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Facts
The assessee, Holyfaith Tribal W and D Trust, claimed exemption under Sections 11 and 12 of the Income Tax Act. The Assessing Officer denied this exemption, alleging violations of Section 17 of the FCRA, 2010, due to transfers of foreign contributions to an unauthorized bank account. The CIT(A) subsequently dismissed the assessee's appeal ex-parte due to non-compliance.
Held
The Tribunal condoned the delay in filing the appeal, noting the assessee's unawareness of prior proceedings. Recognizing the lack of compliance before the CIT(A) and the need for proper adjudication, the Tribunal restored the matter to the CIT(A) for fresh consideration, instructing the assessee to provide all necessary documentation.
Key Issues
Denial of exemption under Sections 11 and 12 for alleged violation of FCRA, 2010; jurisdiction of AO to deny exemption; ex-parte dismissal by CIT(A); condonation of delay in filing appeal.
Sections Cited
Income Tax Act, 1961: Sections 11, Income Tax Act, 1961: Sections 12, Income Tax Act, 1961: Sections 13(1), Income Tax Act, 1961: Sections 13(3), Income Tax Act, 1961: Sections 142(1), Income Tax Act, 1961: Sections 143(1), Income Tax Act, 1961: Sections 143(2), Income Tax Act, 1961: Sections 143(3), Foreign Contribution Regulation Act, 2010: Section 17
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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI SONJOY SARMA & BEFORE SHRI SONJOY SARMA & BEFORE SHRI SONJOY SARMA & SHRI RATNESH NANDAN SAHAYSHRI RATNESH NANDAN SAHAYSHRI RATNESH NANDAN SAHAY
Assessee represented by Assessee represented by Shri Devesh Poddar, A.R. Shri Devesh Poddar, A.R. Department represented by Department represented by Shri Khubchand T. Pandya, Sr.DR Shri Khubchand T. Pandya, Sr.DR Date of hearing 28/08/2025 Date of pronouncement Date of pronouncement 29/09/2025 O R D E R PER: RATNESH NANDAN SAHAY, A.M. RATNESH NANDAN SAHAY, A.M.
This appeal by the appellant is directed against the order of the National This appeal by the appellant is directed against the order of the National This appeal by the appellant is directed against the order of the National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals), [in short, the ld. CIT(A)] dated Tax (Appeals), [in short, the ld. CIT(A)] dated 04/09 04/09/2023 for the Assessment Year (AY) 2017 Assessment Year (AY) 2017-18 by raising following grounds of appeal: by raising following grounds of appeal:
"1. For that the revenue authorities were not justified in disallowing the For that the revenue authorities were not justified in disallowing the For that the revenue authorities were not justified in disallowing the deduction/exemption claimed U/s 11 and 12 alleging that the assessee has deduction/exemption claimed U/s 11 and 12 alleging that the assessee has deduction/exemption claimed U/s 11 and 12 alleging that the assessee has violated the provisions of Section 17 of the FCRA (Foreign contribu violated the provisions of Section 17 of the FCRA (Foreign contribu violated the provisions of Section 17 of the FCRA (Foreign contribution Regulation Act, 2010). No adverse action has been taken by the MHA (Ministry Regulation Act, 2010). No adverse action has been taken by the MHA (Ministry Regulation Act, 2010). No adverse action has been taken by the MHA (Ministry of Home Affairs) against the appellant on this issue and rather the of Home Affairs) against the appellant on this issue and rather the of Home Affairs) against the appellant on this issue and rather the registration/approval was also renewed, as such, the allegation made is registration/approval was also renewed, as such, the allegation made is registration/approval was also renewed, as such, the allegation made is baseless and the exemption disallo baseless and the exemption disallowed is uncalled for.
2. For that the revenue authorities were not justified in alleging that the assessee For that the revenue authorities were not justified in alleging that the assessee For that the revenue authorities were not justified in alleging that the assessee has violated the provisions of Section 13(1) and 13(3) of the Income has violated the provisions of Section 13(1) and 13(3) of the Income has violated the provisions of Section 13(1) and 13(3) of the Income-tax Act, 1961 (the Act) and as such, the exemption claimed U/s 11 and 12 is 1961 (the Act) and as such, the exemption claimed U/s 11 and 12 is 1961 (the Act) and as such, the exemption claimed U/s 11 and 12 is disallowed. The notices U/s 133(6) were not issued rightly and as such, could lowed. The notices U/s 133(6) were not issued rightly and as such, could lowed. The notices U/s 133(6) were not issued rightly and as such, could P a g e 1 | 7 not be complied with. In any view of the case, this by itself cannot be the reason to disallow the exemption claimed.
For that the Ld. AO -ITO Exemption has no jurisdiction to reject the claim of exemption for any of the reasons mentioned in the order of assessment and disputed in this appeal. No defect or violation has been done by the appellant so as to deny the exemption claimed U/s 11 and 12 of the Income-tax Act, 1961 (the Act), and as such, the order passed by the lower authorities is fit to be set aside.
4. For that the ld. CIT(A) was not justified in dismissing the appeal of the assessee without rightly appreciating the facts and law even if no efficient compliance was made by the appellant.
For that any other grounds in detail shall be argued at the time of hearing."
Shri Devesh Poddar, ld AR appeared for the assessee and Shri Khubchand T. Pandya, ld. Sr.DR appeared for the revenue.
3. At the outset, we find from perusal of record that there is delay of about four months in filing of this appeal by the appellant before the Tribunal. Impugned order was passed by the ld. CIT(A) on 04/09/2023, however, this appeal was filed on 29/03/2024. The appellant has filed application for condonation of delay mentioning the fact that the assessee trust was unaware of the appellate proceedings, notices issued and the order passed. The order passed by the ld. CIT(A) is an ex parte order for non- compliance by the assessee. This was due to the fact that the current management was unaware of this impugned proceedings and the then CA of the appellant trust also did not inform us for the same. It was also stated in the condonation application that in the 1st week of March, 2024 when the jurisdictional Assessing Officer contacted the assessee trust for the outstanding demand collection then the assessee trust came to know P a g e 2 | 7 about the order passed by the ld. CIT(A) dated 04/09/2023. Thereafter the assessee contacted the CA who referred the assessee to another A.R. for the appellate proceedings before the Tribunal. The appellant stated that the delay in filing appeal was neither intentional nor deliberate and the appellant has good case on merit and would suffer prejudice if delay is not condoned in his case and the appeal is not adjudicated on merit. On the other hand, the learned Senior Departmental Representative (ld. Sr.DR) for the revenue submits that on the issue of condonation of delay, the Bench may take appropriate view in accordance with law. Therefore, considering the fact that assessee trust was unaware of the appellate proceedings, notices issued and the order passed, which was an ex parte order and the delay is not also considering intentional, the delay of about four months in filing this appeal before this Tribunal is condoned.
Now coming to the merit of the case, the brief facts of the case are that the assessee is a Trust and filed its return of income for the A.Y. 2016-17 on 21/10/2016 in Form ITR-7 and claimed exemption under Section 11 and 12 of the Income Tax Act, 1961 (in short, the Act) on showing total income at ₹ NIL. The case was processed under Section 143(1) of the Act and thereafter selected for scrutiny under CASS for verification of application of income for charitable or religious purposes being higher than the gross income. Statutory notices under Section 143(2) and 142(1) of the Act were issued, in response to which the Secretary of the Trust appeared and produced the documents required for verification of the P a g e 3 | 7 application of income for charitable or religious purposes. During course of assessment proceedings, it was found by the Assessing Officer that out of ₹ 63,99,901/- of foreign contribution received, ₹ 9,81,735/- was transferred from designated FC bank account to unautorised FC utilization bank account of the assessee trust. The same was established on perusal of debit entries of bank of India account and credit entries of United Bank of India account (Savings bank account No. 1608010074917 and account holder-Nawatoli, CSP) of the assessee trust. The Assessing Officer, therefore, mentioned in the assessment order that it is pertinent to mention here that FC Utilization bank account of the assessee is account No. 1608010047755 and not the account number mentioned above in United Bank of India, Gumla. The bank account of United Bank of India, Gumla which was found unauthorized for transfer of FC received was opened on 17/06/2015. The assessee was requested to furnish the reason or/and purpose of transfer of foreign contribution received into the unauthorized FC utilization bank account during the year under consideration, however, no explanation was ever given. On perusal of the documents and bank statement produced by the assessee, it was found that provisions of Section 17 of Foreign Contribution Regulation Act, 2010 were violated. The Assessing Officer after giving detailed reasons in the body of the assessment order, concluded that on consideration of the documents produced by the assessee, it was found that the assessee had not obtained any permission to transfer foreign contribution received to P a g e 4 | 7 another bank account during the year under consideration and the assessee trust had also not sent any intimation in this regard to the competent authority in stipulated time, therefore, the assessee trust violated the provisions of Section 17 of FCRA, 2010 for the relevant year under consideration and therefore, the Assessing Officer denied the exemption claimed under Section 11 and 12 of the Act and assessed total income of assessee trust of ₹66,02,939/- under Section 143(3) of the Act.
5. Aggrieved by the order of Assessing Officer, the assessee filed appeal before the ld. CIT(A), who vide the impugned order, dismissed the appeal of assessee on the grounds that "during the appellate proceedings, the appellant has only submitted submission in the form of "Statement of Facts". After that neither he has replied to hearing notices nor submitted any documentary evidence/information to prove his side.. Sufficient and adequate opportunities were afforded to the appellant as indicated at table at page no. 1 and 2. No reply whatsoever has been submitted by the appellant. It can be safely presumed that the appellant is not interested in pursuing his appeal. Therefore, the undersigned sees no reasons to interfere with the orders of the Assessing Officer. Thus, the appeal raised by the appellant is dismissed."
Aggrieved by the order of ld. CIT(A), this appeal has been preferred by the assessee-trust before this Tribunal. The ld. AR of the assessee submitted that since the assessee-trust has not violated the provisions of Section 17 of FCRA and no adverse action has been taken by the MHA, P a g e 5 | 7 the exemption denied by the Assessing Officer is uncalled for. The ld. AR also submitted that the Assessing Officer i.e. ITO(Exemption) has no jurisdiction to reject the claim of exemption for any of the reasons mentioned in the assessment order as the exemption can be allowed or denied only by the ld. CIT(E) as provided under Section 11 and 12 of the Act. Thus, the action of the Assessing Officer was beyond its jurisdiction.
On the other hand, the ld. Sr.DR defended the action of the Assessing Officer and also pointed out that the assessee-trust has neither replied to the notice issued by the ld. CIT(A) nor any documentary evidence/information was produced before him.
We have considered the rival submissions and we find that the assessee- trust has not made any compliance before the ld. CIT(A), thus, in the interest of justice, we restore the matter back to the file of ld. CIT(A) for fresh adjudication after affording a reasonable opportunity of being heard to the assessee-trust. The assessee-trust is also directed to make necessary compliance and produce all relevant documents before him in support of its claim of exemption.
In the result, this appeal of the assessee is partly allowed for statistical purposes only. Order pronounced in the open court on 29/09/2025.