TMI Blog2012 (10) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... d any error in law in observing that in view of the order issued by the High Court, which was binding upon all the cooperative societies in the State of U.P. including the respondent-assessee, the respondent cooperative society could have got its account audited through a chartered accountant - in favour of assessee. Under Section 271B there is discretion with the income tax authorities to award penalty and this discretion has to be exercised fairly and reasonably on the facts and circumstances in accordance with the settled judicial principles. - INCOME TAX APPEAL No. - 496 of 2011 - - - Dated:- 9-10-2012 - Sunil Ambwani, And Aditya Nath Mittal, JJ. Petitioner Counsel :- S.C./A.N. Mahajan Respondent Counsel :- C.S.C., K.K. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nchayat, Hardoi would amount to compliance of the provisions of 2nd proviso to Section 44-AB?" 6. The respondent-assessee is cooperative society carrying on banking business. It filed a return showing Nil income. During the course of assessment proceedings it was noticed that the assessee had not complied with the provisions of Section 44AB of the Act, which requires the assessee to get its accounts audited by the Accountant, which under the Explanation to Section 288 means Chartered Accountant within the meaning of Chartered Accountant Act, 1949 and includes in relation to any State any person, who by virtue of provisions of sub-section (2) of Section 226 of the Companies Act, 1956 is entitled to be appointed to act as Auditor of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have got its accounts audited by any Chartered Accountant. The Tribunal following its order in the case of District Cooperative Bank Ltd. v. ACIT (Supra) found that it was not a fit case for levying penalty under Section 271B of the Act. 10. Section 64 of the U.P. Cooperative Societies Act, 1963 provides for audit of the accounts of the cooperative society:- "64. Audit- (1) The Registrar, or any other person appointed by the State Government, shall audit or cause to be audited by a person authorised 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. (2) The audit u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered under the Chartered Accountants Act is not filed on prescribed format. Even if there was order of High Court, the assessee could have got its account audited by the Chartered Accountant or brought to the notice of the High Court that the provisions under Section 44AB to get the accounts audited by an accountant, who has to be Chartered Accountant as defined in the Explanation to Section 288 of the Act is a mandatory provision providing for audit under the Income Tax Act, 1961. 13. Learned counsel appearing for the respondent assessee submits that the cooperative societies are required to get statutory audit made of its accounts under Section 64 of the U.P. Cooperative Society Act by the Registrar or Auditor appointed by the Regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble cause was considered. The High Court relying upon Tanjavur Silk Handloom Weavers Cooperative Production Sales Society Ltd. v. Union of India, (2003) 263 ITR 334 (Mad.); and Bangalore Steel Distributors v. ITO, (1994) TLR 254 (Bang.) held that whether penalty should be imposed on failure to perform statutory provisions of law is matter of discretion of the authority, and such discretion should be exercised judicially and on consideration of relevant circumstances. The High Court also relied upon Hindustan Steel Ltd. v. State of Orissa, (1972) 83 ITR 26 (SC) and Smt. Harbans Kaur v. CWT, (1997) 224 ITR 418, and the judgment of the Rajasthan High Court in Rajasthan Cooperative Dairy Federation Ltd. v. Dy. CIT, (2003) 259 ITR 126. 16. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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