SHREE KRISHNA EDUCATIONAL SOCIETY,VISAKHAPATNAM vs. INCOME TAX OFFICER, EXEMPTION WARD, VISAKHAPATNAM
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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
PER S. BALAKRISHNAN, Accountant Member :
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [Ld. CIT(A)-NFAC] vide DIN & Order No. ITBA/NFAC/S/250/2022-23/1049738450(1), dated 14/02/2023
2 arising out of the order passed U/s. 271B of the Income Tax Act,
1961 [the Act] for the AY 2018-19.
The facts of the case are that the assessee is a society
registered under Societies Registration Act to run an educational
institution. The assessee filed its return of income for the AY
2018-19 in ITR-7 on 30/10/2018 declaring NIL income after
claiming exemption U/s. 10(23C) of the Act. The scrutiny
assessment was completed on 7/4/2021 vide order U/s. 143(3)
r.w.s 143(3A) & 143(3B) of the Act assessing the total income at
Rs. 7,56,350/-. The Ld. AO during the scrutiny proceedings
noticed that the assessee had gross receipts of Rs. 2,84,51,500/-
which is exceeding the statutory limit for tax audit as per section
44AB of the Act and noticed that the assessee has not filed any
report prescribed U/s. 44AB of the Act. Therefore, the Ld. AO
initiated penalty proceedings U/s. 271B of the Act and show
cause notice dated 7/4/2021 was issued and served on the
assessee. Thereafter, one more show cause notice dated
15/07/2021 was also issued and served on the assessee. In
response, the assessee submitted that the Ld. AO has assessed
the income under ‘income from other sources’ during the scrutiny
assessment proceedings and hence it is not required to be
audited U/s. 44AB of the Act. After carefully considering the
submissions of the assessee, the Ld. AO being not convinced,
rejected the assessee’s reply and proceeded to levy penalty of Rs.
1,42,260/- U/s. 271B of the Act. Aggrieved by the order of the
Ld. AO, the assessee filed an appeal before the NFAC.
On appeal, the NFAC confirmed the order of the Ld. AO.
Aggrieved by the order of the NFAC, the assessee is in appeal
before us and raised the following grounds of appeal:
“1. The order of the Ld. CIT(A) is contrary to the facts and also the law applicable to the facts of the case. 2. The Ld. CIT(A) is not justified in deciding the appeal exparte. 3. The Ld. CIT(A) is not justified in sustaining the penalty of Rs. 1,42,260/- levied by the Assessing Officer U/s. 271B of the Act. Any other grounds may be urged at the time of hearing.” 4.
The only issue arises from the above grounds is sustenance
of penalty of Rs. 1,42,260/- levied by the Ld. AO U/s. 271B of
the Act.
At the outset, the Ld. AR argued that the assessee filed its
return of income declaring it as income from other sources. The
CPC while processing the return U/s. 143(1) of the Act has also
considered the income of the assessee as income from other
4 sources. The Ld. AO during the scrutiny assessment proceedings
in his computation sheet has treated the income as income from
other sources. The Ld. AR therefore pleaded that since the
income of the assessee has been consistently treated as income
from other sources, the provisions of section 44AB of the Act
which are applicable to the Profit & Gains of Business or
Profession cannot be applied in the instant case. He therefore
pleaded to delete the penalty levied by the Ld. AO.
Per contra, the Ld. DR fully supported the orders of the Ld.
Revenue Authorities.
We have heard both the sides and perused the material
available on record and the orders of the Ld. Revenue
Authorities. Admittedly, while filing the return of income, the
assessee has disclosed its income as income from other sources
as demonstrated in page 6 of the paper book in Sl. No.13(iv) of
the ITR-7. Subsequently, we also find that the intimation U/s.
143(1) also considered it as income from other sources. During
the scrutiny assessment proceedings, the Ld. AO also in his
computation sheet which is available in page 42 of the paper
book treated the income of the assessee as income from other
sources. Section 44AB(a) of the Act clearly states that Every
5 person,—(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds the prescribed limits”. In the instant case, since the income has been treated as income from other sources and not as income from profit & gains of business or profession, the provisions of section 44AB of the Act, in our considered view, are not applicable. We therefore have no hesitation to delete the penalty of Rs. 1,42,260/- levied by the Ld. AO and direct the Ld. AO accordingly.
In the result, appeal of the assessee is allowed. 7.
Pronounced in the open Court on the 15th June, 2023.
Sd/- Sd/- (दु�वू� आर.एल रे�डी) (एस बालाकृ�णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) �या�यकसद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER Dated :15.06.2023 OKK - SPS
आदेश क� ��त�ल�प अ�े�षत/Copy of the order forwarded to:- �नधा�रती/ The Assessee – Sree Krishna Educational Society, D.No. 1. 3-286, Adarsh Nagar, Old Dairy Farm, Visakhapatnam, Andhra Pradesh 530040.
6 राज�व/The Revenue – Income Tax Officer, Exemption Ward, Income 2. Tax Office, Infinity Towers, Sankaramatham Road, Visakhapatnam, Andhra Pradesh – 530016. 3. The Principal Commissioner of Income Tax, आयकर आयु�त (अपील)/ The Commissioner of Income Tax 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, �वशाखापटणम/ DR, ITAT, 5. Visakhapatnam गाड� फ़ाईल / Guard file 6. आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam
