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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal filed by the assessee is arising out of the order of the Commissioner of Income Tax, National Faceless Appeal Centre, Delhi in Order No.ITBA/NFAC/S/250/2022-23/1047148387(1) dated 09.11.2022. The assessment was framed by the Income Tax Officer, Exemptions Ward, Madurai for the assessment year 2017-18 u/s.144
- 2 - ITA No.23/Chny/2023 of the Income Tax Act, 1961 (hereinafter ‘the Act’), vide order dated 29.12.2019.
The first issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of AO in framing best judgment assessment u/s.144 of the Act by holding that the return filed is belated one and assessee has not responded to notice issued u/s.142(1) of the Act. For this, assessee has raised the following ten grounds:- 2. The order of the assessing officer stating that since the assessee failed to comply to the notice u/s 142 (1) and therefore proceeded to assess u/s 144 of the Income tax Act is against law and facts since the assessee on his own filed return of income and filed another return in response to notice u/s 142(1); 3. The action of the assessing officer simply not accepting the return of income filed by the assessee when the assessing officer himself has issued notice u/s 142(1); 4. The denial of benefits of sec. 11 and 12 and the action of the Commissioner of Income tax (Appeals) upholding the actions of the assessing officer is not as per law only because the return is a belated one; 5. The assessing officer and learned Commissioner of Income tax (Appeals) have failed to note that even though the return is filed belatedly (including return filed u/s 148) the benefits of sections 11 to be given as per law. (ITAT, Delhi in ITA Nos.2733.2734 of 2018 in the case of United Educational Society, Gaziabad Vs. JCIT, Range 2, Gaziabad); 6. The learned assessing officer and the learned Commissioner of Income tax (Appeals) have failed to note that when a public charitable trust register u/s 12 A, had substantially satisfied the conditions for availing the benefits of exemptions as trust, should not be denied merely on bar of limitation of furnishing the audit report in Form 10 B. (Sarvodaya Charitable Trust Vs Income tax Officer (Exemptions) (High Court of Gujarat (2021 – 278 TAXMAN 148/125 taxmann (Gujarat);
- 3 - ITA No.23/Chny/2023 7. The action of the action of assessing officer assessing the bank deposits as "unexplained money u/s 69 A" of the Income tax Act is against law without adducing any valid reasons; 8. The learned Commissioner of income tax (Appeals) upheld the action of assessing officer for provoking the section 69 A of the act and failed to note that the provisions of section 69A are not applicable in the case of the appellant trust since all the valuables were recorded in the books of accounts and were produced before the assessing officer at time of assessment proceedings; 9. The assessing officer has failed to note that the assessee has duly responded to various notices and furnished the details on various dates and on various modes viz. by courier, e mail and also e-proceedings. Therefore the action of the assessing officer to assess the income u/s 144 is not correct and against law; 10. For these grounds and such other grounds that may be adduced at the time of hearing, it is prayed that the order of the assessing officer and learned Commissioner of Income tax (Appeals)- may be cancelled and render justice.
At the outset, the ld.counsel for the assessee took us through the assessment order and stated that the AO framed assessment u/s.144 of the Act dated 26.12.2019 and also not allowed the claim of deduction u/s.11 of the Act by treating the assessee a AOP as against claimed by assessee as charitable trust. The ld.counsel for the assessee explained that the assessee’s trust has been engaged in running schools in the name of KSS Periakaruppa Nadar Sivakasi Jaycees Nursery School and KAT Dharmaraj Nadar Rojapputhayammal Sivakasi Jaycees Matriculation Higher Secondary School during the financial year 2016-17. He took us through the assessment order and we noticed that the assessee has not filed return on due date as prescribed u/s.139(1)of the Act for the
- 4 - ITA No.23/Chny/2023 relevant assessment year 2017-18 and accordingly, the AO on getting AIR information noted that the assessee has made substantial cash deposit during demonetization period in demonetized currency of Rs.500/- and Rs.1000/- notes to the extent of Rs.14,09,338/-in its current account maintained with Tamilnad Mercantile Bank Ltd., Sivakasi. According to AO, the assessee has not filed its return of income u/s.139(1) of the Act or u/s.139(4C)(e) of the Act in response to notice issued u/s.142(1) of the Act. According to AO, assessee did not file Form No.10BB and hence, the AO proceeded to make best judgement assessment u/s.144(1B) of the Act and accordingly, he computed assessee’s total income by making disallowance as under:- Loss as per income and expenditure account (-) Rs.2,15,544 Add: Corpus donation disallowed vide para 6.6 above Rs.3,06,088 Depreciation disallowed vide para 6.7.2 above Rs.30,00,000 Disallowance of expenses vide para 6.9.3 Rs.2,14,487 Disallowance of expenses vide para 6.9.4 Rs.8,76,436 Disallowance of expenses vide para 6.9.5 Rs.2,98,800 Disallowance of expenses vide para 6.9.6 Rs.3,00,000 Disallowance of expenses vide para 6.9.7 Rs.12,00,000 Disallowance of expenses vide para 6.9.8 Rs.2,00,000 Disallowance of expenses vide para 6.9.9 Rs.2,00,000 Disallowance of expenses vide para 6.9.10 Rs.2,00,000 Disallowance of expenses vide para 6.9.11 Rs.7,00,000 Total Rs.72,80,267 Investment not fully disclosed u/s.69B vide para 6.5 Rs.1,26,75,502 Total income Rs.1,99,55,769
Aggrieved, assessee preferred appeal before CIT(A).
- 5 - ITA No.23/Chny/2023 4. The CIT(A) also not provided opportunity of being heard to the assessee as the appeal was not fixed for hearing as per the appellate order and even the order of CIT(A) is totally non-speaking and simpliciter by giving following observation in para 8.2, confirmed the action of AO and dismissed the appeal of assessee. “8.2 I have perused the matter. The deductions and exemption available under the IT Act to trusts are subject to the return of income and all accompanying documents and certifications being filed in time. Since the appellant failed to file its return of income for AY 2007-08 within the prescribed timeline of 31.03.2018, the benefits can no longer be granted to it. The AO’s action in thus denying the benefit u/s.11 & 12 of the IT Act are upheld and the ground of appeal in this respect is dismissed.”
When these facts were pointed out to ld.Senior DR, he could not controvert the above fact situation but agreed that due to non- cooperation of the assessee and non-filing of return u/s.139(1) or 139(4) of the Act, the AO has made best judgment assessment u/s.144 of the Act. He also stated that the CIT(A) also dismissed the appeal as the assessee has not filed any evidence before him.
To counter this, the ld.counsel for the assessee only requested that matter can be set aside and opportunity may be allowed to assessee for representing its case and filling of details to prove the claim of deduction u/s.11 of the Act and also to prove other disallowances made by the AO with documentary evidences.
- 6 - ITA No.23/Chny/2023 7. After hearing rival contentions and going through the facts of the case, we noted that neither the AO nor the CIT(A) has considered the issue of claim of deduction u/s.11 of the Act and addition made u/s.69B of the Act being investment of Rs.1,26,75,502/-. As the assessee was not allowed proper opportunity of being heard and even the order of CIT(A) is totally non-speaking, we set aside the order of CIT(A) and that of the AO also and remand the matter back to the file of the AO for fresh adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 12th October, 2023 at Chennai.
Sd/- Sd/- (महावीर �सह ) (मनोज कुमार अ�वाल) (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा�य� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER चे�ई/Chennai, �दनांक/Dated, the 12th October, 2023 RSR आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकरआयु� /CIT 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF.