JNANA JYOTHI REHABILITATION SOCIETY FOR DISABLED,HUBBALI vs. INCOME TAX OFFICER, WARD-1, HUBBALLI

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ITA 1478/BANG/2025Status: DisposedITAT Bangalore21 August 2025AY 2015-16Bench: Dr. DIPAK P. RIPOTE (Accountant Member), SHRI PRAKASH CHAND YADAV (Judicial Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal. It noted that the assessee had submitted expenditure details during the appeal proceedings. The Tribunal set aside the assessment order for denovo adjudication by the AO, providing the assessee a reasonable opportunity of being heard.

What were the facts?

The assessee, a rehabilitation society, filed an appeal against the CIT(A)'s order which confirmed the addition made by the AO. The AO had made an ad-hoc disallowance of 30% of expenditure due to non-compliance with notices and failure to submit details during assessment. The assessee faced a delay in filing the appeal before the Tribunal.

What were the issues?

Whether the AO was justified in making an ad-hoc disallowance of expenditure without affording sufficient opportunity and whether the delay in filing appeal should be condoned.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3),Section 250,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC’’BENCH: BANGALORE

Before: Dr. DIPAK P. RIPOTE & SHRI PRAKASH CHAND YADAV

Hearing: 21.08.2025Pronounced: 21.08.2025

Assessment Year:2015-16 Jnana Jyothi Rehabilitation Society Income Tax Officer, for Disabled, Ward-(1) Old Soraba, P.O Old Soraba, Hubbali. Shivamogga-577429, Vs. Karnataka. PAN NO : AABTJ7999J APPELLANT RESPONDENT Appellant by : Sri Gireesha T.L, CA Respondent by : Sri Ganesh R Ghale, Advocate-Standing Counsel for Revenue Date of Hearing : 21.08.2025 Date of Pronouncement : 21.08.2025 O R D E R

PER Dr. DIPAK P. RIPOTE, ACCOUNTANT MEMBER:

1.

This is an appeal filed by Jnana Jyothi Rehabilitation Society for Disabled against the order of the Learned Commissioner of Income Tax (Appeals) (NFAC) (in short “Ld. CIT(A)”) passed U/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for Asst Year 2015- 16 on 03/12/2024 emanating from Assessment Order dated 31/10/2017 passed U/s. 144 of the Act. Submissions of the Ld. AR: 2. The Ld. AR invited our attention to the fact that there was a delay in filing the appeal before this Tribunal of 106 days. The Ld. AR took us through the Affidavit to explain the reason for the delay.

Jnana Jyothi Rehabilitation Society for Disabled vs. ITO 3. The Ld. AR submitted that the assessee is running a school for differently abled children. There is a deficiency in the income and expenditure account. However, the Ld. AO passed an ex-parte order and made adhoc disallowance. The Ld. AR submitted that since it is a non-profit organization, one more opportunity may be given to file all the details before the Ld. Ld. AO. The Ld. AR submitted that the assessee receiving grant from Department of Empowerment of Differently Abled and Senior Citizens, Govt. of Karnataka. The Ld. AR submitted that the assessee had submitted details of expenditure to the appropriate authority of Govt. of Karnataka.

4.

Submissions of Ld. DR: The Ld. DR fairly accepted that there was a sufficient cause for delay. The Ld. DR also agreed for setting aside the case to Ld. AO.

5.

Findings and Analysis: We have heard both the parties and perused the records. In this case, the assessee-trust had filed return of income on 23/09/2015 declaring total income of Rs. NIL for Asst. Year 2015- 16. The assessee’s case was selected for scrutiny. Since the assessee failed to comply with the notices, the Ld. AO passed an order U/s. 144 of the Act disallowing 30% of the expenditure claimed.

Jnana Jyothi Rehabilitation Society for Disabled vs. ITO 6. The Ld. CIT(A) confirmed the addition. Relevant para 5.1.1 of the order of the Ld. CIT(A) is reproduced here under:

We have perused the submissions filed by the Ld. AR, assessment order and the order of the Ld. CIT(A). It is noted that the assessee’s books of accounts have been duly audited by the Chartered Accountant. As per the income and expenditure account for the year, there is a meager profit of Rs. 923/- only. It is also noted that the assessee’s income is mainly from grant received and expenditure seems to be towards running the school for mentally retarded children and differently abled children. The assessee has filed details of expenditure.

7.

In this case, the Ld. AO has made adhoc disallowance of 30% of expenditure as the assessee could not file the details during the assessment proceedings. During the appeal proceedings before the ITAT, the assessee has filed the details of expenditure along with Jnana Jyothi Rehabilitation Society for Disabled vs. ITO audit report. In the interest of justice, we set-aside the assessment order to the Ld AO for denovo adjudication. Ld. AO shall provide a reasonable opportunity of being heard to the assessee.

8.

In the result, appeal of the assessee is allowed for statistical purposes as indicated herein above. We condone the delay.

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