TaxTMI 
TaxTMI 
2016 (8) TMI 772
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....ed by the ld. Assessing Officer. 2. Briefly the facts of the case are that the assessee society was set up under the Societies Act, 1958 and during the year under consideration, the assessee was operating two educational institutes namely Seedling Nursery School, Jaipur and Seedling Modern Public School, Udaipur. The return of income was filed on 30.03.2006 declaring total income at Rs. NIL. The assessee has shown gross receipts of Rs. 1,07,30,147/- and which it has claimed as exempt u/s 11(1)(a) of the Act. Given that during the year under consideration, the assessee was not registered u/s 12A of the Act, the AO assessed the income of the assessee at Rs. 30,53,721/- u/s 143(3) of the Act. The AO also initiated penalty u/s 271B for failu....
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....r delayed submission of tax audit report. Accordingly penalty is clearly leviable and therefore the same is confirmed." 2.2 During the course of hearing, the ld. AR submitted that the return was filed on 30.03.2006 declaring total income at Rs. NIL as the assessee was under a bonafide belief that being an educational institute, its income was exempt under the various provisions of the Act such as 12A/11 and 10(23)(C) of the Act. The assessee was also under a bonafide belief that the imparting of education was not a business activity and the provisions of section 44AB were not applicable. However the assessee didn't the benefit of an expert advice and as such it failed to apply in time for getting the aforesaid exemption u/s 12AA/10(23)()....
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.... ld. CIT(A) has confirmed the penalty on a different ground. It is clear that accounts of the assessee stood audited as such the charge levied by the ld. AO for initiating and imposing penalty did not stand the test of law. The ld. CIT(A) has confirmed the penalty on different ground i.e. the audit report as filed late. It is submitted that ld. CIT(A) was not justified in confirming the penalty on a different ground than on the ground on which penalty was levied. The submission of the assessee is that the penalty was wrongly initiated and unlawfully imposed. The ld. CIT(A) also erred in confirming the same. The same deserved to be quashed. 2.5 The ld AR further submitted that it was under a bonafide belief that it never conducted any bus....
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....port was submitted as per provisions of section 44AB. The grounds on which penalty has been imposed are without any foundation in as much as the assessee had submitted audit report alongwith the return of income as discussed above. In view of this it is prayed that the penalty imposed may kindly be deleted. The facts that in subsequent year the assessee was granted registration u/s 12A speaks volumes about the bonafides of the assessee. Otherwise also on a whole the delay only of few months, which in the background of the facts of the case, deserved condonation. It was never a fit case for initiating/levy of penalty much less for confirming the same by the ld. CIT(A). The Hon'ble ITAT is requested to quash the same. 2.7 The ld. AR relied....
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....t) in the form prescribed under this section (Form 3CD). In the instant case, the books of accounts have been audited and the auditor's have issued an audit report dated 22.06.2005 which is well before the specified date as prescribed for filing the return of income under section 139(1) i.e 31st October, 2005. The AO has also taken cognisance of the auditor's report while framing the assessment. Now coming to the second and the third conditions that the report of such audit alongwith other report of the accountant (in form No. 3CD) is also required to be furnished by 31.10.2005, the assessee has filed the return of income on 30.03.2006 alongwith Form No. 10B. Given that all the three conditions need to be satisfied cumulatively and the a....
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....g provisions for levy of penalty u/s 271B or any other similar provisions of the Act. 2.12 In our view, the assessee's belief that being a society running educational institutes is not carrying on business is a reasonable belief which is fortified by subsequent grant of registration under section 12A by the CIT. Even though grant of registration u/s 12A is not a basis that the income of the assessee would be fully exempt or the assessee wouldn't be required to file its return of income, it is atleast a reasonable basis to hold that the provisions of section 44AB are not attracted. Basis such belief, where the provisions of section 44AB have not been complied with, it is a matter where the assessee has shown reasonable cause and the AO sh....