DCIT (EXEMPTION), GHAZIABAD vs. M/S. DAYANAND DINANATH GROUP OF INSTITUTIONS EDUCATIONAL SOCIETY, KANPUR

Ld. Commissioner of Income Tax (Appeals)-II Kanpur has erred in law and on the facts & circumstances of the case. The findings of the Ld. CIT (A) are not acceptable in principle because CIT(A)has not considered the findings of the AO narrated' in the assessment order as well as broadly in the rejection order dated 28.03.2016 u/s 12AA(1)(b)(ii) of I.T.Act,

Facts narrated by the revenue authorities are not disputed here, hence, the same are not repeated here for the sake of brevity.

Ld. DR relied upon the Order of the AO and reiterated the contentions raised in the grounds of appeal.

In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records.

We have heard the Ld. DR and perused the records, especially the order of the Ld. CIT(A). We find that Assessee filed return showing NIL income on 20.9.2013. Thereafter the case of the assessee was selected for scrutiny and accordingly the statutory notices u/s. 143(2) dated 22.9.2014 and notice dated 6.4.2015 u/s. 142(1) of the Income tax Act, 1961 were issued. In response thereof, the assessee’s representative attended the proceedings and filed written submissions/ explanations alongwith books of accounts, bill voucher etc. The assessee society was registered with the Registrar of Society of UP on 10.11.2009 and copy of renewal granted from 18.9.2012 for a period of 5 years was filed. The assessee was required to furnish the copy of registration granted u/s. 12A of the Act. In this regard, assessee filed the copy of Form 10A application moved for the registration u/s. 12A but it could not produce the registration certificate u/s. 12A of the Act granted to it. The registration u/s. 12A of the Act is not available to the assessee for the year under consideration i.e. for the AY 2013-14. Accordingly, the income of the assessee was assessed in the status of AOP. During the course of assessment proceedings, the assessee was engaged in running educational institution. The assessee has shown gross receipts of Rs. 5,55,29,806/- and shown excess of income over expenditure of Rs. 1,28,66,308/-. During the course of assessment proceedings AO noticed that assessee society has received corpus funds of Rs. 25,20,000/- during the year under consideration which has been shown in its balance sheet for the FY 2012-13. Accordingly, the assessee’s counsel was asked to explain as to why not this amount may be treated as income as the assessee does not have any registration u/s. 12A of the Act, but assessee’s counsel did not give sufficient reply on this issue. Hence, the AO completed the assessment u/s. 143(3) of the Act on the total income of Rs. 1,53,86,308/- and entire amount received as corpus fund amount to Rs. 25,20,000/- was added to the income of the assessee vide order dated 23.2.2016. However, in appeal the Ld. CIT(A)-II Kanpur, by relying upon the various case laws has allowed the appeal of the assessee by holding that once an application is made under the said provision and in the case the same is not responded to within six months, it would be taken that the application is registered under the provisions and accordingly, directed the AO to grant all the benefits of exemption available as per law to the assessee till AO receives a formal copy of order granting the registration to the assessee. We find considerable cogency in the contention raised by the Revenue that Ld. CIT(A)has not considered the findings of the AO narrated in the assessment order as well as broadly in the rejection order dated 28.03.2016 u/s 12AA(1)(b)(ii) of I.T.Act, 1961 of the CIT(E), Lucknow and he has not appreciated the fact mentioned in consequential factual finding of the CIT(E) order dated 28.03.2016 u/s 12AA(1)(b)(ii) of IT Act, 1961 that the claim of the applicant for registration us/12AA on basis-of form no 1OA claimed to have been filed before JCIT-1, Kanpur on 22.08.2008 has been found to be false and assessee was not granted registration u/s 12A. Assessee society should have moved separate appeal to appropriate authority against the rejection order dated 28.3.2016 u/s. 12AA(1)(b)(ii) of the I.T. Act of the Ld. CIT(E), Lucknow. After considering the facts and circumstances of the case, we are of the considered view that the impugned order is contrary to the law and facts on the file, hence, is not sustainable in the eyes of law. Therefore, in the interest of justice, we are setting aside the 4 issue in dispute to the file of the Ld. CIT(A) to thoroughly consider the contention raised in the grounds of appeal raised by the Revenue as mentioned in the grounds of appeal and decide the issue in dispute afresh, as per law and then pass a speaking order on the same, after giving adequate opportunity of being heard to the assessee.