THE JAMSETJI NUSSERWANJI TATA PARSI HIGH SCHOOL TRUST,NAGPUR vs. DEPUTY DIRECTOR OF INCOME TAX CPC, BENGALORE, BANGALORE
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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
PER K.M. ROY, A.M.
The present appeal has been filed by the assessee challenging the impugned order dated 16/10/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), Mumbai, [“learned CIT(A)”], for the assessment year 2021-22, emanating out a rectification order dated 07/03/2023, passed under section 154 of the Act.
In its appeal, the assessee has raised following grounds:–
“1. On the facts and circumstances of the case, order passed Commissioner of Income Tax Appeal, National Faceless Appeal Centre U/s. 154 of the Income Tax Act, 1961 is illegal, invalid and bad in law;
The Jamsetji Nusserwanji Tata Parsi High School Trust ITA no.377/Nag./2023
On the fact and circumstances of the case learned Commissioner of Income Tax Appeal, National Faceless Appeal Centre erred in not considering the reply filed by the assessee on 06/03/2023 before the learned Deputy Director of Income Tax, CPC, therefore order passed in unjustified, unwarranted and excessive; 3. On the fact and circumstances of the case learned Commissioner of Income Tax Appeal, National Faceless Appeal Centre erred in not considering that DDIT without going into merits of the case raised demand and adjusted the entire fund of assessee without providing proper opportunity to being heard and passed order U/s. 154 of the Income Tax Act, therefore the order passed in unjustified, unwarranted and excessive; 4. On the facts and circumstances of the case learned Commissioner of Income Tax Appeal, National Faceless Appeal Centre ought to have considered that the Deputy Director of Income Tax, CPC has not provided proper opportunity to explain the case and without considering the reply filed by the assessee trust passed order U/s. 154 of the Income Tax Act, therefore order passed is unjustified, unwarranted and excessive; 5. On the facts and circumstances of the case learned Commissioner of Income Tax Appeal, National Faceless Appeal Centre erred in not considering reply filed by the assessee and thereby confirmed order denying the exemption U/s. 11 & 12 of the Income Tax Act, when the assessee trust liable for the same, therefore order passed is illegal, valid and bad in law; 6. On the facts and circumstances of the case learned Commissioner of Income Tax Appeal, National Faceless Appeal Centre erred in not accepting that the assessee has submitted reasonable cause for filing of Form No. 10B after due date of filing of return before the Deputy Director of Income Tax, CPC, therefore order passed is illegal, invalid and bad in law; 7. On the facts and circumstances of the case learned Commissioner of Income Tax Appeal, National Faceless Appeal Centre erred in considering the fact the assessee has filed return of income before filling of Form 10B alongwith all financial statement, therefore the exemption denied U/s. 11 & 12 is unjustified, unwarranted and excessive; 8. The assessee denies the liability of interest charged U/s. 234A, 234B and 234C of the Income Tax Act. Without the prejudice, levy of interest U/s. 234A, 234B and 234C of the Income Tax Act is unjustified, unwarranted and excessive.”
Brief facts of the case are that the assessee is a Charitable Trust and running a School. For the year under consideration, the audit report was submitted on 17/02/2022 i.e., entailing a delay of two days from the due date
The Jamsetji Nusserwanji Tata Parsi High School Trust ITA no.377/Nag./2023
of audit report fixed on 15/02/2022. The assessee trust has filed return of income on 13/03/2022, along with audit report and due date of filing of return of income was 15/03/2022. Thus, there is no delay in filing of return of income with audit report. Accordingly, an order under section 154, was passed suo-motu denying the exemption under section 11 and 12 of the Act.
The learned counsel for the assessee, before us, strongly pleaded that the delay of two days in filing the present appeal be condoned by relying upon the following judicial pronouncements:–
i) Ernst & Young Merchant banking Services LLP Vs. ADIT, ITA no.2333/Mum./2022, order dated 20/03/2023; wherein it has been held that “Without giving proper opportunity of being heard to the assessee/proper notice for adjustment through applying section 143(1)(a), no alteration in the returned figures can be done by CPC,Bangalore. In this appeal we observed that this basic provision of law has not been followed, hence action of CPC, Bangalore in adjusting retuned income is null and void and without jurisdiction”. ii) M/s. Gangji Shamji Chedda (Princewala) Charitable trust Vs. DCIT, ITA no.1528/Mum./2022, order dated 31/10/2022, wherein the Tribunal held that “No doubt in order to claim the deduction under section 11 & 12 of the Act conditions laid down in the provisions contained under section 12A(B) of the Act need to be complied with by the assessee trust but at the same time when audit report in form 10B has not been filed alongwith return of income due to some technical reasons DCIT, CPC was not empowered to make any adjustment/raise a demand without issuing a notice to the assessee.” iii) CIT v/s Shri Devradhan Madhavlal Genda Trust, [1998] 230 ITR 714 (M.P); iv) CIT v/s Rai bahadur Bissesswarlal Motilal Malwasie Trust, [1992] 65 taxman 273 (Cal.); v) CIT v/s Gujarat Oil & Allied Industries, [1993] 201 ITR 325 (Guj.);
vi) Gyandeep Charitable Trust v/s ADIT, ITA No.555/Ahd./2023 dated 03/01/2024; vii) Hari Gyan Pracharak Trust v/s DCIT, 2023 TaxPub(DT) 3719 (Ahd- Trib)’ Page | 3
The Jamsetji Nusserwanji Tata Parsi High School Trust ITA no.377/Nag./2023
viii) Visha Oswal Jain Sewa Samaj v/s ITO (Exemp.), [2023] TaxPub (DT) 6392 (Ahd-Trib); and 9. Shree Bhairav Seva Samiti v/s ITO (Exemp.), [2023] ITR 708 (Mub- Trib).
The learned Counsel for the assessee further submitted that the issue is covered in favour of the assessee by the Co–ordinate Bench decision of the Tribunal rendered in Gyandeep Charitable Trust (supra).
On the other hand, the learned Departmental Representative relied upon the order of the authorities below.
We have heard the arguments of rival parties, perused the material available on record and gone through the orders of the authorities below. We find that the total income has been arrived on the basis of entire gross receipts of the Trust. The application of the corresponding funds has not been considered to find out the total income chargeable to tax. We are unable to agree with this particular logic adopted by the Revenue. It is basic principle of law that tax should be only on the real income and it cannot be based on any hypothetical income. Accordingly, the expenditure made by the trust in running the School is necessary to be factored into determining at the real income exigible to tax. Unfortunately, the Department has taxed the entire gross receipts and has disregarded the expenditure in totality. The stand of the Department cannot be supported by any means. Upon perusal of the financial statements in PB–9, it is found that ultimately there is a deficit in the hands of the School. Accordingly, in the interest of natural justice and fair
The Jamsetji Nusserwanji Tata Parsi High School Trust ITA no.377/Nag./2023
play, the matter needs to be remanded back to the Assessing Officer to arrive at the total income after conducting such verification as may be warranted.
It will be worthwhile to deal with the issue of condonation. Although, the trust failed to upload the audit report within the extended due date as extended by the circular and keeping in mind that the timely uploading is very much part of the statute, delay is non–condonable at first blush. However, bearing in mind that the appellant is an old established trust existing solely for the purpose of education and the delay of two days is due to human error lacking any mala fide intention in line with the Hon’ble Jurisdictional High Court’s order dated 15/04/2024, published in 162 taxman.com 114 (Bom.). Consequently, the delay in filing of the Audit Report by two days is hereby condoned and thus we set aside the impugned order passed by the learned CIT(A) and restore the matter to the file of the Assessing Officer for denovo adjudication in the light of the above directions.
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 14/05/2024
Sd/- Sd/- V. DURGA RAO K.M. ROY ACCOUNTANT MEMBER JUDICIAL MEMBER
NAGPUR, DATED: 14/05/2024
The Jamsetji Nusserwanji Tata Parsi High School Trust ITA no.377/Nag./2023
Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur
