THE FATHERS HOUSE,MUMBAI vs. COMMISSIONER OF INCOME TAX (APPEALS) NFAC, DELHI

The appellant, M/s. The Fathers House (hereinafter referred to as ‘the assessee trust’) by filing the present appeals, sought to set aside the impugned orders even dated 30.12.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment years 2013-14, 2014- 15 & 2015-16 on identical grounds inter alia that: “1. On the facts and in the prevailing circumstances of the case, the learned CIT(A) – NFAC erred in confirming the addition made by the Ld. Assessing , 407 & 408/M/2022 2 M/s. The Fathers House Officer to the extent of Rs.19,61,761/-, Rs.20,80,024/- & Rs.29,69,710/- for A.Y. 2013-14, 2014-15 & 2015-16 respectively ignoring the provisions of section 17(2) of the Act. Therefore, the impugned addition confirmed ignoring the provisions of law may please be deleted. 2. Without prejudice to the above following ground may please be considered On the facts and in the prevailing circumstances of the case, the learned CIT (A) - NFAC erred in confirming the addition made by the Ld. Assessing Officer to the extent of Rs.19,61,761/-, Rs.20,80,024/- & Rs.29,69,710/- for A.Y. 2013-14, 2014-15 & 2015-16 respectively without appreciating that though the assessee trust was not registered u/s 12AA, the expenditure incurred by it ought to have been allowed as a deduction while computing the total income of the assessee in accordance with the normal rule of accountancy. Therefore, the impugned addition confirmed may please be deleted.

Briefly stated facts necessary for adjudication of the controversy at hand are : assessee being a public charitable trust registered under Bombay Public Trust Act filed its return of income at Rs.34,666/-, Rs.5,58,440/- & at nil for A.Y. 2013-14, 2014-15 & 2015-16 respectively. Assessee’s case were reopened under section 147 of the Income Tax Act, 1961 (for short ‘the Act’) by way of issuance of notice under section 148 of the Act which were served upon the assessee trust and the assessee trust had opted to treat its return of income already filed as reply to the notices issued under section 148 of the Act. Statutory notices under section 143(2) & 142(1) of the Act were issued and served upon the assessee who was duly represented before the AO by Shri K.G. Saptarishi, CA. The assessee trust was not registered under section 12A of the Act at the time of passing assessment orders, however, subsequently the assessee trust had applied under section 12AA and was granted registration under section 12A of the Act on 24.09.2018. Since , 407 & 408/M/2022 3 M/s. The Fathers House the assessee was not registered as a trust under section 12A the Assessing Officer (AO) disallowed the total expenditure of Rs.19,61,761/-, Rs.20,80,024/- & Rs.29,69,710/- for A.Y. 2013-14, 2014-15 & 2015-16 respectively and made addition thereof to the total income of the assessee and thereby framed the assessment under section 147 of the Act.

Assessee carried the matter before the Ld. CIT(A) by way of challenging the assessment orders who has upheld the addition made by the AO by dismissing the appeals. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeals.

Undisputedly till passing of assessment order and order passed by the Ld. CIT(A) the assessee was not registered as a trust under section 12A of the Act which fact is apparent from the impugned order passed by the Ld. CIT(A). The relevant part of which is extracted for ready perusal as under: “4.5 In view of the discussion made above, it was found that the appellant has not produced any details/submission before the Assessing Officer and the AO accordingly disallowed the exemption of Rs.19,61,761/- by treating the assessee as an AOP in the absence of registration certificate u/s 12A of the Act, Hence, I am not inclined to interfere with decision of the Assessing Officer. Accordingly, the addition of Rs.19,61,761/- made by the AO is confirmed.”

The Ld. A.R. for the assessee contended that now the assessee has got registered itself under section 12A for the years under assessments. Keeping in view the fact that both the AO as well as the Ld. CIT(A) have not decided the issue on merits while making addition/disallowance of exemption claimed by the assessee under section 12A by treating the assessee as an association of persons (AOP), to serve the cause of justice the assessee is required to be provided with an opportunity of being , 407 & 408/M/2022 4 M/s. The Fathers House heard by deciding the issue raised before the AO as well as on merits. Even during the assessment proceedings the assessee has failed to file any submissions to reply with the queries raised by the AO and to decide the issue once for all the case is required to be revisited by the AO afresh. In these circumstances impugned orders passed by the Ld. CIT(A) are set aside and all the appeals filed by the assessee are remitted back to the AO to decide afresh on merits in view of the registration accorded to the assessee trust under section 12A of the Act.

Resultantly, all the appeals filed by the assessee are allowed for statistical purposes.