CONCERN FOR URBAN AND RURAL DEVELOPMENT SOCIETY CURDS,KANAKANAGAR V. .INCOME TAX OFFICER EXEMPTIONS WARD 1 BANGALORE, BANGALORE

ITA 2025/BANG/2024

AI Insights

The case involves the Concern for Urban and Rural Development Society, which filed an appeal against the order of the National Faceless Appeal Centre (NFAC) concerning the assessment year 2017-18. The assessee had declared nil income in their return, which was selected for scrutiny, leading to an assessment under section 144 of the Income Tax Act, resulting in an addition of Rs.61,85,934. The assessee's appeal to the CIT(A) was unsuccessful due to non-response from the assessee. The Tribunal noted discrepancies between the income tax return and the financial statements submitted and decided to remit the case back to the AO for a fresh assessment, emphasizing the need for a fair opportunity for the assessee to present their case.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 32950 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SIDDESH NAGARAJ GADDI
• Keywords: Opportunity of being heard
• Section: 144; 143(3); 250; 48; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER ITA No.2025/Bang/2024 Assessment Year : 2017-18 Concern for Urban and Rural Development Society Curds, No.27, 17th Cross, Kanakanagar, R. T. Nagar, Bengaluru – 560 032. PAN : AAAAC 2980 J Vs. The Income Tax Officer (Exemptions), Ward – 1, Bengaluru. APPELLANT RESPONDENT Assessee by : Shri. Siddesh Nagaraj Gaddi, CA. Revenue by : Shri. Subramanian, JCIT(DR)(ITAT), Bengaluru. Date of hearing : 03.11.2024 Date of Pronouncement : 17.12.2024 O R D E R Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the assessee against the Order passed by the National Faceless Appeal Centre (NFAC) [DIN and Order No.ITBA/NFAC/S/250/2024-24/1069056284(1)] dated 24.09.2024. 2. Briefly stated, the facts of the case are that assessee filed return of income electronically on 28.03.2018 declaring Nil income. The case was selected for scrutiny under CASS and statutory notices were issued to the assessee. During the course of assessment proceedings, none appeared on ITA No.2025/Bang/2024 Page 2 of 7 behalf of the assessee. Accordingly, the AO completed the assessment under section 144 of the Act and made addition of Rs.61,85,934/-. 3. Aggrieved from the above Order, assessee filed appeal before the CIT(A) and CIT(A) issued notices for hearing and written submissions on 23.12.2020, 19.01.2021 and 22.05.2024 and there was no response from the assessee. Accordingly, the Assessment Order was confirmed by the CIT(A). 4. Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel for the assessee filed written submissions and the relevant part of the written submission is as under: 37. From the above the precedents, it is evident that the that an Assessing Officer cannot solely rely on incorrect balance sheets for making additions under Section 69. The focus should be on establishing the correctness of the income based on reliable and verified data. 38. The addition seems to be made only due to the non-response of the Assessee. The same appears to be an exploitation of the Appellant’s background. Additional reference may be made to the Circular issued by CBDT dated 11-4-1955 wherein it has been directed to the Revenue Authorities to not take advantage of the ignorance of the assessee and to assist taxpayers in determining the correct income/tax. The relevant extract of the same is provided herewith: The Board have issued instructions from time to time in regard to the attitude which the Officers of the Department should adopt in dealing with assessees in matters affecting their interest and convenience. It appears that these instructions are not being uniformly followed. 2. Complaints are still being received that while ITO’s are prompt in making assessments likely to result into demands and in effecting their recovery, they are lethargic and indifferent in ITA No.2025/Bang/2024 Page 3 of 7 granting refunds and giving reliefs due to assessees under the Act. Dilatoriness or indifference in dealing with refund claims (either under s. 48 or due to appellate, revisional, etc., orders) must be completely avoided so that the public may feel that the Government are actually prompt and careful in the matter of collecting taxes and granting refunds and giving reliefs. 3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should :— (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 4. Public Relations Officers have been appointed at important centres, but by the very nature of their duties, their field of activity is bound to be limited. …. …. … 6. The intention of this circular is not that tax due should not be charged or that any favour should be shown to anybody in the matter of assessment, or that where investigations are called for, they should not be made. Whatever the legitimate tax it must ITA No.2025/Bang/2024 Page 4 of 7 be assessed and must be collected. The purpose of this circular is merely to emphasise that we should not take advantage of an assessee’s ignorance to collect more tax out of him than is legitimately due from him 39. From the above discussion of the scheme of the Act, it is relevant to note that the duty of the Officer is to assess real and correct income in accordance with the law. The Circular states that Officers of the department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard, the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. 40. It is one of their duties to assist the taxpayers in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard, the officer should take the initiative in guiding a taxpayer, where proceedings or other particulars before them indicate that some refund or relief is due to him. 41. Further, the Circular states that the department should freely advise the assessee when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. It may be true that the Circular is of the year 1955. Nevertheless, as per the recent notification issued by the Income-tax Department as to how the department has to approach the assessee, the Board has been consistent in stating that the department should adopt an assessee-friendly approach. 42. Given the above submissions it is implored before your goodoffice that the above additions made in the impugned assessment order shall be reversed and the impugned assessment order shall be quashed as the same is passed without performing the duties to which the officer was obliged as per the provisions of the Act. ITA No.2025/Bang/2024 Page 5 of 7 43. With respect to the denial of the contentions of the assessee, for not submitting satisfactory explanations with respect to the details filed in the ITR form, it is submitted that the assessee was not in a position to submit such documents due to peculiar circumstances as explained above. Without prejudice to the same, the Revenue Authorities could have resorted to the provisions of section 133(6) by obtaining the required documents from the broker. 44. We implore yourself to direct the authorities to consider the underlying documents by re-appreciating the facts of the case to determine the correct income and not to take advantage of the ignorance of the assessee. 45. We wish to place reliance on the Circular of CBDT [Circular 14/XL-35 dated 11.04.1955], which is binding on the authorities. As per this, the authorities have been directed to help the assessee in arriving at the correct income and not take advantage of the situation/technical defaults. 46. Without prejudice to considering correct particulars of income, the Ld.AO has erred in law and on facts in considering gross receipts for taxation purposes. 47. Considering the above, we include your good self to allow the Appellant’s appeal of the assessee on these grounds. 48. On the basis of the above grounds and other grounds which may be urged at the time of hearing with the consent of the Hon’ble ITAT, it is prayed that the order passed under section 143(3) as upheld by the order u.s. 250 of the Act be quashed and the relief sought to be granted. 49. Therefore, it is prayed before this Honourable Tribunal that, considering the above submission of the Appellant, the appeal may be allowed. 5. In addition to the above, he further submitted that the wrong financial statements were presented by the assessee and even the amount shown in the ITA No.2025/Bang/2024 Page 6 of 7 Income Tax Return of Rs.42 lakhs is incorrect and requested and undertook that if a chance is given to the assessee, assessee shall comply with the requirements of the Revenue. 6. The learned DR relied and supported the Orders of the lower authorities and submitted that inspite of various opportunities provided to the assessee, assessee has neither appeared nor filed written submissions and did not respond to the notices issued. Therefore, he submitted that the Order passed by the lower authorities is correct and objected to providing any further opportunity to the assessee. 7. Considering the rival submissions, we noted that assessee filed return declaring Nil income and during the course of assessment proceedings, there was no representation from the assessee’s side. Accordingly, the AO completed assessment under section 144 of the Act, computing income at Rs.61,85,934/-. On perusal of the ITR submitted by the assessee, the amount shown are not matching with the financial statements submitted before us. The learned AR submitted that the financial statements produced before the Hon’ble Tribunal were filed before the Registrar of Societies, Bangalore. Considering the facts of the case and in the interest of justice, we remit the issue back to the file of AO to decide the issue afresh as per law after affording reasonable opportunity of being heard to the assessee. Needless to mention that the assessee shall not take unnecessary adjournments in the matter and shall cooperate with the Revenue for early disposal of the case. ITA No.2025/Bang/2024 Page 7 of 7 8. In the result, the appeal by the assessee is allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (PRAKASH CHAND YADAV) (LAXMI PRASAD SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated : 17.12.2024. /NS/* Copy to: 1. Appellant 2. Respondent 3. Pr.CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "