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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Rajpal Yadav & Mrs. Annapurna Gupta
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH (Conducted Through Virtual Court) Before: Shri Rajpal Yadav, Vice President And Mrs. Annapurna Gupta, Accountant Member ITA No. 454/Ahd/2019 Assessment Year 2013-14
Taramandal Charitable The ACIT(CPC), Trust, 202, Matruchhaya, Post Bag No. 2, 47, Haribhakti Colony, Vs Electronic City, Race Course, Vadodara Post Office, PAN: AAATT6344A Bangalore-560100 (Appellant) (Respondent)
Revenue by: Shri S.S. Shukla, Sr. D.R. Assessee by: Shri Parimal Sinh B. Parmar, A.R. Date of hearing : 22-12-2021 Date of pronouncement : 10-01-2022 आदेश/ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:-
The present appeal has been filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-1, Vadodara, (in short referred to as CIT(A)), dated 30-06-2017, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the “Act”) pertaining to Assessment Year (A.Y) 2013-14.
The grounds raised by the assessee are as under:-
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The Ld. CIT(A) has erred in not appreciating that assessee falls below taxable limit even after disallowance, hence additions are not taxable. 2. The Ld. CIT(A) has erred in law and on facts in confirming the taxation of income of the assessee at maximum marginal rate u/s. 167B of the Act. 3. The Ld. CIT(A) has erred in law and on facts in confirming the disallowance of deduction of Rs. 51,420/- being amount applied to charitable purposes by the appellant u/s. 11 of the Act. 4. The Ld. CIT(A) has erred in law and on facts in confirming the disallowance of Rs. 16,422/- being 15% of the amount set apart from application u/s. 11 of the Act. 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. The Ld. CIT(A) has erred in law and on facts of the case in confirming action of the Ld. A.O. in levying interest u/s. 234A/B/C of the Act. 7. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.
The solitary issue in the present appeal relates to adjustment made to the income of the assessee in the intimation u/s. 143(1) of the Act denying the benefit of deduction/exemption of income claimed by the assessee as a charitable trust as per the provisions of section 11 of the Act, resulting thereby in taxable income being assessed and tax demand being raised on the assessee in the intimation u/s. 143(1) of the Act.
As per the intimation u/s 143(1) of the Act, the assessee had shown income from other sources amounting to Rs. 1,09,480/- and claimed deduction against the same on account of applying its income to charitable purposes in India amounting to Rs. 51,420 and amount accumulated or set apart for application to charitable purpose amounting to Rs. 16,422/-, thus
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claiming total deduction of Rs. 67,842/-.Gross total income thus returned by the assessee was Rs. 41,638/- against which no taxes were shown as payable. In the intimation the deductions claimed of Rs. 51,420/- and Rs. 16,422/- ,as stated above, was denied and the total income assessed at Rs. 1,09,480/- on which taxes were computed at normal rate amounting to Rs. 33,829/- and after including interest thereon total income tax liability of Rs. 50,289/- was raised on the assessee.
The assessee went in appeal against the adjustments made before the ld. CIT(A) contending that the denial of deduction as claimed in the return was not correct since the assessee was registered as public charitable trust by the CIT u/s 12A of the Act. It was further contended that in any case, even after the denial of deduction, the gross income of the assessee was below the taxable limit prescribed for AOPs, in which status the assessee trust was assessed.
5.1 The ld. CIT(A) however upheld the adjustments made in the intimation stating that the assessee had not furnished the details of its registration u/s. 12A/12AA in the return of income and had in fact mentioned that it had not been registered under the said section. The relevant finding of the ld. CIT(A) at para 5 of the order is as under:- “5. I have considered the appellant’s submission. A perusal of the print out of the return of income filed by the appellant in ITR-7 for A.Y. 2013-14 shows that the appellant has not entered the details of registration u/s. 12A/12A in Col, C(i) of Schedule Part-A-GEN. Similar, the appellant has not entered the details of registration u/s. 10 in Col. B(i) of Schedule Part-A-GEN. As a matter of fact, in the return of income in Clause-(i) where it has been asked as to whether registered u/s. 12/12AA, the reply given is ‘No’. Due to this fact, the exemption claimed by the appellant u/s. 11 & 12 of the Act has not been allowed to it. Thus, the return has been processed u/s. 143(1) of the Act by ACIT, CPC, on the basis of information given in the return of income filed by the appellant trust and I don’t find any mistake in such processing. Accordingly, the grounds of appeal are dismissed.”
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We have heard both the sides. The denial of deduction claimed by the assessee u/s. 11 of the Act in the intimation u/s. 143(1) of the Act was for the reason that assessee had not furnished details of its registration as a charitable trust u/s. 12A of the Act and had in fact stated “no” against column in the return of income asking whether registered u/s. 12A/12AA of the Act. But at the same time we find that the necessary details of registration u/s. 12A had been filed before the ld. CIT(A) and the assessee had also pointed out that in any case even if it is treated as not registered and assessed in status of AOP since its taxable income was below the limit prescribed for AOPs no tax liability arose in the case of the assessee. We have gone through the provisions of section 143(1) and we find that the said section provides ,by way of proviso, that no adjustments to the income shall be made till the same is intimated to the assessee and 30 days time is given to the assessee to respond to the same. The said proviso u/s. 143(1) are as under:- “143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub- section (1) of section 139; (iv) disallowance of expenditure 82[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 83[section 10AA or under any of the provisions of Chapter VI-A under the heading "C.—Deductions in respect of
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certain incomes", if] the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:]”
6.1 In the present case, the facts on record do not reveal any such opportunity being granted to respond. Therefore, when the assessee had responded before the ld. CIT(A), i.e, the first available opportunity, pointing out with evidence that it was a registered charitable entity and thus entitled to the deductions/exemptions claimed he was duty-bound to consider the same and accordingly adjudicate the issue.
6.2 The assessee, we have noted, had also pleaded that even prima facie no tax was due as payable by it even after making the adjustments as its income was below the taxable limit. The Ld.CIT(A),we find, has not taken any cognizance of this contention of the assessee.
6.3 The Ld. CIT(A)’s order, justifying the adjustments on the basis of disclosure made by the assessee that it was not registered as a charitable entity, is we find taking a hyper technical view on the issue ,particularly when the adjustment was made without affording any opportunity to the assessee as provided in law , coupled with the fact that the assessee had evidenced its registration u/s 12A of the Act to the Ld.CIT(A) by producing the certificate.
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Also the Ld. CIT(A) has not addressed the alternative argument of the assessee that even after the adjustments its income was below the taxable limit .
6.4 In view of the above ,we consider it fit to restore the issue to the ld. CIT(A) with the direction to decide the appeal after considering the submissions of the assessee. Needless to add due opportunity of hearing be granted to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 10-01-2022
Sd/- Sd/- (RAJPAL YADAV) (ANNAPURNA GUPTA) VICE PRESIDENT True Copy ACCOUNTANT MEMBER Ahmedabad : Dated 10/01/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद