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Facts
The assessee trust challenged the CIT(A)'s order upholding the AO's disallowance of accumulation under Section 11(2) of the Income Tax Act due to late filing of Form 10 and vague purpose. The CIT(A) dismissed the appeal for non-compliance with notices.
Held
The Tribunal found that the lower authorities did not decide the issue on merits and that the assessee was not given a sufficient opportunity to present its case. The case was remanded to the CIT(A) for de novo adjudication.
Key Issues
Whether the assessee was denied principles of natural justice and whether the disallowance of accumulation under Section 11(2) was decided on merits.
Sections Cited
11(2), 11(5), 12A, 11, 250, 143(1), 143(2), 142(1), 119(2)(b), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
(Assessment Year: 2017-18) Bombay Education Society The Assistant Commissioner of 24, Christ Church School Staff Income Tax, Exem, Circle 1, Quarters, Clare Road, Byculla, Mumbai Vs. Mumbai. – 400 008. PAN/GIR No. AAATB3089Q (Appellant) : (Respondent) Assessee by : Shri Sanjay R. Parikh Respondent by : Shri Leyaqat Ali Aafaqui, SR DR Date of Hearing : 26.06.2025 Date of Pronouncement : 31.07.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18.
The assessee has raised the following grounds of appeal: A) Principles of Natural Justice Violated 1) The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)] erred on facts and in law in not giving a reasonable and sufficient opportunity of being heard before passing the order w/s. 250 of the Income Tax Act. 2) The learned CIT(A) failed to appreciate that the appellant was prevented by a reasonable and sufficient cause (i.e. being under a bona fide belief that their appeal (A.Y. 2025) Bombay Education Society would be heard only after receipt of Remand Report) for furnishing the details and explanations called for by the CIT(A). 3) As principles of natural justice have been violated, appellant prays that the order u/s. 250 may be set aside and CIT(A) may be directed to pass an order after giving a reasonable and sufficient opportunity of being heard to the appellant. B) Not allowing benefit of accumulation u/s. 11(2)-Rs. 5,20,04,190/- 4) The learned CIT(A) erred on facts and in law in not allowing benefit of accumulation u/s. 11(2) of Rs. 5,20,04,190/- by holding that the appellant had not submitted any documentary evidence during the appellate proceedings to substantiate their claim and that the appellant had not invested in the prescribed mode u/s. 11(5). 5) Appellant prays that your honour hold that the appellant was entitled to accumulation u/s. 11(2) of Rs. 5,20,04,190/- and the AO may be directed to allow the same to the appellant. C) General 6) The above grounds of appeal
are without prejudice to one another and the appellant craves leave to add, alter, amend, delete or modify any of the above grounds of appeal.”
3. Brief facts of the case are that the assessee trust is registered as a charitable organization u/s. 12A of the Act vide registration no. INS/10673, dated 31.07.1975 and has also registered with the Charity Commissioner, Mumbai, where the assessee has claimed exemption u/s. 11 of the Act. The assessee had filed its return of income dated 24.10.2017 along with form 10B, declaring total income at Rs. Nil and the same was processed u/s. 143(1) of the Act. The assessee’s case was selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. The learned Assessing Officer ('ld. A.O.' for short) observed that the assessee had claimed exemption u/s. 11 of the Act, where expenses incurred for the object of the trust were claimed as exempt. The ld. AO made disallowance of accumulation made (A.Y. 2025) Bombay Education Society u/s. 11(2) of the Act for the reason that the assessee has failed to file form 10 before due date of filing of returns as same was filed only on 23.12.2019 after prescribed due date and also the purpose of accumulation mentioned was general and vague. The ld. AO determined the total income at Rs. 5,20,04,190/-, and passed the assessment order dated 11.12.2019, u/s. 143(3) of the Act.
4. The assessee was in appeal before the first appellate authority, who vide order dated 29.01.2024, dismissed the appeal filed by the assessee for the reason that the assessee has not furnished any details sought for by not complying with the notices and further the ld. CIT(A) has specified that the delay in filing form 10 was already condoned by the ld. CIT(Exemption) vide order dated 24.09.2020, u/s.119(2)(b) of the Act.
5. The assessee is in appeal before us, challenging the order of the ld. CIT(A).
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the ld. CIT(A) has failed to decide the issue on the merits and had passed an ex parte order without giving sufficient opportunity to the assessee to substantiate its claim. The ld. AR further stated that both the lower authorities have failed to consider the assessee’s submission and had disallowed the accumulation u/s. 11(2) of the Act for the reason of delay in filing form 10 and stating that the purpose for accumulation was general in nature. The ld. AR prayed that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present its case before the ld. CIT(A).
(A.Y. 2025) Bombay Education Society 7. The learned Departmental Representative ('ld. DR' for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee was given several opportunities by the ld. CIT(A) which was not availed by the assessee.
We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the disallowance made by the ld. A.O. before the first appellate authority on the ground that the assessee has failed to corroborate its claim by documentary evidences pertaining to its claim of accumulation u/s. 11(2) of the Act. The ld. CIT(A) has also not decided the issue on the merits of the case.
On the above facts of the case, we are of the considered view that the assessee may be given one more opportunity to present its case before the first appellate authority by adhering to the principles of natural justice and in the interest of justice dispensation. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication. The assessee is directed to strictly comply with the proceedings without any undue delay on its side and the ld. CIT(A) is also directed to decide the issue on the merits of the case based upon the submission of the assessee and in accordance with law.