VEGETABLE AND FRUIT PROMOTION COUNCIL KERALAM (VFPCK),KAKKANAD V. ACIT, ERNAKULAM

ITA 493/COCH/2024

AI Insights

The case involves the Vegetable & Fruit Promotion Council Keralam (VFPCK), a company registered under section 8 of the Companies Act, 2013, and granted registration under section 12AA of the Income Tax Act, 1961. The assessee was penalized by the Assistant Commissioner of Income Tax for not having its books audited as required under section 44AB of the Income Tax Act, 1961, for the Assessment Year 2016-17. The penalty of Rs. 1,50,000 was contested in the Tribunal, which found that the provisions of section 44AB were not applicable to the assessee as it was not engaged in any business activities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23376 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Laws Referred To: Companies Act, 2013, Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: R. RAMACHANDRAN
• Section: 143(3); 12AA; 44AB; 271B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PRAKASH CHAND YADAV, JM ITA No. 493/Coch/2024 Assessment Year: 2016-17 Vegetable & Fruit Promotion Council .......... Appellant Keralam (VFPCK) Mythri Bhavan, Near Doordarshan Kendra Kakkanad, Cochi 682037 [PAN: AAATV6575D] Vs. Asst. Commissioner of Income Tax .......... Respondent Ernakulam Appellant by: Shri R. Ramachandran, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 12.12.2024 Date of Pronouncement: 21.01.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 04.03.2024 for Assessment Year (AY) 2016-17. 2. Brief facts of the case are that the assessee is a company duly incorporated under the provisions of section 8 of the Companies Act, 2013. It is duly granted registration under the provisions of section 12AA of the Income Tax Act, 1961 (the Act) . The assessee 2 ITA No. 494/Coch/2024 Vegetable & Fruit Promotion Council Keralam (VFPCK company was formed by the Government of Kerala for the relief of poor, small and marginal farmers. Assessment for AY 2016-17 was completed u/s. 143(3) of the Act vide order dated 29.12.2026 at an income of Rs. 2,53,20,45/-. During the course of assessment proceedings, the AO found that the assessee had not got the books of account audited as stipulated u/s. 44AB of the Act and failed to file the prescribed audit report on or before the specified date. Therefore, he initiated penalty proceedings u/s. 271B of the Act. In response to the show cause notice no explanation was filed by the assessee. In the circumstance the AO had proceeded with levy of penalty u/s. 271B of the Act vide order dated 15.03.2022 levying penalty of Rs.1,50,000/- u/s. 271B of the Act. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the levy of penalty for non prosecution without adverting to the statements of facts of the case. 4. Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal. 5. The learned counsel for the assessee submits that the provisions of section 44AB of the Act have no application to the assessee, inasmuch as, the assessee was not carrying on any business. Therefore, he prayed that the penalty order be quashed. 6. On the other hand, the learned Sr. DR, supporting the orders of the lower authorities, submits that no interference is called for. 3 ITA No. 494/Coch/2024 Vegetable & Fruit Promotion Council Keralam (VFPCK 7. We have heard the rival contentions of both the parties and perused the material available on record. The solitary issue in the present appeal relates to whether the levy of penalty u/s. 271B of the Act is justified in the facts of the present case. Admittedly, the assessee is a company registered u/s. 8 of the Companies Act, 2013 enjoying registration under the provisions of section 12AA of the Act. Therefore, it cannot be said that the assessee company is carrying on any business and the turnover exceeded above Rs. 1 crore. Therefore, the provisions of section 44AB of the Act have no application to the facts of the present case. The lower authorities, without properly appreciating the facts of the case as well as spirit of provisions of section 44AB of the Act, had merely levied penalty which is contrary to the plain provisions of section 44AB of the Act. Therefore, we direct the AO to delete the penalty of Rs. 1,50,000/- levied u/s. 271B of the Act. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on 21st January, 2025. Sd/- Sd/- (PRAKASH CHAND YADAV) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 21st January, 2025 n.p. 4 ITA No. 494/Coch/2024 Vegetable & Fruit Promotion Council Keralam (VFPCK Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "