SHRI PRABHAS PATAN JAIN SWETAMBERMURTI PUJAK SANGH,VERAVAL, GUJARAT vs. ITO EXEMPTION WD 2, RAJKOT

Grounds of appeal raised by the assessee are as follows:

“1. That the Ld. CIT(A) has grievously erred in confirming the assessment by the learned CPC of the Nil income returned by the appellant at Rs.68,61,494/-.

2. That the Ld. CIT(A) has grievously erred in failing to appreciate that the Ld. CPC has travelled beyond the jurisdiction vested u/s 143(1) of the Act.

Facts of the case are that the appellant is a public charitable trust duly registered under the provisions of Bombay Public Trust Act, 1950 as also under section 12A of the Income Tax Act. For the assessment year under consideration the appellant e-filed its return of income on 01/01/2022 declaring therein gross income of Rs. 1,80,69, 123/- which inter alia included deemed income u/s 11(3) of Rs.68,61,494/-. The said income was set off against expenses and claim u/s 11(1)(a) and 11(2) resulting in Nil taxable income. The Ld. CPC whilst processing the said return u/s 143(1) of the Act has assessed the income at Rs. 68,61,494/- by bringing to tax the deemed income u/s 11(3) separately. 3.1 The appellant also begs to submit that in accordance with the provisions of the first proviso to sub-section 1 of section 143, an opportunity has to be provided to it before any adjustments are made in the return. The appellant in this regard had raised two grievances on the portal which remained unresolved and the adjustment was made u/s 143(1)(a). The findings of the Ld. CPC are contrary to facts and unjustified in law and the appellant being aggrieved has preferred this appeal.

The assessee filed an appeal before the Commissioner of Income Tax(Appeals), against the order on 28.12.2022. That the Ld. CIT(A) has dismissed the appeal with following observation:

The assessee filed an appeal before us against the impugned order of Ld. CIT(A) dated 28.12.2022.

During the course of hearing, Ld. AR of the assessee is Public Charitable Trust and due to one reason (Notice not served) of the other reason, the assessee cannot filed the relevant documents in support of claim of expenses, the Ld. AR of the assessee prayed for an opportunity to be given to the assessee to present his case before the lower authority.

On the contrary, Ld. DR for the revenue relied on the judgement of the Ld. CIT(A) and not objected to the prayer of the assessee.

We have heard both the parties and perused the material available on record. We note that for the assessment year 2021-22, the appellant e-filed its return of income on 01/01/2022 declaring therein gross income of Rs. 1,80,69, 123/- which inter alia included deemed income u/s 11(3) of Rs.68,61,494/-. The said income was set off against expenses and claim u/s 11(1)(a) and 11(2) resulting in Nil taxable income but was assessed at Rs. 68,61,494/- by bringing to tax the deemed income u/s 11(3) separately. Before the Honourable Kolkata High Court in the case of CIT v. Natwarlal Chowdary Charitable Trust (1189 ITR 656), which has since decided the issue in favour of the appellant in accordance with the provisions of the first proviso to sub-section 1 of section 143, that an opportunity A.Y. 2021-22 Shri Prabhas Patan Jain v. ITO(E) has to be provided to it before any adjustments are made in the return. We note that assessee was not given an opportunity of being heard and could not plead his case successfully before the ld. CIT(A) because notices were only sent not served on assessee. We also note that assessee has appeared before the Ld. AO and furnished all the documents. It is settled law that principles of natural justice and fair play require that the affected party should be granted sufficient opportunity of being heard to represent case. In the interest of justice, we deem it fit and proper to set aside the order of the ld. CIT(A). We restore the matter back to the file of Ld. CIT(A) for de novo adjudication of this matter and pass a speaking order after affording opportunity of being heard to the assessee, who in turn, is also directed to contest his stand forthwith.