IILM EDUCATION TRUST,GURGAON vs. DCIT (EXEMPTIONS CIRCLE 2), CHANDIGARH

आदेश/ORDER

PER A.D.JAIN, VICE PRESIDENT

NFAC, Delhi. The following grounds of appeal have been taken :

1. That on the facts and circumstances of the case and in law, the order dated 23.02.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeals Centre ['CIT(A)'] is bad in law and liable to be quashed/ set-aside.

ITA 227/CHD/2023 A.Y. 2014-15 2 1.1. That on the facts and circumstances of the case and in law, the CIT(A) erred in disposing off The appeal ex-parte without granting opportunity for personal hearing either physically or through video conferencing mode, in gross violation of principles of natural justice.

1.2. That on the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that delay/ non filing of submissions were, inter alia, on account of - (i) long prevailing Covid-19 pandemic; (ii) critical illness to authorized representative (Mr Anil Kanodia, CA); and (iii) appellant becoming aware of various notice(s) just a day or two before compliance date. 1.3. That on the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that the appellant was interested in contesting the appeal as evident from the fact that the first appeal was duly filed in time, and the appellant is a charitable organization which cannot afford to bear the burden of such adverse and futile assessment/ demand.

Re: Denial o f exemption under section 11/12 2 . That the CIT(A) erred of facts and in law in 'confirming the action of the assessing officer in denying exemption claimed by the appellant under section 11/12 of the Income Tax Act, 1961 ("the Act') alleging the activities of the appellant to not be charitable in nature. 2.1. That the CIT(A) erred on facts and in law in not appreciating that the appellant is - (a) duly registered under section 12A, (b) undisputedly engaged in carrying on education which is 'per se' a charitable activity; and (c) compliant with the trust deed and applicable provisions of the Act and other laws in force, and thus eligible for exemption under sections 11 /12 of the Act. 2.2. That the CIT(A)/ assessing officer erred on facts and in law in denying exemption under sections 11/12 of the Act merely on the ground that land settled upon trust and building received as donation (that too in preceding year) were recorded at a nominal value in the books of the appellant.

Re: Addition o f voluntary donations- double taxation (wit/tout prejudice)

3. That the CIT(A) erred on facts and in law in confirming the addition of voluntary donation of Rs.3,47,00,000, without appreciating that the said amount was already included in the gross receipts declared by the appellant, thus resulting in double addition.

Re: Addition on account o f building received as corpus donation (without prejudice)

ITA 227/CHD/2023 A.Y. 2014-15 3 4. That the CIT(A) erred on facts and in law in confirming addition of Rs.4,31,07,826, being alleged value of building received as donation, merely on the ground that the same was recorded at nominal value of Rs. 10. 4.1. That on the facts and circumstances of the case and in law, the aforesaid addition made in the year under consideration (assessment year 2014-15) is per se bad in law since the building was received as donation in the immediately preceding year (assessment year 2013-14), which stood accepted as such in that year in hands of the appellant as well as the donor. 4.2. That the CIT(A) erred on facts and in law in not appreciating that aforesaid receipt of donation is. in any case, in the nature of corpus donation and hence not liable to tax under the provisions of the Act. 4.3. That the CIT(A)/ assessing officer erred on facts and in law in drawing adverse inference from the fact that deed of donation was not registered without appreciating that the same was duly notarized, and that there is no statutory requirement to register such deed. 4.4. That the C1T(A)/ assessing officer erred on facts and in law in not even specifying the provisions of the Act under which the aforesaid addition has been made. 4.5. Without prejudice, on the facts and circumstances of the case and in law, the receipt of building (capital asset) towards corpus with a direction to be utilized for specific purposes (education) is, per se, a capital receipt not liable to tax .

Re: Disallowance o f lease charges/ rent

5. That the CIT(A) erred on facts and in law in confirming the disallowance of Rs.72,00,000 being rent paid by the appellant to Kulwant Rai Trust alleging the same to be in the nature of accommodation entry. 5.1 That the C1T(A) erred on facts and in law in not appreciating that the merely because the land underneath the leased building is owned by the settlor of the appellant-trust, the actual lease of area of building to the appellant could not be doubted more so when undisputedly the land was leased, for educational activities and rent paid is not alleged to be excessive or unreasonable. 5.2 That the CIT(A)/ assessing officer erred on facts and in law in not appreciating that the appellant and lessee are separate and independent charitable entities, not covered under section 13(3) of the Act.

6. That on the facts and circumstances of the case and in law, interest is not leviable/ chargeable under section 234B of the Act.

ITA 227/CHD/2023 A.Y. 2014-15 4 2. The facts of the case are that the assessee is a public charitable Trust with the object of imparting ‘education’.

The assessee Trust was registered u/s 12AA of the Income Tax Act, 1961 vide order dated 12.02.2015 read with rectification order dated 20.12.2016w.e.f. 01.04.2012. For the year under consideration, the assessee Trust filed its return of income on 22.09.2014 declaring ‘nil’ income after claiming exemption u/s 11/12 of the Act. The return filed by the assessee was selected for scrutiny and the Assessing Officer passed assessment order dated 29.12.2016 u/s 143(3) of the Act assessing income of the assessee at Rs.7,88,94,211/- and also made several additions. Against aforesaid additions, the assessee filed appeal before the CIT(A).

ITA 227/CHD/2023 A.Y. 2014-15 6 submissions and supporting documents on ITBA Portal.

The ld. Counsel for the assessee has submitted that the assessee could not comply with the directions of the ld. CIT(A) on account of extremely difficult situations during the then ongoing pandemic, lockdown imposed in the country, and the critical illness leading to the death of the Treasurer/authorized representative, Late Shri Anil Kanodia, who was looking after the appeal and represented the Trust before the authorities below. The ld. Counsel for the assessee has further submitted that the impugned ex- parte order has been passed without considering the material available on record and has requested that the impugned order of the ld. CIT(A) be set aside and the assessee be given appropriate opportunity of being heard to present its case.

ITA 227/CHD/2023 A.Y. 2014-15 7 The assessee, no doubt, shall cooperate in the fresh proceedings before the ld. CIT(A).

Order pronounced in the Open Court on 07.06.2024.