JERMEL'S ACCADEMY,SILIGURI vs. ITO, WARD - 1(4), SILIGURI, SILIGURI

PER BENCH:

These appeals filed by the assessee are against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-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 AYs 2014-15,
2015-16 & 2017-18. Since the appeals were heard together, they are being decided vide this common order for the sake of convenience and brevity.
I.T.A. Nos.: 992, 993 & 994/KOL/2024
AYs: 2014-15, 2015-16 & 2017-18
Jermel's Accademy.
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the expenditure incurred relating to the income earned and tax the remaining surplus only.
4. For that the appellant craves leave to add, alter or delete all or any of the grounds of appeal.”
AY 2017-18:
“1. For that on the facts and in the circumstances of the case, Ld. CIT(A) was not justified in passing an ex-parte order.
2. For that on the facts and in the circumstances of the case, Ld. CIT(A) ought to have allowed the exemption claimed by the assessee u/s 11(1) and 12 of the Income Tax Act, if any.
3. For that on the facts and in the circumstances of the case, Ld. CIT(A) was not justified in confirming the addition of Rs. 50,14,820/- made by the A.O on account of cash - deposits in bank accounts during the demonetization period by wrongly treating the same as unexplained money u/s 69A of the Act.
4. For that the appellant craves leave to add, alter or delete all or any of the grounds of appeal.”
3.1. The assessee has taken additional grounds of appeal which are as under:
AY 2014-15:
“a) For that the assessment order dated 28.03.2022 is void and nullity in the eye of law as there are no recorded reasons to belief that income chargeable to tax has escaped assessment.
b) Without prejudice to ground no. a stated above, the recorded reasons are invalid and improper and as such, the re- assessment framed vide order dated 28.03.2022 is bad in the eye of law.
c) For that there was no sanction or the purported sanction u/s 151 was not in accordance with law, thus, vitiating the re-opening process.”
AY 2017-18:
“a) For that the assessment order dated 28.03.2022 is void and nullity in the eye of law as there are no recorded reasons to belief that income chargeable to tax has escaped assessment.
I.T.A. Nos.: 992, 993 & 994/KOL/2024
AYs: 2014-15, 2015-16 & 2017-18
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b) Without prejudice to ground no. a stated above, the recorded reasons are invalid and improper and as such, the re- assessment framed vide order dated 28.03.2022 is bad in the eye of law.
c) For that there was no sanction or the purported sanction u/s 151 was not in accordance with law, thus, vitiating the re-opening process.”
4. Brief facts of the case as applicable for A.Y. 20104-15 are that the assessee is a Trust which runs a co-educational school for secondary level education and is affiliated to the Central Board of Secondary education (C.B.S.E.). The basis of reopening the assessment was the information available with the department that the assessee had made cash deposits amounting to Rs. 1,39,87,262/- and, therefore, the proceedings u/s 147 of the Act were initiated after issuing notice u/s 148 of the Act and the assessee filed the return of income declaring ‘NIL’
income in response to the notice issued. The total fees collection for the relevant year was Rs. 3,31,78,875/- and the entire receipts had been claimed to have been accounted for in the account maintained by the Trust. The Assessing Officer (hereinafter referred to as ld. 'AO') noticed that the assessee had claimed exemption u/s 11(1)(A) of the Act for Rs.
3,28,53,862/- and asked it to furnish the documentary evidence that the Trust was eligible for exemption u/s 11(1)(A) of the Act. The assessee stated that the exemption is allowable in view of the second proviso to section 12A(2) of the Act and a copy of the order for provisional registration dated 30.08.2021 for A.Y. 2022-23 to A.Y. 2024-25, was filed. The Ld. AO again required the assessee to furnish the evidence for the exemption claimed and since the assessee had neither filed the return of income as per the provision of section 139(1) of the Act for claiming the exemption nor any documentary evidence was filed, therefore, the exemption claimed by the assessee was disallowed.
Aggrieved with the assessment order, the assessee filed an appeal before
I.T.A. Nos.: 992, 993 & 994/KOL/2024
AYs: 2014-15, 2015-16 & 2017-18
Jermel's Accademy.
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the Ld. CIT(A) who issued several notices of hearing to file the submission but the assessee failed to comply with the notices issued.
In para 9 of the appeal order, the Ld. CIT(A) has concluded that the assessee had no evidence to substantiate the grounds taken and had not even argued with any supporting, relevant and cogent arguments/averments and the appeal was decided on the basis of the extremely brief non-speaking submission appearing in the grounds of appeal and the statement of facts filed along with the impugned appeal.
The Ld. CIT(A) in para 10.1 has held that the assessee stated that it is a Trust running educational institution and had obtained registration u/s 12AB on 30.08.2021 but did not file any proof for the same. Before the Ld. AO it was stated that the source of cash deposits in bank accounts are the fees collected from students during the year amounting to Rs. 3,31,78,875/-. Since the assessee had neither identified its status by furnishing Registration Certificate issued u/s 12A/12AA during the scrutiny/appellate proceedings nor had claimed exemption u/s 11 or any other provision of the Act by filing its ITR and only a copy of provisional registration dated 30.08.2021 which is from AY 2022-23 to AY 2024-25 was filed and did not furnish any documentary evidence that the application for grant of exemption was pending with the competent authority nor the claim of exemption u/s 11(1)(A) was filed, therefore, the claim was not allowed. The Ld. CIT(A) has also referred to the provisions of sub-clause (iiiad) & (vi) of clause
23C of section 10 and has held that the assessee is not eligible to get the benefit under those sub-clauses as no exemption certificate issued vide Rule 2CA of the Income-tax Rules, 1962 was filed during the course of the scrutiny proceedings. Further as per sub-section (4C) of section 139 of the Act, every educational institution referred to in sub-clause
I.T.A. Nos.: 992, 993 & 994/KOL/2024
AYs: 2014-15, 2015-16 & 2017-18
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(iiiab), (iiiad), (vi) of Section 10(23C) whose total income, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax is liable to furnish a return of such income of the previous year and since no return of income was filed therefore, the ground of appeal was dismissed and the exemption claimed by the assessee was denied. The assessee had failed to file books of accounts, therefore, relying upon the decision of Hon’ble
Supreme Court in the case of Calcutta Discount Co [41 ITR 191 (SC.)]
the other ground of appeal was also dismissed and the appeal was dismissed.
5. During the course of the appeal proceeding, the assessee relied upon the case of CIT vs. M/s. Infinity Infotech Parks Ltd. dated
10.09.2024 in support of the claim that when the income relating to the subject matter of reopening was not added, the re-assessment proceeding is bad in law. It was requested that since proper submission could not be made before the Ld. CIT(A), another opportunity of being heard before the Ld. CIT(A) so that the assessee can make adequate submission. The Ld. DR relied upon the order of the Ld. CIT(A).
6. We have considered the matter and find that the assessee did not make any submission and the appeal was decided on the basis of the facts mentioned in the appeal memo. Before us the balance sheet of Jermel's Accademy as well as the income and expenditure showing various receipts have been filed which were neither filed before the Ld.
AO nor even before the Ld. CIT(A). Hence, in the interest of justice and fair play to both the parties, the order of the Ld. CIT(A) for A.Y. 2014-15
is set aside to be done de novo. The assessee shall be at liberty to file the required evidence for the relief claimed.
I.T.A. Nos.: 992, 993 & 994/KOL/2024
AYs: 2014-15, 2015-16 & 2017-18
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were treated as business instead of the activities of a non-profit making institution and the assessee was considered as an AOP in terms of the provisions of the Act. Before the Ld. CIT(A), the assessee could not succeed, who upheld the addition of Rs. 50,14,820/- on account of cash deposit during the demonetization period in the bank account maintained in the name of the assessee. Reliance was placed on the following judgments:
(i) Chuharmal Vs CIT (1988) 172 ITR 250 (SC) ii) Smt. Srilekha Banerjee and Others Vs CIT, Bihar & Orissa, 1964 AIR 697
(SC)
9. The relevant extract from the order of the Ld. CIT(A) is as under:
“10.3 To sum up the above, the analysis of the cash deposited and other credit added in the appellant income is as under:
• The appellant failed to furnish the return of income either u/s 139 or any other provision as envisaged in the Act.
• The appellant deposited cash of Rs.50,14,820/- in the bank accounts maintained by the appellant during demonetisation period.
• The appellant found to be the owner of the money as established through KYC received from bank.
• The income earned by the appellant is not offered for taxation purposes and taxes due thereon are not paid.
• The appellant failed to offer any explanation during assessment proceedings as well as appellate proceedings, therefore, the cash deposit appearing in the bank statement remained unexplained and thus liable to be added u/s 69A of the Act.
10.4 In Ground No. 7 appellant has contested that AO’s action to treat its income as business activity instead of a non profit making institution.
In the instant case, the appellant had deposits of Rs.50,14,820/- during the demonetization period in the bank account. The appellant has not filed return of income. Through statement facts filed with appeal, the appellant stated that it is an educational institution and they are not liable to file return. The assessee has neither identified its status by furnishing
I.T.A. Nos.: 992, 993 & 994/KOL/2024
AYs: 2014-15, 2015-16 & 2017-18
Jermel's Accademy.
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Registration Certificate issued u/s 12A/12AA during the scrutiny/appellate proceedings nor claimed exemption u/s 11 or any other provision of the Income-tax Act, 1961 by filing its ITRs. During scrutiny proceedings, the assessee was specifically was asked to furnish a copy of Registration
Certificate issued u/s 12A/12AA of Income-tax Act, 1961. The assessee made response stating that trust was formed and registered in the office of the Sub-