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Facts
The assessee, Goenka & Associates Educational Trust, appealed against the CIT(A)-NFAC's order for AY 2014-2015, which confirmed the AO's disallowances related to excess application of income, provision for gratuity, and computation of 15% exemption u/s 11(1)(a). The assessee's counsel argued that the CIT(A)-NFAC failed to provide an effective opportunity of hearing.
Held
The ITAT found that the CIT(A)-NFAC did not provide an effective opportunity of hearing or comply with section 250(6) of the Act. Consequently, the tribunal restored the appeal back to the CIT(A)-NFAC for fresh adjudication, with the onus on the assessee to file and prove all relevant facts.
Key Issues
Whether the CIT(A)-NFAC's order, confirming disallowances by the AO, was valid given the lack of an effective hearing opportunity for the assessee as mandated by section 250(6) of the Income Tax Act.
Sections Cited
143(3), 11(1)(a), 11(2), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “D” BENCH : MUMBAI
Before: SHRI SATBEER SINGH GODARA & SHRI OMKARESHWAR CHIDARA
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “D” BENCH : MUMBAI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER ITA.No.2310/Mum./2024 Assessment Year 2014-2015 Goenka & Associates Educational Trust, The DCIT (Exemption) Yashodham High School Circle-1(1), Cumballa Hill, Bldg., General A.K. Vaidya MTNL Bldg., Peddar Road, vs. Marg, Goregaon East, Mumbai – 400 026. Mumbai – 400 063. Maharashtra. Maharashtra. PAN AAATG1248E (Appellant) (Respondent) For Assessee : Shri Aamod Prabhudesai For Revenue : Shri Dr. Kishor Dhule, CIT-DR Date of Hearing : 22.07.2024 Date of Pronouncement : 24.07.2024 ORDER PER SATBEER SINGH GODARA, J.M.
This assessee’s appeal for assessment year 2014- 2015 arises against the order of the learned CIT(A)-National Faceless Appeal Centre, Delhi’s DIN & order no.ITBA/ NFAC/S/250/2023-24/1063460720(1), dated 27.03.2024, 2 ITA.No.2310/MUM./2024 in proceedings u/s.143(3) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties. Case file perused.
The assessee pleads the following substantive ground in the instant appeal :
In the facts and in the circumstances of the case and in law, the CITIA) erred in confirming the action of the Ld. AO of disallowing the excess application of income for the year of Rs.4,41,82,654/-. The Ld CIT(A) ought to have held that excess application of income for the year is eligible to be carried forward and be part of application of income of subsequent year(s) and ought to have directed the Ld. AO accordingly. In view of the same, it is humbly prayed that the Ld. AO be directed to allow the excess application of income for the year to be carried forward as an application of income of subsequent years.
2. In the facts and in the circumstances of the case and in law, the LD, CIT(A) erred in confirming the action of the 3 ITA.No.2310/MUM./2024 Ld. AO of not allowing provisions for gratuity of Rs.3,48,00,124/as an application of income us. 11(1)(a). The Ld. CIT(A), for the purpose of application of income u/s.11(1)(a), ought to have held that any sum should be considered as an application of income based on method of accounting regularly employed and accordingly, ought to have directed the Ld. AO to allow the provision for gratuity of Rs.3,48,90,124/- as an application of income u/s.11(1)(a). In view of the same, it is humbly prayed that the Ld. AO be directed to allow the provision for gratuity of Rs.3,48,90,124/- as an application of income u/s. 11(1)(a). 3. In the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have directed the Ld. AO to add back donation paid of Rs.2,01,600/- in computing the income for the purpose of computing the exemption at 15% of income u/s.11(1)(a) of the Act and consequently, the exemption u/s.11(1)(a) ought to have been granted at Rs.2,09,33,930/- instead of Rs.2,09,03,690/-.
4 ITA.No.2310/MUM./2024 Without prejudice to Ground No. 1 to 3 above and in the alternate : 4. In the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have allowed accumulation of income u/s.11(2) of the balance income and consequently, ought to have directed the Ld. AO to assess the total income at Rs. Nil.
5. It is humbly prayed that the reliefs as prayed for hereinabove and/or such other reliefs as may be justified by the facts and circumstances of the case and as may meet the ends of justice should be granted.
The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary.”
3. Learned counsel’s first and foremost arguments raised during the course of hearing is that the CIT(A)-NFAC has nowhere provided any effective opportunity of hearing before confirming the assessment findings disallowing/ adding “deficit” for the purpose of sec.11 exemption proceedings etc., as follows :
5 ITA.No.2310/MUM./2024 “1. In ground no.1, the assessee objects to disallowance of excess application of income of Rs.44182654. Due to the reason stated by the AO in para 3.3.1 of the assessment order, disallowance of claim of deficit is approved. The assessee 's ground on this issue is dismissed.
2. Ground no. 2 disputes disallowing provision for gratuity amounting to Rs.34890124. The AO has passed a speaking order. The reason stated by the AO in para no.4.1, on this issue is approved and confirmed. The action of the AO is justified. Due to the reasons stated in para 4.1 disallowance of provision of gratuity is confirmed. Assessee's ground on this issue is dismissed.
Income set apart or accumulated u/s 11(1)(a)@15% at Rs.20903690 is confirmed. The assessee's contention in ground no.3 is not supported by any evidence. Hence the action of the AO is confirmed.”
6 ITA.No.2310/MUM./2024 4. Learned CIT-DR could hardly dispute that the CIT(A)-NFAC’s foregoing detailed discussion has neither quoted any opportunity of hearing provided to the assessee nor he has ensured compliance to sec.250(6) of the Act requiring it to give points for determination followed by a detailed adjudication thereof. Faced with this situation, we deem it appropriate in the larger interest of justice to restore the assessee’s instant appeal back to the CIT(A)-NFAC for it’s afresh adjudication, preferably within three effective opportunities of hearing, subject to the rider that it shall be the taxpayer’s onus and responsibility only to file and prove all the relevant facts in consequential proceedings. Ordered accordingly.
This assessee’s appeal is allowed for statistical purposes in above terms.