Tax Audit held not required for Entities having exempt Income by Punjab & Haryana High Court

ITA 494 of 2005 dated 17-07-2012
Chapter IV of the Act provides for 'computation of total income'. Section 44AB of the Act is one of the sections enacted under Chapter IV-D dealing with computation of profits and gains of business or profession. Section 44AB of the Act becomes operative where there is computation of profits and gains of business or profession as a part of total income. In other words, it has no applicability where the assessee
is not involved in or has no income from profits and gains from business or profession. In the present case, it was not disputed that the income of the assessee was exempted under Section 10 (20) of the Act which
falls in Chapter III of the Act. There was no income of the assessee which would fall under heading “profits and gains of business or profession”. Once that was so, it could not be said that the provisions of
Section 44AB were applicable and as a sequel thereto, penalty under Section 271B of the Act was not leviable. The Tribunal had rightly decided the issue in favour of the assessee.