Income Tax Appellate Tribunal - Chennai
A A 540 Thuduppathi Paccs Limited,Erode vs Ito Ward 2(1), Erode, Erode on 9 April, 2026
ITANo.258/Chny/2026
आयकर अपीलीय अिधकरण,'बी' यायपीठ,चे ई
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
ी एबी टी वक , याियक सद य एवं ी बालकृ णन एस, लेखा सद य के सम
BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER
&
SHRI S BALAKRISHNAN, HON'BLE ACCOUNTANT MEMBER
आईटीए.नं. /ITANo.258/CHNY/2026 (A.Y.2018-19)
A A 540 Thuduppathi Paccs Limited Income Tax Officer,
A A 540 ThuduppathiPaccs, Perundurai, Ward-2(1), Erode
Nallampatti B.O, Mettupalayam,
Erode,638057
[PAN:AABAA8157C]
(अपीलाथ /Appellant) ( थ /Respondent)
अपीलाथ की ओर से / Appellant by : Mr. S. Sridhar
थ की ओर से/Respondent by : Mr. Shiva Srinivas, CIT
सुनवाई की तारीख/Date of hearing : 18.03.2026
घोषणा की तारीख/Date of : 09.04.2026
Pronouncement
आदे श/ORD ER
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
1. This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, New Delhi [hereinafter in short "Ld.CIT(A)"] vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1082927989(1) dated 24.11.2025 for the PageNo.1 ITANo.258/Chny/2026 A.Y.2018-19 arising out of the Penalty Order passed u/s 271B of the Income Tax Act, 1961(hereinafter referred to as the "Act") dated 25.10.2023
2. Brief facts of the case are the assessee filed return of income on 23.03.2019 for the A.Y. 2018-19. The case was selected for limited scrutiny through CASS for the following issues.
i) Investments/Advances/Loans
ii) Deduction from Total income under Chapter VI-A Subsequently, notice u/s 143(2) and 142(1) along with detailed questionnaire was issued on 23.09.2019 and 21.12.2020 respectively. The assessee filed its reply on 13.01.2021. Considering the submissions, the assessment was completed determining the total income at Rs.38,02,873/- u/s 143(3) r.w.s 143(3A) and 143(3B) of the Act on 25.02.2021 after disallowing the deductions claimed by the assessee under Chapter VI-A of the Act. The ld AO initiated penalty proceedings u/s 271B of the Act on 10.04.2023 as assessee has not complied with the provisions of section 44AB of the Act. The ld AO observed that the assessee was liable to get its books of account audited for the A.Y. 2018-19 as required u/s 44AB of the Act, but has failed to do so same within the prescribed stipulated time. It was noted that the assessee filed its Audit Report 23.03.2019 whereas the due date for filing the Audit Report was 31.10.2018. Therefore, ld AO called upon the assessee to explain as to why the penalty u/s 271B of the Act cannot be levied for non-filing the Tax Audit report on or before due date prescribed under the provisions of the Act. In response, the assessee submitted that the assessee being a society is subjected to PageNo.2 ITANo.258/Chny/2026 audit under the Tamil Nadu Co-operative Societies Act, 1983 and the Department of Co-operative Audit has not completed the audit. The audit by the department of Co-
operative Audit was completed only on 28.10.2018. The ld AO being not convinced to the explanation of the assessee observed that the assessee is liable to get its account audited from the accountantas required u/s 44AB of the Act, since the assessee has exceeded the threshold limit as prescribed. He, therefore, proceeded to levy a penalty of Rs.52,201/- u/s 271B of the Act.
3. On being aggrieved by the penalty order the assessee carried the matter in appeal before the ld CIT(A) but could not succeed. The ld CIT(A) rejected the submissions of the assessee and upheld the penalty levied u/s 271B of the Act.
4. On being aggrieved by the order of the ld CIT(A) the assessee is in appeal before us.
5. At the outset, the ld AR submitted that the assessee was subjected to audit under the Tamil Nadu Co-operative Societies Act, 1983 and the department of Co- operative Audit was completed as late as 28.12.2018. He, therefore, pleaded that the assessee default is not intentional. He submitted that the assessee has filed the Audit Report u/s 44AB of the Act on 23.03.2019, before the completion of assessment proceedings. On this issue, he relied on the following decisions of the jurisdictional Co-ordinate Bench:-
i) ITA No.655/Chny/2023 {A 1235 Madurai Agricultural Producers Co-operative Marketing Society Ltd vs ITO }
ii) ITA No.603/Chny/2022 {Shri Ramunaicker Raja vs The Assistant Commissioner of Income Tax} PageNo.3 ITANo.258/Chny/2026
iii) ITA No.2248/Chny/2019 {M/s Balaji Logistics, vs Asst. Commissioner of Income Tax}
6. Per contra the ld DR relied on the orders of the Revenue Authorities.
7. We have heard both the parties and perused the material available on record. It is an undisputed fact that assessee has filed the Audit Report u/s 44AB of the Act on 23.03.2019 as against the prescribed due date on 31.10.2018. The reason stated by the ld AR is that the assessee as a society is subjected to audit under the Tamil Nadu Co-operative Societies Act, 1983 and the audit was completed on 28.12.2018. Hence, the assessee could file the audit-report only on 23.03.2019. According to the ld AR, the cause for the delay in filing of audit-report was not deliberate, but due to delay in completion of statutory audit by the State Government. Hence, penalty ought not to have been levied on the assessee. For such a proposition, he relied on the decision of this Tribunal, in ITA No.655/Chny/2023 {A 1235 Madurai Agricultural Producers Co-operative Marketing Society Ltd vs ITO} in identical circumstances the Co-ordinate Bench in Para 4 held as follows: -
"None appeared for the assessee. We have heard the Ld.DR, perused the materials available on record and gone through orders of the authorities below. The Ld.DR, Shri AR.V.Sreenivasan, AddI.CIT, supporting the order of the Ld.CIT(A), submitted that the law by way of provisions of Sec.44AB of the Act, mandates every person carrying on business to file Tax Audit Report from an Accountant on or before due date prescribed u/s.139(1) of the Act, if receipts from business exceed the threshold limit. In the present case, although, the assessee is liable to file Tax Audit Report as required u/s.44AB of the Act, but the assessee failed to file such Tax Audit Report within the due date prescribed under the Act, and thus, the AO and the Ld.CIT(A) rightly levied penalty u/s.271B of the Act. We find that although, the assessee has not filed Tax Audit Report as required u/s.44AB of the Act, on or before due date prescribed under the Act, but such Audit Report has been filed before the AO completes assessment u/s.143(3) of the Act, which is evident from the fact that the assessee has obtained Audit PageNo.4 ITANo.258/Chny/2026 Report on 30.09.2017, whereas assessment has been completed on 30.11.2018. Therefore, once the Audit Report required to be filed as per provisions of Sec.44AB of the Act, was made available to the AO, before he completes assessment, then, delay in filing of such Audit Report, penalty u/s.271B of the Act, cannot be levied. This principle is supported by the decision of ITAT Chennai Bench in the case of M/s.T PD 101 Uthangarai Milk Producers Co-operative Society Ltd. v. ITO in ITA"No.152/Chny/2021 dated 29.06.2022."
In the case on hand the assessee has filed Audit Report on 23.03.2019, along with the return of income.The audit report u/s 44AB of the Act was filed before the ld AO during the assessment proceedings butbefore the completion of the assessment u/s 143(3) of the Act on 25.02.2021. The ld AO was having the audit report before the completion of the assessment. Further, we also note that the reason given by the assessee for not filing the audit report within the due date, there is reasonable cause as provided by section 271B of the Act. We, therefore, of the opinion that the ld AO erred in levying the penalty u/s 271B of the Act. Therefore, we direct the ld AO to delete the penalty of Rs.52,201/- levied u/s 271B of the Act.
8. In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 09th April, 2026.
Sd/- Sd/-
(एबीट वक ) (बालकृ णन एस)
(ABY T VARKEY) (SHRI BALAKRISHNAN)
या यकसद य/Judicial Member लेखा सद /Accountant Member
चे नई/Chennai,
दनांक/Dated, 09th April, 2026
YS-
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ITANo.258/Chny/2026
आदे शकी ितिलिपअ ेिषत/Copy to:
1. अपीलाथ /Appellant,
2. थ / Respondent,
3. आयकरआयु /CIT, Chennai/Madurai/Coimbatore/Salem
4. िवभागीय ितिनिध/DR
5. गाडफाईल/GF.
PageNo.6