RAJASTHAN CRICKET ASSOCIATION,JAIPUR vs. INCOME TAX OFFICER, EXEMPTIONS WARD 1, JAIPUR, JAIPUR

fu/kZkj.k o"kZ@Assessment Years : 2016-17 Rajasthan Cricket Association cuke The ITO, Exemption, North Block, SMS Stadium, Jan Vs. Ward-1, Jaipur. Path, Ambedkar Circle, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATR0798J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Shyam Lal Agarwal, C.A. & Shri Tarun Agarwal, C.A. jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Choudhary, JCIT-Sr.DR lquokbZ dh rkjh[k@ Date of Hearing : 19/02/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 15/04/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee challenges the order of National Faceless Appeal Centre, Delhi (for short CIT(A) dated 18.11.2024, the dispute relates to the assessment year 2016-17 that the order of Ld. CIT(A) arises because the assessee challenged the order passed u/s 154 of the Income Tax Act, 1961 (for short “Act”) dated 15.12.2020 passed by ITO, Exemption, Ward-1, Jaipur ( for short AO) before him.

Rajasthan Cricket Association vs. ITO (E) 2. The brief facts of the case are that the assessee filed return of income declaring NIL income for the year under consideration on 15.10.2016. The case of the assessee was selected for scrutiny under CASS. Statutory notices were issued and served upon the assessee. In response the assessee filed the reply and submitted the details required.

2.1 The assessee is registered as a society under the Rajasthan Societies Registration Act, 1958. The certificate issued u/s. 12AA of the Income Tax Act, 1961 was withdrawn by the Commissioner of Income Tax-I, Jaipur on 28.12.2010 w.e.f. 2005-06 which was subject matter of appeal and our own Hon’ble Rajasthan High Court disposed of that appeal in favour of the assessee.

2.2 In the return of income filed, association has declared total receipts at Rs. 1,80,34,791/- out of which Rs. 1,53,29,572/- claimed as application of income and claimed income accumulated or set a part u/s. 11(1)(a) of the Act upto 15 % at Rs. 27,05,219 [ 15 % of 1,80,34,791/- ] and thereby assessee trust declared Nil total income.

Rajasthan Cricket Association vs. ITO (E) 2.3 Ld. AO in the assessment proceeding noted that during the year under consideration the assessee has shown receipt at Rs. 1,80,34,791/- against which expenditure of Rs. 4,88,80,927/- resulting in excess of expenditure over income at Rs. 3,08,46,136/- . Based on that observation the claim made by the assessee to the extent of 15 % of income for an amount of Rs. 27,05,219/- was denied as claimed as per provision of section 11(1)(a) of the Act and thereby the assessment order was passed on 12.12.2018.

2.4 The appellant-assessee filed an application u/s. 154 of the Act stating that the excess of expenditure claimed by them were out of income of earlier years and therefore 15 % claim against the income of current year is allowable as per provision of section 11(1)(a) of the Act. That application of the assessee-appellant trust was rejected by the ld. AO by observing as under: Now assessee has filed application us/ 154 with the explanation that the excess expenditure was met out from accumulated funds of earlier years i.e. F.Y.2011-12, 2012-13 & 2012-13 and therefore, set- apart of 15% claimed is correct and therefore, requested to rectify the same by passing order u/s 154 of I.T. Act, 1961. The justification furnished in the application in support of its submission is as under:- Details of income applied during the years ended 31.03.2016 Particular Amount Gross expenses as per I & E account 4,88,80,927 Less: Depreciation 1,24,78,834 Add: Income Tax Demand deposited 4,25,00,000 Rajasthan Cricket Association vs. ITO (E) Add: Acquisition of fixed assets for the 83,413 7,89,85,506 objects of the Association Less: Application out of the amount 1,26,00,000 accumulated during F.Y. 2011-12 Less: Applications out of the amount 1,56,89,251 accumulated during the F.Y. 2012-13 Less: Applications out of the amount 3,53,66,683 6,36,55,934 accumulated during the F.Y. 2013-14 Total 1,53,29,572 Here it is not known either from the present application or assessment records that the assessee has filed Form No.10 within the stipulated time in the prescribed form and procedure and the purpose for which the same were filed in F.Ys.2011-12 to 2013-14. This is particularly so despite affording reasonable and sufficient opportunities to the assessee during assessment proceedings. Now, the only way left out to the AO by the assesseein assessment proceedings is to assumeand complete assessment proceedings as it desires. It may also be seen from the table furnished by the assessee as quoted above, an amount of income tax liability amounting to Rs 4,25,00,000/- was met out from the accumulated funds of earlier years. Thus, it is to be seen, discussed and decided as to whether the Form No.10 (if at all filed within the stipulated time) were filed for the specific purpose of "paying outstanding Income tax liabilities". If it is not so, then the present narrative will aobviously collapse. In these circumstances, as is clear, debatable issues are outside the ambit of provisions 154 of the Act. On the other than hand, if it is presumed that these are set-apart amounts u/s 11(1)(a), then also the stand adopted by the assessee is subject to long discussion and debate as set apart u/s 11(1)(a) of the Act is permissible on the unspent receipts of out of current years receipts and expenditure subject to maximum of 15% of gross receipts of the year. There is no ambiguity in so far as set-apart allowed u/s 11(1)(a) is concerned as it states that if assessee could not spent 100% of current years receipts but spent at-least 85% out of current years receipts, then it is permitted to set-apart remaining 15% without any conditions. Things gives further clarity from the fact that if the amount expended towards the objects is morethan 85%, then only the remaining portion out of current years receipts is allowed to be set-apart u/s 11(1)(a). This means, 15% set-apart is not a fixed standard deduction. Total receipts as per assessment records for A.Y. 2016-17 is Rs 1.80,34,791/- against which it had utilized an amount of Rs 3.64,02,093/- In these circumstances, it cannot be said that the issue now raised before the AO in 154 application is rectifiable u/s 154 of the Act. Since, assessee had failed to submit/furnish such details/information called for by the AO during assessment proceedings, the same cannot be given Rajasthan Cricket Association vs. ITO (E) any cognizance in the present application as the same are outside the ambit of provisions of section 154 of the Act. Therefore, after considering the above facts and position of the case, the present rectification application cannot be accepted and accordingly rejected as the same lack merits

3. Aggrieved, from that order passed u/s. 154 of the Act the assessee filed an appeal before the ld. CIT(A). Apropos to the grounds so raised and after hearing the contention of the assessee that appeal was disposed off by ld. CIT(A) by observing as under : “6. Decision:- I have gone through AO's order, appellant submission and other record available. It is seen that during scrutiny assessment, in the return of income filed for A.Y. 2016-17, association has declared total receipts at Rs 1,80,34,791/- out of which Rs 1,53,29,572/- has been claimed as application of income and claimed income accumulated or set-apart u/s 11(1)(a) upto 15% at Rs 27,05,219/- and declared Nil total income. However, examination of the audited Income & Expenditure account obtained during the course of assessment proceedings reveals that the gross receipts at Rs 1,80,34,791/- against which it had incurred expenditure at Rs 4,88,80,927/- resulting in excess of expenditure over income at Rs 3,08,46,136/-.

In view of above position of the case, vide letter No. ITBA/AST/F/17/2018-19/1014056649(1) dated 06/12/2018, AO specifically asked appellant to explain the discrepancy with documentary evidence in support of their submissions. However, nothing has been submitted on the specific query raised by AO. It seemed during the year assessee association does not have any surplus so as to make claim for accumulation or set apart u/s 11(1)(a) as claimed in the return of income. As has already been discussed above, its expenditure during the year exceeds revenue by Rs 3,08,46,136/-. Therefore, claim made in the Against this appellant filed rectification application with AO. The rectification application rejected by the AO vide its order dated 15.12.2020 as under- “The explain discrepancies found on the documents furnished during the course of assessment proceedings. Now assessee has filed application us/ 154 with the explanation that the excess expenditure was met out from accumulated funds of earlier years i.e. F.Y.2011-12, 2012-13 & 2012-13 and therefore, set-apart of 15% claimed is correct and therefore, requested to rectify the same by passing order u/s 154 of I.T. Act, 1961. The justification furnished in the application in support of its submission is as under:- Details of income applied during the years ended 31.03.2016 Particular Amount Gross expenses as per I & E account 4,88,80,927 Less: Depreciation 1,24,78,834 Add: Income Tax Demand deposited 4,25,00,000 Add: Acquisition of fixed assets for the 83,413 7,89,85,506 objects of the Association Less: Application out of the amount 1,26,00,000 accumulated during F.Y. 2011-12 Less: Applications out of the amount 1,56,89,251 accumulated during the F.Y. 2012-13 Less: Applications out of the amount 3,53,66,683 6,36,55,934 accumulated during the F.Y. 2013-14 Total 1,53,29,572 Here it is not known either from the present application or assessment records that the assessee has filed Form No.10 within the stipulated time in the prescribed form and procedure and the purpose for which the same were filed in F.Ys.2011-12 to 2013-14. This is particularly so despite affording reasonable and sufficient opportunities to the assessee during assessment proceedings. Now, the only way left out to the AO by the assessee in assessment proceedings is to assume and complete assessment proceedings as it desires. It may also be seen from the table furnished by the assessee as quoted above, an amount of income tax liability amounting to Rs 4,25,00,000/- was met out from the accumulated funds of earlier years. Thus, it is to be seen, Rajasthan Cricket Association vs. ITO (E) discussed and decided as to whether the Form No.10 (if at all filed within the stipulated time) were filed for the specific purpose of "paying outstanding Income tax liabilities". If it is not so, then the present narrative will aobviously collapse. In these circumstances, as is clear, debatable issues are outside the ambit of provisions 154 of the Act. On the other than hand, if it is presumed that these are set-apart amounts u/s 11(1)(a), then also the stand adopted by the assessee is subject to long discussion and debate as set apart u/s 11(1)(a) of the Act is permissible on the unspent receipts of out of current years receipts and expenditure subject to maximum of 15% of gross receipts of the year. There is no ambiguity in so far as set-apart allowed u/s 11(1)(a) is concerned as it states that if assessee could not spent 100% of current years receipts but spent at-least 85% out of current years receipts, then it is permitted to set-apart remaining 15% without any conditions. Things gives further clarity from the fact that if the amount expended towards the objects is morethan 85%, then only the remaining portion out of current years receipts is allowed to be set-apart u/s 11(1)(a). This means, 15% set-apart is not a fixed standard deduction. Total receipts as per assessment records for A.Y. 2016-17 is Rs 1.80,34,791/- against which it had utilized an amount of Rs 3.64,02,093/- In these circumstances, it cannot be said that the issue now raised before the AO in 154 application is rectifiable u/s 154 of the Act. Since, assessee had failed to submit/furnish such details/information called for by the AO during assessment proceedings, the same cannot be given any cognizance in the present application as the same are outside the ambit of provisions of section 154 of the Act. Therefore, after considering the above facts and position of the case, the present rectification application cannot be accepted and accordingly rejected as the same lack merits.” As discussed above by AO in his rectification order, the matter needs verification and analysis on the claims made by appellant and is not some mistake apparent on record. Hence, this issue cannot be dealt u/s.

154. In view of this action of AO is upheld and grounds of appeal are dismissed.”

4. Feeling dissatisfied with the finding so recorded by the ld. CIT(E) the assessee preferred the present appeal on the following grounds before this tribunal :

Rajasthan Cricket Association vs. ITO (E) “1. That the Ld. CIT(A) erred in upholding the AO's conclusion that the appellant association failed to provide necessary evidence in support of its claim.

2. That the Ld. CIT(A) failed to consider that the assessment order passed by the AO contained a computational error and a misapplication of law, both of which are mistakes apparent on the record. 3. that the Ld. CIT(A) failed to provide adequate opportunity to the appellant to explain its case, thereby violating the principles of natural justice.

4. That the order passed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, is bad in law and on facts. The Ld. CIT(A) erred in rejecting the appeal without appreciating the fact that the rectification application filed under section 154 of the Income Tax Act, 1961, was maintainable and was erroneously rejected by the Assessing Officer (AO).

5. That the Ld. CIT(A) failed to appreciate the appellant's legitimate claim for accumulation or set apart under section 11(1)(a) of the Income Tax Act, 1961. The Ld. AO's view that accumulation under section 11(1)(a) can only be claimed when there is a surplus is erroneous and contrary to settled principles of law.

5. In support of the grounds of appeal the ld. AR of the assessee has relied upon the following written submission:-

Facts of the Case Rajasthan Cricket Association is a charitable entity engaged in the object of promotion of the game of cricket in the state of Rajasthan. The Appellant, being registered under section 12A of the I.T. Act, 1961, filed its return of income for the A.Y. 2016-17 claiming the benefits under sections 11 and 12 of the Income Tax Act, 1961 declaring Nil income.

Rajasthan Cricket Association vs. ITO (E) In the assessment order passed by the Ld. Assessing Officer on 13.12.2018, the total income was assessed at Rs. Nil only, however, it was held that “during the year the assessee association does not have any surplus so as to make claim for accumulation or set apart u/s 11(1)(a) as claimed in the return of Income. As already have been discussed above, its expenditure during the year exceeds revenue by Rs. 30846136/-, therefore, claim made in the return of income u/s 11(1)(a) at Rs. 27,05,219/- is unacceptable and hence disallowed.” From the assessment order dated 13.12.2018 passed under section 143(3) of the Income Tax Act, 1961, it is apparent that the Learned AO erroneously passed the order without making proper computation of the applications of income detailed by the appellant in the Income Tax Returns along with the Form 10 filed and other documents/information attached thereto. The same was also explained by way of submissions and details filed during assessment proceedings. In the Return filed the computation was submitted for the application of income as per the provisions of section 11 and the balance of Rs. 27,05,219/-, being within 15% of the income, eligible as set apart u/s 11(1)(a) was mentioned. And thereafter, the total income which comes to NIL was mentioned. The Ld. AO not disputed the expenditure and income as per the Income and Expenditure account and also passed the order at NIL income but has wrong fully mentioned that the claim of set apart u/s 11(1)(a) (upto 15% of total income) is only available if there is a surplus. Though there was no tax effect but due to improper computation made by the Ld. AO, the appellant filed application u/s 154 of the I.T. Act, 1961 on 19.11.2020 explaining that theLd. Assessing Officer has made wrong computation at his own and has not made computation on the actual figures of application of income and set apart filed by the appellant as per the provisions of section 11 of the I.T. Act, 1961. The appellant requested to rectify the same by passing order u/s 154 of I.T. Act,1961. However, the Ld. AO passed an order, without rectifying the mistakes apparent on record and passed an order u/s 154 on 15.12.2020 mentioning that, “In these circumstances, it cannot be said that the issue now raised before the AO in 154 application is rectifiable u/s 154 of the Act. Since, assessee had failed to submit/furnish such details/information called for by the AO during assessment proceedings, the same cannot be given any cognizance in the present application as the same are outside the ambit of provisions of section 154 of the Act. Therefore, after considering the above facts and position of the case, the present rectification application cannot be accepted and accordingly rejected as the same lack merits.”. Since, the order passed by Ld. AO was devoid of merit, it was decided to file an appeal against the order passed u/s 154 before the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi.

Rajasthan Cricket Association vs. ITO (E) The Learned CIT without appreciating the merits of the case and in the written submissions filed before him, just relied upon the order of the Ld. AO and passed an order on 18.11.2024 and dismissed the appeal. Aggrieved by the order passed by the Ld. CIT(Appeals), the appellant is filing this appeal before this Honorable Bench of ITAT. It is requested to your kind honors, kindly consider our ground-wise submissions made as under. Ground No.1 That the Ld. CIT(A) erred in upholding the AO’s conclusion that the appellant association failed to provide necessary evidence in support of its claim. Our submissions 1. That, in the original assessment made by the Ld. AO, the AO did not raise any doubt about the applicability of the benefit of sections 11 and 12 of the Income Tax Act, 1961, further, no disallowance was made from the return of income. The only issuewas on the claim made for accumulation or set apart u/s 11(1)(a),which was not allowed by the Ld Assessing Officer on the basis of the wrong fact that the appellant does not have any surplus and hence the set apart cannot be claimed.

6. The appeal before the Ld. CIT(A) was on the merits of the fact that the Ld. AO has made a mistake apparent on record, where the claim u/s 11(1)(a) is unconditional and a part of applications of income. However, the Ld. CIT(A) has held at Page No. 12 of his order that, “As discussed above by AO in his rectification order, the matter needs verification and analysis on the claims made by appellant and is not some mistake apparent on record. Hence, this issue cannot be dealt u/s.

are dismissed.” The Ld. CIT(A) erred in reading a clear interpretation of Section 11(1)(a) and ignoring the fact that no additional verification or analysis is required, where all the relevant documents and information are already on record before the Ld. AO. In view of the above, it is requested to your kind honors to allow the ground in Favor of the appellant association. Ground No. 2 That the Ld. CIT(A) failed to consider that the assessment order passed by the AO contained a computational error and a misapplication of law, both of which are mistakes apparent on the record. Our Submissions

1. That the Ld. AO has completed the assessment after accepting the benefits under section 11 and 12 of the Income Tax Act, 1961 and passed the order at Nil income. In the assessment order, the Ld. AO has mentioned that the application of income as Rs. 1,80,34,791/- (restricted to the gross receipts),and arbitrarily held at para 4 of the order passed under section 143(3) that, “In the return of income filed for A.Y. 2016-17, Association has declared total receipts at Rs 1,80,34,791/- out of which Rs 1,53,29,572/- has been claimed as application of income and claimed income accumulated or set-apart u/s 11(1)(a) upto 15% at Rs 27,05,219/- and declared Nil total income. However, examination of the audited Income &Expenditure account obtained during the course of assessment proceedings reveals that the gross receipts at Rs 1,80,34,791/- against which it had incurred expenditure at Rs 4,88,80,927/- resulting in excess of expenditure over income at Rs 3,08,46,136/-.”

2. However, the applications made as per the Income Tax Return, computation of income, and the Form 10B were 1,53,29,572/- only. Further, there was no disallowance of any application by the Ld. AO as claimed in the income tax return by the appellant.The copy of the ITR and Form 10B (duly filed), is available with at paper book page 86 to 95 and page 75 to 79 respectively. The details as available on record before the Ld. Assessing Officermake it evident that out of the total expenditure of Rs. 3,64,02,093/- as per the income & expenditure accounts, only 1,53,29,572/- were applied out of the current year's income and the balance applications were made out of last year’sincome accumulations. The same is also evident from Annexure A to the audit report available at page79of the paper book.

3. That this evidently suggests, the Ld. AO has not gone through the Income Tax return and details for application claimed under section 11 of the Income Tax Act, 1961 Further at Para 5 of the Ld. AO’s assessment order (concluding para) it was held that, “In view of above position of the case, vide letter No. ITBA/AST/F/17/2018- 19/1014056649(1) dated 06/12/2018, it was specifically asked to explain the discrepancy with documentary evidence in support of their submissions, if any by 10/12/2018. However, nothing has been submitted on the specific query raised. This clearly establishes that during the year assessee association does not have any surplus so as to make claim for accumulation or set apart u/s 11(1)(a) as claimed in the return of income. As already been discussed above, its expenditure during the year exceeds revenue by Rs 3,08,46,136/-Therefore, claim made in the return of income u/s 11(1)(a) at Rs 27,05,219/- is unacceptable and hence disallowed.” Since records, such as the Income Tax Return, Computation of Income, Financial Statements, and Audit report, were already submitted to the Ld. AO during the assessment proceedings, all the documents/informationrequiredfor a claim of set apart under section 11(1)(a), theLd AO has erroneously mentioned that the assessee has no surplus to claim for accumulation in the order. Hence, a rectification application was preferred under section 154 of the Income Tax Act,1961 In view of the above, it is requested to your kind honors to allow the ground in favor of the appellant association. Ground No. 3 “That the Ld. CIT(A) failed to provide adequate opportunity to the appellant to explain its case, thereby violating the principles of natural justice.”

Rajasthan Cricket Association vs. ITO (E) Our Submissions In this particular case, if the Ld CIT(A) was of the view that the appellant association did not provide sufficient information, an opportunity to be heard ought to have been provided, as the same was never questioned by the Ld CIT(A) in during the appellate proceedings. That, passing an order without giving an opportunity was a complete violation of natural justice. Ground No. 4 That the order passed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, is bad in law and on facts. The Ld. CIT(A) erred in rejecting the appeal without appreciating the fact that the rectification application filed under section 154 of the Income Tax Act, 1961, was maintainable and was erroneously rejected by the Assessing Officer (AO). Our Submissions The rectification application was disposed of by the Ld. AO on 15/12/2020 after rejecting the application and held at page 2 of the order that, “Here it is not known either from the present application or assessment records that the assessee has filed Form No.10 within the stipulated time in the prescribed form and procedure and the purpose for which the same were filed in F.Ys.2011-12 to 2013-14. This is particularly so despite affording reasonable and sufficient opportunities to the assessee during assessment proceedings. Now, the only way left out to the AO by the assessee in assessment proceedings is to assume and complete assessment proceedings as it desires. It is clear from the above statement of ld. AO that, he has grossly erred in mentioning that the Form 10 for FY 2011-12 to FY 13-14 have to be verified now at the time when rectification has been sought of the mistake, while it is well known to the ld. AO that the assessment of all those previous years have already been completed under scrutiny assessment and further order under section 250 of the I.T. Act, 1961. Hence, it is very clear that all such records were available in his own files and knowingly mentioning the wrong facts were just with the intend to reject the application for rectification. Further, as per the assessment record which is available on E- proceedings of the Income Tax portal, the assessee has submitted all the required details during the assessment proceedings on 20.11.2018 vide letter dated 19.11.2018 like copy of the Form 10B, Balance Sheet, Income & Expenditure Account, Computation of Income, ITR etc. required for the claim of the assessee and to complete the assessment proceedings. It cannot be a valid argument on the part of the ld. AO that the claim under section 11(1)(a) denied at the time of assessment, which Rajasthan Cricket Association vs. ITO (E) is otherwise available without any details, could have been checked at the time of assessment proceedings only and not now, whereas denying benefit of section 11(1)(a) is a mistake apparent on mistake on part of the Ld. AO. Further, Section 154 of the Act allows rectification of mistakes apparent from the record. The Hon’ble Supreme Court in the case of T.S. Balaram v. Volkart Bros. [(1971) 82 ITR 50 (SC)] has held that a mistake apparent from the record should be patent and not requiring prolonged reasoning. The present case involves an apparent mistake, as the facts were evident from the records. In view of the above, it is requested to your kind honors to allow the ground in favor of the appellant association.” 5.1 To support the contention ld. AR of the assessee also filed a detailed paper book in support of the contention the index of the document submitted reads as under:-

Sr. Particulars Page No. No.

Income from property held for charitable or religious purposes. 11. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income— (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property; That provision, being very clear as vanilla the claim of the assessee is very much within the law. Not only that the issue which the revenue raised has already been settled by our Hon’ble Rajasthan High Court in the case of Commissioner of Income-tax, Bikaner Vs. Krishi Upaj Mandi Samiti [ 69 taxmann.com 425 (Rajasthan) ] wherein the High Court held that; Where assessee, a charitable trust, incurred expenditure in excess of income in previous year relevant to assessment year for charitable purposes, out of accumulated charity fund, it could not be denied benefit of exemption under Rajasthan Cricket Association vs. ITO (E) section 11(1)(a) in respect of income of previous year relevant to assessment year, which had been admittedly applied for charitable purposes Respectfully following the binding precedent and the provision of the law we consider the appeal of the assessee direct the ld. AO to allow the claim of Rs. 27,05,219/- as claimed in the return of income.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 15/04/2025.