THE FATHERS HOUSE, MUMBAI V. COMMISSIONER OF INCOME TAX (A) NFAC`, DELHI

ITA 407/MUM/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0905 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 27-09-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 24-02-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 147; 148; 11; 12A; 12AA; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER ITA Nos.406, 407 & 408/M/2022 Assessment Years: 2013-14, 2014-15 & 2015-16 M/s. The Fathers House, 51, Sunil Building, Meera Bag Road, Santacruz (West), Mumbai – 400 054 PAN: AABTT7473M Vs. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, New Delhi-110001 (Appellant) (Respondent) Present for: Assessee by : None Revenue by : Shri Anil Gupta, D.R. Date of Hearing : 28 . 09 . 2022 Date of Pronouncement : 13 . 10 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: Since common questions of facts and law have been raised in these inter-connected appeals, the same are being disposed of by way of composite order to avoid repetition of discussion. 2. The appellant, M/s. The Fathers House (hereinafter referred to as ‘the assessee trust’) by filing the present appeals, sought to set aside the impugned orders even dated 30.12.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment years 2013-14, 2014-15 & 2015-16 on identical grounds inter alia that: ITA Nos.406, 407 & 408/M/2022 M/s. The Fathers House 2 “1. On the facts and in the prevailing circumstances of the case, the learned CIT(A) – NFAC erred in confirming the addition made by the Ld. Assessing Officer to the extent of Rs.19,61,761/-, Rs.20,80,024/- & Rs.29,69,710/- for A.Y. 2013-14, 2014-15 & 2015-16 respectively ignoring the provisions of section 17(2) of the Act. Therefore, the impugned addition confirmed ignoring the provisions of law may please be deleted. 2. Without prejudice to the above following ground may please be considered On the facts and in the prevailing circumstances of the case, the learned CIT (A) - NFAC erred in confirming the addition made by the Ld. Assessing Officer to the extent of Rs.19,61,761/-, Rs.20,80,024/- & Rs.29,69,710/- for A.Y. 2013-14, 2014-15 & 2015-16 respectively without appreciating that though the assessee trust was not registered u/s 12AA, the expenditure incurred by it ought to have been allowed as a deduction while computing the total income of the assessee in accordance with the normal rule of accountancy. Therefore, the impugned addition confirmed may please be deleted. 3. The Appellate craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal.” 2. Briefly stated facts necessary for adjudication of the controversy at hand are : assessee being a public charitable trust registered under Bombay Public Trust Act filed its return of income at Rs.34,666/-, Rs.5,58,440/- & at nil for A.Y. 2013-14, 2014-15 & 2015-16 respectively. Assessee’s case were reopened under section 147 of the Income Tax Act, 1961 (for short ‘the Act’) by way of issuance of notice under section 148 of the Act which were served upon the assessee trust and the assessee trust had opted to treat its return of income already filed as reply to the notices issued under section 148 of the Act. Statutory notices under section 143(2) & 142(1) of the Act were issued and served upon the assessee who was duly represented before the AO by Shri K.G. Saptarishi, CA. The assessee trust was not registered under section 12A of the Act at the time of passing assessment orders, however, subsequently the ITA Nos.406, 407 & 408/M/2022 M/s. The Fathers House 3 assessee trust had applied under section 12AA and was granted registration under section 12A of the Act on 24.09.2018. Since the assessee was not registered as a trust under section 12A the Assessing Officer (AO) disallowed the total expenditure of Rs.19,61,761/-, Rs.20,80,024/- & Rs.29,69,710/- for A.Y. 2013-14, 2014-15 & 2015-16 respectively and made addition thereof to the total income of the assessee and thereby framed the assessment under section 147 of the Act. 3. Assessee carried the matter before the Ld. CIT(A) by way of challenging the assessment orders who has upheld the addition made by the AO by dismissing the appeals. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeals. 4. Undisputedly, the assessee trust though a charitable trust registered under Bombay Public Trust Act, has not been got itself registered under section 12AA of the Act, however got itself registered under section 12A only on 24.09.2018 i.e. after completion of the assessment proceedings. It is also not in dispute that the assessee has claimed deduction on account of certain expenses claimed to have incurred on the object of trust, on account of legal and miscellaneous expenses etc. which have been disallowed by the AO on the sole ground that the assessee trust has not been registered under section 12A of the Act. 5. In the backdrop of the aforesaid facts and circumstances of the case, the Ld. CIT(A) has passed the impugned order as under: “4.2 The matter was considered. Relevant assessment order, written submission and respective provisions of law were perused. From the ITA Nos.406, 407 & 408/M/2022 M/s. The Fathers House 4 perusal of assessment order, it was observed that the Assessing Officer reopened the case for assessment u/s 147 of the Act believing the reasons that the appellant was not registered u/s 12A of the Act and exemptions u/s 11 & 12 were claimed for the expenditure/expenses of Rs.19,61,761/-. The Assessing Officer sought the details of expenses, but in response neither details of expenses were produced nor any submission was filed before the Assessing officer during the course of assessment proceedings. 4.3 The appellant in its written submission reproduce here above contended that the expenses should be allowed to be deducted even if the trust is not registered under section 12AA of the Act by computing the income in accordance with the normal rule of accountancy in a commercial sense without reference to the head of income specified in section 14. In support of its claim, the judgment of the Apex Court in the case of CIT vs Programme for community organization, 248 ITR 1 (SC) in reference of Kerala High Court's decision in the same case in 228 ITR 620 (Ker) were referred and order of the ITAT, Pune in the case of ITO vs Shri vishwakalyan Jivraksha Pratishthan ITA No. 2013/PN/2014 was relied upon. The gist of the judgments/orders has already been placed in the written submission of the appellant reproduce above. The gist of the judgments/orders was perused and found that the matters specified in these case laws are related to the assessment order wherein books of account and other details were provided during the assessment proceedings. But, in the foregoing case, the appellant had not produced any details/documents nor filed written submission before the AO during assessment proceedings. Moreover, the appellant claimed exemption u/s 12A without having registration certificate u/s 12AA of the Act. Hence, the judgments relied upon is found irrelevant in respect of this case and not accepted. 4.4. The applicant further took the plea of the application of section 12A(2) of the Act and place the reliance of the orders of the ITAT, Cochin in the case of SNDP Yogam vs ADIT (Exemption) 68 taxmann. Com 152 and the ITAT, Kolkatain the case of Sree Sree Ramkrishna Samity vs DCIT 156 ITD 646. The gist of the orders has already been given in the written statement of the appellant reproduced above. The reference of the appellant and related section 12A(2) of the Act were perused. Section 12A(2) of the Act reads as under; "(2) Where an application has been made on or after the 1 st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made:] ITA Nos.406, 407 & 408/M/2022 M/s. The Fathers House 5 [Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year: Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.]" By referring the referred judgments and section 12A(2) of the Act, the appellant requested to accord relief and contended that the case cannot be reopened u/s 147 only due to non-registration of the trust under section 12A of the Act and took plea that since the case is before the appellate authority, the case should be treated as pending before the Assessing Officer. The contention of the appellant was considered and found not to be as per prevailing provisions of the law. Section 12A(2) of the Act already reproduced above prohibits the AO from taking action u/s 147 in the preceding assessment for the cases wherein non- registration of trust involved. But, in this case, the AO had taken action u/s 147 of the Act and passed assessment order accordingly on 31.08.2017 itself, whereas from the copy of registration certificate it is evident that the appellant applied for registration u/s 12A on 31.03.2018 and registration certificate was accordingly granted on 24.09.2018. However, a typographical mistake regarding the date of notice u/s 148 of the Act was noticed in both assessment order and written submission of the appellant as the date of notice u/s 148 is found to be mentioned 29.09.2018 whereas correct date of notice should be 29.09.2016 apparent from the record, which is being ignored treating the same a human error. Hence, it is clear that the provisions of the section 12A(2) of the Act does not attract in this case in such a situation where assessment order was passed well before even the filing of application u/s 12AA of the Act. Further, the issue of proceedings pending before the Assessing Officer is also not involved in this case as section 12A(2) ITA Nos.406, 407 & 408/M/2022 M/s. The Fathers House 6 clearly mentions that the assessment proceedings should remain pending before the Assessing Officer as on the date of such registration for applying the provisions of section 11 and 12 of the Act. The case was pending before the Appellate Authority i.e. the Commissioner of Income Tax (Appeals) as on the date of registration and not before the Assessing Officer. Section 2(7A) of the Act deals with the definition of Assessing Officer, which is read as under: "[(7A) "Assessing Officer' means the Assistant Commissioner [or Deputy Commissioner] [or Assistant Director] or Deputy Director] or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the [Additional Commissioner or] [Additional Director or] [Joint Commissioner or Joint Director] who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;]" Section 2(7A) clearly define that the Commissioner of Income Tax (Appeals) is not an Assessing Officer and hence proceedings pending before him cannot be treated as proceedings pending before the Assessing Officer. Hence, the contention of the appellant is not accepted. 4.5 In view of the discussion made above, it was found that the appellant has not produced any details/submission before the Assessing Officer and the AO accordingly disallowed the exemption of Rs.19,61,761/- by treating the assessee as an AOP in the absence of registration certificate u/s 12A of the Act. Hence, I am not inclined to interfere with decision of the Assessing Officer. Accordingly, the addition of Rs.19,61,761/- made by the AO is confirmed.” 6. Bare perusal of the impugned order passed by the Ld. CIT(A) and the assessment order by the AO it has come on record that the assessee trust has not brought on record any detail/evidences in support of its claim for expenses to be considered the same under the normal provisions of the Act when undisputedly the assessee trust was not a registered trust under section 12AA of the Act. Even before the Tribunal the assessee trust has not come present despite service of notice to bring on record the documents/evidences in support of its claim. In these ITA Nos.406, 407 & 408/M/2022 M/s. The Fathers House 7 circumstances, I do not find no illegality or perversity in the impugned orders passed by the Ld. CIT(A). Hence, aforesaid appeals filed by the assessee are dismissed. Order pronounced in the open court on 13.10.2022. Sd/- (KULDIP SINGH) JUDICIAL MEMBER Mumbai, Dated: 13.10.2022. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.