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Income Tax Appellate Tribunal, DELHI BENCH “F” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O.P. KANT
PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the assessee against the impugned order dated 30.03.2017, passed by Commissioner of Income Tax (Appeals)-I, NOIDA for the quantum of assessment passed u/s.143(3) for the Assessment Year 2010-11. In the grounds of appeal
, the Assessee has raised following grounds:
1. That under the facts and circumstances, the impugned assessment order determining income at Rs. 12,31,458/- and the impugned CIT (A) order sustaining the additions made by the AO and further enhancing the assessable income to Rs. 11,95,01,215/- are illegal and unsustainable in law as well as on merits.
2. That under the facts and circumstances, the Ld. AO erred in law as well as on merits in treating the excess of income over expenses of hostel division of Rs.7,38,410/- as business income and further erred in taxing the same U/s.11 (4A) r.w.s. 2(15) of the I.T Act. Ld. CIT (A) also erred in not holding the said amount as exempted U/s.11.
3. That under the facts and circumstances, the Ld. AO erred in law as well as on merits in disallowing advertisement expenses of Rs.4,93,048/- claimed in hostel division expenses and in taxing the same as normal income. Ld. CIT (A) also erred in not deleting the said disallowance. 4. That under the facts and circumstances, Ld. CIT (A) erred in law as well as on merits in enhancing the assessed income of Rs. 12,31,458/- to Rs.11,95,01,215/-, thus in making a net enhancement of Rs.11,82,69,757/- by wrongly holding the total fee receipts of Rs.6,63,62,413/- from students and total donation receipts of Rs.5,31,38,802/- as chargeable to tax U/s.56 of the Act as “income from other sources” and in holding that the same as not eligible for exemption U/s.11 of the l.T Act. 5. That without prejudice to G.N. 4, the Ld. CIT (A) exceeded his jurisdiction in examining the issue of eligibility of claim of section 11 and further exceeded his jurisdiction in holding the fee receipts and donations as taxable U/s.56 being not eligible for exemption U/s. 11 of the I.T. Act.
6. That under the facts and circumstances the Ld. CIT (A) exceeded in his jurisdiction as well as erred in law as well as on merits in holding that no deduction shall be allowed, which finding is without any basis and material on record.
That the issue of not allowing the deduction, since not a part of show cause notice U/s.251 (2) of the I.T Act, therefore this issue could not had been examined and adjudicated and also, therefore, outside the scope and jurisdiction of Ld. CIT (A), for making enhancement in the income on account of not allowing the deductions.”
Ld. Counsel for the assessee informed that the Ld. CIT (A) has passed an ex-parte order, because the notices were sent on wrong address, and therefore, no intimation or notice could be received about the date of hearing. He informed that in Form no.35, address for sending the notice has been duly mentioned and the notice has been sent on the address mentioned in the assessment order. Thus, in the interest of justice, the matter should be restored back to the file of the assessee to decide the issue afresh.
Ld. DR also accepted that the matter can be restored back to the file of the Ld. CIT (A).
Here, in this case, the assessee is a society which was established to promote and provide education in various fields, which was running institute in the name and style of M/s. Girls Institute of Technology, Knowledge Park-2, Greater Noida. Looking to its aims and objects, registration u/s.12A has been granted. Ld. Assessing Officer has made various additions, denying exemption u/s. 11(1) on various grounds.
Ld. CIT (A) has not only has confirmed the action of the Assessing Officer although on merits, but has made huge enhancement and has determined the income of Rs. 11,95,01,215/- by adding the entire fees received from the students as well as donations as compared to assessment made by the Assessing Officer at a net profit of Rs.12,31,458/- on a violation of Section 11(4A). Ld. CIT (A) was made the enhancement but the notice of enhancement was sent on a wrong address. Not only he has denied the benefit of Section 11 to 13 but has taxed the entire receipts from carrying out the activity of education, denying all the expenses including the donations. Once registration has been granted u/s.12A then the computation of such charitable Trust/Society has to be done in accordance with Section 11 to 13 and only those additions/disallowances can be made if they are in violation of conditions therein. It is unfathomable that the entire receipts and donations receipt can be taxed as income of the assessee without allowing any expenses debited to the income and expenditure account. Once it is a fact that assessee was running an educational institution and was registered as a charitable society, then it was incumbent upon the CIT (A) to compute the income as per section 11 to 13 of the Act. Since it is an ex-parte order, therefore, the matter is remanded back to the file of the Ld. CIT (A) to be decided afresh and in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 17th February, 2020.