2023 (9) TMI 611 - AT - Income Tax

Penalty levied u/s 271B - not getting the audit u/s 44AB - appellant is a Charitable Trust - HELD THAT - During the hearing before us when it was queried whether the assessee which has receipt of more than Rs. 12.00 crores whether the assessee has got its accounts audited under the provisions of income tax act applicable on charitable organization and report in form 10B was furnished, Ld AR answered that the assessee was not having 12AA for the relevant year thus such audit was not conducted. We agree with the observations of Ld CIT(A) that the addition made by the Ld AO u/s 37(1) was accepted by the appellant, thus, also accepted the fact that the assessee has income from business and profession. Moreover, to fit into the definition of Charitable purpose as per section 2(15) of the Act, the appellant was required to fulfill certain prescribed conditions. The appellant was failed in establishing during the penalty proceedings before AO, as well as before the Ld CIT(A). We therefore are of the considered opinion that Ld CIT(A) had correctly appreciated the facts of the case in confirming the penalty imposed by the Ld AO u/s 44AB. We uphold the order of Ld CIT(A), in terms of our observations herein above. Thus, ground of the assessee on the sole issue pertaining to levy of penalty u/s 271B are dismissed.

Summary

Issues involved:
The issues involved in the judgment are the confirmation of penalty under section 271B for not getting the audit under section 44AB and the levy of penalty for income not from education but from business.

Confirmation of Penalty under Section 271B:
The appeal was directed against the order of the Commissioner of Income Tax (Appeals) confirming the penalty levied by the Assessing Officer under section 271B of the Income Tax Act, 1961. The appellant, a Charitable Trust, argued that the provisions of section 44AB for getting an audit are not applicable to charitable institutions. The delay in filing the appeal was condoned due to compelling circumstances. However, the Tribunal upheld the penalty, stating that the appellant failed to establish that the income was not from business, as observed by the Assessing Officer and confirmed by the Commissioner.

Levy of Penalty for Income not from Education but from Business:
The assessee, a society running a school, contended that it was an educational institution for charitable purposes and thus not liable for Tax Audit under section 44AB. The Assessing Officer imposed a penalty under section 271B, considering the society to be earning profit and not solely engaged in educational activities. Despite the society's registration under section 12AA, the Tribunal found that the conduct of the assessee, including accepting additions proposed by the AO, indicated income from business. The Tribunal upheld the penalty, agreeing with the Commissioner's findings and dismissing the appeal.

Conclusion:
The Tribunal dismissed the appeal of the assessee, upholding the penalties imposed under section 271B for not getting the audit under section 44AB and for income not solely from education but from business. The Tribunal found no reason to interfere with the decisions of the lower authorities, affirming the penalties based on the facts and law presented in the case.