NITIN GIRLS SENIOR SECONDARY SCHOOL, JAIPUR V. ITO, EXEMPTON WARD-1, JAIPUR

ITA 183/JPR/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9430 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-10-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 10-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 271(1)(c); 11; 143(3); 12A; 143(2); 153

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oaJh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la- @ITA No. 183/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2016-17 Nitin Girls Senior Secondary School 1,970, Barkat Nagar Tonk Phatak, Jaipur. cuke Vs. ITO, Exemption, Ward-1, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AACTN 1914 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri R.S. Poonia (C.A.) jktLo dh vksj ls@Revenue by: Shri A.S. Nehra(Addl. CIT) lquokbZ dh rkjh[k@Date of Hearing :10/10/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 31/10/2022 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal is filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi, [herein after referred to as “NFAC”], CIT(A) for the assessment year 16-17 dated 31.03.2022. 2. The assessee has marched this appeal on the following grounds of appeal:- “1.That under the facts and circumstances of the case the Ld. CIT(Appeals) has erred in confirming by treating Rs. 9,00,000/- and Rs. 47,64,522/- as per of Gross Receipts. Whereas the gross receipts are only Rs. 43,36,896/-. Kindly direct to rectify the same. 2 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School 2. That under the facts and circumstances of the case the Ld. CIT(Appeals) has erred in not allowing the exemption u/s 10(23)(iiid), when the assessment-institute fulfills all the conditions of Section 10(23)(iiid) of the I.T. Act, 1961. 3. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.” 3. The brief facts of the case are that the assessee is an AOP/Trust registered under Rajasthan Societies Registration Act. The assessee filed its return of income on 30.09.2016 declaring total income of Rs. 1.26.520/-. The case was selected for limited scrutiny under CASS and notice u/s 143(2) dated 14.07.2017 was issued to the assessee. During the assessment proceedings, the AO added Rs. 9,00,000/- to the total income of the assessee on account of transfer to corpus fund claiming as application of money and Rs. 47,64,522/- as building fund taken directly to the balance sheet. Being aggrieved by the above, the assessee is in appeal against the said order u/s 143(3) of the Act. 4. The AO arrived the findings that theshow cause, nothing has been furnished by the assessee trust. It clearly establishes that assessee has nothing to state in its defense and is an admission of its wrong doing to avoid payment of Tax on the unutilized funds of the year. Therefore, after taking into account all the facts and circumstances of the case, the amount of Rs. 47,64,522/- is added to its receipts of the year. Penalty proceedings u/s 271(1)(c) for furnishing inaccurate particulars and concealing of income are being initiated separately. With the above remarks, total income of the assessee trust is computed as under: Gross receipts as I & E A/c Rs. 43,36,896/- 3 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School Add: a) Transferred to corpus fund claiming as application of income as discussed above Rs. 9,00,000/- b) Building fund taken directly to balance sheet as discussed above Rs. 47,64,522/- Rs. 56,64,522/- Rs. 41,88,055/- Less:- Application of income as per I & E A/c Rs. 41,88,055/- Rs. 58,13,363/- Or say Rs. 58,13,360/- Assessed u/s 143(3) of the I.T. Act, 1961 at total income Rs. 58,13,360/-. Issuetax calculation sheet and notice of demand u/s 156 of the IT Act, appended with this order and which forms an integral part of this order. Penalty proceedings u/s 271(1)(c) of the Act furnishing inaccurate particulars and concealing of income have been initiated separately. 5. Before the ld. CIT(A), the assessee has reiterated its arguments. The ld. CIT(A) for the reasons stated in his order has rejected the arguments and submissions made by the assessee. The ld. CIT(A) has confirmed the action of the AO by observing as under:- “5.3DECISION:- The order u/s 143(3), statement of facts and the submission furnished by the appellant have been considered. 5.4 I have perused the assessment order and submission of the appellant. The appellant is a Trust and has filed its return of income claiming deduction u/s 11 & 4 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School 12 of the Act. During the assessment proceedings, the appellant trust was asked to furnish copy of registration u/s 12A of the Act, the requirement to claim the benefit u/s 11 & 12 of the Act. 5.5 It is noted by the AO in the assessment order that the Registration Certificate submitted by the appellant belonged to another trust `M/s Nitin Shiksha Samiti', having different PAN AAAJNO303R, which was also assessed with the same AO. It was also observed by the AO that by producing the same certificate or registration, M/s Nitin Shiksha Samiti has also claimed benefit u/s 11 &12 of the Act. 5.6 In view of the above facts, the appellant was asked to provide/submit during the present proceedings:- 1.) Copies of certificate u/s 12 of the Act. 2.) Copies of return of income (with schedules) 3.) Whether any other school is run by 'N/l/s Nitin Shiksha Samiti' 4.) Submission on how the certificate u/s 12AA(1)(b) of the Act, issued to Nitin Shiksha Samiti having different PAN will be considered of the school run by the appellant having different PAN. 5.) Balance Sheet and Profit & Loss account of the appellant for AY 201516 & 2014-15. 5.7 In response to the above queries, the appellant has again submitted the same certificate of registration issued to Nitin Shiksha Samiti on 12.05.2000.The appellant has furnished Balance Sheet, profit & loss account and copy of return of income for AY 2016-17 only. 5.8 The appellant has not made any submission in regard to this office query that how the certificate u/s 12AA(1)(b) of the Act, issued to Nitin Shiksha Samiti having different PAN will be considered of the school run by the appellant having different PAN. 5.9 Instead of making any submission to rebut the disallowance of claim of benefit u/s 11 & 12 of the Act, the appellant had tried to divert the issue during the present proceedings by claiming the exemption u/s 10(23c)(iiiad) of the Act. The submission on account of claim u/s 10(23c)(iiiad) is completely irrelevant in the present case as the appellant had claimed benefit of section 11 & 12 of 5 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School the Act in the return of income. During the assessment proceedings, the issue was to substantiate the claim by producing the relevant certificate u/s 12A of the Act, the most important criteria to claim the benefit u/s 11 & 12 of the Act. 5.10 The appellant was categorically asked during the present proceedings that "provide/submit during the present proceedings:- 1.) Copies of certificate u/s 12 of the Act". By not submitting the relevant certificate u/s 12A of the Act in the name of the appellant, the appellant has failed to substantiate its claim, and therefore, no benefit u/s 11 & 12 of the Act can be given to the appellant. 5.11 On perusal of the Income & Expenditure account, it is found that a sum of Rs. 9,00,000/- is debited into the account under the head "To transfer to corpus fund". Since no deduction u/s 11 & 12 of the Act is available to the appellant no such deduction of Rs. 9,00,000/- towards 'corpus fund' is allowed. This sum is to be added to the excess of 'Income over expenditure' of the Income & Expenditure account. 5.12 It is also noted by the AO that a sum of Rs. 47,64,522/- was introduced in the balance sheet as corpus fund (building fund) and the appellant has claimed exemption u/s 11(1)(d) of the Act. 5.13 The appellant was specifically asked to provide the balance sheet and income & expenditure account of AY 2014-15 & 2015-16 to examine the correct facts in this regard. The appellant has not provided the balance sheet and income & expenditure account of earlier two years. It has also not made any submission to deny/rebut the finding of the AO that Rs. 47,64,522/- was introduced directly to the balance sheet and exemption u/s 11(1)(d) has been claimed for such corpus fund. 5.14 It is firstly held that this amount of Rs. 47,64,522/- should be part of the Income & Expenditure account as gross receipts. Further, is has been held in earlier paragraphs that no deduction u/s 11 & 12 of the Act is available to the appellant, no deduction of Rs. 47,64,522/- is allowed to the appellant. 5.15 In view of the above discussion, the action of the AO to add Rs. 9,00,000/- and Rs. 47,64,522/- to the net surplus of Rs. 1,48,841 (Rs.43,36,896 - Rs. 41,88,055) and assessing the total income at Rs. 58,13,360/- is confirmed. Ground of appeal is DISMISSED. 6 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School 6. GROUND NO. 3:- In this ground the appellant has craved leave to add, alter, amend, modify, substitute, delete and/or rescind all or any the grounds before or at the time of hearing. No such option was exercised by the appellant during the appellate proceedings, and, as such, this ground of appeal is treated as DISMISSED. 7. In the result, the appellant’s appeal is dismissed.” 6. The assessee filed additional evidence under rule 29 of the Income Tax rules, 1962 in this regard on 06.10.2022, which is reproduced as under:- “with reference to above subject we request you that: 1. This present appeal is filed vide dated 11.05.2022 against the order passed by CIT(Appeals), NFAC, Delhi vides dated 31.03.2022. 2. Further, it is submitted we are submitting some additional evidences, which helps in more clarity & corroborate the facts to easy understand the case. Kingly look into the circumstances of the case, kindly admit additional evidences as mentioned below:- A. Audited Financials of M/s Nitin Girls Senior Secondary School for A.Y. 2015- 16. B. Financials of M/s Nitin shikshan Samity for A.Y. 2015-16. C. Financials of /s Nitin shikshan Samity for A.Y. 2016-17. D. Ledger account of Nitin Girls Senior Secondary School in the books of Nitin Shikshan Samity for the period from 01.04.2014 to 31.03.2015. E. Ledger account of Nitin Girls Senir Secondary School in the books of Nitin Shikshan Samity for the period from 01.04.2015 to 31.03.2016. F. Ledger account of Nitin Shikshan Samity (Building Fund) in the books of Nitin Girls Senior Secondary School for the period from 01.04.2011 to 31.03.2016. G. Bank Account Statement of M/s /s Nitin shikshan Samity for the period from 07.04.2012 to 31.03.2016. 7 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School In view of above submission you are requested that to kindly admit the additional evidence. So the substantial justice may be delivered to the appellant.” 7. The ld. DR is heard who has relied on the findings of the lower authorities. 8. We have heard both the parties and perused the materials available on record. We observed that the substantial justice should be made to the parties in accordance with law. The Assessing Officer during the assessment proceedings observed that the assessee has not furnished any documents regarding show cause notice and the assessee has not established that the assessee has nothing to state in its defense and is an admission of its wrong doing to avoid payment of tax on the utilize funds of the year. During the appellate proceedings the assessee has furnished the written submission through e-filing portal dated 17.07.2021 failed to produce relevant documents. During the course of argument the ld. AR of the assessee submitted that a request for acceptance of additional evidence under Rule 29 of the Income Tax Rules, 1962 has been submitted. 9. We are constrained for the acceptance of the documents as additional evidence de hors rule 46A of the Rules, because the appellant is not entitled to produce oral or documentary evidence afresh before the appellate authority, as a matter of right. Under special and certain circumstances only, as mentioned, in clauses (a), (b ), (c) and (d) of rule 46A(1) additional evidence can be adduced. Rule 46A itself contains the principles of natural justice. That being so, sub-rule (4) of rule 46A does not permit to accept any 8 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School additional evidence in contravention of the provisions of sub-rules (2) and (3) of rule 46A. The appellate authority is not permitted to act whimsically while exercising the jurisdiction under rule 46A of the Rules. 10. In this regard, We have gone through the decisions of various High Courts in the cases : 1. [2006] 153 TAXMAN 31 (GUJ. ) High Court Of Gujarat N.B. Surti Family Trust Vs. Commissioner Of Income-Tax. 2. [2007] 162 Taxman 257 (Gau.) High Court Of Gauhati Commissioner Of Income- Tax Vs.Ranjit Kumar Choudhury. 3.[2018] 89 Taxmann.Com 126 (Allahabad) High Court Of Allahabad Dr. Prabhu Dayal Yadav Vs. Commissioner Of Income Tax. We noted from the above judgments, that considering the fact that these additional evidences which are now sought to be admitted would be in the interest of proper adjudication of the issues at hand, the same are hereby admitted and the matter is set-aside to the file of AO to examine the same and decide the matter as per law after providing reasonable opportunity to the assessee and therefore we deem it fit to remand it back to the file of AO. 11. Accordingly, it is a fit case for remand for proper adjudication of the case by following the established procedure laid down. Under rules 46A(1), (2) and (3) of the Rules which we order accordingly. The impugned order passed by the Lower authority is hereby quashed and set aside. The appeal is remanded to the AO, who shall make an endeavour to dispose of the entire appeal in accordance with law as indicated above as expeditiously as possible, where additional evidence as it requires to justify the claim of 9 ITA No. 183/JP/2022 Nitin Girls Senior Secondary School assessee which needs to be verified and examined by the Revenue authorities afresh after allowing proper opportunity to the assessee. In the result, the appeals of the assessee is allowed for statistical purposes in all the cases. Order pronounced in the open court on 31/10/2022 Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 31/10/2022 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Nitin Girls Senior Secondary School, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Exemption, Ward-1, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 183/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar