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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI AMARJIT SINGH, JM & SHRI MANOJ KUMAR
O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 04.11.2019 passed by the Commissioner of Income Tax (Appeals)-6, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2014- 15.
The assessee has raised the following grounds of appeal: - “1) The Learned Commissioner of Income Tax (Appeals) ("Ld. CIT(A)") erred in passing the order u/s. 250 of the Income Tax Act, 1961 without giving an opportunity of being heard to your Appellant thereby violating the principles of natural justice. Looking to the facts and circumstances of appellant's case and in law, it is submitted that vide letter dated 09/10/2019 your appellant had requested the Ld. CIT(A) for a short adjournment as the concerned authorized person was out of India. Without prejudice to the above:
2 A.Y. 2014-15 2) The Ld CIT(A) erred in confirming the action of the Learned Assessing Officer ("Ld. AO") that activity of providing protection and benefit of the members of the public who invest and deal in securities through the members of the Multi Commodity Exchange ("The Exchange") by compensating the investors in respect of the claim against defaulting members of the Exchange does not fall within the definition of "charitable purposes". Your Appellant submit that looking to the facts and circumstances of the Appellant's case and in law, the said object is very well covered within the definition of "charitable defined in Section 2(15) of the Income-tax Act 1961. The hon'ble [TAT. NI in your Appellants own case has granted the registration u/s. 12A of the Won- Tax Act, 1961 accepting the above object of your Appellant's as a charitable purpose. The Ld AO therefore be directed to accept the said activities as charitable purpose and grant exemption u/s.11 of the Income Tax Act, 1961. (B) The Ld. CIT(A) also erred in confirming the action of the Ld AO that the Second and Third objects of your Appellants i.e., creating awareness by educating general public and other stake holders through publishing books and other literature by means of media, advertisements, holding events, etc. of trading on commodity exchange does not fall under the definition of charitable purpose as defined in Section 2(15) of the Act. Your appellants submit that looking to the facts and circumstances of your Appellant's case and in law, these objects are very well covered within the definition of charitable purposes. The Ld AO be directed to consider the same as charitable activities and allow the benefit of section 11 of the Income-tax Act 1961 on amount of Rs.1,07,50,673/- spent on these objects.
The Ld. CIT(A) erred in confirming the action of the Ld AO that your Appellant is for the benefit of related party as mentioned in section 13(3) of the Act, 1%1 and thereby rejecting the claim of exemption under Section 11 of the Income-tax Act 1961. Your Appellant submits that looking to the facts and circumstances of your Appellant's case and in law; it is submitted that your Appellants has paid compensation in respect of claim against defaulting members of the Exchange during the year and has not applied its income directly or indirectly for the benefit of any person referred to in Section 13(3) and therefore there is no violation of section 13(3) of the Act. The Ld AO be directed to grant exemption under Section 11 of the Income-tax Act 1961.
4. The Ld. CIT(A) erred in confirming the action of the Ld AO that your Appellant had received contribution charges and penalties from the members of the Exchange and from the Exchange are in nature of business activities and are therefore hit by provisions of section 2(15) of the Income Tax Act, 1961. Your Appellant submits that looking to the facts and circumstances of your Appellant's case and in law; it is submitted that it has neither charged any contribution charges or penalties nor provided or rendered any services for a fee or cess either directly or indirectly 3 A.Y. 2014-15 which are in the nature of commercial activities which are prima- facie in the nature of business activities. The Ld AO be directed to grant exemption under Section 11 of the Income-tax Act 1961. 5 (A) The Ld. CIT(A) erred in confirming the action of the Ld AO that amount of Rs.25,00,000/- and Rs.2,91,18,428/- being Corpus Contributions received from the Exchange as income u/s. 2(24) of the Act. Your appellant submits that looking to the facts and circumstances of your Appellant's case and in/114 said Corpus Contributions have been received from the Exchange with specific directions that only income is to be used for the objects of the Trust and therefore are exempt u/s. 12 of the Act. (B) The Ld. CIT(A) also erred in confirming the action of the Ld AO who considered the Corpus Contributions received from the Exchange as not Voluntary Contribution. Your appellant submits that looking to the facts and circumstances of your Appellant's case and in law, the said Contributions received from the Exchange are corpus contributions as per the letters received from the Exchange. The Ld AO therefore be directed to consider the said amount as Corpus contributions being exempt u/s. 12(1) of the Income Tax Act, 1961. Your appellant further reserves the rights to add, amend or alter the aforesaid grounds of appeal
as they may think fit by themselves or by their representatives.”
3. The brief facts of the case are that the appellant is a trust registered with DIT(E), Mumbai u/s 12A under Registration No. 46035. The trust is also registered with the Charity Commissioner Mumbai vide Registration No. E-29307(Mumbai). The appellant filed its return of income on 30.09.2014 along with the Income & Expenditure Account, Balance-Sheet and Audit Report in Form 10B declaring total income to the tune of Rs. Nil. The case was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessment was completed u/s 143(3)(ii) of the Act on 26.12.2016 determining total income to the tune of Rs.6,56,44,310/- by rejecting the claim of the assessee trust u/s 11 of the Act. The AO made the addition on account of business profit, income from other sources and disallowed the expenses us/ 37 of the Act. The total income of the assessee was assessed to the tune of Rs.6,56,44,310/-. Thereafter, the appellant preferred an appeal before the 4 A.Y. 2014-15 CIT(A) who dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us.
We have heard the argument and advanced by the Ld. Representative of the parties and perused the record. In fact, the Ld. Representative of the assessee did not argue the case on merits but argued on this point that the CIT(A) has decided the matter of controversy in absence of the assessee and without giving an opportunity of being heard to the assessee in accordance with law, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside in the interest of justice. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. On appraisal of the order passed by the CIT(A) dated 04.11.2019, we find that the CIT(A) has decided the matter of controversy in absence of the assessee/Representative of the Assessee without giving an opportunity of being heard to the assessee in the accordance with law. A proper and reasonable opportunity is required to be given to the assessee before deciding the matter of controversy in accordance with law.
For this proposition we place reliance upon the following case laws. (1) CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 154 DTR (Bom) 302 (2) CIT Vs. S Chenniappa Mudaliar (1969) 74 ITR 1 (SC) 6. Accordingly in the interest of justice, we set aside the finding of the CIT(A) on all the issues and remit the issues raised in the appeal to the file of the Ld. CIT(A) to consider the issue afresh and pass an order on the merits of the case after giving a proper/reasonable opportunity of being heard to the assessee in accordance with law.