ISLAMI BAITH UL MALL,CHIKMAGALUR V. INCOME TAX OFFICER, WARD-1, CHIKMAGALUR

ITA 2495/BANG/2024

AI Insights

The case involves M/s. Islami Baith Ul Mall, a trust, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2017-18. The primary contention was the incorrect estimation of taxable income and procedural lapses in the assessment process. The trust argued that the gross receipts, which were estimated at 8% of the deposits in bank accounts, were not taxable income but rather sources like pigmy collections and loan repayments. The trust also contested the ex-parte decision by the CIT(A) due to non-receipt of notices, as their secretary was not tech-savvy. The Income Tax Appellate Tribunal (ITAT) found merit in the trust's plea for a fresh assessment, noting the procedural lapses and the need for substantial justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32773 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEHA SAHAY
• Assessee Lawyers: RAJEEV CHANNAPPA NULVI
• Keywords: Set aside; Principle of natural justice
• Section: 142(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 2495/Bang/2024 Assessment Year : 2017-18 M/s. Islami Baith Ul Mall – Chikmagalur, Masjid E Azam Complex, Maroof Street, Chikmagalur – 577 101, Karnataka. PAN: AABTI0422M Vs. The Income Tax Officer, Ward – 1, Chikmagalur. APPELLANT RESPONDENT Assessee by : Shri Rajeev Channappa Nulvi, Advocate Revenue by : Smt. Neha Sahay, JCIT-DR Date of Hearing : 04-02-2025 Date of Pronouncement : 24-02-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 29/11/2023 in respect of the A.Y. 2017-18 and raised the following grounds: “1. The order passed by the Jurisdictional Assessing Office u/s 144 is against the facts and circumstances of the case and against the principle of natural justice. 2. On the facts and circumstances of the case and in the provisions of the law, the Assessing Officer erred in estimating the taxable income at 8%, on the gross deposits in the bank account, as against the facts, the said gross Page 2 of 4 ITA No. 2495/Bang/2024 receipts are not the taxable income but source of the said gross receipts are pigmy collection from women flock of minority community of Muslim and repayment of loan amount received from borrowers, where the financial assistance given to weaker sections of Muslim community. 3. On the facts and circumstances of the case and in the provisions of the law, the Hon'ble CIT(A), NFAC erred in dismissing the appeal in limine for non-prosecution of appeal, as the Appellant/Trust was unaware of the notice issued u/s 250, as the secretary of the Appellant/Trust, not the tech-savvy and not in the habit of using the computer. 4. On the facts and circumstances of the case and in the provisions of the law, the order passed by the Assessing Officer is against the principle of natural justice, as the Appellant/Trust filed a manual return of income in the course of assessment proceedings, which is in the form of computation of income and made the submission regarding the nature of activities of the trust and source of deposits in the bank account. Hence, the Assessing Officer's action is against the principle of natural justice. 5. On the facts and circumstances of the case and in the provisions of the law, the Assessing Officer erred in making the addition of Rs.27,37,000/- u/s 69 for the cash deposits made during the demonetisation period, as there was no bar in accepting the demonetisation currency during the demonetisation period prior to 30-12-2016, in view of special banking note prohibition Act 2016. 6. For these and other reasons which may be adduced at the time of the hearing, the Appellant/Trust prays before this Hon'ble Bench to set aside the order of the Assessing Officer for Denovo assessment for providing one more opportunity to the Appellant/Trust to submit its substantive submission effectively. 9. The appellant craves permission to add, to alter, to amend and to delete any of the grounds at the time of the hearing.” 2. The assessee is a trust and for the A.Y. 2017-18, the assessee had not filed their return of income and therefore based on the information received that the assessee had deposited substantial cash in bank accounts during the demonetisation period, notice u/s. 142(1) was issued but the assessee Page 3 of 4 ITA No. 2495/Bang/2024 had neither filed their return of income nor submitted any objections to the said notices and therefore the AO had passed an order u/s. 144 of the Act by making three types of additions. Challenging the said order, the assessee filed an appeal before the Ld.CIT(A) and raised several grounds on merits but unfortunately the assessee had not appeared before the Ld.CIT(A) on five occasions and therefore the Ld.CIT(A) had decided the appeal ex-parte and dismissed the appeal. 3. As against the said order, the assessee is in appeal before this Tribunal. 4. At the time of hearing, the Ld.AR submitted that the notices issued by the Ld.CIT(A) to the email address given in form 35, it is the email ID of their tax consultant, but he had not brought to the notice of the trustees and therefore they were not able to appear before the Ld.CIT(A) and prayed to grant one more opportunity by sending the notices to the present email address mentioned in form no. 36. 5. The Ld.DR submitted that the assessee had not filed their return of income and also not replied to the notice issued by the AO as well as the Ld.CIT(A) and prayed that no leniency could be shown on the assessee and prayed to dismiss the appeal. 6. We have heard the arguments of both sides and perused the materials available on record. 7. We have considered the facts that the assessment was made u/s. 144 of the Act and also the Ld.CIT(A) had passed an ex-parte order and therefore the merits of the case was not decided by any of the authorities. We have also considered the reasons stated by the assessee that the tax consultant had not informed the various hearing notices issued by the Ld.CIT(A) and we feel that for no fault of the assessee, they should not be penalised. We are also of the view that the assessee had also not followed up the matter with Page 4 of 4 ITA No. 2495/Bang/2024 the tax consultant and therefore the assessee could not blame the tax consultant alone. In such circumstances, in order to render substantial justice, we remit this issue to the file of the AO on condition that the assessee has to pay a cost of Rs. 10,000/- under the Major Head Income Tax (Other than companies) 0021, Minor Head other receipts (500) on or before 05/03/2025 and produce the proof of payment before the AO and thereafter the AO is directed to decide the issue afresh on merits and in accordance with law after hearing the assessee. 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 24th February, 2025. Sd/- Sd/- (LAXMI PRASAD SAHU) (SOUNDARARAJAN K.) Accountant Member Judicial Member Bangalore, Dated, the 24th February, 2025. /MS / Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Bangalore "