INCOME TAX OFFICER, ERNAKULAM vs. CHRIST EDUCATIONAL TRUST, ERNAKULAM

Brief facts of the case Brief facts of the case as submitted by the AR of the as submitted by the AR of the assessee are that the assessee is a t assessee is a trust registered u/s 12AA(1)(b)(i) A(1)(b)(i) of the Act & CO 22/Coch/2024 Christ Educational Trust, Ernakulam Page 3 of 6 with effect from AY 2011-12 vide registration number CIT/CHN/T/12A/58/ 2010-11 dated 22.6.2011. The assessee filed its return of income for AY 2016-17 on 29.09.2016. Thereafter, the said return was selected for the scrutiny under CASS and accordingly, notices u/s. 143(2) and 142(1) of the Act were issued. The assessee in spite of repeated reminders did not respond to any of the statutory notices and therefore the AO completed the assessment u/s. 144 of the Act as best of judgment. During the course of assessment proceeding, the AO found that assessee has claimed exemption u/s. 10(23C) of the Act in its return of income but no copy of approval for registration under the IT Act had been furnished. Further, the AO also observed that no evidences relating to expenses claimed amounting to Rs. 6,30,46,104/- were also furnished. Since the assessee had not furnished any copy of the registration, therefore the AO disallowed the entire capital expenses amounting to Rs. 6,26,618/- along with the amount set apart of Rs. 36,08,077/- and 50% of the revenue expenses claimed amounting to Rs. 3,15,23,052/- (6,30,46,104 x 50%) and accordingly, assessed on a total income of Rs. 3,57,57,747/- [Rs. 6,26,618 + Rs. 36,08,077 + Rs. 3,15,23,052].

Aggrieved by the assessment order passed by the AO u/s 144 of the Act, dated 27.12.2018, the assessee preferred an appeal before the ld. CIT(A)/NFAC.

Before the ld. CIT(A)/NFAC, the assessee contended that the registration certificate having been issued by the ld. CIT(Exemption), the details thereof was already available with the department. The ld. CIT(A)/NFAC held that as the copy of the order for registration had also been sent to the O/o DDIT(Exemption) i.e. the assessing officer, thus this order was already available with the AO and therefore, non submission of such certificate for any reason could not be a ground ITA No.221/Coch/2024 & CO 22/Coch/2024 Christ Educational Trust, Ernakulam Page 4 of 6 for denial of exemption. Further, ld. CIT(A)/NFAC observed that the audit report in form 10B was already uploaded by the assessee on 29.09.2016 overlooked by the AO. In view of the same, the ld. CIT(A)/NFAC directed the AO to allow the exemption claimed by the assessee u/s. 10(23C) of the Act by relying the decision of Hon’ble ITAT Ahmedabad in the case of Sardar Bhuvan Trust in to 881/2010 dated 10.05.2023.

Aggrieved by the order of the ld. CIT(A)/NFAC dated 10/01/2024, the assessee has filed the present appeal before this Tribunal.

Before us, the ld. DR vehemently submitted that the assessee has never claimed exemption u/s. 11/12 of the Act in its return of income and in fact claimed exemption u/s. 10(23)(vi) of the Act only. Further, during the course of assessment proceedings, no certificate of registration had been produced by the assessee before the AO. The ld. DR also submitted that even in support of expenses claimed in the return, no evidence was provided by the assessee and therefore, the AO has rightly disallowed the expenses claimed by the assessee.

Per contra, the ld. A.R. of the assessee vehemently submitted that the assessee is registered u/s. 12AA of the Act and accordingly, eligible to claim exemption u/s. 11 of the Act. The books of accounts of the trust are audited by a Chartered Accountant and the audit report in the form 10B was uploaded along with the return of income within the due date. Further, due to the flood situation in Kerala, only part compliance could be made before the AO and AO without giving the opportunity of being heard, passed an order u/s. 144 of the Act by violating the principles of Natural Justice. Lastly, ld. AR of the assessee submitted that while selecting the drop-down box during filing of the return, the assessee due to clerical error, had & CO 22/Coch/2024 Christ Educational Trust, Ernakulam Page 5 of 6 inadvertently claimed exemption u/s. 10(23)(vi) of the Act instead of section 11 of the Act.

We have heard the rival submissions and perused the material on record. On going through the order of the ld. CIT(A)/NFAC we find that the ld. CIT(A)/NFAC in his appellate order has extracted the order passed by the ld. CIT u/s. 12AA of the Act dated 22.06.2011 granting registration u/s. 12AA(1)(b)(i) of the Act from AY 2011-12. Therefore it is not a disputed fact that no registration has been granted in the case of assessee trust. However, we could not understand that on the one hand the ld. CIT(A)/NFAC himself observed that the assessee is registered U/s 12AA of the Act & on the other hand directed the AO to allow the exemption claimed by the assessee u/s 10(23C) of the Act especially when the Gross receipts of the assessee in the AY under consideration are more than 1 crore. Further before us, ld. AR of the assessee submitted that due to the flood situation in Kerala, only part compliance could be made before the AO and the AO without granting the opportunity of being heard, has passed an order u/s. 144 of the Act by violating the principles of Natural Justice. Further, it is also submitted by ld. AR that while selecting the drop-down box during the filing of the return, the assessee due to clerical error, had inadvertently claimed exemption u/s. 10(23)(vi) of the Act instead of section 11 of the Act. Further, before us the revenue argued that during the course of assessment proceedings, no evidence was provided by the assessee to the AO in support of the expenses claimed. Being so, taking into consideration the totality of the facts of the case, we are of the considered opinion that in the interest of justice and equity, the entire issue in dispute is remitted to the file of AO for fresh consideration in accordance with the law. Needless to say, the reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to submit the registration certificate, audit report along with the books & CO 22/Coch/2024 Christ Educational Trust, Ernakulam Page 6 of 6 of accounts/documents/records and bills and vouchers as required by the AO for completion of the assessment. The assessee is also directed not to seek unnecessary adjournments and in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.