COMMISSIONER OF INCOME TAX Vs. IQBALPUR CO-OPERATIVE CANE DEVELOPMENT UNION LTD
HIGH COURT OF UTTARAKHAND
COMMISSIONER OF INCOME TAX
Iqbalpur Co-Operative Cane Development Union Ltd
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(1.) The respondent is a co-operative society registered under the U.P. Co-operative Societies Act, 1965. Sub-section (1) of section 64 of the said Act directs the Registrar, or any other person appointed by the State Government, to audit or cause to be audited by a person authorized by him by general or special order in writing and possessing such qualifications as may be specified by the State Government in this behalf, accounts of every co-operative society, at least once in each co-operative year. The accounts of the respondent were, accordingly, required to be audited in accordance with the mandate contained in section 64 of the Act. Income of a co-operative society under the Income-tax Act, 1961, is taxable. Section 80P of the Income-tax Act permits certain deductions in respect of income of co-operative societies. During the relevant assessment years, respondent co-operative society did not earn such income for which it was required to pay tax under the Income-tax Act. The relevant part of section 44AB of the Income-tax Act is as follows:--
(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year; or
get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed :...
Provided further that in a case where such person is required by and under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this section if such person gets the accounts of such business or profession audited under such law before the specified date and furnishes by that date the report of the audit as required under such other law and a further report by an accountant in the form prescribed under this section.
Explanation.--For the purposes of this section,--...
(ii) 'specified date', in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139.
In the instant case, the turnover of the respondent exceeded Rs. 1 crore for the relevant previous years. By virtue of the proviso as above, respondent was not required to have one more audit to be conducted in addition to the audit to be conducted by the Registrar in terms of the U.P. Co-operative Societies Act. However, by reason of the mandate contained in section 44AB, such auditing was required to be conducted before the specified date and the auditor was required to sign and verify the audit report on or before the specified date. The same was not done. It was done, however, after the specified date. In that view of the matter, penalty proceeding under section 271B was initiated and the respondent was penalized by imposition of penalty of Rs. 1 lakh. The respondent lost before the Commissioner of Income-tax (Appeals), but succeeded before the Tribunal. Relief was given by the Tribunal to the respondent under section 273B of the Income-tax Act holding that, in that matter of delaying in completing the audit and signing the audit report, the respondent has been able to establish that there was reasonable cause therefor, inasmuch as, neither appointment of the auditor was within its domain and, at the same time, it was also not within his domain to have the auditor to be appointed by the Registrar or such other person to be appointed by the State Government to complete the same within the time as provided for in the Income-tax Act.
(2.) That being the situation, we find no scope of interference with the appeal. The appeal fails and the same is dismissed.;
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