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Income Tax Appellate Tribunal, ‘SMC’ BENCH VARANASI
Before: SHRI RAMIT KOCHAR & SHRI PAVAN KUMAR GADALE
BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER (A.Y: 2014-15) Central Charitable Trust Vs. Income Tax Officer Jafrapur- 276001, Exemption, Uttar Pradesh. WardAyakarBhawan, MaqboolAlam Road, Varanasi 221002 Uttar Pradesh PAN/GIR No. : AABTC4875G Appellant .. Respondent Appellant by : ShriArvind Shukla, Advocate Respondentby : Shri A.K. Singh, Sr.DR Date of Hearing 12.04.2023 Date of Pronouncement 12.04.2023 आदेश / O R D E R
PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi/CIT(A)passed u/s.250 of the Income Tax Act, 1961.The assessee has raised the following grounds of appeal: Central Charitable Trust - 2 - “1. Because the learned CIT(A) has erred in law as well as on facts in dismissing the appeal of the trust running educational institution without appreciating the facts and circumstances of the case in the correct perspective.
2. Because the learned AO as well as the learned CIT(A) have failed to appreciate that the assessee is engaged solely in running an educational institution having gross receipts below one crore and hence no part of his receipts/income was taxable by virtue of clear unambiguous provisions of section 10(232)(iiiad).
3. Because the authorities below have sought to deny the benefit available to the educational institution by clear provisions of section 10(23C)(iiiad) with unrelated provisions of section 11/12A when such sections should not be applied to the facts of the case.
4. Because the authorities below have sought to deny the benefit available to the educational institution on the basis of some inadvertent technical errors in filing return without appreciating the facts of the case.
5. Because the order is bad in law as well as on facts.”
2. The brief facts of the case are that, the assessee is a trust and has claimed that it is undertaking charitable activities including educational activities. The assessee was registered on 05.09.2008 and has Central Charitable Trust - 3 - claimed that it is complying with the objects as per the bylaws and maintaining regular books of account. The assessee has filed an application for Registration U/sec12AA of the Act on 08.04.2015,and the Registration was granted w.e.f. 01.04.2015.We are presently concerned with A.Y. 2014-15(previous year 2013-14).The assessee has filed the return of income for the A.Y. 2014-15 on 19.11.2014 disclosing a total income of Rs.NIL after claiming exemption u/s.11 and 12 of the Income-tax Act, 1961 of Rs.31,80,350/- , and Rs.12,00,000/- claiming as corpus donation as earmarked for construction of school building , as per statement of fact filed before ld. CIT(A).During the previous year, 2013-14, the assessee has claimed in statement of fact filed before ld. CIT(A) to have received contributions of Rs.12,00,000/- and treated as corpus donations and also education receipts of Rs.31,80,350/- all aggregating to Rs.43,80,350/- and claimed exemption u/s. 11 and 12 of the Actin the return of income filed with department(although the assessee was not holding registration u/s 12AA of the 1961 Act for the impugned assessment year 2014-15). Whereas the ACIT/CPC has treated the corpus ITA No. 12/Vns/2023 Central Charitable Trust - 4 - donations as the income of the assessee and the assessed total income of Rs.12,00,000/-and passed the order under Section 143(1) dated 12.03.2016, while granting deduction u/s 10A and 10AA of the Act.
Aggrieved by the order, the assessee has filed an appeal with the Ld.CIT(A). In the appellate proceedings ld. CIT(A) considered the grounds of appeal, findings of the Assessing Officer and the statement of facts and has issued notice of hearing on the various dates but there was no compliance. Therefore, the CIT(A) is of the opinion that the assessee is not interested in prosecuting the appeal and based on the information find that the assessee has not produced the evidence of granting registration U/sec12A of the Act and also corpus donation claimed as capital receipt by the assessee towards building construction, pertaining to building which was completed in the year 2010. The ld. CIT(A) dismissed this claim of Corpus donation of Rs. 12 lacs on the ground that the assessee is not registered u/s 12AA. The ld.CIT(A) dealt with the exemption in respect of Section 10A/10AA of the Act which is not part of the assessee claims and has confirmed the action of the Assessing Officer and Central Charitable Trust - 5 - dismissed the assessee appeal. The assessee could not establish its claim for deduction u/s 10(23C)(iiiad) as it could not prove that the assessee is existing solely for educational purposes and not for the purposes of profits. The CIT(A) issued notice u/s 250 to the assessee to substantiate and prove its claim u/s 10A/10AA as well 10(23C)(iiiad), but the assessee did not file details. The ld. CIT(A) directed AO to verify the claim as to eligibility u/s 10A/10AA and if not found correct, withdraw this exemption also. Aggrieved by the CIT(A)’s order, the assessee has filed an appeal before the Hon’ble Tribunal.
4.At the time of hearing, Ld.AR submitted that the CIT(A) has erred in sustaining the addition made by the CPC/Assessing Officer and the CIT(A) also erred in considering the corpus donation of Rs.12,00,000/- as income of the assessee and confirmed the addition. The ld. Counsel for the assessee claimed that the assessee is entitled for exemption u/s.10(23C)(iiiad) of the Act and whereas CPC in order U/sec143(1) of the Act has wrongly mentioned the claim under Section 10A/10AA of the Act. The Ld. AR also submitted that the assessee could not represent before the CIT(A) as Central Charitable Trust - 6 - the notices were not received. The Ld.AR emphasized that the assessee has received the Registration U/sec12AA of the Act w.e.f 1-4-2015and filed the paper book substantiating with the certificate of affiliation of CBSE, audit report, income tax return, activities of the institution and prayed for an opportunity of hearing before the lower authorities. Contra, Ld. DR relied on the order of the ld CIT(A) and submitted that the assessee has not mentioned these facts before the lower authorities.
5.We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no appearance in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer as per order U/sec143(1) of the Act . We find the Ld.CIT(A) has issued the notices of hearing referred at Para 4 of the order, but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal Central Charitable Trust - 7 - based on the information available on record has confirmed the addition of corpus donations of Rs.12 Lakhs and dealt on provisions U/sec 10A/10AA of the Act for grant of exemption to the tune of Rs. 31,80,530/-, wherein ld. CIT(A) observed that the assessee having failed to substantiate that it is engaged solely in educational activities not for profits, and directing AO to verify the claim of deduction u/s 10A/10AA and withdraw the same to the tune of Rs. 31,80,530/- if the assessee is not able to substantiate the claim. We find that the assessee has raised grounds of appeal challenging the addition of the assessing officer and there could be various reasons for non appearance which cannot be overruled. We considering the principles of natural justice shall provide one more opportunity of hearing to the assessee to substantiate the case before the CIT(A) along with evidences and information, with respect to issue of claim of corpus donation of Rs. 12 lacs as well as claim of deduction for alleged educational receipts to the tune of Rs.31,80,530/- . Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate ITA No. 12/Vns/2023 Central Charitable Trust - 8 - afresh on merits and the assessee should cooperate in submitting the information for early disposal of the appeal and allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 12.04.2023 and reduced to writing and signed on 01.05.2023.