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आदेश/Order
The present are the appeals preferred by the assessee against the separate orders dated 21.06.2017 of the Commissioner of Income Tax(Appeals), Palampur [hereinafter referred to as ‘CIT(A)’].
ITA No. 809/Chd/2018 is an appeal against the confirmation of the quantum addition by the Ld. CIT(A) vide order dated 21.6.2017, whereas, ITA No. 810/Chd/2018 is against the confirmation of penalty by the Ld. CIT(A) imposed by the Assessing Officer on the assessee u/s 271 (1)(c) of the Act.
ITA Nos. 809 & 810--Chd-2018- Bhuvneshari Educational Society, Mandi 2 3. Both the appeals are barred by limitation period of 270 days.
Separate applications for condonation of delay have been filed. It has
been pleaded in the applications that in the impugned order of the
CIT(A) dated 21.6.2017 passed in relation to the imposition of penalty
u/s 271 (1)(c) of the Act. The Ld. CIT(A), in the last lines / conclusion
has mentioned that the appeal of the assessee is allowed, however, as
per the discussion in the body of the order it appears that Ld. CIT(A)
has dismissed the appeal of the assessee. That Smt. Kalpana Sharma,
the President of the assessee society who was not conversant to nitty-
gritties of litigations, misunderstood the order and was under the
impression that the appeals of the assessee have been allowed. Further,
she due to family circumstances was under extreme stress and could not
consult the counsel in this respect.
Considering the above pleadings and also in the interest of justice,
applications for condonation of delay are hereby allowed subject to the
payment of cost of Rs. 5,000/- in each case to be deposited in Prime
Minister’s Relief Fund within 5 days from the date of receipt of copy of
this order.]
ITA No. 809/Chd/2018
Now we take up ITA No. 809/Chd/2018 on merits. In this appeal
the assessee has taken the following grounds:-
ITA Nos. 809 & 810--Chd-2018- Bhuvneshari Educational Society, Mandi 3 1. That the order of Ld. CIT(A) is against the law and facts of the case. 2. That the Ld. CIT(A), has wrongly upheld the orders of the Assessing Officer without appreciating the fact that the assessee-society is registered u/s 12A of the Income tax Act and is to be assessed as per the provisions of Section 11 & 12 of the Income tax Act. 3. That the Ld. CIT(A) is not justified in sustaining the Order of the Assessing Officer while upholding the estimated additions without appreciating that even after such disallowances assessee had spent/utilized more than 85% of its receipts for charitable purposes and not liable for any income tax as per the provisions of Section 11 and 12 of the IT Act. 4. That the Ld. CIT(A) is not justified while upholding the additions on the issues which are only on disallowance of certain portion of expenses which admittedly is pure guess work, that too on conjectures and surmises. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard and disposed off.
The Ld. Counsel for the assessee, at the outset, has submitted that the assessee society has been granted registration as a ‘charitable institution’ u/s 12A of the Income Tax Act, 1961 (in short 'the Act'). That as per the provisions of section 11 of the I.T. Act, the assessee has to spend 85% of the total income and is entitled to accumulate 15% of the total income subject to the conditions as provided under the relevant provisions of section 11 of the I.T. Act. The Ld. Counsel has further submitted that the Assessing Officer has made disallowance of certain expenditure out of total expenditure on adhoc basis. The Ld. Counsel has further submitted that even if the aforesaid disallowances are
ITA Nos. 809 & 810--Chd-2018- Bhuvneshari Educational Society, Mandi 4 affirmed, even then, the total expenditure which constitutes application
of income for the object of assessee society, is more than 85% and,
hence, the additions, if any, made by the Assessing Officer on account
of adhoc disallowance of expenditure though, will be treated as income
of the assessee, but the same will be part of 15 % of the income which
the assessee is entitled to accumulate to be used in subsequent years as
per the relevant provisions of the section 11 of the Act.
The Ld. DR, on the other hand, has submitted that the assessee did
not produce the books of account before the Assessing Officer, hence,
the matter should be restored to the file of the Assessing Officer for
verification of the accounts as well as the above contention of the
assessee.
In view of the above, the matter is restored to the file of the
Assessing Officer to examine if even after impugned disallowance the
total application of income for the objects of the assessee exceeds 85%
of the income of the year, and the total income of the assessee even after
disallowance falls within the limit of 15%, which the assessee is entitled
to accumulate as per the provisions of the Act, then to allow the relief
accordingly.
In the result the appeal of the assessee is treated as allowed for
statistical purposes.
ITA Nos. 809 & 810--Chd-2018- Bhuvneshari Educational Society, Mandi 5 However, the above directions are subject to deposit of Costs as
imposed with the Prime Minister’s Relief fund, the receipt of which
will be shown by the assessee to the Assessing Officer in the set aside
proceedings.
ITA No.810/Chd/2018
Now coming to the appeal in ITA No. 810/Chd/2018. The assessee
in this appeal has agitated the levy of penalty in respect of the adhoc
disallowance made by the Assessing Officer.
Since the expenditure has been disallowed on adhoc basis by the
Assessing Officer and as pleaded by the assessee, even otherwise, the
income of the assessee will fall within the 15% limit, which the assessee
otherwise is entitled to accumulate as per the provisions of seciton11 of
the Act, hence, under these circumstances, it cannot be said to be the
case of concealment of income or furnishing of inaccurate particulars of
income. However, the aspect that the total income of the assessee for
the year, after application of the funds, did not exceed 15% as per our
directions given above is required to be verified by the Assessing
Officer. In view of this, this matter is also restored to the file of the
Assessing Officer for this limited purpose only. If, the contention of the
assessee is found to be correct, then no penalty will be leviable.
ITA Nos. 809 & 810--Chd-2018- Bhuvneshari Educational Society, Mandi 6 The assessee will show the receipt of the deposit of the cost of Rs. 5000/- in this case also to the Assessing Officer on the first day of
hearing. This appeal of the assessee is also treated as allowed for statistical purposes. In the result, both the appeals of the assessee are treated as allowed for statistical purposes. Order dictated and pronounced in the Open Court immediately on completion of hearing.
Sd/-
(संजय गग� / SANJAY GARG) �या�यक सद�य/ Judicial Member Dated : 06.06.2019 “आर.के.”
आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु�त/ CIT 4. आयकरआयु�त (अपील)/ The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यआ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File
आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar