INCOME TAX ACT, 1961

Section 271B

Penalty under section 271B - Contravention of section 44AB - Assessee did not get its account audited - Audit report not furnished in Form No. 3CA

Proceedings were initiated based on an allegation that assessee had failed to furnish report of audited accounts as required under section 44AB. Assessee submitted that as per the second proviso to section 44AB, if a person is required by or under any other law to get his accounts audited, getting the accounts audited under that law before the specified date and furnishing of a report of such audit, would be sufficient compliance of the requirement under that section and that no penalty could be imposed. But AO found that, assessee failed to furnish the report of audit in prescribed Form, duly signed and verified by an Accountant as required under section 44AB as required under the second proviso to section 44AB. Therefore, assessee was liable to be imposed with penalty under section 271B.Held: Assessee furnished only the Annual Report depicting the audited financial statement along with copy of the receipts and distribution statements. He had not furnished the report of audit in the prescribed form, Form 3CA, as required under second proviso to section 44AB. When the second proviso carves out an exemption from general provisions of section 44AB, stipulations therein needed to be strictly adhered and mere fact that the audit of the assessee was conducted under the provisions of Co-operative Societies Act, would not be sufficient for such compliance. Since assessee failed to show any 'reasonable cause', coming within the purview of section 273B, imposition of penalty under section 271B cannot be interfered with.

REFERRED :

FAVOUR : Against the assessee.

A.Y. :

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