Loading judgment…
Facts
The assessee, M/s Junior Chamber International, appealed an order that dismissed their appeal ex-parte due to non-appearance. The assessee's delay in filing the appeal was attributed to changes in management and lack of awareness of proceedings. The appeal concerned an addition of ₹34,55,113/- made by the Assessing Officer (AO) on account of the "Expo Utsav" event, which the assessee contended was for their charitable object.
Held
The Tribunal acknowledged the delay in filing the appeal but condoned it in the interest of natural justice, recognizing the issues caused by management changes and lack of awareness. The Tribunal decided to restore the matter to the CIT(A) for fresh adjudication, imposing a cost of ₹10,000/- on the assessee.
Key Issues
Whether the addition of income from "Expo Utsav" was justified and whether the CIT(A) order passed ex-parte without adjudicating on merits should be set aside.
Sections Cited
12AA, 194C, 13(8), 11(1), 11(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI GEORGE MATHAN & SHRI RATNESH NANDAN SAHAY
Assessee represented by Shri Devesh Poddar, Adv. Department represented by Shri Khubchand T. Pandya, Sr.DR Date of hearing 13/03/2025 Date of pronouncement 13/03/2025 O R D E R PER: BENCH 1. This appeal by the appellant is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/ learned Commissioner of Income Tax (Appeals), [in short, the ld. CIT(A)] dated 24/11/2023 for the Assessment Year (AY) 2015- 16. In this appeal, the appellant has raised following grounds of appeal:
1. For that Ld. CIT(A) was not justified in dismissing the appeal of the assessee ex parte due to the change in management we were not aware of the notice issued/case pending and as such, compliance could not be made. In any view of the case, appeal dismissed without adjudicating the facts is uncalled for and bad in law.
2. For that the addition made of ₹ 34,55,113/- as income over expenditure of Expo Utsav is uncalled for and fit to be deleted. Expo Utsav is a signature event of the assessee society wherein an exhibition is placed for access to public at large wherein all kinds of shops/showroom etc display their goods for the public at a reasonable rate. As such, it cannot be said that the same was against the object of trust.
3. For that the Expo is done each year by the assessee and never in past has such addition been made. Principal of consistency should be followed and as such, the addition made is uncalled for.
4. For that the AO was not justified in not treating the profit of ₹ 34,55,113/- from Expo Utsav as receipt of the firm to be utilized towards its object and rather M/s Junior Chamber International Vs ITO(E) making addition as income from other sources. The addition made by Ld. AO and confirmed by ld. CIT(A) is uncalled for.
5. For that the other grounds in detail shall be argued at the time of final hearing."
2. From perusal of record, we find that there is a delay of 36 days in filing this appeal before the Tribunal, for which the appellant has filed application for condonation of delay. In the condonation application, the learned Authorised Representative (ld. AR) of the appellant stated that the delay was caused due to the fact that the management of the society is changed each year and the current management was not aware of any such legal proceedings. Even at the time of first appellate stage, no compliance could be made because no notice was received by the current management and as such the assessee was not aware of any such order passed by the ld. CIT(A). The assessee came to know about decision of ld. CIT(A) when the department asked for outstanding demand then the assessee contacted the present Authorised Representative who advised to file the present appeal at the earliest. The ld. AR of the appellant submits that the delay was not intentional and deliberate. The appellant has good case on merit and is likely to succeed if one more opportunity is provided to the appellant.
3. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that no plausible explanation was mentioned by the ld. AR of the assessee for the delay in filing appeal before the Tribunal, therefore, the appellant is not entitled for any leniency at this stage.
4. We have considered the rival submissions of both the parties and perused the application for condonation of delay. In the application, the appellant stated that delay was caused due to the fact that the management of the society is changed each year and the current management was not aware of any such 2 M/s Junior Chamber International Vs ITO(E) legal proceedings. Even at the time of first appellate stage, no compliance could be made because no notice was received by the current management and as such the assessee was not aware of any such order passed by the ld. CIT(A). The assessee came to know about decision of ld. CIT(A) when the department asked for outstanding demand. We find merit in the contention of the assessee. The delay is not inordinate and the assessee is not benefitted for delayed filing of appeal, therefore, considering the overall facts and circumstances, we condone the delay in filing appeal and admit the same for hearing and adjudication.
The facts of the case, in brief, are that the appellant society is an association of young entrepreneurs and it is a society registered under Section 12AA of the Income Tax Act, 1961 (in short, the Act). The case of appellant was selected for limited scrutiny for tax credit mismatch and transaction of trust with specified persons. In the assessment order, the Assessing Officer has stated as under: "that during the F.Y. 2014-15, the appellant has received annual subscription of Rs. 5,01,000/-, rental income of Rs.1,20,291/-, sawan mela net receipts of Rs. 1,51,969/- and substantial receipts were derived from conduct of Expo Utsav 2014 wherein receipts of Rs.90,72,234/- has been shown from stall rent, Rs.2,06,645/- from advertisement and Rs.1,06,800/- from additional perks, Rs.4,70,800/- - from sale of entry tickets. The said Expo Utsav was conducted in financial year 2014-15 at Morabadi in Ranchi. From perusal of 26AS, it appears that tax has been deducted u/s 194C by the deductors on M/s Junior Chamber International Vs ITO(E) payments to the assessee society claimed to be for stall rent. The said deductions have been made @ 2%. It is also found that fixed amounts of Rs.1,25,000/- have been received from Automobile companies who participated in the said Expo Utsav. The AO has further observed that the appellant society was engaged in transaction with other entities, who were not the Members of the society. The Junior Chamber of International Ranchi was formed on 6.01.2009 with objects mentioned in its Memorandum of Association. It is pertinent to mention that surplus from conduct of Expo Utsav was Rs.42,28,373/- and if this surplus including bank interest of Rs.7,25,847/- is taken, the income being Rs.49,54,220/-, it is surprising to find that community expenses have been claimed at meagre Rs.1,67,299/- with fellowship expenses of Rs.6,14,708/- on IPL screening, Diwali celebration, Holi meet, picnic etc, which appeared to be for the members."
Accordingly, the AO observed that the assessee society registered under the Societies Registration Act and also u/s 12AA of the Act was found to be engaged in deriving income from sale of stalls to other entities and substantial income was being received from such activity whereas, the appellant's dominant object of relief of poor has not been accomplished. In view of above, the AO held that association had the dominant character of commercial organization in FY 2014-15 and it is deriving income through providing stalls claimed to be on rent/contract is hit by the threshold limit of rupees twenty five lakhs and the said business receipts is taxable as any other association of person under Section 13(8)
M/s Junior Chamber International Vs ITO(E) of the Act. Hence, the excess of income over expenditure i.e. Rs.34,55,113/- of Expo Utsav was treated as income of current year and chargeable to tax. The AO also stated that, Form 10 was not e-filed electronically by the appellant as per statutory requirement for the relevant assessment year. Further, in the Audit report 10B, both claims for option under clause(2) of Explanation to section 11(1) and u/s 11 (2) of the Act, amount of Rs.18,39,343/- and Rs.18,39,342/- are mentioned, but return of income does not mention accumulation u/s 11 (2)of the Act. Accordingly, the Assessing Officer has held that the claim u/s 11(2) of the Act is also not allowed for the assessment year 2015-16.
Aggrieved by the order of Assessing Officer, the appellant filed appeal before the ld. CIT(A). When the case of appellant was fixed for hearing by the ld. CIT(A) on various dates as mentioned in the impugned order in para 4.1, the appellant did not appear on any date and not explained its case to the satisfaction of the ld. CIT(A). The ld. CIT(A), therefore, dismissed the appeal of the appellant on the ground that the appellant did not avail the opportunity given by the ld. CIT(A) and substantiate the receipts made by the appellant trust.
Aggrieved by the order of the ld. CIT(A), the appellant has filed the present appeal before this Tribunal 9. During the course of hearing before us, additional legal grounds were raised by the appellant trust which is reproduced as under: "1 For that the case of assessee was selected for limited scrutiny with a reason "Tax credit mismatch and transaction of trust with specified persons." However, from the order of assessment it can be seen that the Ld. AO has not made any addition