ADARSH BAL NIKETAN,ROORKEE vs. ITO (EXEMPTION), DEHRADUN

That the Ld. CIT (A) has erred on facts and in law by not going through the provisions u/s 10(23)(vi) of the Income Tax Act,1961 while it was main grounds of appeal

The assessee is a society and granted registration u/s. 12AA of the Income-tax Act. The assessee was also holding exemption certificate u/s. 10(23C)(vi) of the Act. The assessee filed its return of income on 29.03.2016 wherein, the CPC found some defects and issued notice u/s. 139(9). In response, the assessee claimed to have rectified the defect and claimed exemption u/s. 10(23C)(vi)of the Act. However, the CPC rejected the return of income submitted in response to notice issued u/s. 139(9) of the Act and processed the original return of income u/s. 143(1) and thereby made an adjustment to the tune of Rs.3,46,69,080/- by denying the claim of exemption u/s. 11 and 12 as well as section 10(23C)(vi) of the Act. Aggrieved by the adjustment made by the CPC while processing the return of income u/s. 143(1), the assessee filed petition u/s. 154 of the Act with the Income-tax Officer (Exemption) whereby the Assessing Officer made an addition on account of short fall of application of income to the tune of Rs.12,15,966/- by disallowing the claim of depreciation of Rs.15,98,140/-. The assessee challenged the order passed u/s. 154 before the ld. CIT(A)and contended that the addition made by the Assessing Officer on account of short fall of utilization of income is not justified when the assessee submitted Form 10 to the department on 30.10.2016 by speed post dated 30.10.2016. The assessee further contended that the income is also exempt u/s. 10(23C)(vi) of the Act. The CIT(A) has dismissed the appeal of the assessee on technical ground of submitting the Form- 10 to the wrong authority and not to the concerned Assessing Officer. Even the claim of exemption u/s. 10(23C)(vi) was not considered by the ld. CIT(A).

Before the Tribunal, ld. AR of the assessee has submitted that the CIT(A) has dismissed the appeal of the assessee on technical ground without deciding the issue on merits. He has further submitted that the assessee relied upon various case laws on the point which were not considered and appreciated by the CIT(A). He has thus prayed that the matter may be set aside to the record of the Assessing Officer for considering the claim of exemption u/s. 10(23C)(vi) of the Act, as the assessee is holding the exemption certificate. 4. On the other hand, ld. DR has relied upon the orders of the authorities below. 5. Having considered the rival submissions and going through the impugned orders of the Assessing Officer as well as CIT(A), we note that the Assessing Officer while passing the order u/s. 154 dated 22.05.2018, has accepted the fact that the assessee is registered u/s. 12A of the Act, but has raised the objection that the assessee should have filed Form No. 10 as per provisions of the Act and Rules made in this regard. Assessing Officer has particularly raised this issue that the Form should have been filed electronically. Accordingly, the Assessing Officer denied the deemed application of income of Rs.12,15,956/- for want of any supporting evidence. The CIT(A) has also dismissed the appeal of the assessee on technical ground that the Form-10 was submitted by the assessee to a wrong authority than the concerned Assessing Officer. Neither the Assessing Officer nor CIT(A) has disputed the fact that the assessee has sent the form-10 vide speed post dated 30.03.2016 which is within the limitation period as prescribed by the Rules. Further the Assessing Officer as well as the CIT(A) has not considered the claim of the assessee u/s. 10(23C)(vi) of the Act. Accordingly, in the facts and circumstances of the case and in the interest of justice, the matter is set aside to the record of the Assessing Officer for deciding the issue of exemption u/s. 10(23C)(vi) after giving an opportunity of hearing to the assessee.