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Facts
The assessee filed a NIL return for AY 2020-21, claiming exemption u/s 11(1)(c) but failed to provide proof of 12A/12AA registration. The AO consequently disallowed the exemption, treated gross receipts as business income, and estimated income u/s 44AD, making substantial additions in an ex-parte assessment order u/s 144 r.w.s. 144B. The CIT(A) dismissed the assessee's appeal, also ex-parte, due to lack of submissions, thereby upholding the AO's order.
Held
The Tribunal noted the ex-parte orders passed by both the AO and CIT(A) without providing adequate opportunity of hearing, despite the assessee's claim of existing 12A/12AA registration. With the Ld. DR's agreement, the Tribunal decided to remit the case back to the AO for fresh adjudication, directing the AO to provide proper opportunity to the assessee, who in turn must produce all necessary documents and evidence.
Key Issues
The key issues were the validity of ex-parte assessment orders passed by the AO and CIT(A) without granting proper opportunity of hearing, the disallowance of exemption u/s 11(1)(c) and estimation of income u/s 44AD, and whether the matter should be remitted for fresh adjudication.
Sections Cited
12A, 12AA, 11, 11(1)(c), 44AD, 144, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “A”, NEW DELHI
Before: SHRI SHAMIM YAHYA, & SHRI SUDHIR KUMAR
The Assessee has filed the instant Appeal against the Order of the Ld. CIT(Appeal)/NFAC, Delhi dated 30.10.2023, relating to assessment year 2020-21 on the following grounds:- “1. On the facts and circumstances of the case and in law, the assessment order passed by the AO by making addition of Rs. 26,56,12,954/- and Rs. 2,07,91,846/- on the ground that the assessee failed to furnish certificate of registration u/s. 12A/12AA is totally erroneous without appreciating the fact that the assessee was duly registered u/s. 12A/12AA of the Act and this fact was verifiable from the department’s own records.
2. On the facts and circumstances of the case and in law, the AO erred in passing exparte order and CIT(A) erred in passing exparte order and CIT(A) erred in not holding so.
3. On the facts and circumstances of the case and in law, the order passed by lower authorities CIT(A) and AO is against the principles of natural justice.
On the facts and circumstances of the case and in law, the CIT(A) erred in not adjudicating the grounds of appeal
on merit.
5. On the facts and circumstances of the case and in law, the CIT(A) erred in passing exparte order.
6. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in passing order without providing proper opportunity of being heard.
7. On the facts and circumstances of the case and in law, the AO erred in not allowing the deduction / exemption u/s. 11 of the Act and CIT(A) erred in not holding so.
8. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition made by the AO by invoking section 44AD of the Act on account of estimation of gross receipts of Rs. 2,07,91,846/- i.e. @ 8% of Rs. 25,98,98,077/-.
9. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of AO in disallowance of exemption claimed u/s. 11(1)(c) of the Act of Rs. 26,56,12,954/-. 10 On the facts and circumstances of the case and in law, the AO erred in treating the assessee as an AOP (Association of Person) and treating the gross receipts as deemed receipts from business and CIT(A) erred in not holding so.” 2
Brief facts of the case are that Assessee filed its return of income for the year under consideration declaring total income as NIL. The case of the assessee was selected for scrutiny under CASS for the reasons of expenditure for charitable or religious purposes and depreciation claimed by trust during the year. The notices were issued and served upon the assessee accordingly. The assessee did not respond to the notices. During the assessment proceedings, AO noted that the assessee had claimed exemption u/s. 11(1)(c) of the Act to the tune of Rs. 26,56,12,954/-, however, the assessee failed to furnish the Certificate of Registration u/s. 12A/12AA and as such had failed to prove that it was a registered trust duly approved by the competent authority. AO further noted that assesee had only filed form 10-B, which could not be said to be fulfilling the condition laid down for claiming deduction u/s. 11 of the Act, therefore, the AO had disallowed the aforesaid exemption claimed. Further, the AO had considered the gross receipts of the assessee as receipts from business and the income from such receipts was estimated at 8% of the gross receipts, i.e. 8% of Rs. 25,98,98,077/- at Rs. 2,07,91,846/- and added the same to the total income of the assessee vide exparte assessment order dated 13.09.2022 passed u/s. 144 r.w.s. 144B of the Act. Against the aforesaid AO’s order, assessee appealed before the Ld. CIT(A), who vide his impugned order 30.10.2023 has dismissed the appeal of the assessee by observing that the assessee has not filed any written submission/document with respect to ground raised
in Form 35 and accordingly upheld the order of the AO. Aggrieved with the aforesaid action of the Ld. CIT(A), assessee is in appeal before us.
3. At the outset, Ld. AR has submitted that AO has passed the assessment order by making addition of Rs. 26,56,12,954/- and Rs. 2,07,91,846/- on the ground that the assessee failed to furnish certificate of registration u/s. 12A/12AA is totally erroneous without appreciating the fact that the assessee was duly registered u/s. 12A/12AA of the Act, this fact was 3