TMI Blog2001 (1) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... securities and stocks and being a mutual fund, its income was not chargeable to tax under the provisions of section 10(23D). The assessee, however, filed return of income under section 237 with a view to claim refund of tax deducted at source. The Assessing Officer noticed that the assessee s annual turnover had far exceeded the sum of ₹ 20 lakhs laid down under the provisions of section 44AB of the Act. He therefore initiated penalty proceedings under section 271B of the Act. The assessee argued that by virtue of provisions of section 10(23D), its income was not taxable. Hence the assessee was not liable for tax audit envisaged under section 44AB of the Act. For this purpose the assessee relied upon the opinion of Shri N.A. Palkhiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that if the provisions of law are misinterpreted, the same cannot be considered as reasonable cause. He referred to the judgment of Hon ble Delhi High Court in the case of Escorts Ltd. v. Union of India [1991] 189 ITR 811 that when the provisions of statute are clear and unambiguous, there is no need to resort to the aims and objects of the provisions or Finance Minister s speech. The learned Assessing Officer also referred to the judgment of Hon ble Bombay High Court in the case of CIT v. Mirza Ataullaha Baig [1993] 202 ITR 2912 that principle of construction beneficial to the assessee is not applicable when the law is clear. In this view of the matter, the learned Assessing Officer held that the assessee was liable to be visited by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4AB in the cases where exemption under section 10 is claimed as in the cases where income is chargeable to tax. The learned authorised representative, on the contrary, reiterated the assessee s contentions which have already been enumerated in the foregoing paragraphs. 5. We have carefully considered the rival submissions. In our opinion, penalty under section 271B has been levied by the learned Assessing Officer and Revenue has come in appeal before us defending that order as the basic scheme of Income-tax Act, 1961, and the fundamentals underlying the same have not been fully appreciated. It is well settled that there has to be legal basis for any levy of taxes in India. As per Article 265 of the Constitution of India, no tax shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heading of Chapter III is Incomes which do not form part of total income . It is therefore plain to us that provisions of section 44AB cannot and do not have any application in relation to incomes which are enumerated under Chapter III and are expressly excluded from total income. To reiterate, section 44AB is operational only when profits and gains of business or profession are to be computed for the purpose of computation of total income to meet the requirements of the provisions of section 4. That being so, any income which is designated as incomes which do not form part of total income have nothing to do and cannot be subjected to the provisions of section 44AB. 6. In view of the discussion in the foregoing paragraphs, we hold th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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