CONGREGATION OF THE SISTERS OF ST JOSEPH OF CLUNY,SACRED HEART CONVENT vs. INCOME TAX OFFICER, EXEMPTION WARD, RAJAHMUNDRY

In the above cited appeal, the Ld.CIT(A) has sustained the action of the Ld.AO, restricting the claim of expenditure incurred in terms of section 57(iii) of the Act to the tune of Rs.1.20 crores as against expenditure claimed to the tune of Rs.1.49 crores and consequently sustained that addition of such differential expenditure incurred by the Trust as not incurred for the purpose of earning “income from other sources” to the extent of Rs.29.84 lakhs and the same was treated as income of appellant in the computation of taxable income.

During the appeal proceedings before the Ld.CIT(A), the appellant has not complied with the three notices sent by the Office of Ld.CIT(A), despite the notices were issued with an interval of 3 months each. Since the appellant did not respond to the notices issued, the appeal of the assessee was dismissed by the Ld.CIT(A) and it was held that there is no infirmity in the assessment order.

The Ld.AR during the hearing proceedings before ITAT has requested for one more opportunity may be given in view of the fact that the appellant is a properly registered Trust admitting Nil income , all its activities are genuine and all receipts are spent for the charitable purposes mentioned in the bye laws.

The Ld.DR opposed the plea of giving one more opportunity to the appellant, because, reasonable opportunity was already given by the Office of the Ld.CIT(A) and hence, prayed for dismissal of the appeal.

After hearing both the sides, it is decided that a lenient view has to be taken, as the appellant is a Trust, actively taking up charitable activities and also due to the fact that there is no adverse finding by the Revenue with regard to violation of section 11, 12 and 13 of the Act, the Bench decides to give one more opportunity to the appellant Trust to represent its case before the Ld.CIT(A). But the fact remains that the appellant Trust has not responded to the three notices issued by the Ld.CIT(A) and hence, a nominal cost of Rs.5,000/- is imposed on the Trust, which should be paid to AP State Legal Services Authority within a month of receipt of this Order. The appellant should produce proof of payment of AP State Legal Services Authority to the Ld.CIT(A). Subject to the above condition, the issue is remitted back to the file of the Ld.CIT(A) and he is directed to pass an order afresh on merits, after giving reasonable opportunity.

In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 19th June, 2026.