Rajasthan Co-operative Dairy Federation Ltd. vs Dy. Commissioner of Income Tax

By the Court

These two appeals are directed against the order dated 24-11-2000, passed by the Tribunal, Jaipur. These appeals relate to the assessment years 1986-87 and 1988-89. The common issue involved in these appeals is with regard to penalty imposed u/s 271B of the Income Tax Act, 1961, therefore, the appeals are being decided by this common order.

The appellant Rajasthan Co-operative Dairy Federation Ltd. is a co-operative society governed by the provisions of Rajasthan Co-operative Societies Act, 1965, As per the requirement of section 44AB of the Income Tax Act, 1961, the assessee should get his accounts of previous year audited by an auditor before the specified date. For the assessment year 1986-87 the specified date was 30-7-1986, and for the assessment year 1988-89 the specified date was 30-6-1988. Admittedly, the assessee had not got its accounts audited before the aforesaid specified dates, therefore, the proceedings for imposing penalty u/s 271B was initiated by the assessing officer and he levied the penalty of Rs. one lakh for each year i.e. 1986-87 and 1988-89.

In appeal before the Commissioner (Appeals), the assessee submitted that the power to appoint the auditor is with the Registrar, Co-operative Societies u/s 68 of the Co-operative Societies. Act, 1965, and unless the auditor is appointed by the Registrar, Co-operative Societies, it was not possible for the assessee to get his accounts audited and that had not been done by the Registrar, Co-operative Societies, in spite of the repeated requests made by the assessee. The assessee could not get his accounts audited before the specified dates and the explanation submitted by the assessee was accepted being a reasonable cause for delay in filing the audit report and the penalty imposed by the assessing officer had been cancelled by the Commissioner (Appeals).

In both these appeals, the Tribunal, Jaipur, was of the view that since the auditor had not been appointed before the specified dates, as such, the accounts could not be got audited before the specified dates even then the penalty levelled by the assessing officer is justified.

In appeal before us, Mr. Jain, learned counsel for the appellant-assessee submits that the appointment of auditor is in the hand of the Registrar, Co-operative Societies, u/s 68 of the Co-operative Societies Act, 1965,. the assessee could not get his accounts audited without statutory audit is done by the auditor appointed by the Registrar, Co-operative Societies. He drew our attention to the page No. 42 of the paper book which relates to the order dated 8-5-1994, passed by the Registrar, Co-operative Societies, Jaipur, wherein it has been directed that the no certificate with regard to tax audit shall be issued unless the accounts are got audited by the auditor appointed by the Registrar, Co-operative Societies.

Mr. Jain also brought to our notice that in spite of the requests made by the assessee to the Registrar, Co-operative Societies, Jaipur, for appointment of the auditor before the specified dates but the same had not been done by the Registrar and in the absence of appointment of the auditor, it was beyond the control of the assessee to get his accounts audited and the delay had been caused due to late appointment of the auditor. Therefore, the penalty should not be levied upon the assessee u/s 271B of the Income Tax Act, 1961.

He further submits that the proviso to section 44AB of the Income Tax Act, 1961, provides that if a statutory audit is got completed under any other relevant statute by the society, it shall be the sufficient compliance of the provisions of section 44AB of the Act, 1961.

Mr. Singhi, learned counsel for the revenue, submits that it is true, that the proviso to section 44AB of the Income Tax Act, 1961, provides that if the accounts are got audited under any other law by the society that is sufficient compliance of the provisions of section 44AB of the Income Tax Act, 1961, but audit should be completed before the specified date. In this case, audit had not been completed before the specified date, therefore, this provision does not help the assessee in anyway.

We agree with Mr. Singhi, learned counsel for the revenue that the provision requires that if the accounts are got audited, under the relevant law before the specified dates it will be the sufficient compliance of the provisions of section 44AB of the Income Tax Act, 1961. In the case in hand, the accounts are not got audited by the statutory auditor before the specified dates, therefore, this proviso does no help in anyway to the assessee.

But at the same time, the assessee had a reasonable cause for not getting the accounts audited before the specified dates, the penalty u/s 271B is not justified. The admitted facts in this case are that the assessee is a co-operative society and its accounts must be got audited by the auditor appointed by the Registrar, Co-operative Societies and no other auditor can audit the accounts of the assessee. As Mr. Jain, learned counsel for the assessee has rightly brought to our notice that the order of the Registrar, Co-operative Societies, Jaipur, dated 8-5-1994, wherein the Registrar Co-operative Societies, has ordered that no certificate shall be issued with regard to tax audit unless the accounts are got audited by the auditors appointed by the Registrar, Co-operative Societies, Jaipur.

In the case in hand, the assessee had requested the Registrar, Co-operative Societies, Jaipur on 27-1-1987, 14-4-1987 and 11-6-1987. In spite of the repeated requests made by the assessee to the registrar, the registrar had not appointed the auditor to audit the accounts of the assessee. In absence of such appointment of the auditor, it was not possible for the assessee to get its accounts audited by any other auditor before the specified dates. Nowhere on the record, any material has been shown that the delay in auditing the accounts took place at any fault of the assessee. The assessee had taken due care and tried his level best to comply with the provisions of section 44AB of the Income Tax Act, 1961. The assessee cannot be punished for the fault of the third party which is required under the statute.

The assessee was under the obligation to get his accounts audited by the auditor appointed by the Registrar, Co-operative Societies, Jaipur. When the auditor had not been appointed by the Registrar, Co-operative Societies, the assessee can only make request to the registrar to appoint the auditor and the repeated requests were made by the assessee. In spite of repeated requests made by the assessee to the registrar, auditor had not been appointed and the delay in auditing the account took place because the appointment of the auditor was not made by the registrar and for that the assessee should not be punished, We are of the view that the Tribunal had committed an error in setting aside the order passed by the Commissioner (Appeals) by restoring the order passed by the assessing officer by which penalty was imposed u/s 271B of the Income Tax Act, 1961.

In the result, both the appeals are allowed and stand disposed of.

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