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Facts
The assessee, a charitable trust registered u/s 12A, filed a nil return for AY 2018-19. During scrutiny assessment, the assessee failed to respond to notices u/s 143(2) and 142(1), leading the AO to complete an ex-parte assessment u/s 144. The AO disallowed expenses claimed u/s 57 and depreciation totaling Rs.1,45,17,403/- due to lack of documentary evidence. The CIT(A) dismissed the assessee's appeal on technical grounds.
Held
The Tribunal observed that both the ex-parte assessment by the AO and the CIT(A)'s dismissal were made without proper consideration of facts and providing adequate opportunity to the assessee. In the interest of justice, the Tribunal set aside the CIT(A)'s order and remanded the case back to the Assessing Officer for fresh adjudication, granting the assessee a fresh opportunity to furnish documentary evidence.
Key Issues
Whether the ex-parte assessment and disallowance of expenses by the AO, and the subsequent dismissal of appeal by the CIT(A) on technical grounds, were justified given the alleged lack of proper opportunity for the assessee to present its case.
Sections Cited
250, 12A, 143(1), 143(2), 142(1), 57, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma
Assessment Year: 2018-19 Contai Rotary Community Welfare Trust………………………..………….……Appellant Rathtala, P.O. Contai, Dist. Purba Medinipur, W.B. – 721401. [PAN: AAATC7008C] vs. ITO, Ward-1(1), Exemption, Kolkata…..……....….….. ……………….........…..Respondent Appearances by: Shri Miraj D. Shah, AR, appeared on behalf of the appellant. Shri Raja Sengupta, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : May 06, 2025 Date of pronouncing the order : May 07, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 08.11.2024 of the National Faceless Appeal Centre [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
Brief facts of the case are that the assessee is a charitable trust and registered u/s 12A of the Act. The assessee filed its return of income for the assessment year 2018-19 by declaring nil income which was processed u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny under CASS to examine certain issues particularly the expenses claimed under the head of ‘income from other sources’. Notice u/s 143(2) of the Act was issued to the assessee requiring submission of certain documents but no response was received. Thereafter, a notice u/s 142(1) of the Act was issued calling for details of expenses claimed u/s 57 of the Act but the assessee again failed to respond. Thereafter, the Assessing Officer issued reminder to Assessment Year: 2018-19 Contai Rotary Community Welfare Trust the assessee but the assessee continued to remain non-compliant. In the absence of explanation or evidence, the Assessing Officer had no option but to proceed the assessment under the best judgment provision u/s 144 of the Act. While framing the assessment order, the Assessing Officer noted that the assessee declared income from various sources which are as under:
Interest from S.B A/c 1,374 Registration charges 22,91,714 Incentive 1,750 Honorarium to Doctor 90,000 Income from X-ray 6,78,600 Blood other Test 12,01,870 Testing charges 14,018 Miscellaneous income 6,000 Sale of medicine without GST 80,48,093 GST from Medicine sale 7,87,584 Closing stock of medicine 9,77,546 Total 1,40,98,549 2.1 Against the above expenses, the assessee claimed expenses of Rs.1,42,80,649/- u/s 57 of the Act and depreciation of Rs.2,36,754/-. However, no documentary evidence was furnished in support of the expenses or depreciation claimed despite giving multiple opportunities to the assessee. In the absence of submissions, the Assessing Officer disallowed the entire expenses of Rs.1,42,80,649/- and Rs.2,36,754/- totalling to Rs.1,45,17,403/- and added the same to the total income of the assessee.
Assessment Year: 2018-19 Contai Rotary Community Welfare Trust 3. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the ld. CIT(A) contending that the non-compliance was due to negligence of the previous counsel and lack of timely communication. It was also argued before the ld. CIT(A) that sufficient materials were later on submitted but the ld. CIT(A) without detailed examination of the facts and evidences confirmed the order of the Assessing Officer by simply dismissing the appeal of the assessee on technical ground.
Dissatisfied with the above order, the assessee has filed the present appeal before this Tribunal arguing that the assessment order was passed ex parte u/s 144 and the ld. CIT(A) also passed the appellate order without appreciating the facts and materials subsequently submitted. The ld. AR stated that the entire assessment and appellate proceedings were completed without granting proper opportunity to the assessee to be heard. He, therefore, prayed that the matter may be remanded back to the file of the Assessing Officer for fresh adjudication.
On the other hand, the ld. DR supported the orders of the authorities below and opposed the above prayer of remand.
After hearing rival contentions and perusing the materials available on record, we find that the assessment order was passed ex parte u/s 144 of the Act due to assessee’s non-compliance to the statutory notices. We also find that even before the ld. CIT(A), the assessee failed to present its case effectively and the appeal was disposed of without proper consideration of the factual matrix and supporting documents. In the interests of justice and fair play, we are of the considered opinion that the matter needs to be restored to the file of the Assessing Officer for fresh consideration. We, therefore, set aside the order of the ld. CIT(A) and remand the matter to the file of the Assessing Officer for fresh adjudication after providing reasonable opportunity to the assessee to Assessment Year: 2018-19 Contai Rotary Community Welfare Trust furnish documentary evidences in support of its claim. We direct the assessee to appear positively before the Assessing Officer and comply with all the notices diligently which will be issued in the remand proceedings, failing to do so may result in ex parte adjudication as per law.
In the result, the appeal of the assessee is allowed for statistical purposes. Kolkata, the 7th May, 2025.