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Facts
The assessee, a welfare society, filed its return of income for AY 2017-18 declaring 'Nil' income after claiming exemption under Section 11. The Assessing Officer (AO) denied the exemption, treating interest income as income from other sources, and assessed a total income of Rs. 55,49,340. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal noted that the CIT(A) dismissed the appeal ex-parte without considering the assessee's submissions, despite the assessee claiming non-representation was due to circumstances beyond its control. The Tribunal, considering principles of natural justice, decided to provide another opportunity.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte without considering the assessee's submissions, and if the assessee should be granted another opportunity for hearing and substantiating its case.
Sections Cited
Sec 11, Sec 12A, Sec 143(2), Sec 142(1), Sec 250, Sec 2(1), Sec 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH
Before: SHRI BR BASKARAN & SHRI PAVAN KUMAR GADALE
ORDER PER PAVAN KUMAR GADALE, JM: “ The assessee has filed the appeal against the order of the National Faceless Appeal Centre(NFAC) Delhi /CIT (A) passed u/sec 250 of the Act. The assessee has raised the following grounds of appeal:
“1 . The Hon. CIT(A) ought to have appreciated the fact that appellant could not represented its case due to circumstances beyond its control.
2 The Hon. CIT(A) was not justified in summarily rejecting the appeal without considering the submissions filed on 23/06/2023.
3 The Hon. CIT(A) and the Ld. AO were not justified in disregarding the fact that assessee was non-profit company registered U/S.25 of the Companies Act and had also received registration U/S.12A.
4 The Ld. AO erred in denying exemption U/S.11 of the Income Tax Act.
5 The Ld. AO was not justified in considering the interest received of Rs.55,49,340/- as income from other sources”
The brief facts of the case are that, the assessee is a welfare society registered u/sec12A of the IT Act. The assessee has filed the return of income for the A.Y 2017- 18 on 02.09.2017 disclosing a total income of Rs. Nil after claiming exemption u/sec11 of the Act. Subsequently the case was selected for scrutiny and notice u/sec 143(2) and u/sec 142(1) of the Act along with questionnaire was issued. In compliance to the notice, the assessee has filed details and financial statements supporting the income tax return filed. The Assessing Officer (A.O) on perusal of information find that the objects and activities of the society are no longer a charitable institution after amendment u/sec2(1) of the Act w.e.f.A.Y.2009-10 and in such circumstances the society activities are to be considered on principle of mutuality and the asssessee filed the detailed reply vide letter dated 26.11.2019 referred at page 2 Para 5.1 of the order. Whereas the assessing officer was not satisfied with the explanations and dealt on the facts and relied on the judicial decisions at Page 4 Para 5.2 to 5.5 of the order and brought to tax interest income of Rs.53,23,756/- and denied the exemption u/sec11 of the Act and assessed the total income of Rs.55,49,340/-and passed the order u/sec143(3) of the Act dated 2-12-2019.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has condoned the delay in filling the appeal and further issued notices of hearing and since there was no proper compliance to the notice and the assesse seeking adjournment for furnishing the submissions. Therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon'ble Tribunal.
4. At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in confirming the action of the Assessing officer overlooking the information of the assessment proceedings and non representation before the CIT(A) was due to circumstances beyond the control of the assesses.
Further the assessee has a good case on merits and shall substantiate with the material evidences and prayed for an opportunity to explain before the lower authorities. Per Contra, the Ld.DR supported the order of the CIT(A).
We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no proper compliance nor representation in spite of providing adequate opportunity of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld. CIT(A) has issued the notices of hearing on 23.12.2020, 20.01.2021, 05.04.2023, 25.04.2023, 04.05.2023 & 24.05.2023 referred at Page 2 Para 3 of the order but there was no proper response and asking to grant time for furnishing the written submissions and thus the Ld.CIT(A) came to a conclusion that the assesse is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the additions made by the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the facts and principles of natural justice, we shall provide with one more opportunity of hearing to the assesse to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information for early disposal of the Appeal. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes.
In the result, the appeal filed by assessee is allowed for statistical purposes.
Order pronounced in the open court on 16.07.2024.