FAROOQIA COLLEGE OF PHARMACY,MYSORE V. INCOME TAX OFFICER, EXEMPTION WARD, MYSORE

ITA 2407/BANG/2024

AI Insights

The case involves Farooqia College of Pharmacy, a unit of Rifahul Muslimeen Educational Trust (RMET), which did not file a return of income for the assessment year 2017-18 despite significant bank deposits. The AO issued notices under sections 142(1) and 144 of the Income-tax Act, 1961, leading to an ex parte assessment. The CIT(Appeals) upheld the AO's decision without a proper hearing, prompting the assessee to appeal to the ITAT. The ITAT found that the CIT(Appeals) had not provided an opportunity for the assessee to present its case and restored the matter to the AO for a fresh assessment, emphasizing adherence to procedural norms and the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474063 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNAINA BHATIA
• Keywords: Set aside; Opportunity of being heard; TDS
• Section: 144; 142(1); 143(2); 12AA; 69A; 10B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.2407/Bang/2024 Assessment year : 2017-18 Farooqia College of Pharmacy, Umar Khayam Road, Tilak Nagar, Mysore – 570 021. PAN: AAATF 2206R Vs. The Income Tax Officer, Exemptions Ward, Mysore. APPELLANT RESPONDENT Appellant by : Ms. Sunaina Bhatia, CA Respondent by : Ms. Neha Sahay, Jt.CIT(DR)(ITAT), Bengaluru. Date of hearing : 20.03.2025 Date of Pronouncement : 28.03.2025 O R D E R Per Laxmi Prasad Sahu, Accountant Member This appeal of the assessee is arising out of the order passed by the ld. CIT(Appeals), National Faceless Appeal Centre, Delhi (NFAC) dated 18.10.2024 DIN ITBA/NFAC/S/250/2024-25/1069765611(1) relating to assessment year 2017-18 on the following grounds:- “ 1. The order of the Hon'ble CIT[A] in so far as it is against the appellant is opposed to law, equity, and weight of evidence, probabilities, facts and circumstances of the case. ITA No.2407/Bang/2024 Page 2 of 8 2. (a) The Hon'ble CIT[A] grossly erred by upholding the Order of the learned AO without adjudicating all the Grounds urged by the appellant and therefore impugned Order of CIT[A] liable to be set-aside. (b) The Order of the Hon'ble CIT[A] is not in strict compliance of the Section 250(6) of the Income-tax Act, 1961 and therefore impugned CIT [A] Order which is not in terms with the 'Act' is liable to be set aside. (c) The impugned Order of the Hon'ble CIT(A) is further suffered from non-application of independent mind and consequently the impugned Order passed without reasoned and speaking Order liable to be set-aside. (d) The impugned Order of the Hon'ble CIT[A] is further passed in limine and not based on FACTS and therefore impugned Order without deciding the issues on merits liable to be set-aside. 3. (a) The Hon'ble CIT[A] failed to appreciate that on the same issue of the appellant but for the different Assessment Year viz., 2019-2020, the JAO has upheld the appellant contention and allowed the averments through u/s 148A(d) Order dt.21.03.2023 and therefore the Hon'ble CIT[A] Order which is contrary to the settled issue on the appellant case liable to be quashed. (b) The Hon'ble CIT[A] Order failed to follow precedential ratio on the same issue but for different year of the appellant case liable to be set aside as without sanction of settled law on binding nature on subject. (c) The Hon'ble CIT[A] erred in not appreciating that the judicial discipline on ratio of precedent and consequently the impugned Order ‘ upheld ignoring the judicial principles liable to be annulled. 4. (a) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] erred in not deciding that the Order of assessment passed by the learned AO is non-est and bad in law in as much as that mandatory precedent condition stipulated before passing Order u/s 144 was not followed and absent and therefore ITA No.2407/Bang/2024 Page 3 of 8 Impugned Order passed u/s 144 is unilateral, illegal and liable to be annulled. (b) The Hon'ble CIT[A] has grossly failed to notice and consequently decide that the learned AO ought not to have concluded the assessment u/s 144 without appreciating that the appellant had complied all the requirement of section 144 rws 142(1) and thus impugned order suffered from jurisdictional defect liable to be quashed. 5. (a) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] failed to take cognizance that the Order of assessment passed by the learned AO is non-est and bad in law in as much as that the learned AO failed to comply the 'Proviso' to the provisions of Section 144A and therefore impugned Order in violation of Provisions of Section 144A is suffered from jurisdictional defect and thus Order is illegal, bad in taw and liable to be annulled. (b) On the facts and in the circumstances of the case and the law, the Hon'ble CIT[A] grossly failed consider that the learned AO has not obtained the proper sanction/supervisory order as contemplated u/s 144A in terms of Board Circular dt.14.12.2018 and thus subsequent impugned Assessment Order is non-est under law and further void-ab-intio and therefore liable to be quashed. (c) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] erred in not considering that the learned AO apparently on record demonstrated that directions u/s 144A has not been communicated to the appellant though apparently prejudicial to the appellant and thus impugned Order passed in violation of the `proviso' to Provisions of Section 144A is liable to be quashed as void-ab-initio and further impugned Order is without authority of law. 6. (a) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] grossly failed to take note and decide that the impugned Order of assessment passed by the learned AO is non-est and bad in law in as much as that the provisions of Section 69A of the `Act' is not at all applicable to the appellant and therefore the impugned Assessment Order based on such ITA No.2407/Bang/2024 Page 4 of 8 erroneous application of law is suffered from jurisdictional defect and thus Order is illegal, bad in law and liable to be quashed. (b) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] has grossly erred in upholding that the learned AO error in invoking the provisions of Section 11566E of the 'Act' for the reason 'Undisclosed cash credit' can surface from the 'books of account' and the appellant has not maintained 'books of account' as prescribed u/s 2(12A) of the 'Act' and thus impugned Order based on such wrong application of law liable to be quashed. (c) On the facts and in the circumstances of the case and in law, the Hon'ble CIT[A] further erred in not deciding while appreciating the law that the maintenance of 'books of account' as prescribed u/s 2(12A) of the 'Act' is sine qua non for application of the provisions of Section 69A of the Act. (d) The impugned additions of Rs.3,94,38,058/- thus made u/s 69A of the 'Act' is liable for total deletion as the appellant case has not covered to maintain any books of account nor the appellant maintained 'books of account' as prescribed u/s 2(12A) of the 'Act'. 7. The grounds craved hereinabove including sub-grounds are without prejudices to one another grounds and are independent each other. 8. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies himself liable to be charged to interest u/s 234-A, 234-B and 234-C of the Act, which under the facts and in the circumstances of the appellant's case deserves to be cancelled. 9. Your appellant reserves right to add, amend, alter and/or withdraw any ground of appeal at the time of hearing of the appeal.” 2. From the above grounds it is clear that the assessee has challenged the ex parte order passed by the CIT(Appeals) without going into merits of the case. ITA No.2407/Bang/2024 Page 5 of 8 3. Briefly stated the facts of the case are that assessee viz., Farooqia College of Pharmacy has obtained PAN bearing AAATF 2206R and assessed in Ward 1(3), Mysore and the case was transferred to Exemptions Ward. It was observed that the assessee has not filed any return of income for the year under consideration in spite of huge amounts deposited in its bank account of Rs.3,94,38,058. Accordingly notice u/s. 142(1) dated 28.12.2017 was issued to file return of income for AY 2017-18 and the notice was served on the assessee on 29.12.2017, but the assessee did not file return of income. Thereafter, other notices were issued to the assessee for complying previous notices, but the assed did not file any response. Thereafter final show cause notice was issued to the assessee proposing to complete assessment u/s. 144 of the Act. Thereafter the assessee filed submissions on 17.12.2019 dated 13.12.2019 in which it was stated that assessee is a unit of Rifahul Muslimeen Educational Trust (RMET) having PAN AFBTR 1859H. It was further submitted that the RMET is an umbrella trust under which the trust runs units of RMET separately wherein its entire day to day accounts are prepared and consolidated at the parent institution RMET level. It was also submitted that the most of the RMET institutions have obtained separate PAN on its own without which its is highly impracticable to run day to day operations and unit PAN is restricted mainly for compliance purposes viz., to furnish for bank transactions, TDS, etc. The units of RMET prepares its receipts & payments for the year and submit to parent trust RMET. This accounting practice is accepted all ITA No.2407/Bang/2024 Page 6 of 8 across statutory authorities and practiced across board by MNC, domestic companies, NGO, where all branch operations are involved. The units are not filing its income tax returns separately and RMET has separate PAN and it is registered u/s. 12AA and approval granted u/s. 80G. The accounts of units of RMET are consolidated at parent institution and return is filed along with audit report in Form 10B by RMET. 4. During the course of assessment proceedings, the assessee did not furnish information as called for by the AO u/s. 143(2) and since the assessee was holding separate PAN, the entire cash deposit of Rs.3,94,38,058 was considered as income u/s. 69A of the Act. Aggrieved, the assessee filed appeal before the First Appellate Authority. 5. The ld. CIT(Appeals) without giving any opportunity of hearing to the assessee, disposed of the appeal and dismissed. In this regard, the assessee has filed copy of e-proceedings which was also confirmed by the ld. DR vide her letter dated 22.3.2025 received from technical team. Against the order of the CIT(Appeals), the assessee has filed appeal before the ITAT. 6. The ld. counsel for the assessee reiterated the submissions made before the AO and submitted that the ld. CIT(Appeals) without giving any opportunity to the assessee decided the issue ex parte and confirmed the order of the AO. She requested and undertook that if a chance is given to the assessee, assessee will be able to prove that these ITA No.2407/Bang/2024 Page 7 of 8 receipts are included in the Income & Expenditure account of RMET and in its Income Tax return. 7. On the other hand, the ld. DR relied on the order of the AO and submitted that assessee has a different PAN and as per provisions of the Act assessee is an independent assessee and AO has correctly completed the assessment for want of representation from the assessee. She fairly admitted that the ld. CIT(Appeals) has not given any opportunity to the assessee before deciding the issue. 8. Considering the rival submissions, we noted that assessee is a unit of RMET and it has separate PAN and using it for banking transactions, TDS, etc. During the course of assessment proceedings there was no proper response from the assessee’s side and assessee has also not demonstrated before the AO that the disputed amount is included in the consolidated Income & Expenditure account of RMET. Even before us the ld. counsel has not filed separate income and Expenditure account of this unit as stated above that the units are preparing separate income and expenditure account. Considering the prayer of the ld. counsel for the assessee and in the interest of justice, we restore the matter to the file of AO for fresh consideration. During the hearing, the ld. counsel for assessee fairly accepted that since the assessee is having a separate PAN and is a unit of umbrella trust of RMET the AO will be at liberty to examine the entire Income & Expenditure account of RMET de novo and discontinue the PAN of assessee as per provisions of the Act. Since the impugned assessment ITA No.2407/Bang/2024 Page 8 of 8 year is related to demonetisation period, the AO will follow the CBDT instructions/Circulars strictly. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings for early disposal of the case and in case of further default, the assessee shall not be entitled to any leniency. 9. In the result, accordingly, the appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on this 28th day of March, 2025. Sd/- Sd/- ( KESHAV DUBEY) ( LAXMI PRASAD SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated, the 28th March, 2025. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "