SHAKTI GRAMODYOG,GANDHINAGAR vs. DCIT, CIRCLE-1 (EXEMP.) , AHMEDABAD

Now, the assessee is in second appeal before us. The following grounds have been taken by the assessee in this appeal:

The total summation of income that is credited into the all the bank accounts of trust during FY 2009-10 also do not exceed Rs. 30 lakhs. However, AD at the time of passing the order without going through bank statement and submission dated 22/12/2017, considered income of Rs. 1,59,12,761/- as per mistakenly submitted audit report. As per the actual audit report submitted on 22/12/2017, total grant receipt is Rs.27,35,000/- And assesse incurred a loss of Rs 2,56,705/- and a form 108 in support of the same is also submitted to AO. However, without considering the same AO has passed the erroneous order.

Further even if the assessing officer considers total grant receipt of Rs 1,59,12,761/- then also entire receipt cannot be considered as income and the tax calculation should be based on reasonableness and as per the presumptive basis maximum 8% of the total receipt can be considered as income rather than the total receipt. Hence, AO has passed the order in an unjust manner.

The Appellant submits that, Appeal against the order passed by AO on 26/12/2017 for the AY 2010-11 was filed on 03rd April 2018 before the Hon. CIT Appeal. However, the CIT(Appeal) took an unjustify period of 6 years to process the same, which caused undue delay in concluding the assessment. However, Hon CIT (Appeal) passed an order against the assesse on the ground that, assesse is negligent as assesse submitted appeal with 63 day of delay and assesse did not submitted original return on time and submitted return in response to notice U/s 148 and then after also, he submitted audit report twice. The appellant acknowledges a 63- day delay in filing the appeal, which was due to genuine and unavoidable circumstances. The Appellant had reasonable grounds for this delay, which were beyond the control of the management, including health issues and social responsibilities of the trust's President and the unavailability of key person i.e. Accountant. Assesse is a charitable trust and involved in charitable activities and not a professional organization Involving professional corporate staff. Assesse is doing philanthropic activities and each of the trustees giving their time and resources for the betterment of the society. And in such a case the mere delay of 63 days due to unavailability of accountant etc. was causing genuine hardship to the assesse. To draw the conclusion on the basis of delay of mere 63 days doesn't prove the trustee as negligent. Here in case Hon. CIT (appeal) took the time of 6 years to pass the order which is not justifiable at all. In none of the notice or show cause notice issued by CIT (appeal) nowhere assesse being asked to produce supporting evidence in support of condoning delay. Further, vide letter dated 16/06/2024 Hon. CIT Appeals had asked for bank statements of all the banks, which was duly submitted by assesse, which includes bank statements of Axis Bank, SBI and The Sabarkantha Gramodyog vs. DCIT] A.Y. 2010-11 - 4 – District Central Co-op Bank Ltd. The argument of assesse was that, that audit report submitted on 20/09/2017 was by mistake and not the actual audit report and such argument was supported by the fact that, the total credit in to all the bank accounts put to gather is meagerly less than 30 lacs and moreover, total of credit as appearing in Form no. 26AS is also 27.85 lacs. So. In no way it was near to the assessed figure of 1.59 crores by Ld AO. However, without verifying the genuineness of the argument and without verifying the documents Hon. CIT Appeal has confirmed the addition made by Ld. AO. Merely on the grounds that assesse is negligent of law. Such an order is passed in unjust manner.”

Shri Chintan Thakkar, Ld. AR of the assessee explained that the Ld. CIT(A) had dismissed the appeal of the assessee without examining the matter on merits. He submitted that there was a delay of 63 days in filing of appeal before the Ld. CIT(A), which was not condoned by him. The Ld. CIT(A) did not admit the appeal of the assessee and the grounds taken by the assessee was not adjudicated on merits. The Ld. AR submitted that assessee is a trust and is engaged in charitable activity. He further explained that the AO had made the disallowance for the reason that the complete details as required by him couldn’t be furnished in the course of assessment proceeding. He, therefore, requested that another opportunity may be allowed to the assessee by setting aside the matter to the file of the Ld. Jurisdictional AO so that the necessary details in support of the accounts are furnished.

Per contra, Shri Rignesh Das, Ld. Sr. DR supported the orders of the AO and the Ld. CIT(A).

We have considered the rival submissions. It is found that there was a delay of 63 days in filing of the appeal before the Ld. CIT(A). The reason for delay as given in Form No.35 was not found convincing by the Ld. CIT(A) and, therefore, he had Gramodyog vs. DCIT] A.Y. 2010-11 - 5 – declined to condone the delay and dismissed the appeal of the assessee in-limine. It is found from the assessment order that the assessee had filed two audit reports and Form No.10B which had vast differences in respect of expenditures claimed and income of the trust. The reason for filing two audit reports was not explained by the assessee. In the course of assessment, the AO had required the assessee to furnish the bank statements in support of expenses towards application of income of the trust. The assessee had furnished the bank statement of Axis Bank account only and the statement of bank accounts with State Bank of India, Sabarkantha Co-Op. Bank and Baroda Gujarat Gramin Bank were not submitted before the AO. In the absence of the complete bank statements, the AO had presumed that the withdrawal from the bank accounts were in cash or by bearer cheques. In the absence of necessary evidences in support of the expenditure as claimed, the AO had disallowed the entire expenditure of Rs.1,61,69,466/- claimed towards application of income. Further the deduction of Rs.23,86,914/- claimed u/s 11(1)(a) was also disallowed.

The assessee has been unable to explain as to why no compliance could be made before the AO and why the statement of bank accounts and other details were not furnished. At the same time, the AO had made the addition in the absence of necessary details on the presumption that the withdrawals were by cash or bearer cheques. Since, the assessee is a trust and has claimed itself to be engaged in charitable activity, in the interest of justice, we deem it proper to set aside the matter to the file of the AO with a direction to allow another opportunity to the Gramodyog vs. DCIT] A.Y. 2010-11 - 6 – assessee to provide the necessary details and documents as required by the AO. At the same time, since the assessee has failed to explain the reason for non-compliance before the AO, we also deem it proper to impose a cost of Rs.10,000/- (Rupees Ten Thousand only) on the assessee, which should be paid to the Income Tax Department within two weeks from the receipt of this order. The AO will proceed into the matter after verifying that the cost is paid by the assessee. Further, the assessee is also directed to make necessary compliance before the AO and not to seek adjournment without any pressing reason. In case of non- compliance on the part of the assessee, the AO will be free to pass the order in the manner as deemed fit.

In the result, the appeal filed by the assessee is allowed for statistical purposes.