CHHATTISGARH STATE LIVESTOCK DEVELOPMENT AGENCY,RAIPUR V. .ITO, WARD 1(1), RAIPUR, RAIPUR

ITA 227/RPR/2024

AI Insights

The case involves the Chhattisgarh State Livestock Development Agency, which appealed against the order of the Additional/JCIT (Appeals) that upheld the addition of Rs. 32,34,12,405 to the agency's income for the assessment year 2019-20. The agency argued that it acted merely as a pass-through entity for funds received from the Government of India under the 'Rashtriya Gokul Mission' scheme and did not have any taxable income. The Tribunal considered various legal provisions and precedents, including the nature of the funds as capital receipts and the procedural requirements for making adjustments under Section 143(1) of the Income Tax Act, 1961. The Tribunal's decision to remand the case for further examination underscores the complexity of tax implications for government-funded agencies and the strict adherence to procedural norms in tax assessments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 46710 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Other Referred Cases: National Thermal Power Company Ltd. Ltd. Vs. CIT, ITO (Exemption), Ward-2, Pune Vs. Serum Institute of India Research Foundation, Bank of India Retired Employees Medical Assistance Trust Vs. ITO(E)-1(1), Mumbai
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.L.ANURAGI
• Assessee Lawyers: G.S. AGRAWAL
• Keywords: Opportunity of being heard; Revised return; Question of law; Capital receipt; Principle of natural justice
• Section: 250; 143(1); 11; 22; 12A; 13; 119(2)(b); 20

Judgement Text

"आयकर अपीलीय अधिकरण न्यायपीठ रायपुर में। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 227/RPR/2024 नििाारण वर्ा / Assessment Year : 2019-20 Chhattisgarh State Livestock Development Agency, Directorate of Veterinary, G.E. Road, Raipur, Chhattisgarh PAN: AADAC1197N .......अपीलार्थी / Appellant बिाम / V/s. ITO Ward-1(1), Raipur/ Asst. Director of Income Tax, Aaykar Bhawan, Civil Lines, Raipur, Chhattisgarh. ……प्रत्यर्थी / Respondent Assessee by : Shri G.S. Agrawal, CA Revenue by : Shri S.L. Anuragi, CIT-DR सुनवाई की तारीख / Date of Hearing : 08.10.2024 घोषणा की तारीख / Date of Pronouncement : 23.12.2024 2 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee society is directed against the order passed by the Additional/JCIT (Appeals) [for short, Ld. JCIT] u/s. 250 of the Income Tax Act, 1961 (for short, the Act) dated 20.03.2024, which in turn arises from the intimation issued by the AO/CPC u/s.143(1) of the Act, dated 31.03.2021 for A.Y 2019-20. The assessee society has assailed the impugned order on the following grounds of appeal before us: “1 That under facts & law, the Ld. ADDL/JCIT(A) erred in passing the order without considering the Written Submission dated 23.08.2022, filed on 05.09.2022 running into 25 pages, Paper book containing 255 pages & an Application U/R 46A. He passed the order considering 2nd Written Submission dated 18.03.2024 filed on 18.03.2024. Prayed that the Order has been passed arbitrarily without considering the submission & supporting available on record, the addition of Rs.32,34,12,405/- be deleted. 2. That the Ld. ADDL/JCIT(A) further erred in passing the order without allowing hearing through video conferencing though such prayer was made. Prayer that order has been passed arbitrarily without allowing opportunity to the appellant which is against natural justice. Prayed to delete the addition of Rs.32,34,12,405/-. 3. That under facts & law, the Ld. ADDL/JCIT(A) erred in rejecting prayer for adjournment made by Appellant as an application u/s 119(2)(b) was filed before Ld. CCIT, Raipur, making prayer is allow time to file revised Return of Income with a view to avoid litigation. Prayed to delete the addition of Rs.32,34,12,405/-. 3 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 4. That under facts & law, the Ld. ADDL/JCIT(A) further erred in not judiciously considering the ground that Appellant was functioning as an agency of Govt. of State of C.G., formed as society by above govt. for receiving grants from Ministry of Agriculture & Farmers Welfare of Govt. of India under scheme of “Rashtriya Gokul Mission” for strengthening bull mother farms etc. to be passed for establishment of ‘MAITRI’) (Multipurpose Artificial Insemination Technicians in Rural Areas) & for other objects and Appellant did not earn any income and that funds not utilized as well as any interest earned on FDR(taken time being awaiting utilization) merged with fund not utilized is to be returned to above minister of Central Govt. and therefore appellant had no Income. Prayed that addition of Rs.32,34,12,405/- be deleted. 5. That under the facts & law, the Ld. ADDL/JCIT(A) did not consider that the Appellant did not earn any income, amount received from above Ministry of Central Govt. was held by Appellant on their behalf, any interest on FDR (amount awaiting utilization) & unspent amount was property of above Ministry of Central Govt. & as such Appellant had no taxable income, the addition of Rs.32,34,12,405/- be deleted. 6. That under facts & law, the Ld. ADDL/JCIT(A) further erred in not considering the submission that ITR was filed at NIL, by mistakenly claiming deduction u/s 11 instead of claiming the same as no liability under Income Tax as no income received/accrued/or deemed to have been received/or deemed to have been accrued to Appellant as per Section 5&that no income is chargeable u/s 4 of the IT Act. Prayed that mentioning wrong section, Appellant is not liable to pay tax on such amount which is not his income. Prayed to delete the addition of Rs.32,34.12,4056/-.” Also, the assessee has raised additional grounds of appeal, which reads as under: “7. Additional Ground: “That under the facts and the law, the Ld. Additional/JCIT(Appeals) erred in dismissing the appeal 4 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 though the adjustment has been made by the Ld. Assessing Officer, CPC, Bangaluru in intimation u/s 143(1) dated 31.03.2021 for the sum of Rs.32.34,14,405/- without intimating the same to the appellant for such adjustment which is required as per first proviso to Sec.143(1) of Income Tax Act, 1961. Prayed that adjustment of Rs.32,34,12,405/- is illegal and the same kindly be deleted.” As the assesse society based on the additional grounds of appeal has assailed the validity of the jurisdiction that was assumed by the A.O for framing the impugned assessment, the adjudication of which would not require looking any further beyond the facts available on record, therefore, we have no hesitation in admitting the same. Our aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). BRIEF BACKGROUND: - A). The assessee society is an agency formed by the State Government of Chhattisgarh on 11.06.2001 for the purpose of implementing the amounts received from the Department of Animal Husbandry, Dairying and Fisheries under the Ministry of Agriculture and Farmers Welfare of Government of 5 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 India under the scheme “Rashtriya Gokul Mission”. The assessee society is controlled and managed by the State Government of Chhattisgarh, to implement in the state of Chhattisgarh the National Project for Cattle and Buffalo viz. Breeding (NPCBB) viz. “Rashtriya Gokul Mission” and other schemes, which has its objects, viz. (i) to enhance productivity of bovines and increasing milk production in a sustainable manner using advanced technologies; (ii) to propagate use of high genetic merit bulls for breeding purposes; (iii) to enhance artificial insemination coverage through strengthening breeding network and delivery of Artificial Intelligence insemination services at farmers doorstep; and (iv) to promote indigenous cattle and buffalo rearing and conservation in a scientific and holistic manner. B). The Ld. AR states that the Department of Animal Husbandry, Dairying and Fisheries under the Ministry of Agriculture and Farmers Welfare of Government of India has various centrally sponsored schemes, wherein the released funds are to be utilized by the State Government of Chhattisgarh. One such fund is “Rashtriya Gokul Mission” in which Government of India with a view to promote cow breed releases funds to the State Governments. The funds released by the Government of India is to be utilized by the State Government of Chhattisgarh. For such purpose, the State Government of Chhattisgarh had formed an agency which is named as “Chhattisgarh State Livestock Development Agency” i.e. the assessee society. The funds released 6 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 to the State Government of Chhattisgarh are to be utilized in accordance with the broad guidelines of the scheme of “Rashtriya Gokul Mission”. C). The Ld. AR states that the State Government of Chhattisgarh had formed the assessee society on 11.06.2001, as an implementing agency, which is to facilitate the implementation of the funds released by the Government of India and utilize the same in accordance with the broad guidelines of the scheme “Rashtriya Gokul Mission”. The members of the assessee society are the officers of the various departments/ministries of the State Government of Chhattisgarh. The Government of India releases funds to the assessee society for various objects including potential to enhance the productivity of the indigenous bovine breeds of India through professional farm management and superior nutrition for promotion of conservation and development of the indigenous breeds. Accordingly, the assessee society was constituted by State Government of Chhattisgarh as an implementing agency for implementation of National Project for Cattle and Buffalo Breeding (NPCBB) in the State of Chhattisgarh. The assessee society functions as a nodal agency for the production, procurement and distribution of breeding inputs in the field. D). The Ld. AR further states that Government of India through the Department of Animal Husbandry and Dairying, New Delhi which is under the Ministry of Agriculture and Farmers Welfare, remits funds to various 7 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 states. In the State of Chhattisgarh, the assessee society is an agency for onward distribution of the funds for the purpose of “Rashtriya Gokul Mission” and other schemes in the state. The funds received by the assessee society are to be utilized for multiple purposes therein stipulated, as under: “1) Establishment of MAITRI (Multipurpose Artificial Insemination Technicians in Rural India) Centres 2) Training of MAITRI Workers 3) Equipments 4) Refresher training to private AI workers/ existing MAITRIs 5) Strengthening existing AI (Artificial Insemination) Centres 6) Refresher training of other existing AI workers 7) Strengthening existing AI network 8) Monitoring of AI programme 9) Identification of AI born calves (ear tags) 10) Computerization for implementation of INAPH 11) Managerial grants to SIa and grants linked to activities 12) Managerial grants 13) Concurrent evaluation 14) Manpower developint 15) Training of trainers 16) Organization of seminars and workshops (District level, State level and National level) 17) Strengthening LN transport and distribution system 18) LN transport tanker of 10000 Lts., capacity 19) Semen storage containers 550 — 600 Ltrs., capacity 20) LN Transport container 55-60 Ltrs Capacity 21) Semen storage container 45-50 Ltrs Capacity 8 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 22) Procurement of Bulls for AI 23) Development and Conservation of Indigenous Breds 24) Establishment of Institutional Gokul Grams 25) Strengthening of Sahiwal Bull Mother Farms etc. E). The Ld. AR states that the funds which are received by the assessee society from the Government of India are strictly subjected to the stipulations in the sanction letters. Apart from the stipulation about spending the aforesaid funds, there is a stipulation with regard to refund of the money alongwith interest in case it is not spent. The Ld. AR had drawn our attention to Page 35 to 42 of APB, which reveals that the amounts received by the assessee society from the Government of India, if not spent, is to be returned to the Central Government alongwith interest. Accordingly, there is full control of Government of India both on the activities carried on by the assessee society and also on the funds so remitted to it. The Ld. AR has further taken us through the letters of the Government of India, which revealed that the assessee society remained under a statutory obligation to refund the unspent funds released in its favour under the scheme. As per Rule 230(8) of GFR 2017, all interest or other earnings against grant of aid is to be mandatorily remitted by the assesse society to the consolidated funds of Government of India immediately instead of adjusting the same against future releases. The Ld. AR to fortify the aforesaid factual position had taken us through a “Sample letter” dated 22.05.2018 of the Ministry of 9 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 Agriculture and Farmers Welfare addressed to Pay & Accounts Officer, Department of Animal Husbandry and Dairying, New Delhi, Page 57 to 60 of APB. The Ld. AR submitted that a perusal of the Para 11 of the sanction letter revealed that the assets acquired wholly or substantially out of the government grants except those declared as obsolete and unserviceable or condemned in accordance with the procedure laid down in GFR shall not be disposed off without obtaining the prior approval of authority which had sanctioned the grant. Also, the Ld. AR submitted that as per the conditions stipulated in the sanction letters the funds received from the Government of India under various schemes have to be returned back to them. FACTS:- 2. The assessee society had filed its return of income for the subject year, i.e AY 2019-20 on 30.11.2020, wherein it had after claiming exemption of Rs.32,34,12,405/- u/s. 11(1)(d) of the Act, disclosed its income at Rs. Nil. As the assessee society was neither registered nor had applied for registration u/s.12A of the Act, therefore, the A.O/CPC, Bengaluru while processing its return of income u/s. 143(1) of the Act declined its claim for exemption u/s.11(1)(d) of the Act and determined its income at Rs.32,34,12,405/-. 10 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 3. Aggrieved, the assessee society carried the matter in appeal before the CIT(A) but without success. For the sake of clarity, the observations of the CIT(A) are culled out as under: “H] Findings & Decision:- Ground No. 1:- I have gone through the grounds of appeal and submissions filed by the appellant. I have gone through the grounds of appeal and submissions filed by the appellant. The appellant is raising ground. No.1 on technical ground instead of merit which is related directly or Indirectly to the variation made u/s 143(1). The Appellant has not furnished any specific Information that all the e-mail IDs has been carefully checked to see whether any such notice u/s 143(1) is received or not. It may be that the notice u/s 143(1) prior to the order u/s 143(1) was duly served but not attended by the Appellant. The technical grounds seem hyper technical because the appellant who could not get opportunity earlier got opportunity at this stage of appeal proceedings to present its case to dispose of on merit. It is the settled position of law that whenever there is conflict between the substantial justice and hyper technicality then the substantial justice should be preferred to avoid the defeat for the end of justice. The Hon'ble Supreme Court in the case \"M.C Mehta Vs Union of India (1986)\" has not taken a hyper technical approach because adoption of hyper technical approach would have defeated the ends of justice. Therefore, to maintain the substantial justice in this case, the appellant has been given ample opportunities to present its case at this First appeal proceedings stage and the appellant knows the reason of disallowance of deduction. The appellant has also submitted its replies accordingly to consider the case on merit. Therefore, ground No. 1 of appeal raised is DISMISSED. Ground No. 2 It is apparent that the Appellant has admitted that the income of Rs. 32.34.12.405/ not allowable for exemption u/s 11(1)(d). The Appellant claimed the can have been NIL But no explanation has been fled how a duly verified ITR can be revised without filing a Revised Return. No explanation has been has been filed as to how the Interest income on the funds 11 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 kept in the bank accounts of the Appellant cannot be treated as come of the Appellant society. The Appellant has claimed that those Interests are also not the Income of the Appellant society, but no explanation has been filed as to under whose hand such Income has to be assessed. The Appellant has furnished a copy of the petition u/s 119(2)(b) dated 18/03/2024, filed on 18/03/2024 after the notice u/s 250 has been served by this office. The Appellant has not furnished any reply regarding the claim of VC as filed before the Ld. CIT (Appeal) earlier. The Appellant has not filed any such prayer before this Office. The Appellant has also submitted that the appeal has been filed on 04.09.2021 and as such it has been filed after 31.03.2020. The Appellant claimed that the instruction of the CBDT to dispose off the appeals filed up to 31.03.2020 is not applicable in this case. But, I find that in the wort:-list, this appeal is mentioned where the date of compliance is within 31.03.2024, The CBDT has passed a communication on 07.03.2024 in F.No. 279/Misc./M-102/2021-ITJ and has circulated the guidelines for priority/out of turn disposal of appeals by the CIIT(A/AU)/AddL.Jt.CIT (Appeals), where it has been mentioned that the cases having Demand above Rs. 1 Crore has to be disposed off on priority. It has also been mentioned that this guideline. Is Issued in reference to the CBDT's Notification dated 29.12.2021 regarding functioning of Appeal. Hence, this appeal has to be disposed off in a priority as it involves Demand of Rs. 10,71,66,125/-, The Appellant has requested to keep the appeal proceedings pending till the disposal of the above application by the Hon'ble CCIT, Chhattisgarh. On perusal of the above, it can be stated that even if the prayer of the Appellant u/s 119(2)(b) is allowed, it will have no effect on the present appeal and which is not the subject matter of this Appeal. If the Revised Return is filed and it is processed by the CPC as per the ITR, the Ld. AO can give effect to that and the Demand raised in the Intimation dated 31.03.2021 will be automatically reduced. In view of the above, there is no ground to keep the appeal pending. As the Appellant could not furnish any explanation regarding the filling of an ITR claiming an exemption u/s 11(1)(d) which is not allowable apparently as the Appellant is not registered u/s 12A of the Income-tax Act, 1961, exemption cannot be allowed. The Appellant can't claim that the duty verified ITR is not valid. 12 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 In view of the above, this Ground of Appeal is DISMISSED. Ground No. 3 It is seen that the Appellant has raised some issue regarding the charging of Interest u/s 234A, B & C. I find that in each of the Section 234A, B & C, it is written as the assessee SHALL be liable to pay simple Interest...\" Hence, the charging of interest is mandatory and there is no scope of not charging the same. The Appellant can file petition before the Chief Commissioner of Income Tax for waiver for Interest u/s 234A, B & C. The AD is not required to give any opportunity of hearing in this regard before charging of Interest. The Appellant has not mentioned anything as to whether there is any mistake in calculation of the Interest or not. Hence, the ground is DISMISSED. In the Result, the Appeal is DISMISSED”. 4. The assessee society being aggrieved with the order of CIT(A) has carried the matter in appeal before us. 5. We have heard the learned authorized representatives of both the parties, perused the material available on record and the orders of the lower authorities, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 6. Controversy involved in the present appeal lies in a narrow compass, viz. (i). that as to whether or not the AO/CPC Bengaluru was justified in declining the assessee’s claim for exemption u/s. 11(1)(d) of the Act, vide his intimation u/s 143(1) of the Act, dated 31.03.2021?; (ii). that as to whether or not the AO/CPC Bengaluru was justified in determining the income of the assessee society which is stated to be an implementing agency, i.e a pass- 13 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 through entity, vide his intimation u/s 143(1) of the Act, dated 31.03.2021 at Rs.32,34,12,405/-?; and (iii). that as to whether or not the AO/CPC Bengaluru was justified in carrying out adjustments to the returned income of the assesse society without intimating it about the proposed adjustments as required per the mandate of the “1st proviso” and “2nd proviso” of Section 143(1) of the Act?. 7. Shri G.S. Agrawal, Ld. Authorized Representative (for short ‘AR') for the assessee society, at the threshold of hearing, submitted that as the assessee society is only an implementing agency formed for channelizing the funds received from the Government of India in accordance with broad guidelines of the scheme of “Rashtriya Gokul Mission”, therefore, being a simpliciter pass-through entity the funds so received by it from the Government of India could not have been brought to tax in its hands by treating the same as its “Income”. Elaborating on the reasons leading to the filing of the return of income by the assessee society, the Ld. AR submitted that as there was pressure from the Income Tax Department to file its return of income for the year under consideration and explain the funds which it had received from the Government of India, therefore, remaining under a mistaken belief it had filed its return of income for the subject year claiming the funds received from Government of India of Rs.32.34 crore (approx.) as exempt u/s 11(1)(d) of the Act. Carrying his contention further, the Ld. AR submitted that as the funds received by the assessee society, a pass-through 14 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 entity, as an implementing agency of the Central Government Scheme was by no means its income, therefore, it was only for the purpose of conveying the said factual position that the return of income for the subject year was filed declaring an income of Rs. Nil. The Ld. AR submitted that the funds received by the assessee society from the Government of India with specific stipulation as regards the utilization of the same could by no means be held as its “income” and subjected to tax as had been so done by the AO/CPC, Bengaluru vide his intimation issued u/s. 143(1) of the Act, dated 31.03.2021. 8. Alternatively, the Ld. AR submitted that as the amounts received by the assessee society from the Government of India were with specific stipulation as regards utilization of the same and refund of the unspent amount alongwith interest accrued on the same, if any, therefore, the same being in the nature of a “capital receipt” would not fall within the meaning of “Income” u/s. 2(24) of the Act and, thus, could not have been brought to tax in its hands despite the fact that it was not registered u/ss. 12A/12AA of the Act. The Ld. AR to support his aforesaid contention had relied on the order of ITAT, Pune in the case of ITO (Exemption), Ward-2, Pune Vs. Serum Institute of India Research Foundation, (2018) 169 ITD 271 (Pune-Trib.) and that of the ITAT, Mumbai in the case of Bank of India Retired Employees Medical Assistance Trust Vs. ITO(E)-1(1), Mumbai, ITA No. 6469/Mum/2016, dated 11.07.2018. It was, thus, the Ld. AR's claim that 15 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 though the funds received by the assessee society under the various government schemes from Government of India could not be brought within the meaning of “income” and, thus, subjected to tax in its hands, but even otherwise, the same being in the nature of “capital receipts” which were to be utilized as per the dictates and directions of the Government of India could not have been brought to tax by treating the same as income in its hands. 9. Apart from that, the Ld. AR submitted that the “1st proviso” and “2nd proviso” to Section 143(1) of the Act contemplates that no adjustment shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode. Further, it is provided that response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, then such adjustment shall be made. The Ld. AR submitted that though the assessee society filed its return of income for the subject year on 31.11.2020 and, thereafter, had filed its “ITR-V” on 26.03.2021 but the AO/CPC, Bengaluru had within a time span of 5 days processed the return of income vide intimation issued u/s.143(1) of the Act, dated 31.03.2021 i.e without complying with the statutory mandate of the “1st proviso” and “2nd proviso” of Section 143(1) of the Act. It was, thus, the Ld. AR’s claim that the AO/CPC had failed to comply with the statutory obligation that was cast upon him as regards putting the assessee society 16 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 to notice about the proposed adjustment and calling for his objections as was required per the mandate of the “1st proviso” and “2nd proviso” of Section 143(1) of the Act. 10. Per contra, Shri S.L Anuragi, Ld. CIT, Departmental Representative (for short “CIT-DR”) relied on the orders of the lower authorities. The Ld. CIT-DR submitted that as the assessee society was not registered u/ss. 12A/12AA of the Act, therefore, the AO/CPC, Bengaluru had rightly declined its claim for exemption u/s.11(1)(d) of the Act as the raising of the said claim pre-supposes as a pre-condition registration of the assesse society u/ss.12A/12AA of the Act. 11. Admittedly, as the assessee society is not registered u/s.12A/12AA of the Act, therefore, we concur with the Ld. CIT-DR that no infirmity emerges from the declining of its claim for exemption u/s 11(1)(d) of the Act of Rs. 32.34 crore (supra) by the AO/CPC, Bengaluru vide intimation issued u/s.143(1) of the Act, dated 31.03.2021. At the same time, we principally concur with the Ld. AR's contention that as the assessee society is an implementing agency i.e a pass-through entity that has been set up by the State Government of Chhattisgarh for implementing the funds received from the Government of India under “Rashtriya Gokul Mission”, wherein not only the manner of utilization of funds is strictly regulated as per the stipulations in the grants/aid given by the Government of India, but also, the unutilized 17 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 funds alongwith the interest accrued on the same, if any, is mandatorily required to be remitted back to the coffers of the Government of India, therefore, the funds so received by it as an implementing agency could not have been brought within the meaning of “Income” under Sec. 2(24) of the Act . The Ld. AR to fortify his aforesaid claim had taken us through the various letters substantiating the aforesaid factual position. We, thus, are of a firm conviction, that as claimed by the Ld. AR, if the assessee society is an implementing agency set up by the State Government of Chhattisgarh only for channelizing the funds received from the Government of India in accordance with the broad guidelines of the scheme of “Rashtriya Gokul Mission” i.e is a simpliciter pass-through entity, having no control over the funds or the utilization of the same nor any right to retain the unutilized amounts or the interest accrued on the same, if any, therefore, it is difficult to comprehend as to how the funds so received by it as an implementing agency from the Government of India could be brought within the meaning of “income” as contemplated u/s. 2(24) of the Act. 12. Although, we are conscious of the fact that the claim of the assesse society that as it was a simlicitor implementing agency i.e. a pass-through entity for utilizing the funds received from the Government of India in accordance with broad guidelines of the scheme of “Rashtriya Gokul Mission”, therefore, the funds so received by it could not be held as its “income” u/s. 2(24) of the Act, could not have been looked into by the 18 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 A.O/CPC, Bengaluru while processing its return of income u/s. 143(1) of the Act, but the CIT(Appeals) in order to deduce the correct income of the assesse society was obligated to have considered the aforesaid issue specifically when the same was raised before him. Our aforesaid view is fortified by the judgment of the Hon’ble Apex Court in the case of CIT Vs. Mcmillan & Co.(1958) AIR 207, wherein it was held that the Appellate Assistant Commissioner (AAC) in an appeal preferred by the assesse is not prevented from exercising power which the Income Tax Officer can exercise under the proviso to Section 13 of the Act. It was further observed that AAC has also power in appeal to apply provisions under Rule 33 of Indian Income Tax Rules, for the purpose of correct computation of the assessee’s income although the Income Tax Officer had not done so. We, thus, in terms of our aforesaid observations are of the view that the specific claim of the assesee society that was raised before the CIT(Appeals) i.e. the funds received by it from the Government of India under “Rashtriya Gokul Mission” with stipulation as regards utilization of the same and refund of the unspent amount could not be held as its “income”, ought to have been looked into and adjudicated by the CIT(Appeals). 13. Also, we principally concur with the Ld. AR’s contention that as the “1st proviso” and “2nd proviso” to Section 143(1) of the Act, contemplates that no adjustment shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode, therefore, the 19 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 AO/CPC, Bengaluru remained under a statutory obligation to have put the assessee society to notice about the proposed adjustments and called for its objections, if any, prior to carrying out the adjustments to its returned income. 14. Considering the totality of the facts, we are of the view that as it is the claim of the Ld.AR that the assessee society is an implementing agency set up by the State Government of Chhattisgarh, i.e a simpliciter pass-through entity, wherein the funds received by it from the Government of India are to be utilized as per the stipulations in the sanction letters in accordance with broad guidelines of the scheme of “Rashtriya Gokul Mission” and, thus, it has neither any control over the funds nor any right to retain the unutilized amounts or the interest accrued on the same, if any, therefore, the factual position supporting the said claim would require necessary verification. If the aforesaid claim of the assessee society is found to be in order, then, the funds of Rs. 32.34 crore (supra) claimed by the assesse society to have been received as an implementing agency i.e a pass-through entity from the Government of India under the “Rashtriya Gokul Mission” cannot be brought with the meaning of “Income” u/s 2(24) of the Act and subjected to tax in its hands. Accordingly, we restore the matter to the file of the CIT(Appeals) with a direction to verify the factual position and redecide the appeal. Also, the CIT(Appeals) is directed to verify in the course of the set- aside proceedings that as to whether or not the AO/CPC, Bengaluru while 20 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 making the adjustments vide his intimation issued u/s 143(1) of the Act, dated 31.03.2021 had complied with the statutory obligation that was cast upon him as regards putting the assessee society to notice about the proposed adjustment and called for his objections, as is required per the mandate of “1st proviso” and “2nd proviso” of Section 143(1) of the Act. We, thus, in terms of our aforesaid observations restore the matter to the file of the CIT(Appeals) with a direction to re-adjudicate the same. Needless to say, the CIT(Appeals) shall in the course of set-aside proceedings afford a reasonable opportunity of being heard to the assesse society which shall remain at a liberty to substantiate its claim based on fresh documentary evidence/material, if any. Thus, the Grounds of appeal a/w. additional grounds of appeal raised by the assessee society are allowed for statistical purposes in terms of our aforesaid observations. 15. In the result, appeal of the assessee society is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 23rd day of December, 2024. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; दिनाांक / Dated : 23rd December, 2024. ***Hem/SB, Sr. PS. आदेश की प्रनिललपप अग्रेपर्ि / Copy of the Order forwarded to : 21 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. The Pr. CIT, Raipur-1 (C.G) 5. ववभागीय प्रतततनधि, आयकर अपीलीय अधिकरण, रायपुर बेंच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गार्ड फ़ाइल / Guard File. आिेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण, रायपुर / ITAT, Raipur. 22 Chhattisgarh State Livestock Development Agency vs. ITO Ward-1(1) Raipur ITA No. 227/RPR/2024 Date 1 Draft dictated on 08.10.2024 Sr.PS/PS 2 Draft placed before author Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order "