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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
This appeal by the assessee is directed against the order dated 02.8.2023 passed by the Ld. CIT(A), NFAC, Delhi for the A.Y. 2017-18.
The assessee has raised various grounds of appeal argumentative in nature. However, in nutshell, the grievance of the assessee is that the assessment order was passed by the AO without considering the 2 MP State Open School of 2023 documents and explanation in respect of Govt. Aid received by the assessee society which has been confirmed by the Ld. CIT(A) while passing impugned order.
3. At the time of the hearing, Ld. AR of the assessee stated that the AO has made addition by denying the exemption u/s 10(23C)(iiiab) of the Act. The AO has passed order on best judgment basis without considering the necessary details about its receipts from the Government. Ld. CIT(A) has issued notices during the Covid-19 pandemic except the last notice. But, those notices were not received by the assessee as might have been sent to the e-mail not in regular use of the assessee. Therefore, the Ld. AR of the assessee submitted that the appeal of the assessee was dismissed by the Ld. CIT(A) for non- prosecution vide impugned order which may be set aside and the matter may be remanded to the record of the AO for fresh adjudication after considering the necessary details and evidence to be filed by the assessee.
4. On the other hand, the Ld. DR has fairly submitted that since the AO has disallowed the claim of the exemption u/s 10(23C)(iiiab) for want
3 MP State Open School of 2023 of details and Ld. CIT(A) has passed exparte order therefore, the relevant details are required to be verified and examined at the level of the AO.
We have heard rival submissions and considered the relevant material available on record. The AO has denied claim of the exemption u/s 10(23C)(iiiab) of the Act in para 5 & 6 as under: - “5. In reply to final notice the assessee furnished copy of Annual Financial statements, Annual report of society, copy of an old note sheet apparently the order of cabinet, copy of by laws etc. The assessee however did not furnish any written reply to the detailed show cause. It merely uploaded some documents which are general in nature. It is pertinent to note that assessee was provided with ample opportunity to substantiate its claim however assessee failed to furnish any reply and did not utilize the opportunity to reply and remained evasive. In view of this the assessing officer has no choice but to proceed ahead as per the provisions of section 144 of the Income Tax Act, 1961 on the basis of information available, past assessments and to the best of her judgement.
6. The assessee has claimed exemption of Rs. 34636568/- u/s 10(23c)(iiiab). The provision of section 10(23c)(iiiab)of the Act allows to claim exemption to assessee who is wholly or substantially financed by Government. The explanation to section 10(23c)(iiiab) r.w. Rule 2BBB define the meaning of wholly or substantially financed by Government. According to explanation and Rule 2BBB exemption u/s 10(23c)(iiiab) allowable if government grant received is more than 50% of gross receipt of the assessee. From the perusal of financial statement of assessee it is seen that the assessee has earned total receipts of Rs. 32,30,25,697/- which are earned by way of 4 MP State Open School of 2023
Registration and Examination fee, RTI fees, Duplicate Markesheet fees, Tender Fees and Interest on saving bank accounts and FDs. There are no grants received by the assessee from government in any from thus assessee fails to meet the basic requirement of section 10(23c)(iiiab).”
The AO has disallowed the exemption u/s 10(23C)(iiiab) of the Act for want of the necessary details regarding the Govt. grant/Aid received by the assessee so as to verify the necessary conditions as per Rule 2BBB of the IT Rules. Ld. CIT(A) has stated in impugned order that five notices were issued to the assessee and out of which, four notices were issued during Covid-19 pandemic and the last notice dated 06.7.2023 was issued after Covid-19 pandemic period. When there was no response from the side of the assessee, the appeal was dismissed for non- prosecution. Accordingly, in facts & circumstances of the case, when the relevant details and record are required to be considered while allowing the claim of the exemption u/s 10(23C)(iiiab) of the Act then the matter requires reconsideration at the level of the AO and therefore, the impugned order of the Ld. CIT(A) is set aside and the matter is remanded to the record of the AO for fresh adjudication after verification and examination of the relevant details to be produced before the AO.
5 MP State Open School of 2023 Needless to say that the assessee be given an appropriate opportunity of being heard before passing the assessment order.
In result, the appeal of the assessee is allowed for statistical purposes only.
Order pronounced in the open court on 15.02.2024.