GAYATRI GYAN MANDIR CHARITABLE TRUST,JUNAGADH vs. THE INCOME TAX OFFICER, WARD-1 (1), JUNAGADH

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ITA 304/RJT/2016Status: DisposedITAT Rajkot19 September 2019AY 2013-143 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that even without registration under section 12AA, only the net income should be taxed, not the gross income. The disallowance of expenses was an apparent error that should have been rectified.

What were the facts?

The assessee, a charitable trust, filed its return of income claiming expenses. The CPC processed the return under section 143(1) and disallowed the claimed expenses, taxing the gross income. An application under section 154 was rejected, and the CIT(A) upheld the rejection.

What were the issues?

Whether the disallowance of expenses by the CPC/AO under section 143(1) was an apparent error rectifiable under section 154, and if only net income should be taxed for a trust not registered under section 12AA.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 143(1),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: SHRI RAJPAL YADAV, HON’BLE & SHRI WASEEM AHMED HON’BLE

Hearing: 19/09/2019Pronounced: 19/09/2019

आयकर अपील�य अ�धकरण, राजकोट �यायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE SHRI RAJPAL YADAV, HON’BLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HON’BLE ACCOUNTANT MEMBER ITA No.304/RJT/2016 �नधा�रण वष�/ Asstt. Year: 2013-14 Gayatri Gyan Mandir Charitable Trust ITO, Ward-1(1) Junagadh. Vrundavan Complex Nr. Shitala Vs. Kund Road, Junagadh. (Applicant) (Responent) Assessee by : None Revenue by : Shri Anil Kumar Das, DR सुनवाई क� तार�ख/Date of Hearing : 19/09/2019 घोषणा क� तार�ख /Date of Pronouncement: 19/09/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against order of ld.CIT(A)-3, Rajkot dated 21.6.2016 passed for the Asstt.Year 2013-14.

2.

In response to the notice of hearing, an adjournment application was filed by Srhi Samir Jani, Tax Consultant. However, after going through the same, we do not find any force in this adjournment application. It is rejected.

3.

Brief facts of the case are that the assessee was not enjoying certificate of registration under section 12AA of the Act, though it claimed itself as a trust who is not having registration under the Income Tax Act. It has filed its return of income electronically on 8.1.2015 showing gross income of the trust

ITA No.304/RJT/2016 2 at Rs.6,65,190/-. The Trust has claimed expenses related to its activities at Rs.4,91,510/- and net income of Rs.1,73,680/- was required to be taxed. But CPC has transferred this case to the jurisdictional AO who has processed ITR and did not allow expenditure claimed by the assessee while processing return under section 143(1) of the Act.

4.

Dissatisfied with the action of the AO an application under section 154 of the Act was filed which was rejected by the AO. Dissatisfied with the order of the AO, the assessee filed an appeal before the ld.CIT(A). The ld.CIT(A) rejected the appeal of the assessee on the ground that adjustment or relief sought by the assessee does not fall within the ambit of prima facie apparent error which can be rectified under section 154 of the Act.

5.

With the assistance of the ld.DR, we have gone through the record carefully. It is pertinent to observe that even if the trust was not having registration under section 12AA then also only net income is required to be taxed and not the gross income. The assessee has not claimed any benefit under section 11(1)(a) or 11(1)(d) of the Act. Its grievance is that whatever activities it has been carried out, the expenses incurred for such activity deserves to be allowed, and only the net income is to be taxed. In other words, even if we construe that the activities of the assessee as business, for the sake of arguments, then also only net income has to be carved out for taxation. This was apparent error which ought not to have been processed by the CPC or the AO under section 143(1). The moment it was brought to the notice of the AO, he should have immediately rectified it. The scope of section 143(1) is not available with the AO to make such an adjustment. Therefore, the ld.CIT(A) has erred in putting the blame upon the assessee that it is seeking adjustment of such which are beyond the scope of section 154; the dispute is other way around. It is the AO who has exercised powers

ITA No.304/RJT/2016 3 beyond his jurisdiction under section 143(1), and immediately when such error was pointed out to him, he should have rectified the mistake. We accordingly allow the appeal of the assessee, and direct the AO to take only net income shown by the assessee for taxation.

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on 19th September, 2019 at Rajkot.

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

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