ADARSH EDUCATION SOCIETY,SURAT vs. ADIT, CPC, BANGALORE, BANGALORE

आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2018-19, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], National Faceless Appeal Centre (NFAC), dated 20.06.2022, which in turn arises out of an assessment order passed by Assessing Officer, Central Processing Centre (CPC), Bangalore, under section 154 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 12.09.2020.

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(2) The Ld. CIT(A), NFAC has not ensured that copy of any information/ documents of cross objections/ if any, filed by defendant regarding the validity period of exemption notification U/s.10(23C)(vi) is provided to the Appellant. (3) Can The Ld. CIT(A), NFAC feed words in mouth of defendant not intended by latter and suo moto raise objections on behalf of defendant and grant order U/s.250 without communication of such objections to either of the parties? (4) The Appellant reserves the right to add, amend, replace or delete any grounds of Appeal before conclusion of the appeal. (5) The Appellant prays to quash the order of Ld CIT(A), NFAC and allow the eligibility of application for rectification U/s.154 filed by the Appellant.” 3. The Learned Counsel for the assessee argued before the Bench and also filed written submission before the Bench. The sum and substance of his arguments are that assessee is a public charitable Trust engaged in field of imparting education by running various English medium and Gujarat medium schools. It is registered with Gujarat Education Board since decades. It is duly registered u/s 10(23C)(vi) and alternatively also U/s 12AA of the Act. The accounts of trust are duly audited and accounts of its various schools/sections are maintained separately and are also duly audited for the relevant year. The Assessee Trust had filed an original return of income which was processed with exemption Flag: N and tax was charged on entire Gross receipts of Rs.2,87,47,467/- resulting in demand of Rs.1,30,27,165/-, instead of refund claimed Rs.1,98,360/-. The Assessee filed a rectification application u/s 154 but the mistake was not rectified in the order passed u/s 154 of the Act. The Assessee filed appeal against order u/s 154 of the Act before Ld CIT(A). 4. The Ld. Counsel argued that Ld CIT(A), NFAC has erred in concluding that exemption Notification No. SRT/CCIT/ITO(HQ)-I/10(23C)(via)/4(14- 15)/AES/2015-16 dated 28.09.2015, granted is not valid for A.Y.2018-19. The Ld. CIT(A), NFAC has further erred in overlooking CIRCULAR NO. 7/2010 [F. NO. 197/21/2010-ITA-I], dated 27.10.2010 clarifying that once approval is obtained u/s 10(23C)(vi) prior to circular by an educational institution it shall remain valid until withdrawn by the department. The Ld. Counsel submitted before the Bench, the copy of order for approval for exemption u/s 10(23C)(vi) from prescribed authority vide Notification No. SRT/CCIT/ITO(HQ)-

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I/10(23C)(via)/4(14-15)/AES/2015-16 dated 28.09.2015, which was duly provided to Ld.CIT(A), NFAC vide submission dated 05.04.2022. The Ld.CIT(A) has accepted the existence of exemption notification and reproduced it at page no.5 and 6 of his order dated 20.06.2022. However, the Ld.CIT(A), NFAC has erred in concluding that the same is not valid for A.Y.2018-19. 5. The Ld. Counsel took us through Circular No. 7/2010 [F. NO. 197/2172010-ITA-I], dated 27.10.2010 issued by CBDT. The said circular clarifies that exemption approval on or after 01.12.2006, shall be one time approval which would be valid until withdrawn. As the notification u/s 10(23C) is issued on 28.09.2015 in case of assessee, it is on or after 01.12.2006. Therefore, appellant trust is eligible for exemption for A.Y.2018-19. 6. The Ld. CIT(A), NFAC has not ensured that copy of any information/ documents of cross objections, if any, filed by defendant regarding the validity period of exemption notification u/s 10(23C)(vi) is provided to the Appellant. Section 154(3), contains provisions of natural justice and to provide the assessee a reasonable opportunity of being heard. The intention of law is to ensure compliance with principles of natural justice before taking any harsh action. Looking at quantum of disallowance of entire expenditure of institution and quantum of tax thereon, Ld. ADIT upon receipt of application for rectification, should not have solely relied on technical output of its processing center. The Ld. ADIT has neither provided any reasons why denial flag of exemption is not being rectified by him nor provided any opportunity of being heard to the assessee in course of rectification proceedings. Similarly, no such copy of reasons in form of cross objections or otherwise were submitted to appellant in course of first appellate proceedings. 7. Without prejudice to any other grounds of appeal, the Ld. Counsel submitted that assessee had filed appeal with Ld.CIT, NFAC due to non- rectification of mistake in technical processing/data variances by Ld. ADIT, CPC as the exemption Flag was reflected as Exemption was duly granted in preceding year assessment by the department. Therefore, to the best of

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knowledge of assessee, there was no dispute regarding time validity of exemption at time of passing of order u/s 154 of the Act. The Circular No.7/2010 [F. NO. 197/21/2010-ITA-I], dated 27-10-2010 issued by CBDT, being binding to income tax authority and applicable to PAN India public charitable trusts, no such cross-objection of time validity is known to be raised by department officer. The Assessee has also not received any copy of cross-objections or arguments filed by defendant in course of proceedings with Ld.CIT(A), NFAC. Further on perusal of first appellate order, there is no mention of any such time validity findings raised by Ld. ADIT. The Assessee was therefore neither aware nor communicated of any such time- validity findings derived and relied upon by Ld.CIT(A) and hence appellant assessee was not provided any opportunity of presenting his case in respect of time validity findings directly appearing for first time in contents of order u/s 250 of the Act. Therefore Ld CIT(A) has erred on acting on a matter which was not evidenced to be raised by defendant. 8. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue relied on the findings of ld. CIT(A). 9. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld. CIT(A) and other materials brought on record. We note that Ld. CIT(A), NFAC has erred in concluding that exemption Notification No. SRT/CCIT/ITO(HQ)-I/10(23C)(via)/4(14-15)/AES/2015-16 dated 28.09.2015, granted is not valid for AY.2018-19. The Ld. CIT(A), NFAC has further erred in overlooking Circular No.7/2010 [F. No. 197/2172010-ITA-I], dated 27.10.2010, clarifying that once approval is obtained under section 10(23)(vi) prior to circular by an educational institution it shall remain valid until withdrawn by the department. We note that ld CIT(A) has accepted the existence of exemption Notification which is reproduced at page nos. 5 and 6 of his order, dated 20.06.2022, therefore we note that ld CIT(A) has not considered the exemption notification of the assesse. We note that assessee trust is registered u/s 10(23)(vi)

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of the Act, as well as under section 12AA of the Act, and Ld. CIT(A) has not considered both the certificate in right perspective. Further, the assessee was not provided with an opportunity in respect of time validity findings appearing for the first time in the order passed by ld CIT(A) under section 250 of the Act. Therefore, we set aside the order of ld CIT(A) and remit this issue back to the file of the Assessing Officer with the direction to examine registration under section 10(23c)(vi) of the Act and validity period of exemption notification upto AY.2018-19 and adjudicate the issue in accordance with law. For statistical purposes, appeal of the assessee is allowed.

Order pronounced on 29/12/2022 by placing the result on the Notice Board.

Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat �दनांक/ Date: 29/12/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat