ADIVASI PRAGATI MANDAL,THANE vs. ASST CIT PALGHAR CIRCLE, PALGHAR, PALGHAR
What did the Tribunal hold?
The Tribunal held that the CIT(A) should have decided the exemption claim on merits rather than rejecting it on a technicality. Substantial justice should prevail over technicalities.
What were the facts?
The assessee, a society registered under section 12AA, claimed exemption under section 11 for AY 2011-12. The AO denied this exemption as registration was effective from April 1, 2011, treating the surplus as business profit. The CIT(A) upheld the AO's decision.
What were the issues?
Whether the CIT(A) erred in not adjudicating the claim for exemption under Section 11 on merits, despite it being raised in written submissions.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K” BENCH, MUMBAI
Before: SHRI RAJENDRA & SHRI SAKTIJIT DEY
आयकर अपीऱीय अधिकरण, म ुंबई न्यायपीठ ‘के’ म ुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI श्री राजेंद्र, ऱेखा सदस्य एवुं श्री शक्तिजीि दे, न्याययक सदस्य के समक्ष BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER आयकर अऩीऱ सं. / ITA no. 265/Mum./2016 (ननधधारण वषा / Assessment Year : 2011–12) M/s. Adivasi Pragati Mandal C/o Survey no.50, Plot no.42 …….………. अऩीऱधथी / Lokmanya Nagar At & Post Palghar Appellant Dist: Thane 401 404 PAN – AAETS4024L v/s ..…….………. प्रत्यथी / Asstt. Commissioner of Income Tax Palghar Circle, Palghar Respondent ननधधाररती की ओर से / Assessee by : Shri Rahul K. Hakani रधजस्व की ओर से / Revenue by : Shri Sujit Banger सुनवधई की तधरीख / आदेश घोषणध की तधरीख / Date of Hearing – 17.01.2016 Date of Order – 21.10.2016 आदेश / ORDER शक्तिजीि दे, न्याययक सदस्य के द्वारा / PER SAKTIJIT DEY, J.M.
Aforesaid appeal by the assessee is directed against the order dated 21st October 2015, passed by the learned Commissioner (Appeals)–3, Mumbai, pertaining to assessment year 2011–12. Ground no.I(1) with its sub–grounds relate to denial of assessee’s claim of 2 M/s. Adivasi Pragati Mandal exemption under section 11 of the Income Tax Act, 1961 (for short "the Act").
Brief facts are, the assessee a society is registered under section 12AA of the Act. For the assessment year under dispute, assessee filed its return of income on 24th August 2011, declaring total income at nil after claiming exemption under section 11 of the Act. The Assessing Officer noticing that registration under section 12AA of the Act was granted w.e.f. 1st April 2011, denied assessee’s claim of exemption under section 11 on the reasoning that during the relevant financial year the assessee was not registered under section 12AA of the Act and accordingly completed the assessment by treating the surplus of income over expenditure as business profit. Further, he also disallowed an amount of ` 2,73,200 under section 40(a)(ia) of the Act. Being aggrieved of the assessment order so passed, assessee preferred appeal before the learned Commissioner (Appeals).
The learned Commissioner (Appeals) also sustained disallowance of assessee’s claim of exemption under section 11 of the Act as well as disallowance made under section 40(a)(ia).
Learned Authorised Representative submitted before us that in course of proceedings before the first appellate authority, the assessee had specifically raised the issue of claim of exemption under section 3 M/s. Adivasi Pragati Mandal 11, which the learned Commissioner (Appeals) refused to adjudicate by raising a technical objection that assessee had not raised a specific ground on the issue. He, therefore, submitted the matter may be restored back to the file of the learned Commissioner (Appeals) for deciding the issue of assessee’s claim of exemption under section 11 on merits.
Learned Departmental Representative on the other hand justifying the action of the learned Commissioner (Appeals) submitted, as the assessee had not raised the issue before the first appellate authority, there is no scope for adjudicating the same.
We have considered the submissions of the parties and perused the material available on record. It is evident from the impugned order of the learned Commissioner (Appeals) that the assessee in the written submission filed before him had specifically raised the issue of denial of claim of exemption under section 11. In fact, in Para–5(iii), the learned Commissioner (Appeals), though, acknowledges this fact, however, raising a technical objection that the assessee has not raised any specific ground on the issue, has rejected the plea of the assessee. In our opinion, when the assessee in the course of proceedings before the learned Commissioner (Appeals), has specifically raised the issue of denial of exemption under section 11, the learned Commissioner (Appeals) instead of rejecting such plea on 4 M/s. Adivasi Pragati Mandal a technical grand should have decided assessee’s claim on merit. It is settled position of law when justice and technicalities are pitted against each other, judicial approach should always be in favour of substantial justice rather than technicalities. In view of the aforesaid, we are inclined to set aside the impugned order of the learned Commissioner (Appeals) with a direction to decide the issue relating to assessee’s claim of exemption under section 11 on merits after due opportunity of being heard to the assessee. Ground no.I(1) is allowed for statistical purposes.
In view of our aforesaid decision, there is no need to adjudicate ground no.2, at this stage and the same is also set aside to the file of the learned Commissioner (Appeals) for deciding afresh on the basis of the decision to be taken on assessee’s claim of exemption under section 11 of the Act.
In the result, appeal is allowed for statistical purposes. Order pronounced in the open Court on 21.10.2016
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