Dayspring Enterprises of India , Hyderabad V. Income Iax Officer ,Exemption Ward 1(1) , Hyderabad

ITA 302/Hyd/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4184 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Appeal Filed On: 21-07-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: KARAN TALWAR
• Keywords: Charitable institution; Capital expenditure
• Section: 142(1); 143(2)

Judgement Text

आयकर अपील य अ धकरण , हैदराबाद पीठ म IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI RAMA KANTA PANDA, ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 302/Hyd/2021 ( नधा रण वष / Assessment Year: 2016-17) Dayspring Enterprises of India, Jeedimetla Village [PAN No. AAATD2907P] Vs. Commissioner of Income Tax (Exemptions), Hyderabad अपीलाथ / Appellant यथ / Respondent नधा रती वारा/Assessee by: Shri Karan Talwar, Ms. Manasi Agarwal, ARs राज व वारा/Revenue by: Shri Rajendra Kumar, CIT- DR स ु नवाई क तार ख/Date of hearing: 09-06-2022 घोषणा क तार ख/Pronouncement on: 23-06-2022 आदे श / ORDER PER K. NARASIMHA CHARY, JM: Aggrieved by the order dated 30-03-2021, passed by the Learned Commissioner of Income Tax (Exemption)-Hyderabad (“Ld. CIT(E)”) in the case of M/s.Dayspring Enterprises of India (“the assessee”) for the AY.2016-17, assessee filed this appeal. ITA No. 302/Hyd/2021 Page 2 of 6 2. Briefly stated facts relevant for the disposal of this appeal are that the assessee is a religious association and filed its return of income on 09- 09-2016 declaring income as NIL claiming exemption u/s.11 of the Income tax Act, 1961 (“the Act”). The case was selected for scrutiny to examine i) Large amount of income accumulated or set apart by Trust, ii) Application of income for charitable or religious purposes being higher than the Gross Income, iii) Large capital expenditure for charitable purposes and iv) Form- 10 filed after due date and large amount set apart u/s.11(2)/11(5)/11(1)(c) of the Act. Learned Assessing Officer issued notice u/s. 143(2) of the Act followed by u/s. 142(1) of the Act and passed order dt.23-06-2018, accepting the return of income. 3. Subsequently, Ld.CIT(E) noticed that the gross receipts during the year were Rs.2,62,94,189/-, accumulation u/s.11(1)(2) of the Act was Rs.8 Crores relating to AY.2015-16 and the assessee applied in the period relevant for AY.2016-17 only Rs.6,03,18,596/-. It was further observed that the assessee accumulated an amount of Rs.3.05 Crores u/s.11(2) of the Act and thereby there was a shortfall to the tune of Rs.1,15,31,404/- which had to be brought to tax. Further, the assessee did not file Form No.10. Inasmuch as the learned Assessing Officer failed to verify all these things, Ld. CIT(E) held that the assessment order is erroneous and also prejudicial to the interest of Revenue. He accordingly revised the order u/s. 263 of the Act, set it aside and directed the learned Assessing Officer to examine the issues for examination of which the case was picked up for scrutiny. 4. Aggrieved by such an action of Ld. CIT(E), assessee preferred this appeal with a delay of 45 days. It is submitted on behalf of the assessee ITA No. 302/Hyd/2021 Page 3 of 6 that the assessment order was passed after due and adequate enquiry and after due verification of record and where two views are possible, initiation of revision proceedings u/s. 263 of the Act is not maintainable. It is further submitted by the learned AR that the society decided to set apart accumulation of Rs. 3.05 Crores u/s. 11(2) of the Act for the AY.2016-17 for the purpose of investment in immoveable property or place of worship. Further submission of learned AR is that there is an arithmetical error in calculating the shortfall by the Ld. CIT(E). 5. Per contra, learned DR submitted that the assessment order itself reads that purpose for which the case was selected for scrutiny but the assessment order is conspicuously silent as to the details to indicate the application of mind by the learned Assessing Officer. Assessment order itself reads that the gross receipts during the year were Rs. 2,62,94,189/- and the accumulation from the previous year was Rs. 8 Crores. Though the learned Assessing Officer recorded that the application of income was Rs. 9,18,18,596/-, there is no material on record to contradict the figures given by the Ld. CIT(E) in the order u/s. 263 of the Act. 6. We have gone through the record in the light of the submissions made on either side. It could be seen from the record that in spite of the Registry notifying the defects, which includes the aspect of delay, the assessee did not take any steps to rectify the same. Be that as it may, the effective portion of the assessment order is as follows: “3. The assessee submitted that as per ITR 7 for the AY.2016-17, the income is Rs. 2,62,94,189/- whereas the application of Income is Rs. 9,18,18,596/-. The excess expenditure is done from previous year i.e. 2015-16 accumulations of Rs. 8,00,00,000/- and with regard to reasons for delay in filing 10B, the assessee submitted that, Form ITA No. 302/Hyd/2021 Page 4 of 6 10B was filed on 09.09.2016, which is much before the due date as' due date for filing form 108 is 30.09.2016. The assessee has furnished the information regarding Large Capital Expenditure for Charitable Purposes and the same were perused. 4. On verification of the information communicated by the assessee, the assessment is completed after accepting the Income Returned”. 7. The order is very cryptic, and it did not discuss in detail the four points mentioned for picking up the case for scrutiny. Though it is stated by the learned AR that it is only after making enquiries and thorough verification of record, the learned Assessing Officer accepted the return of income, it is not coming out of the order. Ld. CIT(E) is very clear in calculation of the shortfall which reads thus, - 1. Gross Receipts Rs. 2,62,94,189 2. 85% of gross receipts Rs. 2,23,50,600 3. Accumulation u/s. 11(1)(2) relating to AY.2015-16 Rs. 8,00,00,000 4. Amount to be applied during AY. 2016-17 Rs. 10,23,50,600 5. Less: Amount accumulated u/s. 11(2) Rs. 3,05,00,000 6. Net amount to be applied Rs. 7,18,50,000 7. Less: Amount applied by the assessee Rs. 6,03,18,596 8. Shortfall in application Rs. 1,15,31,404 8. Nowhere in the Assessment order were any of these details noted by the learned Assessing Officer. Record does not show that the learned Assessing Officer sought any information on these aspects or that he examined the same. What all the learned Assessing Officer recorded is that the assessee submitted that as per ITR 7 for the AY.2016-17, the income is Rs. 2,62,94,189/- whereas the application of Income is Rs. 9,18,18,596/-. Assessment order does not indicate that the learned Assessing Officer examined the issues with reference to the books of the assessee or that the details furnished by the assessee are supporting the statement of the assessee. Absolutely there is nothing coming from the assessment Order ITA No. 302/Hyd/2021 Page 5 of 6 indicating the examination of the issues meant for verification with reference to any material sought by the learned Assessing Officer and furnished by the assessee. 9. For non-examination of the requisite material in the perspective required by the purpose of picking up this case for scrutiny renders the assessment order erroneous. In view of the fact that the Ld. CIT (E) demonstrated that there is shortfall in the application of the requisite funds makes it clear that the assessment order is prejudicial to the interest of Revenue. Inasmuch as the twin conditions required for invoking the jurisdiction u/s. 263 of the Act are satisfied, we do not find any illegality or irregularity in the order passed by the Ld. CIT (E). We, therefore, decline to interfere with the same. Appeal of the assessee is accordingly liable to be dismissed. 10. In the result, appeal of the assessee is dismissed. Order pronounced in the open court on this the 23 rd day of June, 2022 Sd/- Sd/- (RAMA KANTA PANDA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER TNMM Hyderabad, Dated: 23-06-2022 ITA No. 302/Hyd/2021 Page 6 of 6 Copy forwarded to: 1. Dayspring Enterprises of India, 2-2-95, Logos Bhavan, Medchal Road, Jeedimetla Village, Secunderabad. 2. Commissioner of Income Tax(Exemptions), Hyderabad. 3. DR, ITAT, Hyderabad. 4. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD