Smt. Kanchanben Bhikhalal Sanajkalyan Trust, Ahmedabad V. The Income Tax Officer, Ward-2(Exemption), Ahmedabad

ITA 332/AHD/2022

AI Insights

The case involves Smt. Kanchanben Bhikhalal Sanaj Kalyan Trust appealing against the order of the CIT(A), which upheld the Assessing Officer's decision to restrict the exemption under Section 11(1A) of the Income Tax Act. The Trust argued that the adjustments made by the Assessing Officer during the processing of the return under Section 143(1) were not justifiable as they were not of a prima facie nature. The Tribunal found that the CIT(A) had not adequately addressed the additional ground of appeal regarding the powers of the Assessing Officer under Section 143(1) and the merits of the case concerning the capital account expenses claimed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299969 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-03-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 24-08-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(1); 11(1A); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . No .3 32 /A h d / 20 22 ( A s se ss m e nt Y e a r : 20 20- 21 ) S mt. Ka nc ha n b e n B hik h a la l Sa n aj Ka l ya n Tr us t, “ Pa r a s ” V id ya n ag a r S oc i et y- 3 , Us m a np ur a , Ah me d ab a d V s . I T O ( Ex e m pt io n s ) , War d - 2 , A h me da ba d [P AN N o.A A AT S6 07 8 A] (Appellant) .. (Respondent) Appellant by : Shri Sanjay R. Shah, A.R. Respondent by: Shri N. J. Vyas, Sr. D.R. D a t e of H ea r i ng 07.03.2023 D a t e of P r o no u n ce me nt 10.03.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals), National Faceless Appeal Centre (in short “NFAC”), Delhi on 11.07.2022 for A.Y. 2020-21. 2. The grounds of appeal raised by the assessee are as under: “1. The assessment order passed by the Ld. CIT, is bad and illegal as it is in violation of principle of natural justice. 2. The Ld. CIT has erred in law and on facts in not allowing deduction claimed for application made for Capital account of Rs. 43,22,916/- which has been disclosed by the appellant in return of income. 3. Appellant craves liberty add, amend, alter or modify all or any grounds of appeal before final hearing.” 3. The assessee has also raised additional ground of appeal which reads as under: “1. The learned C.I.T. (Appeals) erred in law and on facts in not appreciating the fact that the learned Assessing Officer was not empowered to make the kind of adjustment made by him while processing the return u/s. 143(1) of the Act. It is submitted that in the facts and circumstances of the case, the learned Assessing Officer should not have made adjustments, which are not of prima facie nature while processing the return of income and should not have made addition by rejecting the deduction of Rs.43,22,916/-. It is submitted that it be so held now and the adjustment ITA No. 332/Ahd/2022 Smt. Kanchanben Bhikhalal Sanaj Kalyan Trust vs. ITO Asst.Year–2020-21 - 2 - made by the learned Assessing Officer and as upheld by the C.I.T.(Appeals) be deleted.” 4. Return of income was filed by the assessee on 24.12.2021 and the same was processes under Section 143(1) restricting the exemption under Section 11(1A) to Rs. 26,09,826/- as against Rs. 69,42,382/- claimed by the assessee. 5. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 6. The Ld. A.R. submitted that the Assessing Officer was not empowered to make any kind of adjustment by him while processing the return under Section 143(1) and therefore, the adjustment made by the Assessing Officer thereby rejecting the deduction of Rs. 43,22,916/- was not justifiable. The Ld. A.R. submitted that the assessee has taken this as additional ground of appeal, but before the CIT(A) while filing statement of facts the assessee has pointed out this as pleading which was not at all discussed by the CIT(A). Besides this the Ld. A.R. submitted that the CIT(A) has not given any reasoning / finding to the extent of merits of the case. The Ld. A.R. submitted that Section 11(1A)(a) the assessee is entitled for exemption in respect of capital account expenses shown as addition in investment made during the year in respect of Reli (Nippon Ind) Banking Fund – G Plan for Rs. 26,09,852/- and Reli (Nippon India) Focused EQU Fund REG – G for Rs. 23,15,15,160/-. The Ld. A.R. submitted that the assessee is entitled as Rs. 26,09,852/- is coming under Rule 17C of the Income Tax Rules and the amount of Rs. 23,15,160/- is re- investment from dividend income by the assessee. 7. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). ITA No. 332/Ahd/2022 Smt. Kanchanben Bhikhalal Sanaj Kalyan Trust vs. ITO Asst.Year–2020-21 - 3 - 8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that in respect of additional ground of appeal which is a legal ground and has been pleaded by the assessee in statement of facts which has not been taken into account by the CIT(A) as well as on merit also the CIT(A) has not given any specific / separate finding about the restricting the exemption under Section 11(1A) to Rs. 26,09,826/- only and not taking into account the other aspect. There is no finding given by the CIT(A) and therefore, it will be appropriate to remand back this issue as it requires verification of the Focused EQU Fund as well as Banking Fund which has been claimed by the assessee. After verifying the same the CIT(A) may take cognizance and adjudicate the issue as per law. Needless to say the assessee be given opportunity of hearing by following principle of natural justice. 9. In result, the appeal of the assessee is partly allowed for statistical purpose. This Order pronounced in Open Court on 10/03/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 10/03/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad