Shree Gunatit Jyot Mahila Trust, Anand V. The ITO, Ward - Exemption, Vadodara

ITA 326/AHD/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0450 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-07-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 21-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAMTA SINGH
• Keywords: Charitable institution
• Section: 27; 271(1)(c); 12A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 326/Ahd/2024 (िनधाᭅरण वषᭅ िनधाᭅरण वषᭅ िनधाᭅरण वषᭅ िनधाᭅरण वषᭅ / Assess ment Year : 2016-17) Sh ree G u na tit Jy o t M a hi la Tr u st Po st B ox N o.2 3, P a ppa ji Ma rg, V al la bh Vi dh ya n ag ar , An an d, Gu jar at , 38 81 20 बनाम बनामबनाम बनाम/ V s . IT O W ar d, E xe mp ti on Va do dar a ᭭थायी लेखा सं./जीआइआर सं./P A N / G IR N o . : A A A T S 8 7 2 2 P (Appellant) . . (Respondent) अपीलाथᱮ ओर से /Appellant by : Shri S. N. Soparkar, Sr. Advocate & Shri Parin Shah, A.R. ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Smt. Mamta Singh, Sr. DR D a t e o f H e a r i n g 31/07/2024 D a t e o f P r o n o u n c e m e n t 06/08/2024 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre ( NFAC), Delhi, (i n short ‘the CIT( A) ’) dated 12.01.2024 for the Assessment Year 2016-17. 2. The brief fa cts of the case a re that the assessee is a charitable trust registered under the Bo mba y Public Tr ust Act and ITA No. 326/Ahd/2024 [Shree Gunatit Jyot Mahila Trust vs. ITO] A.Y. 2016-17 - 2 – also registered under Section 12A of the Inco me Tax Act, 1961 (in short ‘the Act ’). The return of inco me for A.Y. 2016-17 was filed on 03.10.2016 declaring Nil income . In the course of assessment, the AO found that the a ssessee had received corpus donation of Rs.2,7 1,12,111/- for construction of building. Out of this amount, the Trust had utilized Rs.2,36,23,637/- for the purpose of construction of building. While filing the return of income , the assessee had clai med ex e mption for corpus donation under Section 11(1)(d) of the Act. It also clai med a mount of building construction as inco me ap plied for the obje cts under Section 11(1) of the Act. The AO re jected the claim under Section 11(1) of the Act in respect of building construction a mount of Rs.2,36 ,23,637/- on the g round that the expense was incurred out of corpus donation. However, there was no effect on the total income of the trust a nd the assessed inco me was co mputed at Rs. Nil. The AO had, however, initiated penalty proceeding under Section 271(1)(c) of the Act in respect of wrong clai m of deduction under Section 11(1) of the Act in respect of building construction amount of Rs.2,36,23,637/-. A separate penalty order u nder Section 271(1)(c) of the Act dated 30.03.2019 was passed by the AO, af ter allowing an opportunity to the assessee and penalty of Rs.78,31,400/- was imposed @ 100% of tax sought to be evaded for furnishing inaccurate particulars of income . ITA No. 326/Ahd/2024 [Shree Gunatit Jyot Mahila Trust vs. ITO] A.Y. 2016-17 - 3 – 3. Aggrieved with the penalty order of the AO, the asse ssee had filed an appeal before the First Appellate Authority, which was decided by th e Ld. CI T( A) vide the i mpugned order. Penalt y as i mposed under Section 271(1)(c) of the Act was co nfir med b y the Ld. C IT( A) an d the appeal of the assessee was dis missed. 4. Now, the assessee is in second appeal before us. 5. Following grounds of appeal have been taken in this appeal: “ 1 . T h e o r d e r p a s s e d b y N F A C i s b a d i n l a w a n d r e q ui r e d t o b e q u a s h e d . 2 . L d . N F A C e r r e d i n l a w a n d o n f a c t s i n c o n f i r m i ng p e n a l t y o f R s . 7 8 , 3 1 , 4 0 0 / - u / s 2 7 1 ( 1 ) ( c ) o f t h e A c t u n d e r t h e l i m b f u r n i s h i n g o f i n a c c u r a t e p a r t i c u l a r s o f i n c o m e i g n or i n g f a c t t h a t f u l l d e t a i l s a r e s u b m i t t e d i n a s s e s s m e n t p r o c ee d i n g s r e g a r d i n g c o r p u s d o n a t i o n . 3 . L d . N F A C e r r e d i n l a w a n d o n f a c t s f a i l e d t o a pp r e c i a t e t h a t a p p e l l a n t d i d n o t c l a i m t h e e x p e n d i t u r e i n r e t u r n of i n c o m e a n d p r e s e n t a t i o n i t i s e r r o r a c c o r d i n g l y , i t i s n o t c a s e o f p e n a l t y . 4 . L d . N F A C o u g h t t o h a v e c o n s i d e r e d f a c t t h a t n o n a c c e p t a n c e o f b o n a f i d e c l a i m d o e s n o t l e a d t o f u r n i s h i n g i n a cc u r a t e p a r t i c u l a r s o f i n c o m e w h i c h l e a d s t o p e n a l t y . 5 . T h e o r d e r p a s s e d b y l o w e r a u t h o r i t i e s i s r e q u i r ed t o b e q u a s h e d a s s a m e i s w i t h o u t r e c o r d i n g p r o p e r s a t i s f ac t i o n . ” 6. Shri S . N. Soparkar, Sr . Advocate ap pearing for the assessee fairl y ad mitted tha t there was a mistake on the part of the assessee in the co mputation of inco me and deduction in respect of building construction of Rs.2,36,23,627/- was wrongl y cl ai med as ITA No. 326/Ahd/2024 [Shree Gunatit Jyot Mahila Trust vs. ITO] A.Y. 2016-17 - 4 – application of inco me. He explained that the total a mount of application of inco me as mentioned in the co mputation was Rs.4,21,52,867/-, which was restricted to the extent of “inco me before application of income ”, which was Rs.1,75,11,224/- only. Thus, the deduction for application of income was actually clai med to the extent of 1,75,11,224/- only. The Ld. Senior Counsel submitte d that even if the a mount of building construction of Rs.2,36,23,632/- is e xcluded, the other a mounts available towards application of income were sufficient to account for the en tire ad missible de duction of Rs.1,75 ,11,224/-. Thus, there was no escape ment of inco me due to inadvertent clai m of building construction a mount towards application of income . The Ld . Senior Counsel further sub mitted that there was no variation in the total inco me as shown by the assessee and as co mputed b y the AO in the assess ment order. Therefore, the machiner y provision for co mputation of tax sought to be evaded was not applicable in this case . The Ld. S enior Counsel also relied upon the decision of Hon’bl e Gujarat High C ourt in the case of CIT vs. Os hwal Education Trust, [2014] 52 taxmann.com 332 (Gujarat) for his submission that no penalty ca n be levied due to bona-fide mistake of the assessee, which has n o effect on the income of the assessee. 7. The Ld. Sr . DR, on the other hand, relied upon the orders of the lower authorities. ITA No. 326/Ahd/2024 [Shree Gunatit Jyot Mahila Trust vs. ITO] A.Y. 2016-17 - 5 – 8. We have carefull y considered the rival submissions. It is found from the co mputation of inco me that “income before application of inco me” was Rs.1,75 ,11,224/-. The as sessee had deducted the following a mounts towards application of inco me: (i) Amount applied U/s 11(1) (As per I/E A/c) 14859101 (ii) Building Construction 23623637 (iii) Furniture and Equipment 3670129 42152867 Thus, the total amount reduced towards application of inco me was Rs.4,21,52,867/-, which was restricted to the extent of “inco me before application” which was Rs.1 ,75,11,224/-. Even if we exclude the building construction a mount of Rs.2,36,23,637/-, the re maining a mount was still sufficient to clai m the deduction under Section 11(1) of the Act to the extent of available “income before application”. Therefore, the wrong clai m of building construction a mount of Rs .2,36,23,637/- had no i mpact on the tota l inco me of the as sessee. In fact , th e AO had co mputed the inco me at Nil after allowing the deduction in respect of application of income to t he extent of Rs.1,75,11,224/. It is also not the case of the Revenue that the unadjusted building construction amount of Rs.2,36,23,637/- was carried forward for adjust ment with inco me in the future years. There fore, the wrong clai m of business construction a mount towards application of income had no i mpact on the total inco me of the asse ssee either in the current year or in the future years . Under the circu mstances, the machiner y provision to work out the penalty a mount @ 100% o f tax sought to be evaded doesn’t work out as ITA No. 326/Ahd/2024 [Shree Gunatit Jyot Mahila Trust vs. ITO] A.Y. 2016-17 - 6 – there was no evas ion of inco me either in the current year or in future years . Ther efore, the AO was not correct in i mposing the penalty under Sec tion 271(1)(c) of the act. The mistake on the part of the assessee was a bona-fide mistake, which ultimatel y had no i mpact on t he taxable inco me of the assessee. Therefore, the penalty levied under Section 271(1)(c) of the Act is cancelled. 9. In the result, the a ppeal of the assessee is allowed. This Order pronounced on 06/08/2024 Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 06/08/2024 S. K. SINHA True Copy आदेश कᳱ ᮧितिलिप अᮕेिषत आदेश कᳱ ᮧितिलिप अᮕेिषतआदेश कᳱ ᮧितिलिप अᮕेिषत आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent. 3. संबंिधत आयकर आयुᲦ / Concerned CIT 4. आयकर आयुᲦ (अपील) / The CIT(A)- 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडᭅ फाईल / Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, उप उपउप उप/सहायक पंजीकार सहायक पंजीकारसहायक पंजीकार सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय आयकर अपीलीय आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद / ITAT, Ahmedabad