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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI MANISH AGARWAL
Per Bench : This is an appeal filed by the assessee against the order dated 12.11.2021, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2021- 22/1036890501(1) for the assessment year 2016-2017. 2. It was submitted by the ld. AR that the assessee is a trust, which has constructed a Temple, namely Shree Swami Narayan Main Temple at Puri. For the purpose of this construction of the Temple, a trust had been created vide trust deed dated 25.03.2017. The assessee trust had sought registration u/s.12A of the Act on 14.07.2016. Subsequently, a manual application for registration had been filed on 08.06.2017. The assessee had been granted registration u/s.12A of the Act w.e.f. 8.6.2017 on the basis of the manual application. Subsequently, an order u/s.154 of the Act
2 came to be passed and the trust was granted registration as a charitable trust w.e.f A.Y.2017-2018 i.e. 01.04.2016. The assessee filed its return of income for the impugned assessment year on 15.04.2017. It was the submission that the return filed by the assessee came to be taken up for limited scrutiny on the issue that “the return filed after 07.11.2016 and there was cash deposit during the demonetization period”. It was the submission that the assessment year 2016-2017 encompassed the period 01.04.2015 to 31.03.2016 and consequently as the demonetization took place on 08.11.2016, there could be no question of cash deposit during the demonetization period which could be considered in the assessment for the assessment year 2016-2017. It was further submitted that in the assessment, the AO had brought to tax the corpus donations of Rs.1,36,65,893/- which consisted of donations received through cheque to an extent of Rs.1,19,17,893/- and donations received in cash to an extent of Rs.16,44,000/-. It was the submission that the scope of the limited scrutiny had been widened by the AO to look into the corpus donations received by the assessee and this has been done without getting the approval from the competent authority. It was the submission that on appeal, the ld. CIT(A) has dismissed the appeal of the assessee. It was the submission that, at the outset, the corpus donations received were clearly for temple construction for which the assessee has also produced receipts which are found at pages 52 to 65 in the paper book. A sample of the receipt is as follows :-
3
It was further submitted that as there has been violation, insofar as the limited scrutiny has been converted to a full scrutiny without taking requisite permission and approvals, the assessment is liable to be quashed.
In reply, ld. Sr. DR vehemently supported the orders of the ld. AO and ld. CIT(A).
We have considered the rival submissions. A perusal of the assessment order shows that the AO mentions that the assessee has claimed exemption u/s.10(46) of the Act. A perusal of the acknowledgement filed and the computation of income does not show any claim under Section 10(46) of the Act by the assessee. Further a perusal of the assessment order in 2nd para at page 3, the AO mentions that Rs.16,44,000/- was collected through “Hundi”, whereas the ld. AR submitted that these donations were cash collections made and receipts have also been issued. A perusal of the order of the ld. CIT(A) shows that 4 the ld. CIT(A) while dismissing the appeal of the assessee has held in para 6 of his order as follows :-
I have gone through all the details filed by the appellant Authorized Representative, Assessment Order and written submission of the appellant carefully. The following are the relevant facts of the case:-
The Appellant does not have Registration uls 12AA during the relevant AY. The Registration u/s 12AA was granted on 29/12/2017 w.e.f 08/06/2017. 2. The Appellant has filed the Return of Income on 15.04.2017. 3. Notice u/s 143(2) has been issued to the Assessee on 24.09.2018 through CASS on 24;09.2016. 4. There is no pending Assessment proceedings for 2016-17 before the AO as on date of Registration u/s 12AA i.e 29.12.2017 w.e.f.08.06.2017. 5. The most important thing is that the trust deed does not mention the building of a temple was one of the objective of the trust towards which the impugned amount was received as claimed by the assessee. Nor has assessee produced any document or resolution to this effect in front of the AO. Moreover, the assessee has made a facile submission before the AO that the amount will be refunded to the donors at the end of the year if it remains unspent. Hence, assessee’s ground that the amount concerned was received towards the corpus of the trust remains unsubstantiated.
The AO further records that the amounts that remained unutilized was added to the total income of the assessee for the year under consideration but the ld. CIT(A) in para 6 sub-para 5 mentions that the assessee has made a facile submission before the AO that the amount will be refunded to the donors at the end of the year if it is remained unspent. Thus, at the outset, there is absolute confusion in regard to the facts as recorded by the AO and as recorded by the ld. CIT(A).
Coming to the issue of conversion of limited scrutiny into a complete scrutiny, the Hon’ble Juri ictional High Court in the case of 5 Shivkumar Agrawal [1990] 186 ITR 734 (Orissa), has categorically held that when there is an error in the procedure then the issues must be restored to the point where the error in the procedure took place and the proceedings should restart from that point. In the present case, admittedly, the assessment order does not talk of the procedure being followed for conversion of the limited scrutiny to a complete scrutiny or for the purpose of widening the scope of the limited scrutiny to look into the issue of the corpus donations received by the assessee. This being so, in the interest of justice, we are of the view that as per the principles laid down by the Hon’ble Juri ictional High Court in the case of Shivkumar Agrawal, referred to supra, the issues in this appeal must be restored to the file of AO for readjudication after recording the correct facts and obtaining the necessary approvals should it be so required and after granting the assessee adequate opportunity of being heard. We order accordingly.
In the result, appeal of the assessee is partly allowed for statistical purposes. Order dictated and pronounced in the open court on 25/06/2024. (MANISH AGARWAL) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 25/06/2024 Prakash Kumar Mishra, Sr.P.S.
6 आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : अऩीऱाथी / The Appellant-
Shree Swaminarayan Temple Trust, Flat No.204, Bomikhal, Cuttack-751010 प्रत्यथी / The Respondent-
ITO, Exemption Ward, Bhubaneswar आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, कटक / DR,
ITAT, Cuttack 6. गार्ड पाईऱ / Guard file.
सत्यावऩत प्रतत ////
आदेशानुसार/ BY ORDER,
(