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Facts
The assessee, Cossimbazar Social Welfare And Development Trust, registered u/s 12A and 80G(5), filed a nil income return for AY 2022-23. The trust incurred total expenditure of ₹1,41,27,960/- (revenue and capital) which matched its total receipts, claimed as application of income. However, the Ld. AO CPC, while passing the intimation u/s 143(1), failed to consider this application of income, assessing the income at gross receipts and raising a demand of ₹56,48,260/-, which the Ld. CIT(A) upheld.
Held
The Tribunal found that the Ld. AO CPC erred in not considering the application of income despite the facts being available in the return, and the Ld. CIT(A) wrongly dismissed the appeal. The Tribunal set aside the CIT(A)'s order and directed the Ld. AO to allow the application of funds, confirming that the assessee's income should be assessed as nil.
Key Issues
Whether the Ld. AO CPC and Ld. CIT(A) erred by failing to consider the application of income by a charitable trust while processing its return u/s 143(1) of the Income Tax Act, leading to an incorrect assessment and demand.
Sections Cited
143(1), 12A, 80G(5), 11
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This is the appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals) ADDL/ JCIT(A) Mysore, (hereinafter referred to as the “Ld. CIT(A)”] dated 11.12.2024 for the AY 2022-23.
At the time of hearing, the assessee has raised additional ground which is extracted below:-
“(1) That, on the facts and circumstances of the case and in law, the ld. AO, CPC, Bangalore made a mistake in as much as it Computed the Revenue Expenditure at ₹1,35,17,723/- and Capital Expenditure at ₹6,10,177/- aggregating to ₹1,41,27,960/- in Annexure-Schedule ER in the Intimation of Income but failed to consider the said application of income at Point no.6 while computing the total income at ₹1,41,27,960/ and raised a demand of ₹56,48,260/- on the assessee.”
The facts in brief are that the assessee is a social welfare and development trust and runs a educational institution. The trust is registered with the Additional District Sub-Registrar, Berhampore. The books of accounts were properly maintained and duly audited by the chartered accountant. The return of income was filed along with audit report in form 10BB, declaring nil income. The trust is also granted provisional registration u/s 12A of the Act on 27.05.2021 from A.Y. 2021-22 to 2023-24, vide order dated 27.05.2021, by Pr. Commissioner of Income Tax. Besides, the assessee was granted a provisional approval u/s 80G(5) of the Act. During the year the assessee incurred revenue expenditure of ₹1,35,17,723/- and capital expenditure of ₹6,10,177/- aggregating to ₹1,41,27,960/- which was claimed by the assessee as application of income against the total receipts of ₹1,41,27,960/-. All these facts were available in the order passed u/s 143(1) of the Act dated 31.03.2023. Therefore, the issue raised by the assessee does not require any further clarification on facts and all the facts are available in the appeal folder itself. Therefore, we are inclined to admit the additional ground raised by the assessee.
The ld. AR vehemently submitted before us that while passing the order u/s 143(1), the total receipt of the trust was shown at ₹1,41,27,960/-, which was claimed to be spent for incurring the revenue expenditure to the tune of ₹1,35,17,723/- and capital expenditure of ₹6,10,177/-. However, the ld. AO / CPC while
In the appellate proceedings, the ld. CIT (A) simply dismissed the appeal of the assessee by observing that assessee has failed to furnish the complete copy of the order passed u/s 143(1) of the Act dated 31.03.2023 and thus, upheld the order u/s 143(1) passed by AO CPC.
The ld. AR vehemently submitted before us that the order passed by the ld. AO as well as ld. CIT (A) are not maintainable on the ground of not considering the application of income and therefore, may kindly be reversed.
The ld. DR on the other hand submitted that the assessee has not filed the complete copy of the order u/s 143(1) of the Act before the ld. CIT (A) and therefore, the ld. CIT (A) could not take cognizance of the fact that the application of funds by the trust were completely ignored while passing the order u/s 143(1). Therefore, prayed that the issue may be restored to the file of the ld. CIT (A).
After hearing the rival contentions and perusing the materials available on record, we find that in this case, the assessee is a registered trust u/s 12A of the Act and have been granted registration u/s 80G(5) of the Act too. During the year the assessee’s total receipts were 1,41,27,960/- out of which assessee incurred revenue expenditure of ₹1,35,17,723/- and capital expenditure of ₹6,10,177/- aggregating to ₹1,41,27,960/-. In other words, the total receipts were spent on the charitable purposes and thus, assessee was not having any net surplus during the year. From the perusal of order u/s 143(1)
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 15 May 2025