SANT KIRPAL VIDYAK MISSION,LUDHIANA vs. ITO (EXEMPTION), CHANDIGARH

That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having passed without passing and confronting the Draft Assessment Order (DAO) to the appellant /assessee as per the statutory requirement of law and thus, without affording sufficient opportunity of being heard being against established principles of law and that of natural justice and thus needs to be quashed.

That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having passed without waiting disposal of for the rectification application u/s 154 filed and lying pending before the Ld. A.O. on the similar issues as taken in the grounds of appeal in form No. 35 filed before the Ld. CIT(A).

That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous andperverse having passed without affording sufficient opportunity of being heard having sought adjournment on sufficient grounds, thus being against established principles of law and that of natural justice and thus needs to be quashed.

That the orders of Ld. CIT (Appeals), U/S, 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI is erroneous and illegal having confirmed the original assessment order by the Ld. Α.Ο. u/s 143(3) which was passed by not considering the facts and circumstances and the contentions of the appellant along with existences and replies filed as so summoned by the Ld. A.O., wherein Registration Order/Certificate u/s 12A by the CIT-1 Ludhiana was duly + filed AND the holding of Ld. CIT (A) that exemption u/s 12A was cancelled by the CIT (Exemption) is patently wrong, which was infactcancelled by the Ld. A.O., having no juri iction. 6. That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having decided the same on merits without considering the correct facts and representation by the appellant having not provided sufficient and proper opportunity and thereby treating the surplus of income over expenditure to the extent of Rs. 3,08,59,430/- as appellant's Income by erroneously holding that Exemption Certificate u/s 12A was cancelled by the CIT (Exemption), which infact was cancelled by Ld. A.Ο., having no juri iction and thus needs to be quashed,

That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous andperverse having decided the same on merits without considering the correct facts and representation by the appellant having not provided and thereby treating cash deposit to the extent of Rs. 3,41,28,000/-, which amount was infact legal receipts and treating the same as appellant's Income by erroneously upholding the findings of the Ld. A.O. and thus needs to bé quashed.

That the orders of Ld. CIT (Appeals), U/S 250, INCOME TAX DEPARTMENT, NFAC, (APPEALS), DELHI are illegal, erroneous and perverse having decided the same on merits without considering the correct facts. and representation by the appellant without disposing off or considering the fact that the earlier years appeals for the A.Y., 2015-16 and 2016-17 being pending before the CIT (A) itself on the major issue ofcertificate of exemption u/s 12A and thus needs to be quashed.

That the appellant craves leave to add, amend or delete any of the grounds of appeal on or before the disposal of the present appeal.”

Brief facts of the case as per the assessment order are as under: 3.1 The appellant e-filed its return of income for the A.Y. 2017-18 on 02-04- 2019 declaring NIL income belatedly and also filed audit report in form 10B on 31-08-2018 after due date. The case was selected for complete scrutiny. 3.2 It is observed by the AO that the appellant filed its ITR for the A.Y. 2017-18 on 17.3.2018 belatedly and audit report in form 10B was filed on 31.8.2018 after due date. The Assessing Officer further mentioned in the order that the appellant has not submitted valid certificate of registration u/s. 12A of the I T Act, 1961 before the AO.

3 The assessee vide reply dated 29.11.2019 had mentioned that the copy of the 12A certificate was submitted at the time of last year hearing that is A.Y. 2016-17. It was further submitted in the reply that the assessment order u/s 143(3) for the A.Y. 2015-16 and 2016- 17 was passed by the Assessing Officer and the appeals and these two assessment years are pending before the ld. CIT(A). 3.4 The Assessing Officer after a gap of almost two years vide letter dated 03.03.2021 has asked the assessee to furnish the following documents a. Trust Deed/Memorandum of Association b. Certificate of Registration u/s 12A c. Certificate under 80G of IT Act if applicable d. Certificate of Registration from Charity Commissioner e. Certificate Details of any amendment made in the Trust Deed since incorporation. 3.5 The assessee vide its reply dated 03.03.2021 had complied with the notice issued by the Assessing Officer. The reply of the assessee is available at page 41 and 42, the typed copy of the reply is as under:

6 Based on the submission given by the assessee, the ld Assessing Officer, had for the reason best known to him had rcorded the finding at page 2 and 3 of his order: “4. It is observed that the assessee has filed its ITR for the A.Y. 2017-18 on 17.3.2018 belatedly and audit report in form 10B was filed on 31.8.2018 after due date. The assessee has not submitted valid certificate of registration u/s. 12A of the I T Act, 1961. However, the assessee has claimed that the certificate of registration u/s. 12A is not traceable at present. In absence of certificate u/s. 12A, the exemption under Section 10, 11, 12 and 13 of the Act is not found allowable and eligible as per law and will be liable / chargeable to tax. Hence, to provide proper opportunity of being heard, vide notice u/s. 142(1) dated 3.3.2021 wherein the assessee was asked to show cause as to why the assessee’s claim of exemption in respect of income of the charitable or religious trust should not be disallowed and such income be taxed u/s. 164(2) of the Act at Rs. 3,08,59,430/- (surplus as per Income & Expenditure Account). 3.2 In response, the assessee responded in a very evasive manner vide letter dtd. 3.3.2021 which is placed on record: 3.3 The above reply of the assessee has been carefully considered but is not found acceptable. The assessee has not submitted certificate of registration u/s. 12A. However, the assessee has stated that the Commissioner of Income tax had cancelled exemption certificate u/s. 12A of the I T Act. The basic condition of filing ITR within the specified due date given in section 139(1) has not been met making the assessee ineligible for exemption. Further, once the Commissioner of Income tax had cancelled the exemption u/s. 12A of the Act, the exemption is withdrawn and hence all the receipts of the trust either by voluntary contribution or income derived from its property would be an income of the trust in a normal course and shall be chargeable to tax. 3.4 Under the provisions of section 12A of the Act, where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year are to be audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. 3.5 Further, as per Rule 17B of the Income-tax Rules, 1962 (hereinafter referred to as ‘the Rules’) the audit report of the accounts of such a trust or institution is to be furnished in Form no. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed form along with the return of income results in disentitlement of the trust from claiming exemption under sections 11 and 12 of the Act. 3.6 So far as the contention of the assessee, that the AO has no power to withdraw exemption u/s 11 and 12, and such a vested power with the Commissioner of Income Tax is concerned, it is I.T.A. No. 561/Chandi/2022 Assessment Year: 2017-18 8