NOBLE WELFARE AND CHRITABLE TRUST,DELHI vs. ITO WARD EXEMP-2(4), NEW DELHI

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ITA 9844/DEL/2019Status: DisposedITAT Delhi25 November 2022AY 2016-176 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the denial of exemption as the assessee failed to provide conclusive evidence to rebut the departmental authorities' findings regarding violations of Sections 13(1)(c) and 13(1)(d). The assessee also failed to appear or lead evidence before the Tribunal.

What were the facts?

The assessee, a charitable trust, filed a return declaring nil income after claiming exemption under Section 11. The Assessing Officer denied exemption for violating Sections 13(1)(c) and 13(1)(d) by advancing money to specified persons. The CIT(A) dismissed the appeal.

What were the issues?

Whether the denial of exemption under Sections 11 and 12 was justified due to alleged violations of Sections 13(1)(c) and 13(1)(d) by advancing funds to specified persons.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 13(1)(c),Section 13(1)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI

For Respondent: Shri Om Parkash, Sr. DR
Hearing: 30.08.2022Pronounced: 25.11.2022

ORDER This is an appeal by the assessee against order dated 31.10.2019 of learned Commissioner of Income-Tax (Appeals)-40, Delhi for the assessment year 2016-17.

2.

When the appeal was called for hearing, none appeared on behalf of the assessee to represent the case. Even, there is no application by the assessee seeking adjournment.

3.

Perusal of record reveals, though, multiple opportunities were given to the assessee earlier, however, on none of the occasions, the assessee did appear. It is further evident, notice of hearing repeatedly issued to the assessee have returned back unserved with the postal remarks ‘left’, though, notices were issued in the address provided in the appeal memo. These facts reveal complete lack of interest of assessee in pursuing the present appeal. Since sufficient opportunities have been given to assessee, which he has failed to avail, I proceed to dispose of the appeal ex parte qua the assessee after hearing the learned Departmental Representative.

4.

The effective grounds raised by the assessee are as under:

2. That on the facts and circumstances of the case and provisions of the law, the learned Commissioner of Income-Tax (Appeals) was not justified in sustaining the action of the Assessing Officer in computing the surplus of Rs.29,89,816 is against deficit of Rs.2,90,82,520/-. It is prayed that the addition being unwarranted be deleted.

3. That on the facts and circumstances of the case and provisions of the law, the learned Commissioner of Income-Tax (Appeals) was not justified in sustaining the action of the Assessing Officer in denying the exemption u/s 11 and 12 for alleged violation of section 13(1)(c) and 13(1)(d) of the Income-Tax Act and taxing the income of Trust as AOP for giving Rs.10,00,000 to M/s. Yuvraj Agro Foods Private Limited. Assessee has not made any violation of Section 13(1)(c) and section 13(1)(d) of the Income-Tax Act. It is prayed that the additions being unwarranted be deleted.

4. That on the facts and circumstances of the case and provisions of the law, the learned Commissioner of Income-Tax (Appeals) was not justified in sustaining the action of the Assessing Officer denying the exemption u/s 11 and 12 for alleged violation of section 13(1)(c) and 13(1)(d) of the Income-Tax Act and taxing the income of Trust as AOP for giving Rs.99,97,000 against a liability of Rs.40,56,580. It is prayed that denying u/s.11 and 12 and making the addition being unwarranted be deleted.

5. That on the facts and circumstances of the case and provisions of the law, the learned Commissioner of Income-Tax (Appeals) was not justified in sustaining the action of the Assessing Officer denying the exemption u/s 11 and 12 for alleged violation of section 13(1)(c) and 13(1)(d) of the Income-Tax Act and taxing the income of Trust as AOP for giving Rs.4,132/- as insurance of one of the property of Mr. Amit Saxena which was mortgaged by Trust for taking loan for extension of college campus. It is prayed that denying exemption u/s.11 and 12 and making the additions being unwarranted be deleted.

5.

Briefly the facts are assessee is a charitable trust registered under Section 12A of the Income-Tax Act, 1961. For the assessment year under dispute, the assessee filed its return of income on 17.10.2016 declaring nil income after claiming exemption under Section 11 of the Income-Tax Act, 1961. In course of assessment proceeding, the Assessing Officer noticed that the assessee is running an Engineering College and a Law College in Haryana. From the details furnished, he found that the assessee had given an advance of Rs.10,00,000 to M/s.

Yuvraj Agro Foods Pvt. Ltd. who is a specified person in terms of sec.

13(1)(c) and 13(1)(d) of the Act. He further found that substantial payments were made to M/s. Neeraj Agro Foods, wherein, one of the trustee is a partner. Being of the view that the advances to the concerned parties are in violation of sec. 13(1)(c) and 13(1)(d) of the Act, the Assessing Officer held that the assessee has to be assessed in the status of AOP without allowing the benefit of exemption under Sections 11 & 12 of the Act. Further, Assessing Officer held that the depreciation claimed on capital expenditure cannot be allowed as the cost of such assets has already been claimed as application of income.

Proceeding further, the Assessing Officer held that the interest expenditure claimed by the assessee is not allowable as the assessee lost its charitable status due to violation of sec. 13(1)(c) and 13(1)(d) of the Act. Accordingly, he disallowed 50% of the interest expenditure. Against the assessment order so passed, assessee preferred an appeal before learned Commissioner (Appeals).

However, finding no merit in the appeal of the assessee, learned Commissioner (Appeals) dismissed the appeal.

6.

I have considered the submissions of learned Departmental Representative and perused the material on record.

7.

It is evident, assessee’s claim of exemption under Section 11 of the Act as a charitable trust was denied by the Assessing Officer on the ground that the assessee had advanced money to specified persons in violation of sec. 13(1)(c) and 13(1)(d) of the Act. In this regard, the Assessing Officer has specifically alleged that the entities to whom the assessee had advanced money are closely related to the assessee trust since the trustees, one way or the other, are involved with such entities. The material on record reveals that the assessee has failed to rebut the aforesaid factual finding of the departmental authorities by bringing on record any concussive evidence. The factual position remained unaltered before me as well, since, the assessee has failed to appear and lead evidence to rebut the finding of the departmental authorities.

8.

In view of the aforesaid, I do not find any reason to interfere with the decision of learned Commissioner (Appeals).

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