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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI AMIT SHUKLA, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
Date of conclusion of Hearing : 02.03.2023 Date of Pronouncement : 29.05.2023 O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld.CIT(A)”] dated 28.11.2022 for the A.Y.2013-14.
(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust 2. Brief facts of the case are, assessee filed its return of income on 24.09.2013 declaring total income of ₹.NIL. The case was selected for scrutiny and notices u/s. 143(2) and 142(1) of Income-tax Act, 1961 (in short “Act”) were issued and served on the assessee. In response Authorised Representative of the assessee attended and submitted the relevant information as called for. The assessment u/s. 143(3) of the Act was completed on 13.02.2016 making the disallowance u/s. 24(a) of the Act and accumulation u/s. 11(1)(A) to the extent of ₹.58,172/-.
3. Subsequently, Assessing Officer issued notices u/s. 154 / 155 of the Act and duly served on the assessee wherein assessee was informed about the following issues: -
“a) Income-tax refund in the income statement taken at Rs.386/- instead of Rs 18,400/- as per AIR statement. Thus there is difference of Rs.18,014/- (b) Interest on Income-tax refund at Rs.1,596/- was not added in the total income of the assessee. (c) Difference in establishment expenses amounting to Rs.39,647/-. (d) Deduction u/s 11(2) of the Act amounting to Rs.4,82,740/- should not be allowed.”
It was also informed to the assessee, if any objection to the proposed rectification, response to be filed on or before 02.08.2017. However, no response from the assessee received till the date of Page No. | 2
(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust passing of the rectification order u/s. 154 of the Act. Therefore, the Assessing Officer has disallowed the issues raised in the notices and disallowed to the extent of ₹.6,60,401/-.
Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions before him, for the sake of clarity it is reproduced below: -
1. The appellant has filed the Return of Income on declaring total income of Rs. NIL 2. The assessment of your appellant was selected under Scrutiny Assessment and assessment has been made u/s 143(3) of the Income Tax Act, 1961 (hereinafter, for the sake of brevity, referred to as the Act') assessing income of the appellant at Rs.58,170.
The Assessing Officer, thereafter, issued notice u/s 154 of the Act proposing to make additions as mentioned in the notice.
4. The Assessing Officer, thereafter, in exercise of powers vested in him u/s the Act made the following additions to the income of the appellant. a) Difference in Income Tax Refund Rs. 18014 b) Interest on Income-tax Refund Rs. 1596 c) Difference in establishment expenses Rs. 39647 d) Deduction u/s 11(2) Rs. 482740 Total Rs. 541997 However, the Assessing Officer has made addition of Rs. 660401 to the income of the Appellant. e) The Assessment Order has been received by the appellant on October 03, 2017.
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(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust f). The appellant has paid the necessary appeal fees before filing of this appeal
After considering the grounds of appeal and submissions of the assessee, Ld.CIT(A) decided the various issues raised by the assessee in its grounds of appeal by dismissing the issues raised u/s. 11(2) of the Act and remitting the other issues to the file of the Assessing Officer for proper verification after giving opportunity to the assessee.
7. Aggrieved with the order of the Ld.CIT(A), assessee has raised following grounds in its appeal: - “1. Considering the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax Appeals NATIONAL FACELESS APPEAL CENTRE (NFAC), (hereinafter, for the sake for brevity, called as 'CIT(A)") erred on facts and in law in affirming the powers exercised by the Assessing Officer u/s 154 of the Income Tax Act, 1961 (hereinafter, for the sake of brevity, referred to as the Act), and that the orders passed by the Assessing Officer in pursuance thereto be declared as bad in law and void abinitio.
2. Considering the facts and circumstances of the case and in law, CIT(A) erred in confirming, the addition of Rs. 1596 to the income of the appellant is erroneous since the said amount has been applied for furtherance of the objects of the Trust, and the same, therefore, ought to be deleted.
3. Considering the facts and circumstances of the case and in law, CIT(A) erred in confirming the addition of Rs. 39647 to the income of the appellant though the same is erroneous and the same, therefore, ought to be deleted. This is despite admission of the fact that the same has not been considered in order passed u's 154 of the Act.
4. Considering the facts and circumstances of the case and in law, CIT(A) erred in confirming the addition of Rs. 482740 to the income of the appellant by disallowing the deduction u/s 11(2) of Page No. | 4
(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust the Act, generally and specially by exercise of powers u/s 154 of the Act is erroneous, and the same, therefore, ought to be deleted. 5. Considering the facts and circumstances of the case and in law and without prejudice to the foregoing grounds of appeal
, considering the facts and circumstances of the case and in law, CIT(A) erred on facts and in law in confirming the addition of Rs.660401 to the income of the appellant and instead of actual additions of Rs.541997 as mentioned in the Assessment Order, and the same, without prejudice to the foregoing paragraphs be limited to Rs. 541997, and the difference of Rs. 118404 ought to be deleted. This being apparent on the basis of calculations itself, the same ought to have been allowed by the Assessing Officer,
6. The appellant prays that such other and/or further reliefs be granted to the appellant as the facts and circumstances of the case merit.
7. The appellant craves leave to add and/or alter and/or amend any ground(s) of appeal. The appellant craves to pray for an additional ground of appeal based on documents which are on record and file of the Assessing Officer.
8. Considering the facts and circumstances of the case and in law, the entire assessment made u/s 143(3) of the Act and subsequent rectification u/s 154 of the Act are bad in law since the Return of Income has been considered as defective and time for compliance for rectification being November 28, 2014, the same not being rectified till date and notice u/s 143(2) of the Act being the basis for scrutiny assessment u/s 143 of the Act being issued on September 22, 2014 i.e., before the time limit for rectifying the defective return of income expires.”
8. We Shall deal with the issues ground wise.
9. With regard to Ground No. 1, assessee has raised the ground that Ld.CIT(A) affirming the powers exercised by the Assessing Officer u/s.154 by the National Faceless Appeal Center is bad in law and void abinitio.
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(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust 10. Considering the facts on record, we observe that Assessing Officer has issued notices u/s. 154 and 155 of the Act and served the same to the assessee. It is fact on record that assessee has not made any submissions before the Assessing Officer or made any objection to above issues raised by the Assessing Officer in its notices. However, we observe that assessee also failed to object the same before the Ld.CIT(A). During hearing, Ld. AR of the assessee submitted that assessee has not appeared before the Assessing Officer to make objections, however, he raised the issue before us that this is the second round of appeal and in the first round of appeal, ITAT remitted the matter to the Ld.CIT(A) and after considering the submissions of both the parties, we observe that no doubt there are certain mistakes observed by the Assessing Officer and the same was communicated to the assessee. However, assessee has not responded and the Assessing Officer has made the addition without considering any material on record. However, assessee has submitted all the relevant information only before the Ld.CIT(A). Ld.CIT(A) has considered all the issues and decided the grounds as per the merits of the issues. Therefore, it is not proper at this stage to consider the Assessment Order passed by the Page No. | 6
(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust Assessing Officer is bad in law and void ab-initio. Accordingly, ground raised by the assessee is dismissed.
With regard to Ground No. 2, Ld. AR of the assessee submitted that assessee has not preferred to press this ground, accordingly, this grounds of appeal is dismissed as such.
12. With regard to Ground No. 3, Ld. AR of the assessee brought to our notice Para No. 8.3 of the appellate order and brought to our notice that the Assessing Officer has made the addition of ₹.39,647/- on account of difference in establishment expenses and Ld.CIT(A) has clearly observed that on-going through the income and expenditure statement, the Assessing Officer has not passed the speaking order and no such addition has been made in the original Assessment Order passed u/s. 143(3) of the Act. The scope of section 154 is restricted to mistakes apparent from record that are duly discernible from facts on record without going into any lengthy arguments with respect to interpretation of law. The working of the said disallowance has not been elaborated in the order. Ld. AR submitted that by observing the above, Ld.CIT(A) has observed that both Assessing Officer and appellant has failed to submit the show cause notices that led to the said
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(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust rectification in the appellate proceedings. Under these circumstances, in the interest of fair play and justice, Assessing Officer is directed to provide the details of the said addition to the appellant and permit the assessee to file reply within reasonable time and addition is to be made only if it is a mistake apparent from record.
Ld. AR submitted that can the Ld.CIT(A) remit this issue back to the file of the Assessing Officer particularly when assessee is not aware of this addition.
On the other hand, Ld. DR relied on the order of the Ld.CIT(A).
Considered the rival submissions and material placed on record, we observe from the facts on record and noticed that Assessing Officer has proposed the addition of ₹.39,647/- on account of difference in establishment expenses and it is fact on record that he has issued notice u/s. 154 of the Act, however, while passing the order u/s. 154 Assessing Officer has not discussed the issue under consideration and it is also fact on record that the Assessing Officer has completed the original assessment 143(3) and there is no scope for the Assessing Officer to initiate 154 proceedings when the issue is not mistake apparent on Page No. | 8
(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust record. Therefore, Ld.CIT(A) is wrong in remitting this issue back to the file of the Assessing Officer when the mistake is not apparent from the record. Therefore, there is no scope of rectification u/s. 154 of the Act. Accordingly, this ground of appeal is decided in favour of the assessee.
16. With regard to Ground No. 4 we observe that the Assessing Officer has disallowed the deduction claimed u/s. 11(2) of the Act to the extent of ₹.4,82,740/-. The assessee has claimed before the Ld.CIT(A) that this issue is debatable, hence disallowance u/s. 154 is not in order. However, Ld.CIT(A) has discussed in detail the issue relating to section 11(2) of the Act in his order and as per the provisions of section 11(2) of the Act, assessee has to file Form No. 10 before due date of furnishing of return of income to the Assessing Officer as per Rule 17(2) of I.T. Rules in order to carryforward the unutilised funds i.e., accumulated or set apart either in whole or in part for application to such purposes in India, to the subsequent assessment year.
17. In the given case, Ld.CIT(A) has brought on record that assessee did not set apart any income u/s 11(2) for the current year and also no such income was set apart in the earlier years as per audit report in Form 10B. He also brought on record, copy of the audit report in Page No. | 9
(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust Form-10B. Ld.CIT(A) further brought on record that assessee has only filed Form 10 through ITBA system only on 25.02.2021 whereas the extended due date for furnishing the return was 31.10.2013 for the current Assessment Year i.e. A.Y. 2013-14.
It clearly shows that assessee has not followed due process of law and rule prescribed for such accumulation or set-apart of the unutilised funds during this year. After considering the issue involved in this grounds of appeal we observe that assessee has not followed the due process of law and failed to submit Form 10 within the extended due date and it is noticed that assessee has filed Form 10 only on 25.02.2021. Therefore, the relief to the assessee is available only with the Income-tax Department or with CBDT for seeking extension of time and grant of plea, not in any Appellate Forum. Therefore, this grounds of appeal is accordingly dismissed.
19. With regard to Ground No. 6 and 7 which are general in nature and needs no specific adjudication. Accordingly, Ground Nos. 6 and 7 are dismissed.
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(A.Y: 2013-14) Narailwadi Mosque & Kabristan Trust 20. Assessee has raised additional ground i.e. Ground No. 8 in which assessee has submitted that the assessment u/s. 143(3) of the Act and rectification order u/s. 154 of the Act are bad in law considering the fact that Return of Income filed by the assessee is defective and time for compliance for rectification being 28.11.2014 and the same being not rectified till date. At the time of hearing, the above ground is not pressed nor made any submissions, accordingly, this ground of appeal is dismissed.
In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 29th May, 2023