MISSION KAKATIYA,HYDERABAD vs. ITO., EXEMPTION WARD-1(2), HYDERABAD

Briefly, the facts of the case are that appellant is a trust formed under Irrigation & CAD Department, Telangana State for a prestigious “Mission Kakatiya Programme” with object of improving tanks and ground level water in the state of Telangana. The assessee trust was registered u/s 12AA and 80G of the Act. Return of income for the A.Y. 2018-19 was filed declaring Nil income. The department selected the case for Complete Scrutiny under CASS for “Approval u/s.80G and Receipt of Voluntary Contributions”. Statutory notices u/s.143(2) and 142(1) were issued to the assessee on which there was no compliance from the side of assessee. The Assessing Officer passed the ex parte assessment order u/s.144 r.w.s. 144B of the Act wherein he made addition of Rs.5,74,03,581/- by treating the same as Anonymous Donations and taxed the same under the head “Income from other sources”. In appeal, the ld. CIT(A) NFAC has confirmed the addition so made in the impugned order.

Being aggrieved, the assessee is in appeal before us in the present appeal.

The ld. Counsel representing the assessee submitted the contribution was received by way of cheques and the donors can be identified clearly with their names and addresses. However, the assessee could not be represented before the lower authorities on the reasons which are beyond its control. Therefore, prayed for the grant of another opportunity to substantiate its claim.

On the other hand, the ld. DR relied on the orders of the authorities below.

We have heard the rival submissions and perused the material on record. From perusal of the impugned order, it is clear that the NFAC while passing the ex-parte order had not adjudicated the issue raised in appeal on merits, instead the NFAC dismissed the appeal for want of prosecution of appeal. This approach of the NFAC is totally unreasonable and unjustified. The NFAC fell in serious error by not adjudicating the issues in appeal on merits. The settled position of law mandates the NFAC to dispose of the appeal by adjudicating the issue raised in appeal on merits. In the present case, the NFAC had fell into serious error by not disposing of the appeal on merits. Therefore, we vacate this finding of the NFAC.

In the circumstances, we remand the matter back to the file of the Assessing Officer to decide the issue afresh after proper verification and further direct to dispose of the appeal on merits in accordance with law after affording due opportunity of being heard to the appellant.

In the result, the appeal of the assessee is partly allowed for statistical purposes.