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Facts
The assessee, running an educational institution, declared 'Nil' income by claiming exemption under Section 10(23C)(iiiad). The Assessing Officer (AO) made additions of Rs. 40,86,800/- (discrepancy in fees) and Rs. 8,32,800/- (unexplained cash deposit), enhancing the total receipts beyond the Rs. 1 crore limit. The CIT(A) upheld the AO's order.
Held
The Tribunal noted that the assessee maintained accounts on a cash basis, while the disputed receipt was considered on an accrual basis. The AO's verification was found to be improper and incomplete. The Tribunal restored the matter to the AO for de novo verification.
Key Issues
Whether the additions made by the AO regarding fee discrepancies and unexplained cash deposits are valid, considering the assessee's accounting method and exemption claim under Section 10(23C)(iiiad).
Sections Cited
10(23C)(iiiad), 69A, 12AA, 250, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: DR. MITHA LAL MEENA & SHRI ANIKESH BANERJEE
The instant appeal of the assesse filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 for A.Y. 2017-18, date of order 17/10/2023. The impugned order emanated Shree Hari Ram Shikshan Sansathan from the order of the Ld.Income-tax Officer, Exemption, Jodhpur, passed u/s 143(3), date of order 20/12/2019.
The brief facts of the case are that the assesse is a trust running an educational institution school by name ‘Diamond Academic’. The assesse is a registered society under Societies Registration Act with Registrar, Jodhpur. The assesse e-filed the return during the impugned assessment year and declaring total income at Nil by claiming exemption u/s 10(23C)(iiiad). The case was selected for scrutiny under CASS and the Ld.AO had made 2 additions related to discrepancy in fees amount of Rws.40,86,800/- and unexplained cash deposit in the bank amount to Rs.8,32,800/- u/s 69A of the Act. The assessee declared the gross turnover amount to Rs.91,49,222/- in the return of income claiming exemption u/s 10(23C)(iiiad). The Ld.AO found that the assessee has agreed receipt of Rs.40,86,800/- which was not taken in the total receipt during the year. Accordingly, the Ld.AO enhanced the total receipt amount to R.1,32,36,000/- (91,49,200/- + Rs.40,86,800/-) which exceeds the prescribe limit of R.1 crore as mentioned in section 10(23C)(iiiad) of the Act. The assesse is not registered u/s 12AA of the Act during this impugned assessment year. Accordingly, the assessee was treated as AOP and addition amount to Rs40,86,800/- and Rs.8,32,800/- with the total income of the assesse was made. Aggrieved assesse filed an appeal before the Ld.CIT(A). The Ld.CIT(A) upheld the impugned assessment order. Being aggrieved, the assessee filed an appeal before us.
The Ld.AR argued and filed a paper book which is containing pages 1 to 140 which is kept on record. The Ld.AR argued that the receipt which was added back with the total income amount to Rs.40,86,800/- is taken as on accrued basis whereas, on the other hand, the assesse is maintaining total receipts on the basis Shree Hari Ram Shikshan Sansathan of cash basis of accounting. So, the other receipts are duly not taken in the income and expenditure account and also not included in the total rec during the year. The Ld.AR stated that the assesse is maintaining the accounts in year after year, the doctrine of consistency should be applied in assessee’s case. Related to addition of Rs.8,32,800/-, the Ld.AR stated that the assessee is already availing the benefit u/s 10(23C)(iiiad) as educational institution, so the said addition is not part of the total income. The issue was already agitated before the Ld.CIT(A), but the exact accounting system was not duly demonstrated before any of the authorities. The doctrine of consistency is duly accepted if the accounting entries are correct and proper. The assessee is well awarded for the exemption u/s 10(23C)(iiiad) if the turnover is below Rs. 1 crore.
The Ld.DR argued and fully relied on the orders of revenue authorities.
We heard the rival submissions and considered the documents available on the record. The Ld.AR before the bench stated that the assesse is maintaining the accrued receipt of Rs.40,86,800/- in the balance-sheet and related to total receipt, the assesse is maintaining the cash basis of accounting. The Ld.AO added back the entire addition without considering the books of the assesse and further, the assessee claimed that the said method of accounting is continuously maintained year after year. So in case of said receipt, if the assessee declared in preceding years, the assessee’s claim can be accepted. We find that the verification was improper and incomplete from the end of the Ld.AO and accordingly, we restore the matter to the file of Ld.AO for verification de novo related to addition of Rs.40,86,800/- and Rs.8,32,800/-. Needless to say, the assessee should get a reasonable opportunity of hearing in set aside proceedings. On the other hand, the assessee should be diligent and co-operative for quick disposal of the assessment.