ANJUMAN E FAROGH E ISLAM TRUST,MUMBAI V. INCOME TAX OFFICER (EXEMPTION)-1(1), MUMBAI

ITA 5544/MUM/2024

AI Insights

The case involves Anjuman E Farogh E Islam Trust, a small religious trust, which appealed against the order of the learned Addl./Joint Commissioner of Income Tax (Appeals)-1, Gurugram, for the assessment year 2014-15. The trust challenged the assessment completed on the basis of gross income without allowing the expenses claimed, citing a violation of the principles of natural justice. The trust had initially faced issues with the registration under section 12A of the Income Tax Act, which was only granted after the relevant assessment year. The tribunal found that the trust had not been given adequate opportunity to present its case or submit necessary documents, leading to the decision to remand the case for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470802 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI
• Assessee Lawyers: A.S. MITHWANI
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice
• Section: 147; 148; 144; 142(1); 143(2); 250; 11; 12A; 12

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.5544/MUM/2024 (Assessment Year : 2014–15) Anjuman E Farogh E Islam Trust, 11 Ground Floor, BMC Colony, Tentament 272 Kherwadi Road, Bandra (E), Mumbai - 400051 Maharashtra PAN: AADTA7049N ……………. Appellant v/s ITO (E) – 1(1) , 5th Floor Room No.508, Piramal Chamber, Mumbai - 400012 Maharashtra ……………. Respondent Assessee by : Shri A.S. Mithwani Revenue by : Shri Asif Karmali, Sr.DR Date of Hearing – 07/01/2025 Date of Order – 22/01/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal challenging the impugned order dated 26/08/2024 passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional/Joint Commissioner of Income Tax (Appeals)-1, Gurugram [“learned Addl./Joint CIT(A)”], for the assessment year 2014-15. 2. In this appeal, the assessee has raised the following grounds: – ITA No.5544/Mum/2024 (A.Y. 2014-15) 2 “1. That the LD ADDL/JCIT Gurugram has erred by not asking us to submit the Books of Accounts and opportunity of being heard and did not gave us sufficient opportunity to present details and proofs of expenses. 2. That LD ADDL/JCIT Gurugram erred in law and the facts and circumstances of the case in completing the assessment on the basis of gross income as per return submitted and not allowed the expenses undertaken as per the object of the trust in gross violation of principle of natural justice.” 3. The brief facts of the case are that the assessee is a small religious trust. Since its application for registration under section 12A of the Act was rejected, information was passed on to the Assessing Officer (“AO”) for completion of the assessment. During the process of verification at the time of registration under section 12A of the Act, it was found that the assessee has a corpus fund of INR 16,49,600 for which the assessee has claimed exemption under section 11 of the Act. Accordingly, proceedings under section 147 were initiated and notice under section 148 of the Act was issued on 30/10/2017. In response, the assessee filed its return of income on 16/10/2018 declaring a total income of INR 22,170. Thereafter, statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. However, the assessee did not furnish any details as called for during the year under consideration. During the assessment proceedings, it was noticed that during the course of proceedings for the assessment year 2016-17, the assessee furnished a copy of the registration certificate issued under section 12A of the Act. During the assessment proceedings, it was also noticed that the assessee has shown a donation income of INR 10,57,298 and claim expenses of INR 10,25,123. Therefore, a final show cause notice was issued to the assessee on the registered email address, however, the assessee failed to respond to the same. Since the ITA No.5544/Mum/2024 (A.Y. 2014-15) 3 assessee did not provide any details of expenses claimed, accordingly, vide order dated 20/11/2018 passed under section 144 read with section 147 of the Act the assessment was completed on the basis of gross income as per return and total income was assessed at INR 10,57,298. 4. The learned Addl./Joint CIT(A), vide impugned order, dismissed the appeal filed by the assessee by observing as follows: – “4.3 In this case admittedly the appellant got registration under section 12A on 31.10.2017, Therefore for the assessment year 2014-15 the assesses is not eligible to claim exemption under section 11 and 12 of the I.T. Act. The appellant as seen from the assessment order the appellant was required to file details of expenses claimed against the receipts during the year. However, the same were not filed by the appellant before the Income Tax Officer. The appellant has itself admitted that its case for assessment year 16-17 was also going on at that time and the appellant filed the necessary documents for that year and the assessing officer allowed the benefits of those expenses. The appellant has neither filed any supporting documents before the Assessing Officer during the course of assessment proceeding nor it has filed any document during the appellant proceeding despite being ask to do so. Unless the Appellant file necessary details of expenses and establish that these were incurred for the objectives of the appellant, the benefit of such expenses claimed cannot be allowed. The appellant has merely stated that the books of the accounts assesses are maintained and can be presented whenever required. It has been categorically required to file the details in support of its claim. However, no such details have been filed. In view of these facts, I am constrained to confirm the additions made by the Assessing Officer. Hence, the appeal of the appellant is hereby dismissed.” Being aggrieved, the assessee is in appeal before us. 5. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the learned Addl./Joint CIT(A) issued various notices to the assessee and in response thereto assessee filed its submission on 12/08/2024, by submitting as follows: – “With regards to our above said client we wish to state that the assessee is a trust registered with the charity commissioner on 7/11/2012. The trust is involved in religious education and activities in propagation of message of leaders of Islam for humanity. The trust conducts various lectures and activities in the area of Bandra East. ITA No.5544/Mum/2024 (A.Y. 2014-15) 4 The assessee Anjuman E Farogh Islam Welfare Trust which is a very small religious trust had delayed in applying for registration u/s 12A but has received the same on 31.10.2017. The asssessee is a religious trust having a small place for its activities and is open only for a couple of hours during the day. The asseesee did not receive the notices dated 30/10/2017 nor any subsequent notices or order. The LD officer contacted the asseesee through its Chartered Accountant representing the case of registration u/s 12A in the month of Sept 2018. The assessee filed a return of income u/s 148 in response to the above notices on 16th October 2018 and even presented the case orally. The LD officer issued a show cause notice dated 18/11/18 vide email and passed the order on 20/11/18 thereby leaving no time or scope of response. The Books of Accounts of the assessee are maintained and can be presented whenever required. A similar notice for A Y 2016-17 was issued and order in favour of the assessee was passed on 17/12/18. We are attaching the order copy of the said AY. The assesee pleads to give them an opportunity to provide all the details and they will be able to satisfy the officer.” 6. The learned AR submitted that the assessee was under the impression that the case would be transferred back to the AO and it would get an opportunity to submit the details and proof of expenses, however, its appeal was dismissed by the learned Addl./Joint CIT(A) on the ground that the books of accounts were not submitted. The learned AR further submitted that the trust is regularly getting its books audited and also filed the same with the Charity Commissioner and all its expenses are audited as per the audit norms. The learned AR further submitted that the AO issued a show cause notice on 18/11/2018 and passed the order on 20/11/2018, thereby leaving no time for the assessee to respond to the show cause notice. Thus, it was submitted that given an opportunity the assessee will submit all the documents as may be required for examination of the claim of expenses by the assessee. ITA No.5544/Mum/2024 (A.Y. 2014-15) 5 7. Having considered the submissions and perused the material available on record, we deem it appropriate to restore the appeal to the file of the learned Addl./Joint CIT(A) for de novo adjudication with a direction to the assessee to furnish all the documents/evidence in support of its claim of expenditure. Needless to mention no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee. The learned Addl./Joint CIT(A) shall be at liberty to seek a remand report from the AO in respect of the documents/evidence so furnished by the assessee. With the above directions, the impugned order is set aside and grounds raised by the assessee are allowed for statistical purposes. 8. In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 22/01/2025 Sd/- -AMARJIT SINGH ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 22/01/2025 prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Assistant Registrar ITAT, Mumbai "