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Facts
The Assessing Officer (AO) added Rs. 6,53,743/- as excess application of funds by the appellant trust, which was confirmed by the CIT(A). The appellant trust had accumulated Rs. 4 lakh for a specific object but incurred an expenditure of Rs. 10,53,743/-.
Held
The Tribunal decided to send the matter back to the CIT(A) because the appellant did not respond to notices and submissions were not made available. The CIT(A) is directed to provide one more opportunity to the appellant.
Key Issues
Whether the CIT(A) erred in confirming the addition of excess application of funds when the expenditure exceeded the accumulated amount. Whether the appellant should be given another opportunity to present submissions.
Sections Cited
11(3), 11(2)
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Income Tax Appellate Tribunal, Mumbai “J(SMC
Before: Shri Rahul Chaudhary (JM) & Shri Omkareshwar Chidara (AM)
10. From the assessment order, it is observed that the appellant has accumulated a sum of Rs. 4 lakh towards the object to support the physically challenged by giving prosthesis, wheel chair, Jaipur Foot etc. But, the appellant trust has incurred an expenditure of Rs. 10,53,743/- and hence the Ld. AO added Rs. 6,53,743/- as excess application of fund for this purpose.
Aggrieved by the addition, the appellant filed an appeal before Ld. CIT(A) who gave three opportunities and the appellant did not respond to these notices. Hence, based on the assessment order available record and the grounds of appeal raised by appellant, the Ld. CIT(A) gave a detailed reasoning and confirmed the action done by Ld. AO.
2 M/s. Rotary Club of Worli Bombay Trust Aggrieved by this order of first appellate authority, the appellant filed an appeal before the ITAT with the ground of appeal mentioned in page No.1 of this order. During the hearing proceedings before the ITAT, the Ld. AR of the appellant has argued that the amounts were spent towards charitable activities only as per the Trust Deed. Section 11(2) of the Act does not envisage the position that, if the amount set apart for a particular object, then only that particular amount has to be spent which was accumulated for that purpose. As long as the amounts are spent for charitable activities as per Trust Deed, no disallowance can be made, it was argued. Certain cases- law were also filed by Ld. AR of appellant for the above proposition.
Ld. DR relied on the orders of the lower authorities.
After hearing both sides, it is decided to send the matter back to the file of Ld. CIT(A) as the appellant has not responded to the notices sent by him and also all the submissions made before the Bench were not made available before Ld. CIT(A). The Ld. CIT(A) is directed to give one more opportunity and pass the order as per law.
The appeal of appellant is allowed for statistical purposes. Order pronounced in the open Court on 27/06/2025.