KRISHI UPAJ MANDI SAMITI, CHAAPEHEDA,CHAAPEHEDA vs. NEAC, DELHI, DELHI

That the assessee craves leave to add, amend, alter or delete any of the grounds of appeal and all the above grounds are without prejudice to each other.”

The brief facts of the case are that the assessee, Krishi Upaj Mandi Samiti, Chhapiheda, a local authority, filed its return of income for the Assessment Year 2018–19 on 31.08.2018 declaring nil income. The return was Krishi Upaj Mandi Samiti vs. NeAC A.Y. 2018-19 - 3 - processed under section 143(1) of the Income-tax Act, 1961 (“the Act”) on 31.08.2019. Thereafter, the case was selected for complete scrutiny for the specific reason of examining “large receipts from incidental objects.” During the course of assessment proceedings, the Assessing Officer observed from the return of income that the assessee had shown receipts of ₹31,90,771/- from incidental objects, whereas receipts from main objects were ₹74,46,692/-. The assessee was specifically required to furnish details of the incidental objects, activities covered under such incidental objects, income earned therefrom, the nexus between incidental objects and main objects, and also copies of registration under section 12A/12AA and approval under section 10(23C) of the Act as claimed in the return. Since no compliance was made by the assessee to the statutory notices and no explanation or details were furnished in respect of the receipts from incidental objects, the Assessing Officer issued a show cause notice proposing to treat the receipts from incidental objects as business receipts not in accordance with the main objects of the assessee. As the assessee failed to respond even to the show cause notice, the Assessing Officer proceeded to frame the assessment ex parte under section 144 read with section 144B of the Act. The Assessing Officer held that the receipts from incidental objects amounting to ₹31,90,771/- were not proved to be incidental or ancillary to the main objects and, therefore, could not qualify for exemption. Consequently, the income over expenditure of ₹12,51,765/- was treated as unexplained voluntary contribution and added to the total income of the assessee. The total income was thus assessed at ₹12,51,770/- and penalty proceedings under section 270A were also initiated separately for under-reporting of income.

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

Before us, the Counsel for the assessee submitted that in the instant facts, the non-appearance has been caused due to the assessee not being served the relevant notices of hearing and that there was no mala fide intention on the part of the assessee in not causing appearance before the Assessing Officer and CIT(A). The Counsel for the assessee submitted that in the interest of justice, and in view of the fact that, substantial additions as well as penalty has been imposed in the hands of the assessee, the assessee may be granted one more opportunity to explain the case before the Tax Authority.

In response, Ld. DR placed reliance on the observations made by the Ld. CIT(A) in the appellate order.

We have heard the rival contentions and perused the material on record. In the instant case, we observe that the assessee’s case was open for scrutiny Krishi Upaj Mandi Samiti vs. NeAC A.Y. 2018-19 - 6 - with a specific reason for examining large receipts from incidental objects for which exemption has been claimed by the assessee. The Assessing Officer observed that despite a large number of opportunities, the assessee has not been able to prove the nature of these “receipts from incidental objects” and how the same are linked to the main objects of the assessee. Further, the Assessing Officer was of the view that the assessee, on account of consistent non-appearance, despite a large number of opportunities has neither explained the nature of these “receipts from incidental objects” and neither has he given any explanation / submission regarding eligibility with respect to claim of exemption on these receipts. Before us, the Counsel for the assessee submitted that these receipts from incidental objects comprises of earning income from giving out parking place for rent, giving out shops for rent etc. On going through the case records, we observe that there has been consistent non- appearance on part of the assessee at all stages of proceedings. However, in the interest of justice, the matter is restored to the file of CIT(A) with a direction to first decide on the issue of condonation of delay in filing of appeal before him. The assessee is also directed to file necessary documents / supporting evidence in support of the delay not being filed before Ld. CIT(A) within stipulated timelines.

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

Further, since there has been consistent non-compliance by the assessee at all stages of proceedings, the assessee is directed to pay cost of Rs. 10,000/- to be deposited in the Prime Minister Relief Fund and sbumit proof thereof at the time of hearing before the Ld. CIT(A).

In the result, the appeal of the assessee is allowed for statistical purposes. relates to levy of penalty under Section 272A(1)(d) and Section 270A of the Act. Since both these appeals have been dismissed by the Ld. CIT(A) on account of non-appearance by the assessee during the course of appellate proceedings, and the main appeal has been restored to the file of Ld. CIT(A) for de-novo consideration, both these appeals are also restored to the file of Ld. CIT(A) for de-novo consideration.

In the result, all appeals filed by the assessee are allowed for statistical purposes and restored to the file of Ld. CIT(A) for de-novo consideration.