TaxTMI 
TaxTMI 
2016 (3) TMI 286
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....law arises for adjudication before this court: "1. Whether the finding of the Income-tax Appellate Tribunal holding that the provisions of Section 44AB of the income Tax Act, are applicable to the appellant Club, which is a mutual concern, is perverse and arbitrary and contrary to law? 2. Whether in the facts and circumstances of the case, the order passed by the Tribunal imposing penalty on the appellant under Section 271B of the Income Tax Act, is perverse and arbitrary having regard to the explanation offered by the assessee?." 3. The appellant-Club is a registered society, the objectives of which, are as under: "1. To promote sports of all kinds and description. 2. To arrange literary and cultural ....
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....ot applicable to it. Consequently, the appellant did not obtain the audit report at the time of filing of the return of income. The assessing Officer rejected the explanation offered by the appellant and levied the penalty. Aggrieved by the penalty order, the appellant preferred appeals before the Appellate Commissioner, who had upheld the levy of penalty. On further appeal before the ITAT Bangalore by the appellant, the Tribunal dismissed the appeals confirming the levy of penalty. Aggrieved by the said order of the ITAT Bangalore, the appellant is before this Court. 5. We have heard Smt.Jinitha Chatterjee, learned counsel appearing for Sri. S.Parthasarathi for the appellantassessee and Sri. E.I.Sanmathi along with K.V.Aravind for the r....
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....eral law relating to mutual concerns, has held at paras 13 and 14 as under: "13. Under the general law relating to mutual concerns, the surplus accruing to a mutual concern cannot be regarded as income, profits or gains for the purpose of the Act (s.4), and where the contributors are to receive back a part of their own contributions, the complete identity between the contributors and recipients negatives the idea of any profit, for no man can make profit out of himself. Therefore, a mutual concern can carry on an activity with its members, though the surplus arising from such activity is not taxable income or profit. The principle of mutuality has also been accepted in the case of a voluntary organization, which receives contributi....
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....ction 273(B) of the Act that no penalty shall be leviable to a person or on assessee for any failure referred to under the provision of Section 271B of the Act, if, it is proved that there was reasonable cause for such failure. 11. At this juncture, it would be beneficial to extract para 19 of the judgment of this Court in the case of ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER VS DR K SATISH SHETTY [(2009) 310 ITR 0366], which reads as under: "19. The Tribunal has also placed reliance on yet another judgment of the Supreme Court Hindustan Steel Ltd. vs. State of Orissa( 1972) 83 ITR 26 (SC), where it dealt with the provisions contained in the Orissa Sales-tax Act. While considering the general principles the apex Court has....
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.... a person or an assessee for any failure referred to in the said provisions if it is proved that there was reasonable cause for the said failure. 8. Therefore, without entering into the larger issue as to whether there was, or was not, any failure, it is apparent that the assessee can be said to have been prevented by reasonable cause on the basis of a legal opinion published, which was produced before the first appellate authority. In fact, on a reading of provisions of Section 44AB of the Act, it is a moot question as to which of the three phrases can be said to be applicable in a given case, and the same would depend on facts of each case and no straight jacket formula can be evolved in this context. Accordingly, the assessee wa....