DANI CHARITABLE FOUNDATION ,MUMBAI V. INCOME TAX OFFICER, EXEMPTION WARD 1(2), MUMBAI

ITA 4189/MUM/2024

AI Insights

The case involves the Dani Charitable Foundation, which appealed against the order of the Ld. CIT (Appeals) for the Assessment Year 2016-17. The primary contention was the denial of exemption under section 11(2) of the Income Tax Act, which allows trusts to accumulate income for specific purposes. The Income Tax Officer (ITO) had disallowed the accumulation of Rs. 13,00,000, citing non-compliance with the requirement to specify the purpose of accumulation in Form No. 10. The CIT (A) dismissed the appeal due to non-compliance with notices, leading to the current appeal. The tribunal found that the CIT (A) had not adequately considered the merits of the case and remanded the matter for a detailed examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 33829 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 26-09-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 20-08-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: KIRAN UNAVEKAR
• Assessee Lawyers: M.M.GOLVALA
• Keywords: Opportunity of being heard; Charitable institution
• Section: 142(1); 143(2); 250; 11; 12A; 12; 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “K”, MUMBAI BEFORE SHRI MS KAVITHA RAJAGOPAL, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No.4189/M/2024 Assessment Year: 2016-17 Dani Charitable Foundation 3-A, Gujarat Org. Ltd., Baroda Wala Mansion, 81, Dr. Annie Besant Road, Worli, Mumbai- 400018. PAN: AAATD2747D Vs. Income Tax Officer, Exemptions Ward 1(2), Piramal Chamber, Lal Baug, Parel, Mumbai- 400012. (Appellant) (Respondent) Present for : Assessee by : Shri M. M. Golvala Revenue by : Shri Kiran Unavekar, SR. D.R. Date of Hearing : 26 . 09 . 2024 Date of Pronouncement : 24 . 10 . 2024 O R D E R Per: Ratnesh Nandan Sahay, Accountant Member: 1. This appeal has been filed by the appellant against the Order of the Ld. CIT (Appeals) passed u/s. 250 of the Income Tax Act [the ‘Act’ in short] Page | 2 ITA No.4189/MUM/2024 Dani Charitable Foundation; A. Y.2016-17 2 vide DIN & Order No. ITBA/APL/S/250/2024-25/1065947882(1) Dated 24/06/2024 for the Assessment Year 2016-17. 2. Following grounds of appeal have been raised by the appellant: 1. “The Ld. Commissioner of Income-tax (Appeals) erred in not granting sufficient opportunity of being heard to the Appellant. 2. The Ld CIT(A) erred in upholding the action of the Assessing Officer without Dealing with the merits of the matter and without specifically deciding the Grounds of Appeal raised before him, which is in violation of the provisions of section 250(6) of the Act. 3. Both lower authorities erred in disallowing the accumulation of income u/s 11(2) of Rs.13,00,000 on the ground that there was no specific purpose of accumulation mentioned in Form No. 10. 4. Both lower authorities erred in not considering the fact that the purpose for accumulation of income cannot be beyond the objects of the trust as mentioned in the Trust Deed, which, in the Appellant's case are towards charitable purposes only. 5. Both lower authorities erred in not considering the fact that the appellant has complied with the provisions of section 11(2) and invested the said accumulated funds into specified securities u/s 11(5) and, therefore, the said addition is unwarranted. 6. Both lower authorities erred in charging interest u/s.234B of Rs.69,630/- and u/s.234D of Rs.7,886- where no such interest is chargeable.” 3. The facts of the case, in brief, are that the assessee is a trust and had filed original return of income on 10/09/2016 and declared a total income at Rs.2,09,620/-. The case was selected for scrutiny through CASS under complete scrutiny and accordingly, notices u/s. 143(2) and 142(1) of the Income Tax Act were issued from time to time. During the course of assessment proceedings, the Ld. AO noticed that the trust was registered Page | 3 ITA No.4189/MUM/2024 Dani Charitable Foundation; A. Y.2016-17 3 with the Director of Income Tax (Exemption), Mumbai u/s. 12A and 80G of the Income Tax Act. The trust is also registered with the charity commissioner, Mumbai. During the year the objects of the trust remained unchanged. The main objects of the trust were advancement of education, medical aid, relief and rehabilitation of widows and other women without support, orphans, aged and the poor and other charitable objects and public causes. The assessee has claimed exemption u/s. 11 of the Income Tax Act. It was noticed by the Ld. AO that during the assessment year under consideration, the assessee trust has claimed accumulation of income of Rs.13,00,000/- by setting apart u/s. 11(2) of the Income Tax Act r.w. rule 17(2). However, the mandatory requirement of specifying the purpose of accumulation was not filed as per Form no.10. It was noticed from the copy of resolution letter, that the purpose of accumulation was mentioned as ‘to carry out the objects of the trust’, however, the resolution was not accompanied by the minutes of the meeting held in this regard. This showed that the resolution letter was given just to meet the requirements of scrutiny assessment proceedings. Ld. AO, therefore, asked the assessee trust to explain as to why the accumulation of income of Rs.13,00,000/- should not be denied. In response to that, the assessee trust replied that ‘we have mentioned as towards the objects of the trust’ in the form no. 10 (copy of form no. 10 is Page | 4 ITA No.4189/MUM/2024 Dani Charitable Foundation; A. Y.2016-17 4 at page no.1) which implies that the said unspent income has been accumulated for the purpose of spending towards the objects of our trust only which are specified in the trust deed. The submission made by the assessee trust was considered by the Ld. AO but was not accepted on the ground that the assessee trust has contravened the provision of section 11(2) of the Act and consequently, nothing contained in the provisions of section 11 and 12 shall apply to the case of the assessee trust. Accordingly, the AO held that no exemption can be granted u/s. 11(2) of the Act for the assessment year under consideration. 4. Aggrieved by the order of the Ld. AO, the assessee trust preferred an appeal before the Ld. CIT (A). The Ld. CIT(A) vide impugned order dismissed the appeal of the assessee trust on the ground that the assessee trust did not comply with the notices issued by the Ld. CIT(A) on various dates, the details of which are mentioned in paragraph 5 of the impugned order. The Ld. CIT (A), therefore, held that it appears from the non- compliance on the part of the assessee trust that it is not interested in pursuing the appeal on merit. 5. Aggrieved by the order of the Ld. CIT(A), this appeal has been preferred. During the appellate proceedings before us, the appellant has taken the ground that the Ld. CIT (A) has not granted sufficient opportunity of being heard to the appellant trust and decided the appeal without Page | 5 ITA No.4189/MUM/2024 Dani Charitable Foundation; A. Y.2016-17 5 considering the merit of the case. The appellant trust submitted a paper book containing various details in support of its claim that the appellant trust is entitled to accumulate the income u/s. 11(2) of the Act and should be allowed after going through the object of the trust and the provisions of the Income Tax Act. We have considered the facts of the case and submissions made by the appellant and we think it proper to remand the matter back to the file of the Ld. CIT (A) to decide the issue on merit after affording adequate opportunity of being heard to the appellant by considering the details submitted by it. The appellant trust is also directed to appear before the Ld. CIT (A) and explain its case on merit. 6. In the result, the appeal is allowed for statistical purpose. Order pronounced in the open court on 24.10.2024. Sd/- Sd/- KAVITHA RAJAGOPAL RATNESH NANDAN SAHAY JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 24.10.2024. Snehal C. Ayare, Stenographer Copy to:The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// Page | 6 ITA No.4189/MUM/2024 Dani Charitable Foundation; A. Y.2016-17 6 By Order Dy/Asstt. Registrar, ITAT, Mumbai. "