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Facts
The assessee, a trust registered under Section 12AA, filed a NIL return. The AO, under Section 143(3), disallowed accumulations under Section 11(2) and income set apart under Section 11(1)(a), totaling Rs. 3,01,01,840/-. The CIT(A) upheld a disallowance of Rs. 2,75,53,498/-, citing alleged violation of Section 13(1)(c) by advancing loans to specified persons and non-submission of details.
Held
The Tribunal noted that the delay in online filing of Form 10 was condoned. However, it found that the CIT(A) did not conduct an independent inquiry into the alleged loans or the non-submission of details. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the matter for fresh verification and re-adjudication after providing the assessee an opportunity to submit documents and explanations.
Key Issues
Whether the disallowance of exemption under Section 11, due to alleged violation of Section 13(1)(c) and non-submission of details, was justified without proper inquiry by the CIT(A), warranting a remand for fresh adjudication.
Sections Cited
13(1)(c), 11, 11(1)(a), 11(2), 12AA, 80G(5), 143(2), 142(1), 129, 143(3), 234A, 234B, 234C, 234D, 270A
AI-generated summary — verify with the full judgment below
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD
BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A. No.1003/Ahd/2025 (Assessment Year: 2017-18)
Shivashish Foundation Trust, Shiv Ashish Campus Sterling City, Bopal, Ahmedabad-380058. [PAN: AAATS6271 R] | Vs. | The Joint Commissioner of Income Tax(OSD), Circle-1(Exemption) Ahmedabad. (Appellant) | (Respondent)
Appellant by : | Shri Kushal Fofaria, AR Respondent by: | Shri RP Rastogi, CIT(DR) Date of Hearing | 07.07.2025 Date of Pronouncement | 18.07.2025
O R D E R
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the appellate order dated 06.03.2025 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, relating to the Assessment Year 2017-18.
The assessee has raised the following grounds of appeal:
- 1. The Ld. CIT(A) has erred in law and on facts of the case in confirming violation of S. 13(1)(c) of the Act despite the funds lent for the purposes of the trust. - 2. The Ld. CIT(A) has erred in law and on facts of the case in confirming disallowance of exemption of Rs. 2,75,53,498/-u/s. 11 of the Act. - 3. The Ld. CIT(A) has erred in law and on facts of the case in confirming disallowance of entire amount of exemption claimed u/s. 11 of the Act which even exceeds the amount involved in violation of S.13(1)(c) of the Act. - 4. Alternatively and without prejudice, the disallowance shall be restricted to notional interest on amount lent to the directors. - 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring
various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
- 6. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in levying interest u/s. 234A/B/C/D of the Act. - 7. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. AO in initiating penalty proceedings u/s. 270A of the Act. - 8. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. - 3. The brief facts of the case are that the assessee is a trust registered u/s 12AA and approved under section 80G(5) of the Income Tax Act, 1961. It is engaged in running Shivashish School at Bopal, Ahmedabad. The assessee filed its return of income for the year under consideration on on 22.10.2017 declaring NIL income. The case was selected for complete scrutiny under CASS and notices under sections 143(2) and 142(1) of the Act were issued from time to time, including revised notices under section 142(1) r.w.s. 129 due to change in the incumbent officer. Thereafter, the Assessing Officer passed the order under section 143(3) of the Act on 19.12.2019 determining the total income of the assessee at Rs. 3,01,01,840/-, wherein the Assessing Officer disallowed the following : - i. Rs.1,25,00,000/- claimed as accumulation u/s 11(2), - ii. Rs.25,48,340/- on account of depreciation, and - iii. Rs.1,50,53,498/- claimed u/s 11(1)(a) as income set apart. - 4. Aggrieved by the order of the Assessing Officer, the assessee filed appeal before the Ld. CIT(A) who partly allowed the appeal. The Ld. CIT(A) deleted the disallowance of depreciation of Rs.25,48,340/- claimed u/s 11, but upheld the disallowance of exemption u/s 11(1)(a) and 11(2) aggregating to Rs.2,75,53,498/-, on the ground that the assessee had violated
provisions of section 13(1)(c) by making loans and advances of Rs.2,40,20,686/- to specified persons, and had failed to submit relevant details during the appellate proceedings before the Ld. CIT(A) despite specific notices issued for the same.
- 5. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. - 6. Before us, the Ld. AR submitted that the assessee had filed Form 10 in physical form within the prescribed time limit, although online filing was delayed. The Ld. AR, however, submitted that CBDT Circulars No. 7/2018 dated 20.12.2018 and 30/2019 dated 17.12.2019 authorized the Commissioner of Income Tax to condone such delay. The Ld. AR submitted that the assessee accordingly made an application for condonation of delay, which was allowed by the Commissioner of Income Tax (Exemptions), Ahmedabad, vide order dated 23.06.2020. The Ld. AR, therefore, submitted that the claim of exemption u/s 11(2) and 11(1)(a) ought to be allowed. - 7. We have carefully considered the rival submissions, orders of the authorities below, and the material available on record. It is not in dispute that the delay in online filing of Form 10 was condoned by the competent authority vide order dated 23.06.2020. Hence, procedural compliance under section 11(2) stands satisfied. However, we note from paragraph 5.3 of the CIT(A)'s order that the denial of exemption was not solely due to delay in Form 10, but because of an alleged violation of section 13(1)(c) of the Act, whereby the assessee had allegedly advanced loans of Rs.2,40,20,686/- to specified persons. We also note that despite issuing multiple notices by the Ld. CIT(A), no details were submitted by the assessee regarding these transactions, such as ledger confirmations, identity of recipients or nature of transactions etc. We find that the Ld. CIT(A) has not conducted any
independent inquiry or verification into the factual aspects of the alleged loans to trustees, and it is also a fact on record that the denial of exemption was purely on non-submission of details by the assessee. Therefore, in our considered view, this issue requires proper verification at the level of Ld. CIT(A). Therefore, in the interest of justice, we deem it fit to set aside the order of the CIT(A) on this issue and restore the matter to his file with a direction to verify all the facts afresh and adjudicate the issue in accordance with law, after affording adequate opportunity to the assessee to submit the required documents and explanations.
In the result, the appeal of the assessee is allowed for statistical purposes.
The order is pronounced in the open Court on 18.07.2025
Sd/- Sd/-
(SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRE SIDENT
Ahmedabad; Dated 18.07.2025 \btk*
आदेश की ितिलिप अ ेिषत/Copy of the Order forwarded to :
- 1. अपीलाथ / The Appellant - 2. थ / The Respondent. - 3. संबंिधत आयकर आयु / Concerned CIT - 4. आयकर आयु(अपील) / The CIT(A)- - 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad - 6. गाड फाईल / Guard file.
आदेशानुसार/ BY ORDER,
True Copy
सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad