KALOL SEVA SARVJANIK TRUST,MEHSANA vs. ITO (EXEMPTION), PALANPUR

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ITA 2295/AHD/2017Status: DisposedITAT Ahmedabad18 April 2019AY 2013-143 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found the addition disproportionate to the assessee's negligence and, in the interest of justice, granted one more opportunity to the assessee to submit explanations before the AO. A cost of Rs. 10,000 was imposed on the assessee.

What were the facts?

The assessee, a charitable trust, failed to provide explanations to the AO regarding cash deposits in its bank accounts, leading to an ex parte assessment. The CIT(A) also did not provide relief. The assessee claimed a communication gap with its tax consultant as the reason for non-compliance.

What were the issues?

Whether the ex parte addition made by the AO on account of unexplained cash credits was justified without providing the assessee an opportunity to explain, and if the penalty was proportionate to the negligence.

Which sections of the Income-tax Act were involved?

Section 144,Section 143(3),Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘C’

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

For Appellant: Shri Vipul Khandhar
Hearing: 27/03/2019

PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal against order of the ld.CIT(A), Gandhinagar dated 8.9.2017 passed for the Asstt.Year 2013-14.

2.

The assessee has taken three grounds of appeal. It is pleaded that the ld.CIT(A) has erred in confirming addition of Rs.35,59,620/- which was added by the AO in an ex parte assessment order passed under section 144 r.w.s. 143 (3) of the Income Tax Act with the aid of section 68.

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3.

With the assistance of the ld.representatives, we have gone through the record carefully. It emerges out from the record that the assessee is a charitable trust. It has filed return of income on 31.3.2015 electronically declaring total income at Rs.79,470/-. The case of the assessee was selected for scrutiny assessment. The AO received AIR information showing that the assessee has made deposits in cash in its bank accounts. Hence, the AO sought its explanation about the source of such deposits. The assessee did not respond to such show cause notice, and under compelling circumstances, the ld.AO has passed the ex parte order. He treated such deposits as unexplained cash credit. Appeal to the ld.CIT(A) did not bring any relief to the assessee.

4.

Before us, the ld.counsel for the assessee contended that tax consultant of the assessee trust did not advise properly for the requirement to furnish all these details. He filed paper book containing 123 pages, wherein he has annexed profit & loss account, balance sheet, ledger account, donation register, salary register etc. The ld.counsel for the assessee submitted that on account of communication gap between the assessee-trust and erstwhile tax consultant, the assessee could not submit these details, otherwise the assessee has been maintaining all such details. The ld.DR contended that the assessee has not only failed to submit before the AO, but before the ld.CIT(A) also. Hence, it does not deserve to give any leniency on this count.

5.

On due consideration of the above facts, we find that the assessee is little negligent in prosecuting its income tax proceedings before the ld.AO. However, punishment in the shape of tax liability on addition of Rs.35,59,620/- if weighed against this negligence, then punishment is

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disproportionate to the negligence. It is also pertinent to note that the assessee is a charitable trust. It would not have any taxable income, if everything could have been explained in a proper manner. Considering all these facts, we are of the view that in the interest of justice, one more chance be given to the assessee for submitting explanation on this issue before the ld.AO. However, we do not absolve the conduct of the assessee, and therefore, impose a cost of Rs.10,000/- (Rupees Ten Thousand) on the assessee. The assessee is directed to submit copy of this order before the AO within one month from the receipt of order and appear before him. It shall deposit Rs.10,000/- (Rupees Ten thousand) with the Government Treasury and furnish evidence to the AO. The ld.AO shall reexamine all these issues, and re-adjudicate them. The assessee will be at liberty to submit any details in support of its case before the AO.

6.

The observations made by us will not impair or injure the case of the AO and will not cause any prejudice to the defence/explanation of the assessee.

7.

In the result, appeal of the assessee is allowed for statistical purpose.

Pronounced in the Open Court on 18th April, 2019.

Sd/- Sd/- (WASEEM AHMED) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER

Ahmedabad; Dated, 18/04/2019

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