SHRIMAN BASTIRAMJI SARDA CHARITABLE TRUST,NASHIK, PUNE vs. ITO (EXEMPTION), WARD-1, NASHIK, NASHIK, PUNE

Facts of the case, in brief, are that the assessee is a trust registered under the Mumbai Public Trust Act, 1950. It is also registered u/s 12A as well as recognized for exemption u/s 80G of the Act. The assessee trust filed its return of income for AY 2011-12 on 30.09.2011. The case of the assessee was selected for scrutiny and order u/s 143(3) was passed. Subsequently, the case of the assessee was reopened by recording reasons as per provisions of section 147 and notice u/s 148 was issued on 23.03.2018, in response to which the assessee filed its return of income. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 147 of the Act on 26.12.2018 determining the total income of the assessee at Rs.1,71,21,260/- by making various additions.

On appeal, the Ld. CIT(A) gave part relief to the assessee. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising following consolidated/amended grounds of appeal : “Amended

On the facts and circumstances of the case and in law, the Learned A.O. erred in disallowing expenditure of Rs. 1,58,790/- incurred towards object of the trust claimed u/s 11 of the Act. Further, the said disallowance has been inadvertently stated by the Ld. CIT(A) at ₹16,02,361/- in the appellate order.

On the facts and circumstances of the case and in law, the Ld. A.O. erred in making an addition on account of alleged notional interest income amounting to 15,78,828/-, which was deleted by the Ld. CIT(A). However, while granting relief inadvertently, inadvertently the said amount has been stated at 27,44,649/-.

On the facts and circumstances of the case and in law, the Learned A.O. erred in making addition of Rs. 81,04,249/- on account of purchase of assets, which ground remained to be adjudicated by the Ld. CIT(A).

On the facts and circumstances of the case and in law, the Assessment order passed by the Learned A.O. is bad in law.”

At the outset, the Ld. Counsel for the assessee submitted that the disallowance of expenditure of Rs.1,58,790/- made by the AO is not justified, since, the AO has not asked any query on this issue in the final show cause notice for which the assessee could not file any details. The Ld. CIT(A) has upheld the addition on the basis of the assessment order.

Referring to page 1 of the paper book, he drew the attention of the Bench to the same and submitted that in the final show cause notice dated 13.12.2018 there is no mention of any query regarding the amount of Rs.16,02,361/- incurred towards object of the trust. Referring to CBDT Instruction No.20/2015 (F.No.225/269/2015-ITA-II) dated 29.12.2015 he drew the attention to the Bench to para 4 of the said instruction which reads as under :

Referring to the decision of the Hon’ble Bombay High Court in the case of Vivek Jaisingh Asher Vs. ITO reported in (2024) 299 Taxman 222 (Bom.), he submitted that no addition can be made without issuing proper show cause notice. He accordingly submitted that since the AO in the final show cause notice has not put any query to the assessee on this issue, therefore, the order of the Ld. CIT(A) sustaining the addition made by the AO is not justified and the same is liable to be deleted.

In his alternate contention, he submitted that given an opportunity, the assessee is in a position to substantiate his case by filing the requisite details of expenditure of Rs.1,58,790/- incurred towards object of the trust claimed u/s 11 of the Act.

So far as the second issue is concerned, the Ld. AR submitted that the Ld. CIT(A) while deleting the addition of Rs.15,78,828/- made by the AO has inadvertently mentioned the same at Rs.27,44,649/-. He submitted that there is no such addition made by the AO in the body of the assessment order. He, accordingly prayed that this issue may be restored to the file of the Ld. CIT(A) with a direction to rectify the same.

So far as the third issue is concerned, the Ld. AR submitted that although a specific ground was raised before the Ld. CIT(A) challenging the addition of Rs.81,04,249/- made by the AO on account of purchase of assets, however, he has not adjudicated this ground. Therefore, he has no objection if this issue is restored to the file of the Ld. CIT(A) with a direction to adjudicate the same afresh.

The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) and submitted that the AO in the questionnaire attached notice u/s 142(1) of the Act has asked the assessee to produce all the relevant details. Therefore, merely because in the final show cause notice no query has been raised, the same cannot be a ground to delete the addition.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. So far as the first issue is concerned, we find the AO, while disallowing Rs.1,58,790/- incurred towards object of the trust, has not given any opportunity to the assessee in the final show cause notice. Therefore, we find merit in the arguments advanced by the Ld. AR that without putting any query to the assessee, the AO could not have made the addition. The Ld. CIT(A) has also not granted any opportunity to the assessee to substantiate the same by filing the requisite details. So far as the second issue is concerned, we find the AO has made addition of Rs.15,78,828/- on account of notional interest income. However the Ld. CIT(A) has mentioned the same as Rs.27,44,649/-. It is not known from where he got this figures. So far as the third issue is concerned, we find that although a specific ground was taken before the Ld. CIT(A) challenging the addition of Rs.81,04,249/- made by the AO on account of purchase of assets. However, he has not adjudicated the said ground. In view of the above discussion, we deem it proper to restore all the above issues back to the file of the Ld. CIT(A) with a direction to adjudicate the same afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes. ITA No. 284/PUN/2026, AY 2016-17

Facts of the case in brief that the Assessing Officer in the instant case completed the assessment u/s 143(3) of the Act on 26.12.2018 determining the total income of the assessee at Rs.1,06,33,717/- as against the deficit income and expenditure of Rs.(-)13,29,663/- by making various additions.

On appeal, the Ld. CIT(A) gave part relief to the assessee. Aggrieved with such order, the assessee is in appeal before the Tribunal by raising following grounds of appeal : “Being aggrieved by the order passed by the Learned Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals) (CIT(A)) under section (u/s.) 250 of the Income Tax Act ('the Act'), your Appellant prefers an appeal on the following grounds, which it is prayed, may be considered without prejudice to one another.

The Ld. Counsel for the assessee at the outset submitted that the AO in the final show cause notice has not raised any query on the issue of expenditure of Rs.16,02,361/- for which the assessee did not submit any details. The Ld. CIT(A) without giving any opportunity to the assessee upheld the addition made by the AO. He referred to the decision of the Hon’ble Bombay High Court cited (supra) and CBDT Instruction (supra) and submitted that the addition made by the AO and upheld by the Ld. CIT(A) should be deleted. In his alternate submission, he submitted that he has no objection if the matter is referred to the file of the AO with a direction to decide the same by giving an opportunity to the assessee to substantiate the expenditure by providing relevant details.

The Ld. DR on the other hand while supporting the order of the Ld. CIT(A) and AO submitted that the AO in the questionnaire attached notice u/s 142(1) of the Act had asked the assessee to produce all the relevant details. Therefore, merely because in the final show cause notice no query has been raised, the same cannot be a ground to delete the addition.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is the submission of the Ld. Counsel for the assessee that since the AO did not put any query on this issue in the final show cause notice, the assessee could not file any details to substantiate the expenditure of Rs.16,02,361/-. We find although the AO has not put any query on this issue in the final show cause notice, however, in the initial questionnaire issued along with the notice u/s 142(1) of the Act, he has called for various details. Therefore, the decision relied on by the Ld. Counsel for the assessee and CBDT Circular are not applicable. However since admittedly the AO has not raised any query on this issue in the final show cause notice, therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it fit to restore the issue to the file of the AO with a direction to give one final opportunity to the assessee to substantiate his case by filing the requisite details regarding the expenditure of Rs.16,02,361/- incurred towards object of the trust and decide the issue as per fact and law. The assessee is also hereby directed to submit all the details on the appointed date without seeking any adjournment under any pretext failing which the AO at liberty to pass appropriate order as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purpose.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.

The concerned Pr.CIT, Pune

DR, ITAT, ‘B’ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, ////