FAROOQIA COLLEGE OF PHARMACY,MYSORE vs. INCOME TAX OFFICER, EXEMPTION WARD, MYSORE

Per Laxmi Prasad Sahu, Accountant Member

“ 1. The order of the Hon'ble CIT[A] in so far as it is against the appellant is opposed to law, equity, and weight of evidence, probabilities, facts and circumstances of the case.

Impugned Order passed u/s 144 is unilateral, illegal and liable to be annulled. (b) The Hon'ble CIT[A] has grossly failed to notice and consequently decide that the learned AO ought not to have concluded the assessment u/s 144 without appreciating that the appellant had complied all the requirement of section 144 rws 142(1) and thus impugned order suffered from jurisdictional defect liable to be quashed. 5. (a) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] failed to take cognizance that the Order of assessment passed by the learned AO is non-est and bad in law in as much as that the learned AO failed to comply the 'Proviso' to the provisions of Section 144A and therefore impugned Order in violation of Provisions of Section 144A is suffered from jurisdictional defect and thus Order is illegal, bad in taw and liable to be annulled. (b) On the facts and in the circumstances of the case and the law, the Hon'ble CIT[A] grossly failed consider that the learned AO has not obtained the proper sanction/supervisory order as contemplated u/s 144A in terms of Board Circular dt.14.12.2018 and thus subsequent impugned Assessment Order is non-est under law and further void-ab-intio and therefore liable to be quashed. (c) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] erred in not considering that the learned AO apparently on record demonstrated that directions u/s 144A has not been communicated to the appellant though apparently prejudicial to the appellant and thus impugned Order passed in violation of the `proviso' to Provisions of Section 144A is liable to be quashed as void-ab-initio and further impugned Order is without authority of law. 6. (a) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] grossly failed to take note and decide that the impugned Order of assessment passed by the learned AO is non-est and bad in law in as much as that the provisions of Section 69A of the `Act' is not at all applicable to the appellant and therefore the impugned Assessment Order based on such erroneous application of law is suffered from jurisdictional defect and thus Order is illegal, bad in law and liable to be quashed. (b) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] has grossly erred in upholding that the learned AO error in invoking the provisions of Section 11566E of the 'Act' for the reason 'Undisclosed cash credit' can surface from the 'books of account' and the appellant has not maintained 'books of account' as prescribed u/s 2(12A) of the 'Act' and thus impugned Order based on such wrong application of law liable to be quashed. (c) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] further erred in not deciding while appreciating the law that the maintenance of 'books of account' as prescribed u/s 2(12A) of the 'Act' is sine qua non for application of the provisions of Section 69A of the Act. (d) The impugned additions of Rs.3,94,38,058/- thus made u/s 69A of the 'Act' is liable for total deletion as the appellant case has not covered to maintain any books of account nor the appellant maintained 'books of account' as prescribed u/s 2(12A) of the 'Act'.

7. The grounds craved hereinabove including sub-grounds are without prejudices to one another grounds and are independent each other.

9. Your appellant reserves right to add, amend, alter and/or withdraw \ any ground of appeal

at the time of hearing of the appeal.”

2. From the above grounds it is clear that the assessee has challenged the ex parte order passed by the CIT(Appeals) without going into merits of the case.

3. Briefly stated the facts of the case are that assessee viz., Farooqia College of Pharmacy has obtained PAN bearing AAATF 2206R and assessed in Ward 1(3), Mysore and the case was transferred to Exemptions Ward. It was observed that the assessee has not filed any return of income for the year under consideration in spite of huge amounts deposited in its bank account of Rs.3,94,38,058. Accordingly notice u/s. 142(1) dated 28.12.2017 was issued to file return of income for AY 2017-18 and the notice was served on the assessee on 29.12.2017, but the assessee did not file return of income. Thereafter, other notices were issued to the assessee for complying previous notices, but the assed did not file any response. Thereafter final show cause notice was issued to the assessee proposing to complete assessment u/s. 144 of the Act. Thereafter the assessee filed submissions on 17.12.2019 dated 13.12.2019 in which it was stated that assessee is a unit of Rifahul Muslimeen Educational Trust (RMET) having PAN AFBTR 1859H. It was further submitted that the RMET is an umbrella trust under which the trust runs units of RMET separately wherein its entire day to day accounts are prepared and consolidated at the parent institution RMET level. It was also submitted that the most of the RMET institutions have obtained separate PAN on its own without which its is highly impracticable to run day to day operations and unit PAN is restricted mainly for compliance purposes viz., to furnish for bank transactions, TDS, etc. The units of RMET prepares its receipts & payments for the year and submit to parent trust RMET. This accounting practice is accepted all across statutory authorities and practiced across board by MNC, domestic companies, NGO, where all branch operations are involved. The units are not filing its income tax returns separately and RMET has separate PAN and it is registered u/s. 12AA and approval granted u/s. 80G. The accounts of units of RMET are consolidated at parent institution and return is filed along with audit report in Form 10B by RMET.

8. Considering the rival submissions, we noted that assessee is a unit of RMET and it has separate PAN and using it for banking transactions, TDS, etc. During the course of assessment proceedings there was no proper response from the assessee’s side and assessee has also not demonstrated before the AO that the disputed amount is included in the consolidated Income & Expenditure account of RMET. Even before us the ld. counsel has not filed separate income and Expenditure account of this unit as stated above that the units are preparing separate income and expenditure account. Considering the prayer of the ld. counsel for the assessee and in the interest of justice, we restore the matter to the file of AO for fresh consideration. During the hearing, the ld. counsel for assessee fairly accepted that since the assessee is having a separate PAN and is a unit of umbrella trust of RMET the AO will be at liberty to examine the entire Income & Expenditure account of RMET de novo and discontinue the PAN of assessee as per provisions of the Act. Since the impugned assessment year is related to demonetisation period, the AO will follow the CBDT instructions/Circulars strictly. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings for early disposal of the case and in case of further default, the assessee shall not be entitled to any leniency.

Pronounced in the open court on this 28th day of March, 2025.