MAHARASHTRA NURSING COUNCIL ,MUMBAI V. DCIT(EXEMPTION)-2(1), MUMBAI

ITA 553/MUM/2025

AI Insights

The case involves M/s. Maharashtra Nursing Council appealing against penalties imposed by the Deputy Commissioner of Income Tax (Exemption) under section 271B for not filing tax audit reports as required under section 44AB of the Income Tax Act, 1961. The penalties were based on the reassessment that treated the council as a business entity due to non-compliance with section 11(2) regarding accumulation of income, leading to an escapement of income. However, the Tribunal had earlier quashed this reassessment, which formed the basis of the penalties. Consequently, the Tribunal allowed the appeals, setting aside the penalties for all the assessment years in question.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37307 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.R. MAKWANA; LD.
• Assessee Lawyers: NITESH JOSHI; LD
• Keywords: Set aside; Reassessment proceedings
• Section: 147; 11; 12A; 44AB; 271B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI BR BASKARAN, ACCOUNTANT MEMBER AND SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA Nos.549, 550, 551, 552, 553 & 554/M/2025 Assessment Years: 2012-13, 2013-14, 2014-15, 2015-16, 2016-17 & 2017-18 M/s. Maharashtra Nursing Council, 5th Floor, Bombay Mutual Annex Building, Gunbow Street, Opp Residency Hotel, Off D N Road, Fort, Mumbai, Maharashtra – 400 001 PAN: AAFAM5890G Vs. Deputy Commissioner of Income Tax (Exemption) – 2(1), MTNL Building, Peddar Road, Mumbai Maharashtra - 400 026 (Appellant) (Respondent) Present for: Assessee by : Shri Nitesh Joshi, Ld. A.R. Revenue by : Shri R.R. Makwana, Ld. Sr. D.R. Date of Hearing : 18.03.2025 Date of Pronouncement : 18.03.2025 O R D E R Per Bench : All these appeals are directed against the orders dated 18-12- 2024, 20-12-2024, 27-12-2024 and 01-01-2025 {related to the assessment years 2012-13 to 2017-18} passed by the Commissioner of Income-tax (Appeals) {in short Ld. Commissioner} confirming the penalty levied by the Assessing Officer (AO) u/s 271B of the Income Tax Act 1961 {in short ‘Act’} for not filing tax audit report requires to be filed u/s 44AB of the Act. ITA No.549/M/2025 & ors. M/s. Maharashtra Nursing Council 2 2. Shri Nitesh Joshi, the Ld. Counsel for the Assessee has submitted that the AO has reopened the assessment u/s 147 of the Act for the reason that the Assessee did not comply with the provisions of section 11(2) of the Act for accumulation of income and hence there was an escapement of income. The AO completed the assessments of these years denying exemption u/s 11 of the Act. Since the Assessee was denied exemption u/s 11 of the Act, the AO took the view that the Assessee should be treated as a business concern and since the gross receipts of the Assessee exceeded the limit prescribed u/s 44AB of the Act, the Assessee should have got its accounts audited u/s 44AB of the Act and should have filed audit report. Since the Assessee did not file the audit report, the AO initiated penalty proceedings u/s 271B of the Act for all the years under consideration and levied penalty of Rs.1,50,000/- for each of the year and on appeal the Ld. CIT(A) confirmed the same. 3. Ld. Counsel Mr. Joshi, further submitted that the Assessee had challenged the validity of reopening of the assessments before the Ld. CIT(A) and on failing, before the ITAT who vide its order dated 25.10.2024 passed in quantum appeals i.e. ITA Nos.1474 to 1479/M/2024 has quashed the reopening of the assessment. Mr. Joshi further submitted that the Assessee is registered u/s 12A of the Act and the said registration has not been cancelled so far, hence, there is no scope for the AO to treat the Assessee as a business concern. Even otherwise, the Tribunal has since quashed the reopening of the assessment and therefore the foundation on which the impugned penalties have been levied, have fallen to the ground and thus the impugned penalties are liable to be cancelled in all the years. ITA No.549/M/2025 & ors. M/s. Maharashtra Nursing Council 3 4. The Ld. D.R. on the contrary supported the orders passed by the authorities below. 5. We have heard the rival contentions and perused the records. We notice that the AO has initiated penalty proceedings u/s 271B of the Act in the course of reassessment proceedings initiated u/s 147 of the Act on the ground that the Assessee has not accumulated funds as per section 11(2) of the Act and hence there is escapement of income. In that process, the AO denied the exemption claimed u/s 11 of the Act and also treated the Assessee as a business concern. Since the turnover of the Assessee exceeded the limit prescribed u/s 44AB of the Act, the AO also taken the view that the Assessee should have filed tax audit report u/s 44AB of the Act. We notice that the reopening of the assessment and in pursuance to the Assessment order, has since been quashed by the co-ordinate Bench of the Tribunal in the quantum appeals referred to above ; hence the view taken by the AO that the Assessee is a business concern, would not survive anymore. Since the foundation on which the impugned penalty has been levied, is abolished thus penalty levied would also collapse. Thus, the penalty orders passed by the AO are quashed and consequently the orders passed by the Ld. CIT(A) in all the years under consideration are set aside by allowing appeals of the Assessee. ITA No.549/M/2025 & ors. M/s. Maharashtra Nursing Council 4 6. In the result, all the appeals of the Assessee are allowed. Order pronounced in the open court on 18.03.2025. Sd/- Sd/- (BR BASKARAN) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy./Asstt. Registrar, ITAT, Mumbai. "