BHAAVICK SOCIETY ,HARYANA PANCHKULA vs. CIT(A)NFAC , FARIDABAD
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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SHRI SAKTIJIT DEY
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI
BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA Nos. 1582 to 1586/Del/2021 Assessment Years: 2012-13 to 2016-17
Bhaavick Society, House Vs. CIT(A) NFAC, No. 920, Himshika Faridabad Pinjore, Panchkula, Haryana PAN :AABAB5553B (Appellant) (Respondent)
Appellant by Ms. Kriti Bindal, CA Respondent by Shri Om Prakash, Sr. DR
Date of hearing 23.03.2023 Date of pronouncement 31.03.2023
ORDER Captioned appeals by the assessee arise out of five separate
orders, all dated 02.09.2021, passed by the National Faceless Appeal
Centre (NFAC), Delhi.
Common dispute in all these appeals relates to ad hoc
disallowance of expenses in all the assessment years under dispute.
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Briefly, the facts in all these appeals are, the assessee is a society
and stated to be running an educational institution. For the assessment
years under dispute, the assessee filed its returns of income in regular
course declaring nil income after claiming exemption under Section
10(23)(iiiad) of the Income-Tax Act,1961. While verifying the returns
of income filed by the assessee with reference to Form 26AS, the
Assessing Officer observed that the assessee had consultancy receipts
from Sikkim Manipal University of Health Medical and Tea on which
tax has been deducted at source under Section 194J of the Act. Thus,
from the nature of receipts, the Assessing Officer concluded that they
are legal/professional receipts, hence, not covered under Section
10(23)(iiiad) of the Act. Thus, he formed an opinion that surplus
income of various amounts claimed to be exempt under Section
10(23)(iiiad) of the Act in various assessment years are not allowable,
hence, income to that extent has escaped assessment. Accordingly, he
reopened the assessments under Section 147 of the Act. In response to
notices issued under Section 148 of the Act, the assessee filed returns
of income withdrawing its claim of explanation under Section
10(23)(iiiad) and offered the surplus income to tax.
3 ITA Nos.1582 to 1586/Del./2021
In course of assessment proceedings, the Assessing Officer
called upon the assessee to produce its books of accounts and other
details in support of the expenses claimed. After verifying the books
of account and other details, the Assessing Officer observed that
complete set of supporting documents, bills and vouchers in support
of expenses could not be produced by the assessee. Accordingly, on
estimate basis, he disallowed part of the expenses claimed in all
assessment years under dispute as under:
Assessment Years Expenses
i) 2012-13 : Rs.,2,00,000 ii) 2013-14 : Rs.3,00,000 iii) 2014-15 : Rs.2,00,000 iv) 2015-16 : Rs.2,00,000 v ) 2016-17 : Rs.2,00,000
Before me, learned counsel appearing for the assessee submitted
that part of the expenses have been disallowed by the Assessing
Officer on purely ad hoc basis without any valid reasoning. She
submitted, considering the fact that the income of the assessee in all
assessment years under dispute is within the range of Rs.20,00,000 to
4 ITA Nos.1582 to 1586/Del./2021
Rs.25,00,000, there is no reason for the assessee to inflate its
expenses. Thus, she submitted, the ad hoc disallowances made may be
deleted.
Learned Departmental Representative strongly relied upon the
observations of the Assessing Officer and learned Commissioner
(Appeals).
I have considered rival submissions and perused the material
available on record.
Undoubtedly, issue in dispute in all these appeals before me is ad
hoc disallowance of expenses made by the Assessing Officer.
On perusal of the assessment orders, it is observed, in course of
assessment proceedings, the assessee furnished its books of accounts,
ledger and copies of bills/invoices. However, since, original bills and
vouchers were not produced, the Assessing Officer disallowed part of
expenses on purely ad hoc basis. It is observed, while doing so, the
Assessing Officer has observed that in absence of supporting bills and
vouchers, certain expenses have to be restricted to a limit but he has
not discussed the nature and quantum of such expenses. In sum and
substance, the decision of the Assessing Officer in disallowing a part
5 ITA Nos.1582 to 1586/Del./2021
of the expenses is bereft of valid reasoning. In any case, if the assessee
had not maintained proper bills and vouchers in respect of certain
expenses, the disallowance could have been restricted to those
expenses and not across the board. Since, the Assessing Officer has
not given any valid reasoning while disallowing a part of expenses on
purely ad hoc basis, I am inclined to delete the disallowances made by
the Assessing Officer in each of the assessment years under dispute in
the present appeals. Thus, the Assessing Officer is directed to delete
the disputed additions.
Accordingly, ground no.7 in all these appeals is allowed.
Whereas, rest of the grounds, having not been pressed, are dismissed.
In the result, the appeals are allowed to the extent indicated
above Order pronounced in the open court on 31stMarch, 2023.
Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 31st March, 2023. Mohan Lal
6 ITA Nos.1582 to 1586/Del./2021
