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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: DR. BRR KUMAR & MS. ASTHA CHANDRA
O R D E R PER ASTHA CHANDRA, JM
The appeal filed by the assessee is directed against the order dated 30.06.2022 of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (“CIT(A)”) pertaining to Assessment Year (“AY”) 2017-18.
The assessee has taken the following grounds of appeal:- “1. That the order of the Honorable Commissioner of Income Tax (A) is bad in law and against the facts placed on the file.
2. That having regard to the facts and circumstances of the case, the Honorable CIT(A) has erred in law and on facts by not appreciating the fact that the appellant assessee is part and parcel of the group of institutions run by the CRM Jat Post Graduate College. The society CRM Jat Post Graduate College is duly registered u/s 12 AA and also enjoying exemption under 80 G of the Income Tax Act and was eligible for availing benefits of Section 11 of the Income Tax Act.
3. The Honorable Commissioner of Income Tax (A) has erred in law by not appreciating the fact that the appellant assessee had filed separate return of Income tax due to inadvertence and has claimed rebate under section 11 of the Income Tax Act as there was no intention of the assessee to conceal/suppress income or to evade income tax and even the consolidated Balance Sheet of the trust submitted before the learned AO during assessment proceedings shows that there was no contravention of the provisions of Sec 12 AA of the Income Tax Act 4. That the Honorable Commissioner of Income Tax (A) erred in confirming the order of the learned A.O who has erred in assessing the gross receipts of the Appellant as taxable by ignoring the fact that assessee has incurred lawful expenditure of Rs. 1,84,75,075/- during the regular course of running the Institution during the year for imparting education, the only object of the institution. The mistake is apparent from the record.
5. That the Honorable Commissioner of Income Tax (A) erred in law by not following the findings of the Superior Authorities with regard to the allowability of the expenses of Rs 1,84,75,075/- incurred for the achievement of the aims and objects of the appellant institution.
6. That the appellant craves the leave to add, modify, amend and delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
3. Briefly stated, the assessee AOP Chhaju Ram Law College e-filed its return for AY 2017-18 on 23.01.2018 declaring nil income. The case was selected for scrutiny under CASS. Statutory notices along with questionnaire were served upon the assessee in response to which requisite information was furnished. The Ld. Assessing Officer (“AO”) took it on record. It was found that the assessee claimed deduction of Rs. 3,82,86,535/- under section 11 and 12 of the Income Tax Act, 1961 (the “Act”) without having registration certificate under section 12A/12AA of the Act. The Ld. AO show caused the assessee why deduction be not disallowed. In reply, the assessee submitted, inter alia that the assessee is one of the constituent of CRM Jat Post Graduate College, Hissar. Inadvertently, return is being filed separately from the start. The return of AY 2017-18 was mistakenly filed in Form ITR-5 in the status of AOP/BOI. When the mistake was detected, the college revised the return and claimed deduction under section 12AA for which it was eligible. The explanation of the assessee was not acceptable to the Ld. AO who negatived the assessee’s claim of benefit under section 11 of the Act and disallowed deduction of Rs. 3,82,86,535/- and taxed it as its income in order of assessment dated 29.11.2019 under section 143(3) of the Act.
The assessee filed appeal before the Ld. CIT(A) challenging rejection of its claim under section 12AA and treating the gross receipt as its income without allowing deduction of expenses of Rs. 1,84,75,075/- incurred during the year in running the institution. The Ld. CIT(A) adopted the statement of facts filed along with the appeal as assessee’s written submission and dismissed the assessee’s appeal observing in para 5.1.5 and 5.1.6 of the appellate order as under:-
5.1.5 Thus, the appellant college has been filing its Return of Income as a separate entity and this separate entity has not been given any exemption u/s. 12A of the Act. Further, as per Section 12A of the Act, one of the conditions of applicability of Sections 11 and 12 of the Act is registration u/s 12AA of the Act by the prescribed authority i.e., Pr. CIT or CIT. Since the appellant failed to fulfill this basic condition, it was/is not eligible for claiming exemption u/s 11 and 12 of the Act. 5.1.6 At the time of filing the ITR for the A.Y. 2017-18, the appellant did not have registration u/s 12AA of the Act, however, it claimed exemption u/s 11 of the Act. In view of the above narrated facts, in the instant case the provision of Section 28 to 44 of the Act are applicable and as such income is treated/considered as of normal business entity, and the action of Ld. AO of charging it to tax in the status of AOP under the normal provisions of the Act without giving any benefits of section 11 of the Act as to be held to be in favour of ‘Justice and Fairplay'. Therefore, the deduction claimed by the appellant of Rs.3,82,86,535 disallowed by the Ld. AO, is confirmed as it is sustainable in the facts of the case and in law. The appellant is requested to pay the demand in time once the Ld. AO gives effect to this appeal order. Ground no. 2& 3 are, therefore, dismissed.
On the date of hearing fixed none appeared for the assessee, though Ld. DR was present. We heard him and perused the records. It is observed that despite listing points culled from statement of facts filed along with the appeal before him in para 5.1.2 of his appellate order for adjudication, the Ld. CIT(A) did not record any finding thereon and dismissed the grounds raised before him. On these facts and in the circumstances of the case, we deem it fit to remit the matter and restore it to the file of the Ld. CIT(A) for adjudication and decision afresh after allowing reasonable opportunity of being heard to the assessee. We order accordingly.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.