Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’: NEW DELHI
Hearing conducted via Webex ORDER
The present appeal has been filed by the assessee wherein the correctness of the order dated 18.04.2017 of CIT(A)-40, Delhi pertaining to 2009-10 assessment year is assailed on various grounds.
At the time of hearing, no one was present on behalf of the assessee.
The appeal was passed over. In the next round also the assessee remained unrepresented. On a consideration of the material available on record it was deemed appropriate to proceed with the present appeal ex-parte qua the appellant on merits after hearing the Ld. Sr. DR.
A perusal of the impugned order shows that it is borne out from the order itself that an effective representation was not made on behalf of the School of Engineering & Applied Technology vs. ITO assessee. It is seen that some additional ground was raised, however, the discussion in the order is largely focused on the fact that the order passed by the CIT u/s 263 order dated 28.03.2014 had become final for want of any challenge by the assessee. Be that as it may the fact is that additions made by the AO pursuant to the said Revisionary order were under challenge. Hence, what were the submissions of the assessee before the CIT(A) in these proceedings is the issue. The order was silent thereon.
The Ld. Sr. DR was required to address from the order what were the submissions of the assessee assailing the findings arrived at in the assessment order. The ld. Sr. DR submitted that it was a case of no evidence before the Assessing Officer and though the assessee came in appeal, however, failed to file any evidence and reiterated the submissions made before the Assessing Officer. Emphasis was laid down on the fact that in the finding arrived at para 5.1, it has been mentioned that no evidence was filed, hence, it was his prayer that the appeal of the assessee may be dismissed. The relevant finding of the CIT(A) is extracted from para 5.1 to 5.4 of the CIT (A) and reproduced hereunder for the sake of completeness:
“5.1. I have considered the impugned order and also the submissions of the appellant 1 have also seen the order under section 263 dated 28.03.2014 passed by the Id. DIT (E) against which no appeal has been tiled in the [TAT]. In the case of the assessee the assessment was completed at Nil income Subsequently, on going through records, the Id. DIT(E) notice that the assessee had claimed to have received total donation of Rs. 20 lakhs form the Meadows and had also paid Rs. 30 lakhs to the Meadows. It was also noticed that the assessee had claimed to have given certain sums of money to the National Institute of Engineering and Management’ mounting to Rs. 9,42,000/ -. It was also noticed that the assessee- was in receipt of donations of Rs. 6 lakhs from National Institute of Engineering and Management. It was observed by the Ld, DIT(E) that the assessee had made a bogus claim of receiving donations of Rs 26 lakhs, i.e. Rs. 20 lakhs from meadows and Rs. 6 lakhs
School of Engineering & Applied Technology vs. ITO from NIEM. It was also held that Assessing Officer has not made any enquiry in this regard and made an erroneous assessment causing prejudice tt revenue amounting to Rs. 26 lakhs. It was also noticed that the assessee has claimed that it is running an educational institution at Bangalore but the assessee is nether owns any building nor is paying any rent for the space for running institute at Bangalore- It was also observed that no documentary evidence in support of addition to fixed assets were submitted. After giving opportunity of being heard to the assessee, an order was passed under section 263 by the Id DIT (E) held as under: "4. I have gone through facts of the case. It is claimed by the assessee that it has received temporary advances amounting to Rs. 30,00,000/- from the trust "The Meadows'' on different dates during the year, in addition to donation of Rs. 20,00,000/-. Similarly, in respect of National institute of Engineer & management, if is claimed that it has received advance of Rs. 50,00,000/- during the year, in addition to donation of Rs. 6,00,000/-.in this connection, it is noted that .40 has failed to examine the genuineness of the transactions and also whether the same were in accordance with aims and objectives of the Trust. It is seen that there are large number of cash transfer between assessee and The Meadows and NIFM. The flow of funds between the assessee and sources and jus! ideation thereof has not been not been enquired into by AO. The purpose and utilization of the amount borrowed too has not been enquired by the .40. As the AO has accepted bogus claim of receipt of donation of Rs. 26,00,000/-. it has resulted m an erroneous assessment in as much as it is prejudicial to the interests of revenue. 4.2 Similarly, details of addition to fixed assets of Rs. 7,34.303/- has been obtained by the O without am/ supporting evidence in form of Rills an vouchers and sources finding of tin same 4.3 It is also noted that AO has also faded to make necessary enquiries regarding the premises, where the assessee is running its institute. As per assessee, the institute was run from the premises owned i- National Institute of Engineering and Management (NIEM) and no rent was paid by the assessor. However, this is an unsubstantiated claim of the assessee. which has not hem verified by the AO. The AO should verify the claim of the assessee m this regard. It is claimed by the assessee that there are no common trustees m these institution, but t>n transaction of giving rent free accommodation to run a college from a premises where the other trust is already running an educational institute is beyond comprehensible human behavior nr test human probability. This needs further verification and other supporting details to see, if any educational activity was actually earned out by the assessee during the year as claimed by it. The AO failed to carry out necessary enquiries in this regard and allowed the claim of exemption to income stated to be derived ‘row this educational activity. Hence, the order of the AO is erroneous as veil prejudicial to the interest of revenue on this account too." 5.2 It is seen from the above that the Id. DIT (E) gave a definite finding in the matter and set aside the matter to to the Assessing Officer to examine and frame the assessment order after calling and examining necessary details/evidences and after giving the assessee due opportunity of being heard. No appeal has been filed against the order under section 263 passed by the Id. DIT (F) in the ITAT. 5.3 In the case of Herdillia Chemicals Ltd vs. Commissioner of Income tax [(19971 93 TAXMAN 314 (BOM.)], the Hon'ble Bombay High Court have held that though appeal was maintainable from the fresh order passed by the Assessing Officer to give effect to a revisional order or an appellate order, only such issues could be agitated in such appeal which had not attained finaJitv by virtue of earlier orders of revisional or appellate authorities. It was not open in such an appeal to agitate am point which had already been decided by the revisional appellate authorities in their order. The Hon’ble Court have lie Id as under:
10, ...The Tribunal, in this case, in our opinion, was right in holding that the revisional order, wherein a definite finding is recorded on both the points at issue, having become final on account of the failure of the assessee to pursue the statutory remedies provided in the Act against that order, the asscssee cannot be School of Engineering & Applied Technology vs. ITO allowed to challenge such concluded findings collaterally in an appeal filed against the fresh order passed by the !TO with a view to giving effect to the same.
In our opinion, though appeal is maintainable from the order passed by the ITO to give effect to a revisional order or an appellate order, only such issues can be agitated in such appeal which have not attained finality by virtue of earlier orders of the revisional or appellate authorities. It is not open in such an appeal to agitate any point which has already been decided by the revisional the appellate authorities in their order., “ 5.4 in the case under consideration, no appeal has been filed against the order of the Id. Dl l (E) under section 263 and hence the issues adjudicated in the order under section 263 have become final. In view of the decision of the Hon’ble Bomaln High Court in the case of Herdiilia Chemicals Ltd. vs. Commissioner of Income-tax (supra), these issues cannot be agitated in appeal.”
On reading of the above, it is evident that the conclusion has been arrived at in view of fact that certain observations were made in the order passed u/s 263 which were not challenged by the assessee. It is seen that in the Revisionary order passed verification of supporting details were directed.
Admittedly before the Assessing Officer evidences were not available. In the light of fact that appeal was filed before the CIT(A) whether any supporting documents or arguments were advanced is not coming out from the order.
Notwithstanding the finality arrived at on the issue by virtue of the order passed u/s 263 the issues as emanating for the consequent assessment made need to be considered judiciously. The assessee may be well advised to make good its deficiencies/shortcoming in the consequent assessment and not argue on the finality of the 263 order which it has attained on account of lack of any challenge. Hence, in the interests of substantial justice, it is deemed appropriate to set aside the impugned order back to the file of the CIT(A) directing the said Authority to specifically confront the assessee with the need to file supporting evidences etc. if any and thereafter pass an order in School of Engineering & Applied Technology vs. ITO accordance with law. The order passed in the absence of any specific challenge on relevant issues and proceeding on the footing that the order u/s 263 was not challenged is not sufficient. It cannot be ignored that in the said order it was directed that verification on facts be carried out for which purposes the assessee needs to focus on making available relevant facts and not argue on irrelevant issues. The Ld. Sr. DR in the context of the facts which needed verification sought to place reliance upon the principles of law as settled by the Apex Court in the case of CIT(E) vs. Batanagar Education and Research Trust in Civil Appeal No.4451 of 2021 dated 2nd August, 2021. In terms of the above, the impugned order is set aside and restored back to the file of Ld. CIT(A) for decision afresh in accordance with law by passing a speaking order after giving the assessee a reasonable opportunity of being heard. Said order was pronounced at the time of virtual hearing itself in the presence of the parties Webex.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 09th September, 2021