ISLAHI ENGLISH MEDIUM SCHOOL,KANNUR vs. ITO WARD 1 & TPS, KANNUR

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ITA 750/COCH/2025Status: DisposedITAT Cochin20 November 2025AY 2018-19Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI MANU KUMAR GIRI (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessment was completed by estimating profit and no prejudice was caused by the non-maintenance of books, it was not a fit case for levying penalty. The AO was directed to delete the penalty.

What were the facts?

The appellant, an educational institution, did not file a return for AY 2018-19. Assessment was reopened and completed, and the AO levied a penalty of Rs. 25,000 under Section 271A for failure to maintain books of account, which was upheld by the CIT(A).

What were the issues?

Whether penalty under Section 271A for non-maintenance of books of account is justified when the assessment was completed by estimating profit and no prejudice was caused to the revenue.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 144B,Section 274,Section 271A,Section 44A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH

Before: SHRI INTURI RAMA RAO, AM & SHRI MANU KUMAR GIRI, JM

For Appellant: Shri Suresh Kumar, CA
For Respondent: Smt. Leena Lal, Sr. D.R
Hearing: 04.11.2025Pronounced: 20.11.2025

Assessment Year: 2018-19 Islahi English Meidum School .......... Appellant Irikkur P.O., Kannur 670593 [PAN: AAAAI9586J] vs. The Income Tax Officer, WD-1 & TPS, Kannur ......... Respondent Assessee by: Shri Suresh Kumar, CA Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 04.11.2025 Date of Pronouncement: 20.11.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi (NFAC) dated 19.03.2025 for Assessment Year (AY) 2018-19.

2.

Brief facts of the case are that the appellant is an Association of Persons running educational institution. No return of income for AY 2018-19 was filed by the appellant. Therefore, the Income Tax Officer, Ward-1 & TPS, Kannur (hereinafter called "the AO") reopened the assessment by issuing a notice u/s. 148 of the Income Islahi English Meidum School Tax Act, 1961 (the Act) and subsequently the assessment was completed vide order dated 21.12.2023 passed u/s. 147 r.w.s. 144B of the Act at total income of Rs. 9,28,107/-. During the course of assessment proceedings the AO noticed that the appellant had failed to maintain books of account as prescribed. Therefore, penalty proceedings u/s. 274 r.w.s. 271A of the Act were initiated for non maintenance of books account. In response to the show cause notice, the appellant submitted that it is not liable to maintain books of account and get it audited. Rejecting the above contention the AO had proceeded with levy of penalty of Rs. 25,000/-.

3.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

4.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

5.

We have heard the rival contentions and perused the material available on record. The issue that arises for our consideration is the levy of penalty of Rs. 25,000/- u/s. 271A of the Act. It is the contention of the appellant that it is under the bona fide belief that it is not liable to maintain books of account and get it audited u/s. 44A of the Act. Furthermore, the CIT(A) had confirmed the levy of penalty merely on the ground that the appellant had failed to furnish the vouchers in support of the expenditure incurred. In our considered opinion, the assessment was completed by the AO by Islahi English Meidum School estimating the profit. In the circumstances, no prejudice is caused to the appellant on account of non maintenance of books of account. Therefore, it is not a fit case for levy of penalty. Hence, we direct the AO to delete the penalty.

6.

In the result, the appeal filed by the assessee stands allowed.

Order pronounced in the open court on 20th November, 2025.

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