GURUKUL ARSH KANYA VIDHYAPEETH,NAJIBABAD, BIJNOR, UTTAR PRADESH V. INCOME TAX OFFICER (EXEMPTION), BAREILY, BAREILY

ITA 25/LKW/2025

AI Insights

The case involves Gurukul Arsh Kanya Vidhyapeeth, a charitable trust, appealing against the orders of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), which pertained to the assessment year 2018-19. The primary issues revolved around the incorrect taxation of income at Maximum Marginal Rates, misclassification of donations as unexplained cash credits, and the denial of exemptions under sections 11 and 12 of the Income Tax Act, 1961. The tribunal found that the assessee was not given a proper and effective opportunity to present its case at lower levels, which constituted a violation of the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31943 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KRISHNA SHARMA; ADDL
• Assessee Lawyers: SAILESH GUPTA
• Keywords: Set aside; Reasonable cause; Unexplained cash credit; Capital expenditure; Principle of natural justice; Charitable institution; Maximum Marginal Rate
• Section: 144; 143(3); 142(1); 143(2); 11; 12AA; 68; 12

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI KUL BHARAT, VICE PRESIDENT ITA No.25/LKW/2025 Assessment Year: 2018-19 Gurukul Arsh Kanya Vidhyapeeth Gurukul Arsh Kanya Vidhyapeeth, Kotwali Road, Near Shravanpur Nahar Najibabad, Bijnor-246763. v. Income Tax Officer (Exemption) C.R. Building, Kamla Nehru Marg, Civil Lines, Bareily-243001. PAN:AABTG6651N (Appellant) (Respondent) Appellant by: Shri Sailesh Gupta, CA Respondent by: Shri Sanjeev Krishna Sharma, Addl CIT(DR) Date of hearing: 17 02 2025 Date of pronouncement: 20 02 2025 O R D E R PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 13.12.2024, pertaining to the assessment year 2018-19. The assessee has raised the following grounds of appeal: - “1. That on the facts and circumstances of the case and in the Law, the Ld. AO had grossly erred in taxing income amounting to Rs. 15,50,158/at Maximum Marginal rates of tax (MMR). 2. That on the facts and circumstances of the case and in the Law, the Ld. AO had grossly erred in treating donation amounting to Rs. 28,36,285/as unexplained cash credit u/s 68 and taxing the same as per section 115BBE of Income Tax Act, 1961. 3. That on the facts and circumstances of the case and in the Law, the Ld. AO had grossly erred by not allowing revenue and capital expenditure as application of income for exemption u/s 11 & 12 as the assessee is registered u/s 12AA of the Income Tax Act, 1961. ITA No.25/LKW/2025 Page 2 of 4 4. That on the facts and circumstances of the case and in the Law, the National Faceless Appeal Centre (NFAC) had grossly erred in confirming addition of Rs. 28,36,285/to Total Income and taxing the Income for Rs. 15,50,158/at Maximum Marginal Rates of Tax (MMR) and not allowing of exemption Ws 11,12 of Income Tax Act, 1961. 5. That on the facts and circumstances of the case and in the Law, the NFAC had grossly erred in dismissing appeal in limine without any decision on merits. 6. That the appellant craves leave to Add to and / or Amend, modify or withdraw the grounds outlined above before or at the time of hearing of the appeal.” 2. The facts giving rise to the present appeal are that the assessee is a charitable trust. It filed its return of income through electronic mode for the assessment year 2018-19 on 29.10.2018, declaring total income at nil. The return was processed u/s 143(1)(a) of Income Tax Act, 1961 (hereinafter referred as to the “Act”) on 2.10.2019 thereby a demand of Rs.16,60,380/- was raised after making adjustments. Thereafter, the case was selected for complete scrutiny. A notice u/s 143(2) of the Act was issued on 23.09.2019 another notice u/s 142(1) of the Act along with questionnaire was also issued on 25.11.2020. The Assessing Authority in the absence of relevant material and explanation from the assessee proceeded to frame assessment u/s 144 of the Act. Accordingly, a notice to this effect was issued and the assessee trust was asked to file its reply by 22.01.2021, since there was no response on behalf of the assessee, therefore, an exparte assessment was made thereby, the Assessing Officer assessed income at Rs.28,36,290/- u/s 143(3) of the Act. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A), before Ld. CIT(A) also, there was no representation on behalf of the assessee, therefore an exparte order was passed thereby the appeal of the assessee was dismissed in limine without adverting to the grounds of appeal. Now, the assessee is in appeal before this Tribunal. ITA No.25/LKW/2025 Page 3 of 4 3. At the outset, the Ld. Counsel for the assessee contended that no proper and effective opportunity was granted by the lower authorities to the assessee. The Assessing Officer had given only one notice. Thus, the Assessing Officer did not comply with the principle of natural justice and which has grossly prejudiced the assessee. Even before the Ld. CIT(A), there was no meaningful representation as the office bearer of the trust fell sick and there was no representation on behalf of the assessee before the First Appellate Authority. Moreover, the assessee had raised effectively five grounds before the Ld. CIT(A) these were not adverted and considered. Therefore, he prayed that the impugned order may be set aside an opportunity be granted to the assessee for representing his case before lower authorities. 4. On the other hand, the Ld. Departmental Representative (DR) opposed the submission and supported the orders of the lower authorities. He drew our attention to the impugned order to buttress the contention that opportunity was granted by the Ld. CIT(A). However, he fairly submitted that there was no decision on merits by the First Appellate Authority. 5. I have heard the Ld. Representatives of the parties and perused the material available on record. I find that the Assessing Authority had not given sufficient opportunity to the assessee and the Ld. CIT(A) as well failed to advert to the grounds taken by the assessee. Therefore, considering the totality of the facts and the material placed before me, to sub-serve the principle of natural justice and to be fair with both the parties, deem it necessary and expedient under the facts of the present case to set aside the impugned orders and restore the assessment to the file of the Assessing Officer. The AO is hereby directed to consider submissions and evidences; as furnished by ITA No.25/LKW/2025 Page 4 of 4 the assessee in support of its claim and verify the veracity of such claim. The AO would frame the assessment afresh. The assessee is directed not to seek adjournment without any reasonable cause. The grounds raised in the appeal are allowed for statistical purposes. 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 20/02/2025. Sd/- [KUL BHARAT] VICE PRESIDENT DATED: 20/02/2025 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By order // True Copy// Assistant Registrar "