SHREE VEERESHWAR VIDYA VARDHAK SANGH,VARDHAK SANGH NALATWAD, MUDDEBIHAL BIJAPUR vs. INCOME TAX OFFICER EXEMPTIONS WARD 1, GULBARGA, GULBARGA, KARNATAKA

The brief facts of the case are that the assessee is a trust but not filed their return of income. The AO based on the information that the assessee had Time Deposits with Shri Sharan Veereshwar Sahakari Bank and received interest from two banks, but not filed their return of income, had initiated proceedings u/s. 147 of the Act. Several notices u/s. 142(1) as well as show cause notice were issued but the assessee had not furnished the details for the above said query. Further the AO verified the Income & Expenditure account and found that the assessee had debited the expenses of Rs. 2,24,89,447/- for which the assessee had not furnished any details about the application of funds and therefore the AO made the addition and framed the assessment u/s. 147 r.w.s. 144 of the Act.

Similarly, for the A.Y. 2019-20, the assessee not filed their return of income, in spite of the fact that they had Time Deposits, cash deposits, cash withdrawals and receipt of interest. The AO initiated proceedings u/s. 147 of the Act. The assessee thereafter filed return of income pursuant to notice issued u/s. 148 and claimed exemption u/s. 11 of the Act. The AO sought for the details which were not furnished to the satisfaction of AO and therefore an assessment u/s. 147 r.w.s. 144 was made.

Aggrieved with the order of the AO, the assessee filed appeals before the Ld.CIT(A) with a delay of 109 and 107 days. The Ld.CIT(A), after going through the delay condonation application, had dismissed the said condonation applications as no sufficient cause was made out by the assessee.

The assessee challenged both the orders before this Tribunal.

At the time of hearing, the Ld.AR submitted that the assessee because of their ignorance not followed up the assessment proceedings and therefore the details could not be produced and also the delay has been occurred and undertook to produce the documents if the appeals are remitted to the AO.

The Ld.DR submitted that the assessee had not co-operated with the Department and also not filed their return of income for both the years and therefore prayed to dismiss the appeals.

We have heard the arguments of both sides and perused the materials available on record.

The assessments have been framed u/s. 144 of the Act, since the assessee had not furnished the details. The Ld.CIT(A) had dismissed the appeals on the ground of limitation. Both the authorities did not have an opportunity to decide the issues on merits. Even though the assessee is a trust and claimed exemption u/s. 11 of the Act, the details called for by the AO were not furnished. The assessee now undertook to produce the details and submitted that the delay in filing the appeals before the Ld.CIT(A) may be condoned and the issue may be remitted to the AO for fresh consideration.

Considering the fact that the assessee is a trust and claimed the entire income as exemption u/s. 11 of the Act, in the interest of justice, we are inclined to set aside the orders of the lower authorities in respect of the A.Ys. 2020-21 and 2019-20 and remit these issues to the file of the AO for fresh consideration in accordance with law. We also grant liberty to the assessee to produce the necessary documents at the time of remand proceedings and direct the assessee to co-operate with the AO to expedite the assessment proceedings. We are giving the assessee the indulgence on the condition that the assessee should deposit a sum of Rs. 5,000/- as cost in each appeal towards the Prime Minister’s National Relief Fund within a period of four weeks from the date of receipt of this order.

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