Case Law Details
Vakrangee Foundation Vs Assessing Officer (ITAT Raipur)
Introduction: In the case of Vakrangee Foundation vs. Assessing Officer, the Income Tax Appellate Tribunal (ITAT) Raipur addressed the issue of imposing a penalty under Section 271B for non-compliance with tax audit provisions. The appellant, a charitable trust, argued that it was exempt from such provisions due to its charitable status. This article provides an analysis of the ITAT’s decision and its implications.
Detailed Analysis: Vakrangee Foundation, a society registered under the Chhattisgarh Firms & Societies Act, filed an appeal against a penalty imposed by the Assessing Officer under Section 271B. The penalty was related to the assessment year 2017-18. The key grounds for the appeal were as follows:
1. The Charitable Trust Argument: Vakrangee Foundation claimed that it was a charitable trust and, therefore, not liable for a tax audit under Section 44AB. They contended that their income was not taxable, and thus the provisions of Section 44AB, which require a tax audit, did not apply to charitable institutions.
2. Nature of Income: The appellant argued that the penalty was based on the misconception that their income of Rs. 8,00,000 was from business activities, when it was actually derived from education, which aligns with their charitable purpose.
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