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Income Tax Appellate Tribunal, KOLKATA-PATNA ‘e-COURT’, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Dr. Manish Borad
Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax
Assessment Year: 2019-2020 Bihar Foundation (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 16.03.2022 passed for Assessment Year 2019-20.
The assessee has raised seven grounds of appeal. However, its main grievance is that income of the assessee has been determined on gross basis in an assessment passed under section 143(1) of the Income Tax Act. The case of the assessee is that it is a Society constituted by the State Government of Bihar to carry out several charitable activities as enumerated in its Memorandum of Association. It has filed its return of income. While processing that return under section 143(1), it has been observed by the CPC Unit that the assessee was not enjoying the registration under section 12A of the income Tax Act. Therefore, it is not entitled for the benefit of sections 11 & 12 of the Income Tax Act. Its income has been determined on gross basis.
3. Dissatisfied with the order of ld. Assessing Officer, the assessee carried the matter before the ld. 1st Appellate Authority, but the ld. CIT(Appeals) has dismissed the appeal without going through all these issues in detail. The relevant finding of the ld. CIT(Appeals) reads as under:- “The contention of the appellant is not acceptable. The reason for any adjustment is always specified by CPC in the error description/justification report which is a part of the intimation u/s 143(1). However, the appellant has not file complete copy of intimation u/s 143(1) despite being given ample 2
Assessment Year: 2019-2020 Bihar Foundation opportunities. No appeal can be decided on the basis of mere surmises. The grounds of appeal have to be specific based on the reasons on which adjustments have been made. The duty was on the appellant to furnish the reasons for adjustment along with detailed submission and supporting documents. However, this was not done. I, therefore, do not find any reason to interfere with the adjustment made by the AO u/s 143(1). Accordingly, the grounds of appeal are dismissed”.
4. It is pertinent to note that even if an assessee does not enjoy registration under section 12AA that does not authorise the ld. Assessing Officer to take the gross income. The net income has to be worked out. The expenditure incurred on charitable activities, which is to be considered and allowed to the assessee. This exercise has neither been made by the ld. Assessing Officer or by the ld. CIT(Appeals), therefore, their orders are not sustainable. Though at the time of hearing, we have observed that we remit back this case to the file of ld. CIT(Appeals) for fresh adjudication. However, while giving dictation and on perusal of the details, we find that ends of justice will not meet by setting aside the issues to the file of ld. CIT(Appeals), because that will only enhance the multiplicity of the litigation. The ld. CIT(Appeals) would be required to examine the nature of expenses incurred by the assessee before its allowance. For this purpose, ld. CIT(Appeals) would have to call for a remand report from the ld. Assessing Officer. This exercise would institute the proceeding at two levels, in order to avoid allocation of resources at two places for 3
Assessment Year: 2019-2020 Bihar Foundation adjudication of the issues. We deem it appropriate to set aside it to the file of ld. Assessing Officer for re- adjudication.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 05.06.2023.