NATIONAL COUNCIL FOR URBAN AND RURAL DEV SOCIETY,JAMMU vs. INCOE TAX OFFICER WARD- ( EXEMPTIONS), JAMMU

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ITA 90/ASR/2023Status: DisposedITAT Amritsar17 May 2023AY 2017-185 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the Assessing Officer arbitrarily calculated the net profit at 15% on contractual receipts and that the assessee was denied an opportunity to present its case. The matter was remitted back to the Assessing Officer for fresh adjudication.

What were the facts?

The assessee, a charitable society, had its assessment completed ex-parte. The Assessing Officer treated contract receipts as business income, calculated profit at 15%, and added it to total income. The CIT(A) upheld this order.

What were the issues?

Whether contractual receipts of a charitable society are business income and whether the profit margin was correctly determined. Whether the assessee was denied a proper opportunity of being heard.

Which sections of the Income-tax Act were involved?

Section 144,Section 2(15),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.

Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE

Hearing: 10.05.2023Pronounced: 17.05.2023

Per:Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Commissioner of Income Tax (Appeals) NFAC, Delhi,[in brevity the ‘CIT (A)’] order passed u/s 250of the Income Tax Act 1961[in brevity the ‘Act’], for A.Y. 2017-18.The impugned order was emanated from the order of the ld. Income Tax Officer, Ward Jammu[in brevity the ‘AO’], order passed u/s 144 of the Act.

2.

The assessee has taken the following grounds: - “1. That the order under appeal is against the law and facts of the case.

2. That on the facts and circumstances of the case the Ld. CIT (A) has not been justified in confirming the assessment order passed by the Assessing Officer.

3. That on the facts and circumstances of the case the Ld. CIT (A) has also erred in law in confirming the holding of the Ld. AO that the activities of the appellant were not charitable but normal business activities.

4. That the Ld. CIT(A) has erred in law in confirming the assessment order that the work conducted by the appellant is not covered u/s 2(15) of the Income Tax Act, 1961.

5. That in addition and without prejudice to the above the profit margin @15% is too excessive when in fact there is no profit.

6. That the Ld. CIT(A) has also erred in law in confirming the assessment order passed by the Ld. AO as the tax liability has been determined u/s 115BBC by treating the donations as anonymous donations when in fact the identity of the donor is itself mentioned by the Ld. AO in his assessment order.

7. That the appellant has also not been given adjustment of the Tax Deducted at Source of Rs. 83000.00 either by the Ld. CIT(A) or Ld. AO.

8. That the Appellant could not appear/conduct the appeal before the Ld. CIT(A) due to circumstances beyond his control and therefore the appellant craves before the Hon’ble Tribunal that the appellant may kindly be allowed to explain as regards to amount deposited in the bank account. .

9.

It is prayed that the Hon’ble Tribunal may kindly be pleased to allow the appellant to amend or file additional/alternate grounds of appeal at the time of hearing.”

3. Brief fact of the case is that the assessee is a charitable society. For this impugned assessment order, the assessment was completed u/s 144 with addition amount of Rs.6,22,500/-. During Financial Year, the assessee’s gross receipt was Rs.71,93,950/-. Out of that the Rs.41,50,000/- was related to contract received. During assessment the ld. AO explained that this contract received amount is not related to Section 2(15) of the Act which is not for charitable purpose. The ld. AO computed the profit @ 15% at Rs.41,50,000/- which works out to Rs.6,22,500/- and added back with the total income of the assessee. Being aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the order of the ld.AO and passed ex-parte order. Being aggrieved assessee filed an appeal before us.

4.

When the appeal was called for hearing, none was present on behalf of the assessee. No adjournment petition was also filed. Considering, the fact of the case, the appeal is taken for hearing as ex-parte qua for assessee. After the submission of the ld. DR, the matter is adjudicated accordingly. 5. The ld. DR vehemently argued and relied on the orders of revenue authorities. 6. We heard the submission of the ld. DR and considered the orders of the revenue authorities. The assessee is a charitable society. The entire activities are related to charitable purposes. The contract received which was received by the assessee during this financial year amount of Rs.41,50,000/- as related to works contract purpose. But the utilisation of this profit is not discussed by the ld. AO in the assessment order. In fact, the contractual receipt is not under the provision of section 2(15) of the Act. But ld. AO arbitrarily calculated the net profit @ 15% on this contractual receipt which is primarily not accepted by the Bench. The assessee was denied both in assessment and in appeal for production of the documents in favour of its plea. The appeal order was passed without considering the merit of the case and without hearing the assessee itself. In our considered view, we find that assessee should get another opportunity for its argument in the assessment proceeding. We remit back the matter to the ld. AO for further adjudication. Needless to say, the assessee should get a reasonable opportunity of hearing and should be allowed to file the documents in the set aside proceeding.

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