SHREE NIRMAL GYAN PRATISHTHAN,PUNE vs. THE CIT (EXEMPTION), PUNE

The Ld. CIT(A) has erred in dismissing appellant's appeal and confirming the action of the Ld. ADIT, CPC assessing the total income at Rs.23,09,664/- u/s 143(1) of the Act as against the returned income 'Nil' solely on the ground that the appellant has no evidence to substantiate the grounds taken and has not even once argued with any supporting, relevant and cogent arguments/averment.

The Ld. CIT(A) erred in dismissing the appellant's appeal without granting sufficient opportunity for hearing, violating the principles of natural justice. The order u/s 250 of the Act was passed just 12 days after issuing the first notice dated 06.12.2024, which is inadequate time for the appellant to prepare and present the case.

The Ld. CIT(A) failed to appreciate that the order u/s 143(1) has been passed without issuing any notice for proposed adjustments, thereby violating the principles of natural justice.

The Ld. CIT(A) failed to appreciate that the Ld. ADIT, CPC determined the gross receipts of Rs.23,09,664/- as the taxable income without allowing the deduction of expenditure claimed in the return of income of Rs.19,67,431/- thereby taxing the gross receipts of the appellant instead of net income which is not permissible under the Income Tax Act.

The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”

Briefly stated, the facts of the case as mentioned by the assessee in Form No. 35 ‘Statement of Facts' are that the assessee is a public trust registered under the Bombay Public Trust Act, 1950 as well as Society Registration Act, 1960. It is engaged in the charitable activity of running educational institution. The assessee filed its return of income for AY 2020-21 on 31.12.2020 declaring total income at Rs. Nil. During the relevant AY, the assessee received gross receipts of Rs.23,09,664/- against which it claimed expenditure of Rs.19,67,431/- and set apart amount of Rs.3,42,233/- as per the provisions of section 11(1)(a)/11(1)(b) or in terms of third proviso to section 10(23C) of the Act. The return was processed u/s 143(1) of the Income Tax Act, 1961 (the “Act”) on 25.12.2021 wherein the Ld. Assessing Officer, CPC Bangaluru (“AO”) computed the income at Rs.23,09,664/- and the tax liability including interest amounting to Rs.6,62,530/- on the basis of slab rates without assigning any valid reason and without considering the fact that the assessee has claimed exemption under the head “Exemption u/s 11/10(23C)(iv)/10(23C)(v)10(23C)(vi)/ 10(23C) (νία)-Application of income for charitable or religious purposes or for the stated objects of the trust/ institution.”

Aggrieved, the assessee challenged the intimation order u/s 143(1) passed by the Ld. AO before the Ld. CIT(A). The Ld. CIT(A) in his appellate order noted that two notices of hearing dated 06.12.2024 and 12.12.2024 were issued to the assessee electronically in E-proceeding/ITBA facility requiring the assessee to submit the details along with supporting documents and evidence in respect of its claim. However, neither any compliance was received nor any adjournment was sought by the assessee. In the absence of any response to the said notices, the Ld. CIT(A) observed that the assessee appears to be not interested in pursuing this appeal. Relying on the decision of the Hon'ble Supreme Court in the case of B.N. Bhattacharjee and another 118 ITR 461 (SC), the Ld. CIT(A) dismissed the appeal of the assessee for non-prosecution by observing in para 4.4 and 4.5 of the appellate order as under : 5. “4.4 It is pertinent to add here that laws assist those who are vigilant and not those who sleep over their rights. It means equity comes to the aid of the vigilant and not the slumbering. In all actions, suits and other proceedings at law and in equity, the diligent and careful plaintiff is favoured and prejudicial of him who is careless. Viewed thus, it is presumed that the appellant has no, further cogent reasoning or/and evidence to substantiate the grounds taken in this impugned appeal. It is trite that the onus is on person making the claim, and the primary responsibility/onus/burden for proving the claim made before the tax authorities (Assessing Officers/Appellate Authorities) lies with the assessee/appellant. In the present case, the appellant has not been able to even discharge the primary onus/burden statutorily & judicially cast upon him to substantiate the claims made in the grounds of appeal in spite of adequate time and opportunities given as brought out in the foregoing paragraphs.

5 It is, thus, evident that the appellant has no evidence to substantiate the grounds taken and is has not even once argued with any supporting, relevant and cogent arguments/averment, constraining me to, dismiss this appeal as no material change has been brought out by the appellant, to what was available before the AO. Therefore, order made decided ex- parte and appeal of the assessee is dismissed.” Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.

The Ld. AR submitted that the non-compliance before the Ld. CIT(A) was not intentional but has occurred due to the reason that the mother of the trustee, Ms. Vineeta Kapoor was hospitalized and was in a critical condition. Ms. Vineeta Kapoor, trustee was the primary caretaker of her mother and even after discharge of her mother, she was required to monitor her oxygen levels and other parameters constantly as her mother was on oxygen support due to which she missed checking her emails on a regular basis which led the notices remained uncomplied with. The Ld. AR submitted medical reports of the mother of the trustee in support thereof. He emphasized that the Ld. CIT(A) issued only two notices and proceeded to decide the appeal ex-parte for non-prosecution and therefore the assessee was not provided with adequate opportunity of hearing by the Ld. CIT(A) to present its case before him. He, therefore, prayed that the matter may be set aside to the file of the Ld. CIT(A) to decide the appeal afresh on merits after providing due opportunity of hearing to the assessee.

The Ld. DR had no objection to the above request of the Ld. AR.

We have heard the Ld. Representatives of the parties and perused the records. We find that the non-appearance before the Ld. CIT(A) was due to the reason of critical medical condition of the trustee's mother which has been evidenced by furnishing of medical reports in support thereof. We also find that the Ld. CIT(A) issued only two notices in a short span of a week's time, first notice on 06.12.2024 and another on 12.12.2024, fixing the date of hearing on 11.12.2024 and 17.12.2024 respectively. Admittedly, these notices were missed by the assessee due to the aforementioned reasons. In our considered opinion, the assessee had reasonable and sufficient cause for non-compliance of notices due to the reasons stated above. The appellate order reveals that the Ld. CIT(A) has applied the decision in B.N. Bhattacharjee and another (supra). No doubt, the Ld. CIT(A) may decide the appeal ex-parte where the assessee does not prosecute his appeal inspite of several opportunities. None-the-less, he has to adhere to the legislative mandate enshrined in sub-section (6) of section 250 of the Act which requires him to state the points for determination, the decision thereon and the reason for the decision. We observe that the Ld. CIT(A) has passed the order in concurrence of the order of Ld. AO without himself going into the merits of the case. Thus, in our view, his order is in violation of the provisions of section 250(6) of the Act.

On the facts and in the circumstances of the case enumerated above, we deem it fit in the interest of justice and fair play to set aside the order of Ld. CIT(A) and restore the matter back to his file to adjudicate the issue(s) raised by the assessee on merits afresh and pass speaking order on merit after allowing reasonable opportunity of being heard to the assessee who shall provide the requisite support in terms of submitting the relevant documents/evidence as may be required/called upon on the appointed date without seeking adjournment under any pretext, failing which the Ld. CIT(A) shall be at liberty to pass appropriate order as per law. We order accordingly.

In the result, the appeal of assessee is allowed for statistical purpose. Order pronounced in the open court on 31st January, 2025. (Dr. Dipak P. Ripote) ACCOUNΤΑΝΤ ΜΕMBER (Astha Chandra) JUDICIAL MEMBER पुणे / Pune; दिनांक / Dated : 31st January, 2025. रवि आदेश की प्रतिलिपि अग्रेषित /