Prafulla C. Pant, J.
1. This appeal, preferred under Section 260A of Income Tax Act, 1961, is directed against the order dated 19.10.2006, passed by Income Tax Appellate Tribunal, Delhi Bench, 'D' Delhi, passed in ITA No. 1651 (Del) of 2004, whereby appeal of the assessee was allowed and penalty imposed is set aside.
2. Heard learned Counsel for the parties.
3. Brief facts of the case are that appellant is a co-operative society, who is engaged in promotion and supply of sugarcane by its members to local sugar mills. It also undertakes work connected with marketing needs of its members of different goods for development of sugarcane quality, agricultural implements, fertilizers, cane seeds, pesticides etc. The 2 respondent/assesee was required under Section 44AB of Income Tax Act, 1961, to get its account audited, which it failed to get done within the time prescribed i.e. on or before 31.10.1999. When notices were issued to the assessee before the penalties imposed under Section 271B of the aforesaid Act, the assessee pleaded that it was under the bonafide belief that it was not required to get the audit report submitted, as the income of the assessee unit was exempted under Section 80P of the Income Tax Act, 1961. However, the Assessing Officer held that though the income of the assessee was deductible under Section 80P, since the assessee had failed to submit the audit report, it is liable to pay penalty under Section 271B of the Act. Aggrieved by said order dated 14.11.2002, passed by Assessment Officer for the year 1999-2000, the assessee preferred an appeal (No. 66-67/HDR/CIT (A) II/03-04) before the Commissioner of Income Tax (Appeals), Dehradun. Said authority dismissed the appeal. Consequently, the assessee went in Second Appeal before Income Tax Appellate Tribunal, which registered the same as ITA No. 1651(Del)2004 and allowed it vide impugned order dated 19.10.2006. Hence this appeal.
4. Learned Counsel for the appellant argued that ignorance of law is no excuse and, since the assessee admittedly failed to submit the audit report within due date, as such the Assessing Officer had committed no error of law in imposing the penalty under Section 271B of Income Tax Act, 1961. It is further contended 3 that the Income Tax Appellate Tribunal, has erred in law in allowing the appeal and setting aside the penalty. On the other hand, Shri Gopal Narain, learned Counsel for the respondent/assessee argued that there was no intention on the part of the assessee to cause any wrongful loss to the revenue, as no tax was payable on the income of the assessee, as such, there was no justification in imposing the penalty under Section 271B of the Income Tax Act, 1961.
5. Having heard learned Counsel for the parties and after going through the papers on record, we find that it is admitted case that assessee is a co-operative society and its income was deductible under Section 80P of Income Tax Act, 1961. No doubt, under the provisions of Section 44AB of the Act, the assessee was required to get its account audited irrespective of the fact whether the income was deductible or not. The question before us is whether in such a case, there was justification on the part of the Assessing Officer to impose penalty under Section 271B of the Act for non submission of audit report under Section 44AB or not on or before due date.
6. Considering all the facts and circumstances of the case, we are of the view that since there appears no intention on the part of the assessee as found by the Income Tax Appellate Tribunal to conceal the income or to deprive the Government of revenue, as there is no tax payable on the income of the assessee, in view of the provisions of Section 80P of Income Tax Act, 4 1961, we are of the view that it was not necessary for the Assessing Officer to impose penalty under Section 271B of the Act. On going through the impugned order passed by the tribunal, in the above circumstances, we do not find any sufficient reason to interfere with the satisfaction recorded by the tribunal as to the finding of fact that the assessee had no intention to cause any loss to the Revenue and as such, the penalty was not necessarily required to be imposed by the Assessing Officer. Agreeing with the view of the tribunal, we hold that though an assessee is liable to penalty under Section 271B of Income Tax Act, 1961, for failure to comply the provisions of Section 44AB of the Act, but since in the present case, no tax was payable by the assessee/respondent in view of the provisions contained in Section 80P of the Act, the tribunal has committed no error of law in setting aside the penalty imposed by the Assessing Officer. Accordingly, the question of law raised in the appeal stands answered and the appeal is dismissed.