University of Calcutta Vs Dy. CIT (Exemptions) (ITAT Kolkata)
Summary: The ITAT Kolkata allowed University of Calcutta’s appeals for AYs 2018-19 and 2019-20 against the confirmation of penalties under section 271B of the Income-tax Act, 1961. In ITA No. 692/KOL/2026, the Assessing Officer had levied a penalty of ₹1,50,000 for failure to obtain an audit under section 44AB, observing that the University’s gross receipts exceeded ₹1 crore.
The University submitted that it was a State-aided institution existing solely for educational purposes, without a profit motive, and wholly funded by the Government of West Bengal. It therefore maintained that its income was exempt and that the tax audit requirement did not apply. The CIT(A) dismissed its appeal. The Tribunal noted the University’s substantial State funding and educational character and proceeded on the finding that its income was exempt under section 10(23C)(iiiab). Referring to the decisions listed in its order, it set aside the CIT(A)’s order and directed deletion of the penalty. Since ITA No. 693/KOL/2026 involved a similar issue, the Tribunal applied the same decision mutatis mutandis and allowed that appeal as well.
Cases Discussed
- Commissioner of Police Coimbatore City Tamilnadu Police Canteen v. Income-tax Officer, [2025] 179 taxmann.com 639 (ITAT Chennai), decided on 16.10.2025 — Included among the authorities cited by the Tribunal in support of penalty relief.
- Pradipbhai Dayabhai Aghara v. Income-tax Officer, [2024] 159 taxmann.com 1591 (ITAT Rajkot), decided on 17.01.2024 — Listed among the decisions relied upon; its facts and reasoning were not separately discussed.
- Bhartiya Shiksha Prachar Samiti v. DCIT (Exemptions), ITA No. 193/JP/2023 (ITAT Jaipur), decided on 05.06.2023 — Cited among the authorities supporting deletion of the penalty.
- National Law University v. Additional/Joint/Deputy/Assistant Commissioner of Income Tax, ITA No. 2288/DEL/2022 (ITAT Delhi), decided on 24.05.2023 — Included in the Tribunal’s list of supporting precedents without separate analysis.
- Guru Nanak Dev Khalsa Girls v. DCIT, ITA No. 687/ASR/2019 (ITAT Amritsar), decided on 03.12.2021 — Listed among the decisions relied upon for granting relief.
- United Education Society, C/o NIMT College v. JCIT, ITA No. 902/DEL/2016 (ITAT Delhi), decided on 25.01.2018 — Cited in support of the University’s challenge to the audit penalty.
- Abu Mansur Ali v. DCIT, ITA No. 93/KOL/2014 (ITAT Kolkata), decided on 10.08.2016 — Included among the authorities cited; no separate factual comparison was recorded.
- Sant Baba Rangi Ram Charitable Trust v. ITO, ITA No. 185 (Asr)/2012 (ITAT Amritsar), decided on 06.08.2012 — Listed among the supporting decisions on the audit-penalty issue.
- Commissioner of Income-tax v. S.K. Gupta and Co., [2010] 322 ITR 86 (Allahabad High Court), decided on 10.09.2009 — Included among the authorities relied upon, without a separate discussion of its ratio.
- ACIT v. India Magnum Fund, [2002] 81 ITD 295 (Mumbai)/[2002] 74 TTJ 620 (Mumbai) (ITAT Mumbai), decided on 22.01.2001 — Listed among the precedents supporting the Tribunal’s decision.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
These are the appeals preferred by the assessee against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] even dated04.12.2025 for the AY 2018-19 & A.Y. 2019-20. The penalties were levied u/s 271B of the Income-tax Act, 1961 (the Act) vide order dated 27.09.2023 & 08.08.2024 by the ld. AO.
ITA No. 692/KOL/2026
2. The only issue raised by the assessee is against the order of ld. CIT (A) confirming the penalty of ₹1,50,000/- as levied by the ld. AO for not getting the books of accounts audited.
3. The facts in brief are that the assessee a University of Calcutta is wholly funded through the state government. The assessment u/s 147/ 144 of the Act was framed vide order dated 20.03.2023. The ld. AO during the course of assessment proceedings called for various documents and information from the assessee, which were furnished by the assessee before the ld. Assessing Officer. The ld. AO noted that the assessee has failed to get the books of accounts audited u/s 44AB of the Act despite the fact that the gross receipt of the assessee was more than ₹1.00 crores and accordingly initiated the penalty proceedings u/s 274 read with section 271B of the Act vide notice dated 20th March, 2023. The assessee replied the said notice by submittng that the income of the assessee i.e. University of Calcutta which is state aided University under the government of West Bengal and is existing solely for educational purposes and not for the purpose of profit. The university is wholly funded by the State Government and is exempted from payment of tax and therefore is not required to get this account audited. However, the submission of the assessee did not find favour with the ld. AO and the ld. AO levied the penalty of ₹1,50,000/- u/s 271B of the Act.
4. In the appellate proceedings, the appeal of the assessee was dismissed.
5. After hearing the rival contentions and perusing the materials available on record, we note that the assessee is a “ university of Calcutta” which is substantially funded by the State Government and is engaged solely for the educational the books of accounts audited u/s 44AB of the Act as the income of the assessee is exempt u/s 10(23C)(iiiab) and no penalty can be levied u/s 271B of the Act. The case of the assessee is squarely covered by a series of decisions, wherein it has been held that where the income of the assessee is exempt u/s 10(23C)(iiiab) of the Act and no penalty can be levied u/s 271A of the Act. The case of the assessee is squarely covered by the following decisions:-
i. ACIT Vs. India Magnum Fund[2002] 81 ITD 295 (Mumbai)/[2002] 74 TTJ 620 (Mumbai)[22-01 -2001]
ii. M/s Sant Baba Rangi Ram Vs. ITO in ITA no. 185 (Asr)/2012 vide order dated 06.08.2012,
iii. United Education Society Vs. JCIT in ITA No. 902/DEL/2016 vide order dated 25.01.2018,
iv. Guru Nanak Dev Khalsa Girls Vs. DCIT in ITA No. 687/ASR/2019 vide order dated 03.12.2021
v. Commissioner of Income- tax vs. S.K. Gupta and Co. [2010] 322 ITR 86 (Allahabad)[10-09-2009]
vi. National Law University Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax in ITA No. 2288/DEL/2022 vide order dated 24.05.2023,
viii. PradipbhaiDayabhaiAghara vs. Income- tax Officer [2024] 159 taxmann.com 1591 (Rajkot – Trib.)[17 -01-2024]
ix. Bharitya Shiksha Prachar Samiti Vs. The DCIT (E) in ITA No. 193/JP/2023 vide order dated 05.06.2023.
x. Abu Mansur Ali Vs. DCIT in ITA No. 93/KOL/2014 vide order dated 10.08.2016
6. Considering the facts of the case in the light of the above decisions, we set aside the order of ld. CIT (A) and direct the ld. AO to delete the penalty. The appeal is allowed.
ITA No. 693/KOL/2026
7. The issue raised in this appeal is similar to one as decided by us in ITA No. 692/KOL/2026. Accordingly, our decision would, mutatis mutandis, apply to this appeal of assessee in I TA No.693/KOL/2026 as well. Hence, the appeal of assessee is allowed.
8. In the result, the both the appeals of the assessee are allowed.
Order pronounced on 16.09.2026.
