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Facts
The assessee, a charitable trust, failed to provide necessary details and documentation to the Assessing Officer (AO) and the CIT(A) regarding employee PF contributions, charitable expenses, and other expenditures. Consequently, the AO made substantial disallowances and levied penalties. The CIT(A) upheld these additions and penalties.
Held
The Tribunal, acknowledging the assessee's lack of proper guidance and disruptions caused by the COVID-19 pandemic, decided to grant one more opportunity to the assessee in the interest of natural justice. The quantum appeals were remitted back to the AO for fresh adjudication on merits, while the penalty appeals were dismissed as consequential.
Key Issues
Whether the disallowances and penalties levied due to the assessee's failure to furnish details should be upheld, considering the prevailing circumstances and the principles of natural justice.
Sections Cited
250, 143(3), 270A, 271AAC(1), 272A(1)(d), 272A(1)(c), 69C
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Income Tax Appellate Tribunal, A BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & MS. PADMAVATHY.S
आदेश / O R D E R
PER PADMAVATHY.S, A.M: These appeals by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") for Assessment Years (AY) 2018-19 & 2020-21. The order of the CIT(A) is emanating from the order of the A.O passed u/s. 143(3) and the penalty orders u/s. 270A, 271AAC(1), 272A(1)(d) & 272A(1)(c) of the Act. For the purpose of adjudication, we will first consider the appeal filed for A.Y 2018-19.
to 2765/Chny/2025 Surabi Educational and Charitable Trust :- 2 -:
AY 2018-19- Quantum Appeal 2. The assessee is a charitable trust and filed the return of income for A.Y 2018-219 on 06.10.2018 declaring total income at Nil. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The A.O noticed that the assessee has deducted PF towards employee contribution and the same has not been remitted within the due date as specified under the said Act. The A.O called on the assessee to furnish information regarding the expenses towards charitable purposes during the previous year as reflected in Form-10B, since the assessee could not submit the required details, the A.O disallowed the employee contribution towards PF amounting to Rs. 4,73,735/- and also disallowed the entire expenditure to the tune of Rs.5,90,31,580/-. Aggrieved, the assessee filed further appeal before the CIT(A). Since, the assessee did not furnish any submissions or details before the CIT(A), the CIT(A) dismissed the appeal confirming the disallowances made by the A.O. The CIT(A) also confirmed the levy of penalty by the A.O u/s. 270A of the Act for the same reason that the assessee did not furnish any details.
We have heard the both the parities, perused the material available on record. The Ld. A.R submitted that the assessee was not properly guided by the tax consultant and due to lack of knowledge coupled with disruption caused by Covid-19 pandemic, the assessee failed to appear before the lower authorities and represent the case properly. The Ld. AR also filed an undertaking from Trustee of the assessee stating that the case would be represented properly before the lower authorities if one more opportunity is given. Considering the facts and circumstances peculiar to the present case we are inclined to give one more opportunity to the assessee in the interests of natural justice and fair play. Accordingly, we remit the appeal back to the A.O to 2765/Chny/2025 Surabi Educational and Charitable Trust :- 3 -: with a direction to consider the impugned issue afresh by calling for required details in order to decide in accordance with law. The assessee is directed to furnish the details as may be called for and cooperate with the assessment proceedings. It is ordered accordingly.
Further, we also levy a cost of Rs.5,000/- (Five thousand only) in the present appeal since considerable time and efforts have been spent by the Exchequer and for the reason that the assessee being delinquent before the lower authorities. The same shall be paid by the assessee to Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras within a period of sixty days from the date of receipt of this order and produce the receipt before the A.O.
– AY 2018-19- Penalty Appeal 5. The A.O. has initiated penalty u/s.270A for 2018-19 which is confirmed by the CIT(A). We have while deciding the quantum appeal for AY 2018-19 has remitted the appeal back to the A.O. for considering the impugned additions on merits. Therefore the appeal against the order of penalty u/s.270A which is consequential has become infructuous and dismissed accordingly. to 2765/chny/2025 – AY 2020-21- Quantum & Penalty Appeal:
For AY 2020-21 the assessee filed the return of income on 12.01.2021 declaring Nil income. The case was selected for complete scrutiny and the statutory notices were duly served on the assessee. The A.O. called for various details during the course of assessment. Since the assessee could not to 2765/Chny/2025 Surabi Educational and Charitable Trust :- 4 -: submit the entire details as called and could not substantiate with proper documents, the A.O. completed the assessee by making the following disallowances. (i) Excess expenditure disallowed – Rs.1,84,27,083 (ii) Interest disallowed – Rs.94,21,727 (iii) Unexplained expenditure u/s.69C – Rs.1,84,01,729
The A.O also initiated penalty proceedings u/s. 270A, 270AAC(1), 272A(1)(c) and 272A(1)(d) of the Act. On further appeal the CIT(A) confirmed the disallowances for the reason that the assessee did not furnish any further details with regard to the impugned disallowances made by the AO. The CIT(A) also confirmed the various penalties levied by the AO.
We heard the parties and perused the material on record. The ld AR submitted that for A.Y 2020-21 the facts are identical to that of AY 2018-19 where the disallowances / additions are made by the lower authorities for the reason that the assessee did not appear and submit any details. During the course of hearing before us, the Trustee filed an undertaking that if one more opportunity be given the assessee would submit the required details and represent the case properly before the lower authorities. Considering that the facts being identical to AY 2018-19, our decision to remit the impugned issues back to the AO for consideration on merits is mutatis mutandis applicable to AY 2020-21 also. Accordingly, we are remitting the appeal pertaining to 2020-21 also back to A.O to be considered on merits after affording a reasonable opportunity of being heard to the assessee.
We have while deciding the quantum appeal for AY 2020-21 has remitted the appeal back to the A.O. for considering the impugned additions to 2765/Chny/2025 Surabi Educational and Charitable Trust :- 5 -: on merits. Therefore the appeal against the orders of penalty u/s.270A 270AAC(1), 272A(1)(c) and 272A(1)(d) of the Act which are consequential has become infructuous and dismissed accordingly.
In the result, all the appeals of the assessee for AY 2018-19 and AY 2020-21 are partly allowed for statistical purposes.
Order pronounced on 07th day of January, 2026 at Chennai.