MAC CHARITIES,CHENNAI vs. COMMISSIONER OF INCOME TAX (APPEALS), NEW DELHI

There is a delay of 386 days in filing the appeal by the assessee. The assessee has filed condonation petition/affidavit stating the reasons for delay in filing the appeal. We have considered the petition/affidavit of delay in filing the appeal and satisfied that there was sufficient cause for not filing the appeal within the prescribed time limit. Hence, the delay is hereby condoned.

The assessee is a public charitable trust registered u/s. 12A of the Act. The assessee has filed its return of income claiming exemption u/s. 11 of the Act. During the assessment proceedings, the A.O has observed that the assessee has shown total receipt of Rs.11.62 Crores , including voluntary donation of Rs. 9.64 Crores and has shown expenditure of Rs.5.08 Crores including donation made to other trust of Rs. 4.09 Crores. The A.O in respect of donation made of Rs. 4.09 Crores has issued notices u/s. 133(6) of the Act to the seven donee trust, but only one trust responded and other six notices remained un-complied with. The A.O therefore concluded that the assessee has been siphoning of the money by taking advantage of exemption u/s. 11 of the Act without doing actual charitable work. The A.O further observed that assessee has claimed Rs. 4.79 Crores as accumulation for the purpose of funding towards infrastructure and MAC Charities

Aggrieved, the assessee raised the following ground of appeal: “1. The learned CIT (appeals) erred in confirming the addition without considering the plea of the appellant.

The learned CIT (appeals) erred in considering the plea of the appellant denying the exemption u/s. 11 despite the fact that the appellant is a charitable organization for several decades treating the gross receipts as taxable without basis and merely following the orders of the earlier years.

The Learned CIT ( appeals) had erred in confirming the orders of the AO when there has been no examination of the donors and reliance was placed merely on orders of earlier years. The learned CIT ( appeals) ought to have considered that the receipt of donations from other charitable trust and payment of donations appellant received donations from another Charitable Trust only and payment of donations to another charitable trust constituted a valid charitable activity which cannot be a ground for denial of exemption u/s 1l of the Income Tax Act, 1961.”

The Ld. Authorized Representative (A.R) of the assessee submitted that proper representation could not be made before the A.O and therefore one more opportunity should be provided. The Ld. AR also submitted that the Ld. CIT(A) has relied on the order for A.Y. 2017-18, which has been set aside by the Hon’ble ITAT in ITA No.1169/Chny/2023 dated 10.07.2024. Further, the Ld. AR submitted that the Hon’ble ITAT in the above order clearly observed that the Hon’ble Supreme Court has stayed the order of the Hon’ble High Court, which was relied upon by the Ld. CIT(A) in his order for A.Y. 2016-17. MAC Charities

On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.

We have heard the rival submissions, and perused the materials available on record. The A.O has denied the exemption u/s. 11 of the Act as the notices issued u/s. 133(6) to some of the donee trusts were not complied with. The A.O has also made disallowance of expenditure as the assessee failed to respond to notices issued u/s. 142(1) of the Act. Considering the facts, we are of the view that one more opportunity should be provided to the assessee to substantiate its claim before the A.O, subject to payment of costs of Rs. 15,000/-. The same shall be paid by the assessee to the Tamil Nadu State Legal Services Authority at the Hon’ble High Court of Madras within a period of one month from the date of receipt of this order and the receipt shall be produced before the A.O. Accordingly, we remit the matter back to the file of the A.O for denovo assessment. We also direct the assessee to appear before the A.O on the date of hearing without fail and furnish complete details for fresh consideration. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only. MAC Charities

In the result, the appeal filed by the assessee is allowed for statistical purposes.