SATISH KUMAR MITTAL, J. - (1.) THE instant appeal filed by the Revenue under s. 260A of the IT Act, 1961 (hereinafter referred to as 'the Act') is Chandigarh (hereinafter referred to as 'the Tribunal') in ITA No. 471/Chd/2006 in case of the respondent assessee for the asst. yr. 2004 -05 by raising the following substantial questions of law : "(i) Whether on the facts and in the circumstances of the case the learned Tribunal was right in deleting the penalty imposed under s. 271B of the IT Act without deliberating, upon, discussing and analyzing the reasons as spelt out and discussed in para 3 of the penalty order further ignoring the fact that there was no reasonable cause for the assessee for not furnishing the audit report by a chartered accountant within the specified period in view of the facts that the assessee was and engaged in business activity and the gross turnover of the assessee which included the total sales and the interest income on account of business activity of the assessee exceeded Rs. 40 lacs ? (ii) Whether on the facts and in the circumstances of the case, the learned Tribunal was right in law in giving the benefit of s. 273B without discussing the reasonable cause for not furnishing the audit report by chartered accountant within the specified period -
(2.) THE brief facts giving rise to file the present appeal are that the respondent assessee is a co -operative credit and service society deriving income from fertilizer, pesticides, seeds etc. to its members and also from interest etc. For the asst. yr. 2004 -05, the respondent assessee filed return declaring its income at nil after claiming exemption under s. 80P of the Act. The return was accompanied by trading account, P&L a/c and balance sheet which were not audited.
(3.) DURING the course of assessment proceedings, it was noticed that the gross turnover of the assessee exceeded Rs. 40 lacs, therefore, the assessee was required to get its accounts audited by a chartered accountant before the stipulated as required under s. 44AB of the Act. Therefore, for failure to get the accounts audited by the chartered accountant within the specified period and furnish the audit report by the stipulated date as per the provisions of s. 44AB of the Act, penalty proceedings under s. 271B of the Act were initiated against the assessee. Before the AO, the assessee took the plea that the sales turnover of the assessee were much less than Rs. 40 lacs, but after including receipts of interest, it exceeded Rs. 40 lacs. Therefore, assessee did not get its accounts audited as per the requirement of s. 44AB under a bona fide belief that its sales turnover were less than Rs. 40 lacs and as such it was prevented from doing so by sufficient cause, therefore, it prayed that the penalty be not imposed on it. The AO did not accept the contention of the assessee and imposed the penalty of Rs. 21,756.;