ITO (EXEMPTION)-II, KOLKATA vs. SHAW EDUCATION FOUNDATION, KOLKATA

The assessee in the present case is a Trust, which is duly registered under section 12A of the Income Tax Act, 1961. It was established on 01.07.1993 and since inception, the Trust undertook the responsibility of running a School already in existence, namely National Gems School. For all the three years under consideration, regular returns of income were not filed by the assessee. The return of income for A.Y. 2004-05, however, was filed by the assessee on 30.03.2006 and from the perusal of the audited accounts for all the three years under consideration filed along with the said returns, the Assessing Officer noticed that the returns of income for the said three years were required to be filed by the assessee in law. He, therefore, issued notices under section 148, in response to which the returns of income for the years under consideration were filed by the assessee on 13.04.2006. During the course of assessment proceedings, the Assessing Officer found that there were certain payments made by the assessee in violation of the provisions of section 13(2)(c) of the Act. Keeping in view the said violation, he denied the claim of the asseessee for exemption under section 11 for all the three years under consideration and assessed the income earned by it under the head ‘income from other sources’ treating it as an AOP. During the course of assessment proceedings, the assessee failed to produce evidence to support and substantiate the expenditure claimed under the heads “Educational Development Programme”, “School Events” and “Promotional & Development Expenditure” inspite of sufficient opportunity afforded by the Assessing Officer. The expenditure claimed by the assessee under the said heads, therefore, was held to be not genuine by the Assessing Officer and the same was disallowed by him. The claim of the assessee of having received ‘Infrastructure Corpus Fund’ was also examined by the Assessing Officer and on such examination, he found that the contribution to the said fund was received by the assessee from the students of National Gems School. He held that this contribution received by the assessee from the students was not voluntary and in the absence of any declaration filed by the assessee from the concerned students, he treated the corpus fund received by the assessee as its , 717 & 1611/KOL./2008 Assessment years: 2000-2001, 2001-2002 & 2002-2003 Page 3 of 6 income. The claim of the assessee of having spent substantial amount for the purpose of construction of building was also not accepted by the Assessing Officer in the absence of any evidence produced by the assessee to support and substantiate the same. He also found on the basis of inquiry made by him that there was actually no construction of building undertaken by the assessee during the years under consideration. Accordingly, the claim of the assessee of having spent the amount on building construction as application of income was also disallowed by the Assessing Officer. Finally the assessments were completed by the Assessing Officer for all the three years under consideration vide orders passed under section 143(3) read with section 147 determining the total income of the assessee at Rs.2,01,18,690/-, Rs.1,27,76,690/- and Rs.1,43,08,540/- for assessment years 2000-01, 2001-02 & 2002-03 respectively.

Against the orders passed by the Assessing Officer under section 143(3) read with section 147 for all the three years under consideration, the appeals were preferred by the assessee before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), written submissions were filed by the assessee explaining its stand on each and every issue raised by the Assessing Officer in the assessment orders. Various documents were also filed by the assessee in support of its submissions. The said documents filed by the assessee for the first time before him as additional evidence were forwarded by the ld. CIT(Appeals) to the Assessing Officer along with the written submissions filed by the assessee for his comments. In the remand report submitted to the ld. CIT(Appeals), it was stated by the Assessing Officer that various details and documents filed by the assesese at the fag end of the assessment proceedings could not be verified by him on account of insufficiency of time. The Assessing Officer also objected to the admission of additional evidence filed by the assessee for the first time before the ld. CIT(Appeals) on the ground that there was no reason given by the assessee for its failure to file the same before him during the course of , 717 & 1611/KOL./2008 Assessment years: 2000-2001, 2001-2002 & 2002-2003 Page 4 of 6 assessment proceedings. On merit, the Assessing Officer in his remand report mainly relied on the assessment orders without making any comment on the written submissions and additional evidence filed by the assessee before the ld. CIT(Appeals). After taking note of all these facts as well as the remand report submitted by the Assessing Officer, the ld. CIT(Appeals) proceeded to examine the issues himself on merit in the light of written submissions filed by the assessee as well as additional evidence produced in support and mainly relying on the details and documents filed by the assessee before him, he decided all the issues involved in the appeals of the assessee for all the three years under consideration in favour of the assesese thereby deleting the additions made by the Assessing Officer. Aggrieved by the orders of the ld. CIT(Appeals), the Revenue has preferred these appeals before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. At the outset, it is noted that there is a delay of twelve days on the part of the Revenue in filing its appeals for A.Y. 2000-01, 2001-02. In this regard, the Department has moved an application seeking condonation of the said delay and keeping in view the reasons given in the said application, which are duly supported by an affidavit filed by the concerned authority, we are satisfied that there was a sufficient cause for the delay on the part of the Revenue in filing these two appeals for A.Y. 2000-01 and 2001-02. We, therefore, condone the said delay and now proceed to dispose of the present appeals filed by the Revenue on merit after considering the arguments of both the sides and perusing the relevant material on record.

At the time of hearing before us, ld. D.R. has raised a limited contention that most of the details and documents having been filed by the assessee at the fag end of the assessment proceedings, the Assessing Officer did not get sufficient time to verify the same. He has contended that this aspect was specifically pointed out by the Assessing Officer in , 717 & 1611/KOL./2008 Assessment years: 2000-2001, 2001-2002 & 2002-2003 Page 5 of 6 his remand report submitted to the ld. CIT(Appeals) and objection was also raised by him to the admission of additional evidence on the ground that no reason was given by the assesese for its failure to produce the same during the course of assessment proceedings. He submitted that keeping in view this objection raised by him, the Assessing Officer did not verify the additional evidence filed by the assessee and mainly relied on the assessment orders passed by him for all the three years under consideration. He has contended that the Assessing Officer, therefore, has not got any effective opportunity to examine the additional evidence filed by the assessee for the first time before the ld. CIT(Appeals) and the relief given by the ld. CIT(Appeals) vide his impugned orders to the assessee by relying on the said additional evidence is in violation of the principle of natural justice. He has contended that the impugned orders of the ld. CIT(Appeals) are, therefore, liable to be set aside and the matter should go back to the Assessing Officer for giving him an opportunity to verify all the details and documents filed by the assessee. Although the ld. Counsel for the assessee has not raised any material objection in sending the matter back to the Assessing Officer, he has contended that the Assessing Officer should be directed to give sufficient opportunity of being heard to the assessee and to pass a well reasoned and well discussed order on all the issues involved in the case of the assessee after verifying all the details and documents brought on record.

Keeping in view the submissions made by the ld. Representatives of both the sides, we consider it fair and proper and in the interest of justice to set aside the impugned orders of the ld. CIT(Appeals) for all the three years under consideration and restore the matter to the file of the Assessing Officer for deciding all the issues involved in the case of assessee afresh on merit after giving the assessee proper and sufficient opportunity to support and substantiate its case on the basis of all the details and documents already brought on record. The assessee shall be at liberty to produce other documentary evidence, if any, in support of its case on the issues under consideration and after examining/ verifying the , 717 & 1611/KOL./2008 Assessment years: 2000-2001, 2001-2002 & 2002-2003 Page 6 of 6 same, the Assessing Officer shall pass a well discussed and well reasoned order.

In the result, all the three appeals of the Revenue are treated as allowed for statistical purposes. Order pronounced in the open Court on November 20, 2015.