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Facts
The assessee's assessment for AY 2010-11 involved additions by the AO of Rs. 16.70 lakhs for donations and Rs. 6.18 lakhs for unsecured loans, which the CIT(A) largely confirmed and further enhanced by Rs. 4.99 lakhs for donations. The additions were made because notices to donors/lenders were returned unserved, untraceable, or with incomplete addresses, and the assessee contended that they were not given adequate opportunity or details regarding the non-receipt of replies to provide complete confirmations.
Held
The Tribunal noted that while some confirmations were filed, others were incomplete due to unserved notices to donors. To ensure no prejudice is caused, the Tribunal decided to remand the entire matter to the Assessing Officer for a de-novo adjudication of all issues, granting the assessee a proper opportunity to furnish the necessary details and confirmations.
Key Issues
The key legal issues include the jurisdiction of the Assessing Officer and validity of the assessment, the justification of additions for donations and unsecured loans without proper opportunity to the assessee, and the correctness of interest levy under sections 234B, 234C, and penalty proceedings under section 271(1)(c).
Sections Cited
143(3), 120(4)(b), 2(7A), 56(1), 250, 142(1), 234B, 234C, 271(1)(c)
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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Kul BharatDr. B. R. R. Kumar
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A), Ghaziabad dated 31.03.2016.
Following grounds have been raised by the assessee:
“1. For that The Order of Assessment u/s 143(3) passed by Additional Commissioner of Income Tax, Range 1 is without jurisdiction, since the Learned Additional Commissioner of Income Tax who framed the impugned assessment was not empowered or authorized or directed under the provision of section 120 (4)(b) read with section 2(7A) of the Act to exercise the powers or perform the functions of Assessing Officer and as such, the same was without jurisdiction, invalid and deserve to be quashed as such. This ground is raised for the first time before for which a separate petition is filed for admission by the Hon'ble ITAT.
2. For that the Commissioner of Income Tax (Appeals) erred in confirming the order of the Assessing Officer which was passed in violation to the principles of natural justice as the Assessing Officer did not confront the appellant trust with the material gathered by him behind the back of the appellant trust inspite of specific request.
2 Karuna Foundation 3. For that the Commissioner of Income Tax (Appeals) erred in upholding the Assessing Officer's action by treating the donations received of Rs. 16,70,000/- as taxable income u/s 56(1) of the Act.
4. For that the Commissioner of Income Tax (Appeals) erred in enhancing the assessed income by Rs.4,99,500/- without following the procedures laid u/s 250 of the Act.
5. For that the Commissioner of Income Tax (Appeals) erred in upholding the Assessing Officer's action of adding the unsecured loan of Rs. 6,18,000/- as taxable income.
For that the Commissioner of Income Tax (Appeals) erred in not passing a speaking order with respect to the ground raised
by the appellant in regard to the act of Assessing Officer's who added Rs.6,18,000/- as taxable income by stating that the appellant was specifically asked vide notice u/s 142(1) to give complete details of the unsecured loans obtained when the appellant was only asked to "provide details of loans obtained/repaid during the year and the interest payable on the above loan along with the relations of these persons with the society." And, at no stage, after 21-12-2011 till the date of passing of assessment order on 14-03-2013, the appellant was required to file confirmations from these parties. Hence, the entire additions have been made without affording any opportunity to the appellant to provide the details in the assessment order.
7. For that the Commissioner of Income Tax (Appeals) erred in not giving any direction to the Assessing Officer in regard to the ground raised by the appellant with respect to levy of interest u/s 234B and 234C of the Act.
8. For that the Commissioner of Income Tax (Appeals) erred in not giving any direction to the Assessing Officer in regard to the ground raised by the appellant with respect to the action of the Assessing Officer initiating the penalty proceeding u/s 271(1)(c) of the Act, when there is no concealment of income.”
3. The Assessment Order in this case has been passed on 14.03.2013 u/s 143(3) of the Income Tax Act, 1961. The Assessing Officer made addition of Rs.16,70,500/- on account of the donations received and Rs.6,18,000/- on account of unsecured loans. The ld. CIT(A) in addition to the donations disallowed by the Assessing Officer has further disallowed Rs.4,99,500/- on account of the donations received. It was submitted before us that the Ao made addition as the notices 3 Karuna Foundation issued were returned with remarks such as “unserved”, “untraceable”, “no such person” and “incomplete address”. The ld. AR submitted that the notices issued which have been returned have not been notified to the assessee nor the details of such non-receipt of reply from the donors have been made aware to the assessee. At this juncture, the ld. AR pleaded that given an opportunity, the entire confirmations from the donors would be made before the revenue authorities. The ld. DR objected in principle.
On going through the record, we find that it is a fact that the assessee has filed confirmations of some of the donors and the remaining donors could not confirm owing to non-receipt of notices by the donors. Hence, we hold that no prejudice would be caused to the revenue by remanding the matter to the file of Assessing Officer to adjudicate the entire issues de-novo after affording an opportunity to the assessee.
In the result, the appeal of the assessee is allowed for statistical purpose. Order Pronounced in the Open Court on 30/04/2024.