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Facts
The assessee, a charitable trust, filed its return of income for AY 2016-17 declaring NIL income. The return was selected for scrutiny due to a large deduction claimed under Section 57. The assessee failed to provide details and explanations to the AO and CIT(A), leading to disallowance of expenses and depreciation.
Held
The Tribunal held that in the interest of justice and fair play, the assessee should be granted one more opportunity to represent its case on merits. The matter was restored to the AO for de novo adjudication after providing due opportunity of hearing.
Key Issues
Whether the assessee should be granted an opportunity to present its case on merits before the AO when it failed to appear before the AO and CIT(A) and provide necessary details.
Sections Cited
250, 12A, 57, 143(2), 142(1), 144, 11(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K(SMC
Before: SHRI SANDEEP SINGH KARHAILSHRI GIRISH AGRAWAL
Date of Hearing – 26/08/2025 Date of Order - 28/08/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], under section 250 of the Income Tax Act, 1961 (“the Act”), for the assessment year 2016-17.
Having considered the submissions of the assessee, the delay in filing the present appeal is condoned.
In this appeal, the assessee has raised the following grounds: –
ITA No.3276/Mum/2025 (A.Y. 2016-17) 2
“Being aggrieved by the order of the Commissioner of Income Tax (Appeals), the Appellant submits herewith the following Grounds of Appeal (which are taken up without prejudice to each other) for your consideration: On the facts and circumstances of the case and in law, CIT(A) dismissed the Appeal filed by the Appellant on 7th September 2023 by issuing order u/s 250 (Order No. ITBA/NFAC/S/250/2023-24/1055814403(1)) due to absence of any explanation and supporting evidence. The main challenge of the appellant is that the CIT(A) should not have dismissed the appeal because the Hearing Notices received u/s 250 were received by the Ex-Office bearers and the present Officer was unaware of the Notices received, hence it was treated as non-compliance of the notices. In the view held CIT (Central) Nagpur Vs Premkumar Arjundas Luthra (HUF) (Bombay High Court) Appeal No 2336 of 2013 dated 25-04-2016, The Appellate tribunal ordered that the law does not empower the CIT(A)to dismiss the appeal for non-prosecution as it is evident from the provisions of the Act. Additionally, The Appellant has Registered Head Office Situated at New Delhi Holding PAN "AAATT2930J" & is registered U/s 12A(a), However due to the lack of knowledge Mumbai Branch office bearers had applied for additional PAN "AABTT6522B" & filed Income Tax Return under that PAN. That the Appellant craves leave to add, amend, alter or delete any of the above Grounds of Appeal before or at the time of hearing of the Appeal.”
4. The brief facts of the case are that the assessee is a trust registered as a charitable organisation with the Charity Commissioner, Mumbai and with the learned Commissioner of Income Tax (Exemptions) under section 12A of the Act. The assessee is an association founded for the benefit of the trained nurses in India (Maharashtra Branch). For the year under consideration, the assessee filed its return of income on 24/01/2017, declaring a total income of INR Nil. Along with the return of income, the assessee filed its income and expenditure account, balance sheet and Audit Report under Form No.10B. The return filed by the assessee was selected for scrutiny on the basis of a large deduction claimed under section 57 of the Act. Accordingly, statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. In the notices issued under section 142(1) of the Act, the (A.Y. 2016-17) 3 assessee was specifically asked to provide details of the expenditure claimed under section 57 of the Act against the income from other sources. However, despite multiple opportunities being granted, the assessee failed to respond to the statutory notices, and no submission/explanation whatsoever was furnished to the finalisation of the assessment. Accordingly, the Assessing Officer (“AO”) proceeded to complete the assessment on the basis of the material available on record on a best judgment basis, and vide order dated 15/12/2018 passed under section 144 of the Act, the expenses amounting to INR 25,15,731 claimed under section 57 of the Act were disallowed. Further, the AO disallowed the depreciation of INR 9180 under section 11(6) of the Act.
5. Even before the learned CIT(A), the assessee did not comply with any of the hearing notices, and no details/submissions were filed against the additions made by the AO. Accordingly, the learned CIT(A), vide impugned order, upheld the additions made by the AO. Being aggrieved, the assessee is in appeal before us.
6. It is evident from the record that no details were submitted by the assessee before the AO or the learned CIT(A), and accordingly, impugned additions were made, which were affirmed by the learned CIT(A). In the present appeal before us, the assessee is duly represented by the learned Authorized Representative and wishes to pursue the litigation against the addition made by the AO.
ITA No.3276/Mum/2025 (A.Y. 2016-17) 4
In the facts and circumstances as noted above, we are of the considered view that, in the interest of justice and fair play, the assessee be granted one more opportunity to represent its case on merits and produce all the documents in support of its claim. Since in the present case, the assessee neither appeared before the AO nor before the learned CIT(A), we deem it fit and proper to restore the matter to the file of the jurisdictional AO for de novo adjudication on merits after considering all the details/submissions as may be filed by the assessee and after providing due opportunity of hearing to the assessee. The assessee is directed to cooperate in the assessment proceedings and furnish all the details as may be sought by the AO for complete adjudication. As the matter is being restored to the jurisdictional AO for adjudication on its merits, the other grievance raised by the assessee in the present appeal does not require adjudication at this stage. Accordingly, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 28/08/2025