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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI RAMA KANTA PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order of the learned CIT(A)-NFAC, Delhi, dated 10.07.2024, relating to the assessment year 2018-2019.
Although a number of grounds have been raised by the assessee, however, these all relate to the ex-parte order of the Ld. CIT(A) in confirming the order of the Assessing Officer in determining the total income of the assessee at Rs.10,93,82,290/- as against the NIL returned income.
Facts of the case, in brief, are that the assessee is a Trust registered under the provisions of Indian Trust Act, 1882 and also registered u/sec.12A of the Income Tax Act,
2 ITA.No.1880/PUN./2024 1961 [in short “the Act”]. It filed it’s return of income on 24.09.2018 declaring NIL income. The case was selected for complete scrutiny on the following issue :
“Approval u/s.80G and Receipt of Voluntary Contributions.”
3.1. During the course of assessment proceedings, the Assessing Officer observed that assessee claimed revenue expenditure of Rs.73,58,73,844/-. He noticed that the assessee has claimed depreciation amounting to Rs.7,39,98,513/-, which according to the Assessing Officer, is not an allowable deduction u/sec.11(6) of the Act. While doing so, he noted that assessee is not entitled to claim depreciation against capital expenditure which was treated as application of income towards objects of the Trust. If the capital expenditure is made out of the income from property held under Trust or the donations and other income received during the year, the claim of depreciation on the said assets will result into double benefit to the assessee. While holding so, he relied on the decision of Hon’ble Supreme Court in the case of Escorts Ltd., vs. Union of India [1993] 199 ITR 43 (SC) and various other decisions.
3.2. The Assessing Officer also modified the income due to not incurring 85% of the expenditure of total receipts and accordingly determined the total income of the assessee at 3 ITA.No.1880/PUN./2024 Rs.10,93,82,290/- as against the returned income at NIL on account of the following two additions : a) Disallowance of depreciation at Rs.7,39,98,530/-; b) Modification of the income due to not incurring 85% of the total receipts of Rs.3,53,83,776/-.
3.3. Since the assessee did not appear before the Ld. CIT(A) despite number of opportunities granted, the Ld. CIT(A) passed the impugned ex-parte order for want of prosecution.
Aggrieved with such ex-parte order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.
4.1. The learned Counsel for the Assessee, at the very outset submitted that adequate opportunity was not granted by the Ld. CIT(A). Further the Ld. CIT(A) has not decided the issue as per the provisions of sec.250(6) of the Act which he was supposed to do and he has simply dismissed the appeal for want of prosecution. Therefore, the learned Counsel for the Assessee submitted that he has no objection if the matter is restored to the file of Ld. CIT(A) for adjudication of the issue afresh, after giving due opportunity to the assessee.
The Learned DR on the other hand, relied on the order of the Ld. CIT(A).
4 ITA.No.1880/PUN./2024
After hearing both the sides, we find the Assessing Officer determined the total income of the assessee at Rs.10,98,82,290/- as against ‘NIL’ returned income by making two additions namely disallowance of depreciation on assets, the cost of which, were claimed as ‘application of income’ at Rs.7,39,98,513/- and modification of income to the extent of Rs.3,53,83,777/- on account of not incurring 85% of the expenditure on the total receipts. Since the assessee did not appear before the Ld. CIT(A), he passed the impugned ex-parte order for want of prosecution. It is the submission of the Learned counsel for the Assessee that adequate opportunity was not granted and the Ld. CIT(A) has dismissed the appeal for want of prosecution but has not decided the appeal on merits as contemplated u/sec.250(6) of the Act. We find merit in the above arguments advanced by the Learned counsel for the Assessee. As per the provisions of sec.250(6) of the Act, the order of the Ld. CIT(A) disposing of the appeal shall be in writing and shall state the points for determination; the decision thereon and the reasons for the decision. However, the Ld. CIT(A) in the instant case has not decided the appeal on merits, but, has simply dismissed the appeal for want of prosecution. Further a perusal of the order of the Ld. CIT(A) shows that although he has mentioned that multiple opportunities were granted to the assessee, however, the order is silent as to how many opportunities were granted.
5 ITA.No.1880/PUN./2024 Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the matter back to the file of Ld. CIT(A) with a direction to grant one more opportunity to the assessee to substantiate it’s case and decide the appeal as per fact and law by passing a speaking order. The assessee is also hereby directed to make it’s submissions, if any, before the Ld. CIT(A) on the appointed date without seeking any adjournment under any pretext, failing which, the Ld. CIT(A) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 29.11.2024.