M/s. Mercy Education Trust Vs. The Income Tax Officer, Non-Corporate Ward 19(6), Chennai

Parties Involved

Facts Summary

The assessee, M/s. Mercy Education Trust, is engaged in running a B.Ed degree college recognized by the University of Calicut. For the assessment year 2018-19, the assessee did not file its return of income under section 139 of the Income Tax Act. The Jurisdictional Assessing Officer (JAO) issued a notice under section 148 of the Act on 30.03.2022, following which the assessee filed a return of income on 09.11.2022 declaring ‘nil’ income after claiming exemption under section 10(23C)(iiiad) of the Act. During the assessment proceedings, the assessee submitted financial statements and other relevant documents. The reassessment was completed after verifying the evidence and books of accounts, accepting the income disclosed by the assessee. However, the AO initiated penalty proceedings under section 272A(2)(e) of the Act for non-furnishing of the return of income within the due date. The assessee was served a notice under section 274 read with section 272A(2)(e) and filed its reply on 04.04.2023 and 31.05.2023, arguing that it was under a bonafide belief that it was not obliged to file the return of income since its income was exempt under section 10(23C)(iiiad). The AO rejected these contentions and imposed a penalty of Rs.7,80,500/-. Aggrieved by this order, the assessee filed an appeal before the First Appellate Authority (FAA), which also rejected the contentions. The assessee then filed the present appeal before the Tribunal.…

Legal Issues

• 1. Whether the order of the NFAC, Delhi dated 26.06.2025 is contrary to law, fact, and circumstances of the case.
• 2. Whether the NFAC, Delhi erred in sustaining the levy of the penalty under Section 272A(2)(e) of the Act.
• 3. Whether the provisions in section 272A(2)(e) of the Act had no application to the facts of the present case.
• 4. Whether the return of income filed in response to Notice under Section 148 of the Act should be construed as a return of income filed in terms of Section 139(4A) of the Act.
• 5. Whether there was any scope for levying penalty under consideration in consequence to incorrect assumption of jurisdiction under Section 147 of the Act by the JAO instead of the FAO.
• 6. Whether the order imposing penalty under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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