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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI WASEEM AHMED, ACCOUNTANT MEMEBR
ORDER PER MAHAVIR PRASAD, JM:
The appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (‘CIT(A)’ in short) vide Appeal No. CIT(A), Vadodara- 5/10202/2019-20 dated 01.08.2020 arising in the assessment order dated 21.05.2019 passed by the ITO, Ward-Exemption, Vadodara ( ITO) under s. 154 of the Income Tax Act, 1961 (the Act) concerning AY. 2014-15.
[GSFC Science Foundation Vs. ITO] A.Y. 2014-15 - 2 - 2. The grounds of appeal raised by assessee read as under:
“Proper opportunity of being heard not provided in Faceless Appeals:
1. 1. The learned National Faceless Appeal Centre ["CIT(A)"] erred in fact and in law in passing order- u/s 250 of the Income Tax Act, 1961 ("the Act") exparte without providing proper opportunity of being heard to the Appellant.
2. The learned CIT(A) erred in fact and in law in passing order u/s 250 of the Act despite of the fact that the Appellant had sought an adjournment for the hearing of the above matter.
3. The learned CIT(A) erred in fact and in law in passing order u/s 250 of the Act in violation of the principles of natural justice.
4. The learned CIT(A) erred in fact and in law in passing order under the National Faceless Appeal Scheme ("the Scheme") without providing proper opportunity of being heard to the Appellant and consequently defeating the purpose for which the Scheme has been implemented.
5. The order of the ld. CIT(A) is liable to be set aside with directions to provide proper opportunity of being heard to the Appellant .
6. The Hon'ble Bench is requested to issue directions to the Hon'ble Central Board of Direct Taxes ("the CBDT") to implement the Scheme by providing proper opportunity of being heard to the Assessees.
Disallowance of claim of exemption u/s 11(2) of the Act: 7. The learned CIT(A) erred in fact and in law in confirming the action of learned Income Tax Officer, Ward-(Exemption), Vadodara ("the A.O.") in not allowing claim of exemption u/s 11(2) of the Act amounting to Rs.88,43,666/-.
The learned CIT (A) erred in fact and in law in confirming the action of the ld. AO in not allowing claim of exemption u/s 11(2) of the Act despite the fact that the Appellant had complied with all the conditions stipulated in section 11(2) of the Act.
The learned CIT (A) erred in fact and in law in confirming the action of the ld. AO in invoking clause (c) to section 11 (2) of the Act despite the fact that said clause was not applicable to the year under consideration.
The learned CIT (A) erred in feet and in law in confirming the action of the ld. AO in not appreciating the provision of section 11(2) in proper perspective.
Without prejudice to the above, the learned CIT (A) erred in fact and in law hi confirming the action of the Id. AO in not allowing claim of exemption u/s 11(2) on the ground of non-fulfilment of procedural requirement.
[GSFC Science Foundation Vs. ITO] A.Y. 2014-15 - 3 - Other grounds; 12. The learned CIT (A) erred in fact and in law in confirming the action of the ld. AO in charging interest u/s 234B of the Act.` 13. The learned CIT (A) erred in fact and in law in confirming the action of the ld. AO in charging interest u/s 234C of the Act.
Your appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal.”
The brief facts of the case are the assessee is a Charitable Trust registered u/s 12AA of the Income Tax Act, 1961 ("the Act"). The assessee had filed its income tax return u/s 139(1) r.w.s. 139(4A) of the Act on 29.09.2014. The assessee derived a total income of Rs.1,95,08,878/- during the year and applied an amount of Rs. 1,31,90,005/- for the object of the trust which was claimed as exemption u/s 11 of the Act. Accordingly, net surplus of Rs.61,80,070/- was offered for tax in the return filed. The application of income of Rs.1,31,90,005/- comprises of the following;
Sr. Particulars Amount (Rs.) No. 1 Application of Income (Revenue 22,57,628/- Account) 2 Application of Income (Capital Account) 1,10,210/-
3 Funds set apart u/s 1 l(l)(a) of the Act 19,78,501/-
4 Funds set apart u/s 1 1(2) of the Act 88,43,666/-
Total exemption u/s 11 of the Act 1,31,90,005/- 3.1 The return of income was processed by the ld. Assistant Commissioner - Income Tax, CPC, Bangalore ("the CPC") u/s 143(1) of the Act and issued an Intimation thereof on 28.02.2016. The said Intimation, the ld. CPC rejected the claim of exemption amounting to Rs.1,31,90,005/- u/s 11 of the Act and processed the total income of the [GSFC Science Foundation Vs. ITO] A.Y. 2014-15 - 4 - assessee at Rs.1,95,08,878/- along with a demand of Rs. 61,80,070/- payable thereon.
3.2 Thereafter, the assessee filed a rectification application u/s 154 of the Act before the ld. Income-tax Officer, Ward-(Exemptions), Vadodara ("the AO") against the Intimation u/s 143(1) of the Act dated 28.02.2016. Vide the said application, the assessee explained that it is a charitable trust duly registered u/s 12AA of the Act and hence is eligible to claim of exemption u/s 11 of the Act. In support thereof, the assessee also furnished the copy of Income Tax Return, Audit report in Form-10B, Form-10 in support of funds set apart u/s 11(2) of the Act along with the statement of total income.
3.3 Subsequently, the ld. AO passed the order u/s 154 of the Act on 21.05.2019. Vide the said order, ld. AO allowed the exemption u/s 11 of the Act to the extent of Rs. 43,46,339/- and rejected the remaining claim of exemption u/s 11(2) of the Act for Rs.88,43,666/-. Accordingly, the total income was assessed to Rs.1,51,62,539/-. The comparative details of total income are as under: (Amount in Rs.) Particulars As per ITR As per As per u/s 139(4A) intimation rectification u/s 143(1) order u/s 154 Gross total income (A) 1,95,08,878/- 1,95,08,878/- 1,95,08,878/- Less: Application of Income (Revenue 22,57,628/- 22,57,628/- Account) Application of Income (Capital 1,10,210/- 1,10,210/- Account) Funds set apart u/s 1 1(1 )(a) of the 19,78,501/- - 19,78,501/- Act [GSFC Science Foundation Vs. ITO] A.Y. 2014-15 - 5 - Funds set apart u/s 1 1(2) of the Act 88,43,666/- - - Total Exemption u/s 11 of the Act 1,31,90,005/- - 43,46,339/- (B) Net Total Income (A-B) 63,18,873/- 1,95,08,878/- 1,51,62,539/- 3.4 As ld. AO did not allow the claim of exemption for Rs. 88,43,666/- u/s 11(2) of the Act. The ld. AO rejected the said claim of exemption u/s 11(2) on the ground that the assessee had not filed Form 10 within the due date prescribed u/s 139(1) of the Act as per the provisions of section-11(2) as amended by the Finance Act, 2015.
3.5 Aggrieved by the order of ld. AO, the assessee preferred first appeal before the ld. Commissioner of Income-tax (Appeals).
3.6 During the course of appeal proceedings, the assessee was issued a notice for hearing u/s 250 of the Act by the ld. National Faceless Appeal Centre (hereinafter referred to as the "CIT(A)") on 21.01.2021 against which the assessee had e-filed adjournment for 15 days (maximum available time online). Subsequently, the ld. CIT(A) issued another notice for hearing u/s 250 of the Act on 12.07.2021 which was due for compliance in 3 days i.e.15.07.2021. Due to such short period of time given for compliance with the notice, the assessee filed adjournment seeking further time of 15 days to comply with the same. On 30.07.2021, the appellant also filed a reply with a request to adjourn the matter further since the submission & details were under compilation.
3.7 However, the ld. CIT(A) passed the ex-parte order on 01.08.2021 despite of the fact that the assessee had sought an adjournment for the hearing of the above matter. The ld. CIT(A) did not consider the adjournment application filed by the assessee on 30.07.2021 and the same [GSFC Science Foundation Vs. ITO] A.Y. 2014-15 - 6 - has not even been referred in the order of ld. CIT(A). The ld. CIT(A) passed the order without providing proper opportunity of being heard to the assessee.
We have heard the learned Sr.D.R. at length. Since, the matter had been passed ex parte on 01.08.2021. Despite of the fact that assessee had sought adjournment for hearing of the above matter, but the learned CIT(A) did not consider the adjournment application. The CIT(A) has passed an ex parte order and has not considered the adjournment application as assessee was requesting for some time in order to file the submission and details pertaining to the matter as same were under compilation. Since the order of the CIT(A) is an ex parte order and has lack of reasoning, did not pass order on merit and to our opinion, same is amount to miscarriage of justice. Therefore, in the interest of justice, we set aside this matter back to the file of the learned CIT(A) to decide afresh after considering the details to be filed by the assessee.
In the result, the appeal filed by the Assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 11/05/2022