SWABHUMI FOUNDATION ,NORTH TWENTY FOUR PARGANAS vs. DCIT, CIRCLE 1(1), EXEMPTION, , KOLKATA

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ITA 771/KOL/2025Status: DisposedITAT Kolkata26 June 2025AY 2018-196 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal, after considering the submissions and in the interest of justice and fair play, deemed it appropriate to afford one more opportunity to the assessee. The Tribunal decided to restore the issue to the file of the Ld. CIT(A) for de novo adjudication. The reasoning was that the assessee claimed that the CIT(A) order was ex-parte due to communication issues with their email address, and they had sufficient evidence for their claim. The Tribunal directed that a proper opportunity of being heard should be provided to the assessee, and the assessee should not seek adjournments unless for a reasonable cause. The grounds of appeal raised by the assessee were allowed for statistical purposes. The specific disallowance amount and the applicability of section 13(3) and section 11 were not adjudicated on merits by the Tribunal in this order.

What were the facts?

The assessee, Swabhumi Foundation, a charitable trust, is in appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2018-19. The appeal was filed with a delay of 254 days, which the Tribunal condoned. The original assessment order, passed under section 143(3) read with section 144B of the Income Tax Act, 1961, made a disallowance of Rs. 1,27,32,400/- on account of violation of section 13(3) of the Act. The assessee appealed to the CIT(A), who dismissed the appeal for non-prosecution and lack of submissions. The assessee contends that the CIT(A) order was ex-parte due to non-receipt of notices on its registered email address, with communication being sent to a dysfunctional email.

What were the issues?

1. Whether the order of the Ld. CIT(A)-NFAC, Delhi, passed ex-parte without giving the assessee a reasonable opportunity of being heard, and without dealing with the grounds of appeal, is bad in law and liable to be quashed, thereby violating the principle of natural justice, as argued by the assessee. The revenue did not record any specific arguments on this point. 2. Whether the Ld. CIT(A) erred in sustaining the disallowance of Rs. 1,27,32,400/- on account of violation of section 13(3) of the Act, as argued by the assessee, who also contended that the Assessing Officer erred in holding that the rule of consistency is not applicable despite the factual position remaining the same as in previous assessment years and that the disallowance of salary treated as application of funds under section 11 was unjustified. The revenue did not record any specific arguments on this point.

Which sections of the Income-tax Act were involved?

Section 13(3),Section 11,Section 143(3),Section 144B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH KOLKATA

Before: SHRI DUVVURU RL REDDY & SHRI RAKESH MISHRA

For Appellant: Shri Miraz D. Shah, AR, Shri Sanat Kumar Raha and S.B
For Respondent: Shri Miraz D. Shah, AR, Shri Sanat Kumar Raha and S.B
Hearing: 16.06.2025Pronounced: 26.06.2025

Swabhumi Foundation DCIT, Circle 1(1), Exemption 6th Floor, Room No, AN0622, Circle 1(1), Exemption/ 2c/1, Rajarhat Action Area II, Vs. Kolkata, Aaykar Bhavan, 10B, New Town Action Area II SO, Middleton row, Kolkata- New Town, Parganas, 700161 700071, West Bengal (PAN: AAKTS7914B) (Appellant) (Respondent) Present for: Appellant by : Shri Miraz D. Shah, AR Respondent by : Shri Sanat Kumar Raha and S.B. Chakraborty, DR Date of Hearing : 16.06.2025 Date of Pronouncement : 26.06.2025 O R D E R

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

1.

This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A)”) passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2018-19 dated 22.05.2024.

2.

At the outset, it appears from the record of the registry that the appeal has been filed with a delay of 254 days and for this the assessee has filed a condonation petition along with and affidavit, which reads as under: -

“1. Uttam Kumar Saha Son of Late Ram Chandra Saha residing at 17/1, R.B.C Road, South Dumdum, north 24 Parganas, West Bengal- 700028 do hereby solemnly affirm and say as follows: -

1. 1. THAT I as Trustee on behalf of our Trust Swabhumi Foundation (PAN- AAKTS7914B) intend to filed an Appeal Petition before the Ld. ITAT Kolkata Bench.

2. THAT the Condonation Petition filed by me is true to the best of my knowledge and belief.

3. That all correct and true information has been provided under such Condo- nation Petition and as such nothing has been concealed or falsely declared.

4. THAT there was no mala fide intention on my part in relation to the delay in preference of appeal before the Hon'ble ITAT, Kolkata Bench.

1. THAT no notice of hearing of CIT(A)-NFAC was served on the registered e- mail address (accounts/@gdgdakshineswar.com) of the appellant-petitioner, all the communication was made by CIT(A)-NFAC on the e-mail address tuhin.saha07@gmail.com which has been dysfunctional and change long time ago. The copy of screenshot of profile e-mail address in the e-filling portal and screenshot of notice received from CIT(A)-NFAC is enclosed herewith. That the contents of the above paras are true to the best of my knowledge and belief. The deponent is identified by me.”

03. On perusal of the condonation petition, the reason for delay in filing the appeal seems to be genuine and bona fide. The Ld. D.R did not raise any objection in condoning the delay. Keeping in view, the condonation petition as well as judicial pronouncement that the case should be de- cided on merit rather than on technicalities, the delay is hereby condoned and the appeal is admitted for adjudication.

4.

The grounds of appeal raised by the assessee are reproduced as un- der:

“1. FOR THAT the Appellate Order of the Ld. CIT(A)-NFAC, Delhi, is bad in law as it was passed ex-parte without giving the assessee reasonable oppor- tunity of being heard, in as much as no e-mail has been served on the regis- tered e-mail address and without at all dealing with the 'Grounds of Appeal

' raised before him which tantamount to violation of principle of natural justice hence bad in law and liable to be quashed in this appellate forum.

2. FOR THAT Ld. CIT(A), in any event, did not adjudicate the grounds of appeal and did not go through assessment records and the other materials available on record and he has capriciously and arbitrarily dismissed the ap- peal without applying his mind and without going to the case record in appel- lant's case.

3. FOR THAT in the facts and circumstance of the case the Ld. CIT(A)- NFAC, Delhi was not justified in sustaining the disallowance of Rs.1,27,32,400/- to the total income of the appellant on account of violation u/s 13(3) of the act.

4. FOR THAT on the facts and in the circumstances of the case and in law, the Ld. CIT(A)-NFAC, Delhi was not justified in sustaining the disallow- ance as the Ld. A.O erred in holding that the rule of consistency is not appli- cable in the case of the appellant even though the factual position remains the same as it was in the previous assessment years.

5. FOR THAT on the facts and in the circumstances of the case and in law, the Ld. CIT(A)-NFAC, Delhi was not justified in sustaining the disallow- ance as the Ld. A.O has erred in disallowing Rs.1,27,32,400/- as salary u/s 13(3) which were treated as application of funds allowable u/s. 11 of the Act.

6. FOR THAT on the facts and in the circumstances of the case and in law, the Ld. CIT(A)-NFAC, Delhi was not justified in sustaining the disallow- ance as the Ld. A.O failed to appreciate that your appellant was already as- sessed u/s 143(3) for the earlier A.Ys 2016-17 and 2017-18 and form the assessment order no negative inference can be drawn even though the factual position remains the same as it was in the previous assessment years.”

05. Brief facts of the case are that the assessee is a charitable trust and runs a school in the name of DPS North Kolkata. The assessee filed its return of income for A.Y. 2018-19 on 27.10.2018, declaring total income as Nil. The case of the assessee was selected for complete scrutiny and notices u/s 143(2) & 142(1) of the Act were issued, which were duly complied with. The assessment was completed u/s 143(3) read with sec- tion 144B of the Income-tax Act, 1961 (the Act) on 23.04.2021, making disallowance of ₹1,27,32,400/- to the total income of the assessee on ac- count of violation of section 13(3) of the Act. Aggrieved with the said order, the assessee preferred the appeal before the ld. CIT (A), who dismissed the appeal on account of non-prosecution and also because no written submission or evidences were filed for the relief claimed.

6.

Being aggrieved with the order of the ld. CIT (A), the assessee has filed the appeal before us.

7.

We have heard the rival submissions. The ld. AR submitted that the Ld. CIT(A) passed an ex parte order and the merits of the case have not been decided. A perusal of the order of the Ld. CIT(A) shows that during the appellate proceedings, the assessee was given adequate opportunity is of hearing but there was non-compliance before the Ld. CIT(A) and no documents were produced before him. It was submitted by the Ld. AR that the notices for hearing before the Ld. CIT(A) nor the order of the Ld. CIT(A) was received in the functional email which led to the delay in filing the appeal before the Tribunal and because of improper representation, the addition was confirmed by the Ld. CIT(A). The assessee requested that the appeal order may be set aside and the matter may be remanded to the Ld. CIT(A) as the assessee has sufficient evidence for the relief claimed. We, after considering the submission made and in the interest of justice and fair play, deem it appropriate to afford one more opportunity to the assessee and restore the issue to the file of the ld. CIT (A) for de novo adjudication. Needless to mention that proper opportunity of being heard may be provided to the assessee and the assessee should not seek any adjournments unless otherwise required for reasonable cause. The Grounds of appeal raised by assessee are allowed for statistical purposes.

8.

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

Order pronounced in the open court on 26th June, 2025.

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