2026 (7) TMI 1164

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....The order of CIT(A)-NFAC arises out of the order of the AO imposing penalty u/s.271B of the Act amounting to Rs.1,50,000/-. The relevant Assessment Year is 2023-24. 2. Brief facts of the case are as follows: The assessee is an Association of Persons incorporated under the Tamil Nadu Societies Registration Rules, 1978. For the assessment year 2023-24, the assessee filed its return of income on 20.11.2023 declaring a total income of Rs.59,910/-. The case was selected for complete scrutiny under CASS and notices were issued calling for various details. After considering the submissions filed by the assessee, the Assessing Officer completed the assessment u/s.143(3) r.w.s 144B of the Act on 18.02.2025 accepting the returned income. During th....

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....ovisions of section 44AB by not getting its books of account audited. Accordingly, the AO levied a penalty of Rs.1,50,000/- u/s.271B of the Act. 3. Aggrieved by the penalty order, the assessee preferred an appeal before the First Appellate Authority (FAA). Before FAA, the assessee contended that it is a non-profit organization and that its income is exempt on the principle of mutuality. It was further submitted that the club is not carrying on any business activity and, therefore, the provisions of section 44AB relating to tax audit are not applicable. However, the FAA did not accept the contentions of the assessee and held that the assessee had failed to establish a bona fide reason for not complying with the audit requirements. The FAA....

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.... AR placed reliance on the judgment of the Hon'ble Karnataka High Court in the case of Koramangala Club v. ITO reported in [2016] 387 ITR 630 (Kar.). 5. The Ld.DR supported the orders of the AO and the FAA. 6. We have heard rival submissions and perused the material on record. The penalty u/s.271B of the Act has been levied on the ground that the assessee failed to get its books of account audited as required u/s.44AB of the Act. The foundation for levy of penalty is the AO's conclusion that the receipts arising from supply of liquor to the members constitute business receipts, thereby attracting the provisions of section 44AB of the Act. The consistent stand of the assessee is that it is a Sports and Recreation Club functioning o....