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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: HON’BLE SHRI SANDEEP GOSAIN, JM &
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 543/JP/2023 fu/kZkj.k o"kZ@Assessment Year : 2017-18. cuke Central Academy Jodhpur Education Circle (Exemption), Vs. Society, C/o Kalani & Company, Kailash Heights, Lal Kothi, Chartered Accountants, Tonk Road, 5th Floor, Milestone Building, Jaipur. Gandhinagar Turn, Tonk Road, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AAATC 8759 J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal, CA jktLo dh vksj ls@ Revenue by : Shri Anoop Singh (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 04/10/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/10/2023 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M.
This appeal by the assessee is directed against the order dated 27.07.2023 of ld. CIT (A), National Faceless Appeal Centre, Delhi passed under section 250 of the IT Act for the assessment year 2017-18. The assessee has raised the following grounds :-
1. The ld. CIT (A), NFAC has erred on facts and in law in deciding the appeal ex-parte without providing adequate opportunity of hearing to the assessee.
2. The ld. CIT (A), NFAC has erred on facts and in law in not deciding the legal ground of assessee that even if there is violation of provisions of section 13(1)(c) r.w.s. 13(2)(c)/(g) as well as section 11(5) r.w.s. 13(1)(d), the surplus cannot be taxed by denying exemption u/s 11/12.
3. The ld. CIT (A), NFAC has erred on facts and in law in not deciding the grounds of appeal on merit and thereby upholding the order of AO.
The appellant craves to alter, amend and modify any ground of appeal.
5. Necessary cost be awarded to the assessee.
The brief facts of the case are that the assessee society is registered under Rajasthan Societies Registration Act, 1958 vide Registration No. 840/Jaipur/2006-07 dated 09.03.2007. It is also registered under section 12AA of the Income Tax Act by ld. CIT-1, Jaipur vide order dated 20.11.2007. It is solely engaged in imparting education and running 4 schools, namely, Central Academy School at Shastri Nagar, Ratanada, Paota and CHB at Jodhpur. The assessee filed its return declaring Nil income on 14.10.2017 after claiming exemption under section 11. The same was processed under section 143(1) of the IT Act, 1961. The case of the assessee was selected for complete scrutiny through CASS. E-notice under section 143(2) of the IT Act was issued by the AO on 09.08.2018 which was duly e-served upon the assessee. Thereafter, notice under section 142(1) of the IT Act along with query letter was issued on 17.01.2019 and duly served upon the Society. Subsequently, e- notices under section 142(1) were also issued on various dates, which were duly served upon the assessee society. In compliance to the above notices, the assessee society furnished e-submission from time to time. The details of records furnished were examined.
2.1 During assessment proceedings, the AO observed that the assessee society has paid salary and allowance to three persons covered under section 13(3) of Rs. 51,19,200/- out of which he considered Rs. 35,66,000/- as excessive. He further observed that assessee has given advance of Rs. 4.41 crores to various parties stated to be against purchase of immovable properties but has not given justification for the same and therefore, there is violation of section 11(5) of the Act, hence interest @ 12% on such advance i.e. Rs. 20,40,652/- is diversion of the income of society. Accordingly, the AO completed the assessment vide order dated 26.12.2019 whereby exemption under section 11 & 12 is denied and the surplus as per the Income and Expenditure Account along with various additions made in the assessment order is assessed under the head Income from Business & Profession and charged to tax under section 164(2) at maximum marginal rate. Aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT (A). The ld. CIT (A) dismissed the appeal of the assessee ex-parte by observing that the assessee was provided multiple opportunities of being heard vide notice dated 25.12.2020, 23.05.2023, 07.07.2023 and 18.07.2023 but it has not made any submission.
Now the assessee is in appeal before us.
Before us, the ld. A/R of the assessee has submitted his written submission as under :
“ At the outset it is submitted that notice dated 25.12.2020 was issued during COVID 19 and therefore could not be responded. Against notice dated 23.05.2023, adjournment was sought as accepted by the ld. CIT (A). Thereafter, notice dated 07.07.2023 and 18.07.2023 did not came to the notice of the Counsel of the assessee and therefore the same could not be responded and CIT (A) passed the order on 27.07.2023 without considering the fact that on exactly the same issues addition made by the AO in AY 2013- 14 to 2015-16 was mostly deleted and AO was directed to allow exemption u/s 11 of the Act. Against the order of the ld. CIT (A), department filed appeal before Hon’ble ITAT who vide its order dated 09.09.2020 dismissed the appeal filed by the revenue. Copy of CIT (A) order and ITAT order is enclosed. From the above, it can be noted that the reasonable opportunity of hearing was not provided. Further the ld. CIT (A) while deciding the appeal ex-parte has not considered the earlier appellate orders. Therefore, it is requested that instead of remanding the matter back to CIT (A), in the interest of justice, the appeal be decided based on the decision of Hon’ble ITAT in assessee’s own case for AY 2013-14 to 2015-16 by directing the AO to delete the disallowance made out of salary paid to specified person, reduce the disallowance of interest out of application of income and to allow exemption u/s 11 on the surplus declared by the assessee.”
4. On the other hand, the ld. D/R relied on the orders of the revenue authorities and submitted that the order of the ld. CIT (A) be sustained.
5. We have heard the rival contentions, perused the material available on record and gone through the orders of the revenue authorities. The ld. CIT (A) observed in his order that the assessee appellant was provided multiple opportunities of being heard by way of issue of hearing notices dated 25.12.2020, 23.05.2023, 07.07.2023 and 18.07.2023 but neither the appellant has complied with the notices issued nor submitted any document/written submissions in support of its case. The ld. CIT (A), therefore, dismissed the appeal of the assessee ex-parte by holding in para 5 of his order as under :-
“ 5. In view of the above, the appellant is not aggrieved with the assessment order impugned herein and is not interested in prosecuting the appeal. Accordingly, the additions/disallowances as challenged in the Grounds of Appeal and in the Appeal Memo are hereby confirmed. Accordingly given that this office has not received any information or document so as to make a judgment based on merits, this office is left with no option but to dismiss this appeal. Accordingly the appeal of the assessee stands dismissed.”
5.1 Since the impugned order of the ld. CIT (A) was passed ex parte by upholding the assessment order passed under section 143(3) of the IT Act and thereby sustained the additions made by the AO, therefore, in the totality of facts and circumstances of the case and in the interest of justice, we are of the view that it will be reasonable to provide one more opportunity to the assessee to represent its case. We, thus set aside the ex-parte order of the ld. CIT (A) and remand the matter back to the file of ld. CIT (A) for fresh adjudication after providing a reasonable opportunity of being heard to the assessee. The ld. CIT (A) while adjudicating the issue, should also take into consideration the orders passed by the ld. CIT (A) for the preceding assessment years 2013-14 to 15-16 and the order of the Tribunal in 793 & 794/JP/2019 dated 09.09.2020 for the assessment years 2013-14 to 15-16 wherein similar addition made by the AO and exemption under section 11 denied by the AO, has been decided in favour of the assessee. Accordingly,. assessee is granted one more opportunity to represent his case before the ld. CIT (A) and directed to file necessary documents/evidences as required by the ld. CIT (A). In the case the assessee fails to appear before the ld. CIT (A), the ld. CIT (A) may decide the appeal on the basis of the material available on record.
In the result, this appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 30/10/2023.
Sd/- Sd/- ¼lanhi xkslkbZ½ ¼ jkBkSM+ deys'k t;arHkkbZ ½ (RATHOD KAMLESH JAYANTBHAI) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 30/10/2023. Das/ आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Central Academy Jodhpur Education Society, Jodhpur. 2. izR;FkhZ@ The Respondent- Circle (Exemptions), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 543/JP/2023} vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत