Jagruti Welfare Organisation, Bhubaneswar V. CIT (Exemption), Hyderabad, Hyderabad

ITA 50/CTK/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7315 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 12-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 12A; 207

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER Jagruti Welfare Organisation, Plot No.PP Badagada Brit Colony, Pandav Nagar, Lane Badagada, Bhubaneswar. PAN/GIR No. (Appellant Per Bench This is an appeal filed by the assessee a CIT(Exemptions Appeal No. ITBA/Rev/F/Rev5/2021 year 2017-18. 2. Shri S.K.Agarwal, ld AR appeared for the assessee and Shri M.K.Gautam, ld CIT DR appeared for the revenue. 3. It was submitted by ld AR that the original assessment in assessee’s case came to be completed u/s.143(3) on 14.8.2019 accepting the returned IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.50/CTK/2022 Assessment Year : 2017-18 Jagruti Welfare Organisation, Plot No.PP-46, Badagada Brit Colony, Pandav Nagar, Lane-3, Badagada, Bhubaneswar. Vs. CIT (Exemptions), Hyderabad PAN/GIR No.AAATJ 5579 K (Appellant) .. ( Respondent Assessee by : Shri S.K.Agarwal, AR Revenue by : Shri M.K.Gautam, CIT Date of Hearing : 14 /9 Date of Pronouncement : 14/9 O R D E R This is an appeal filed by the assessee against the order of the ld CIT(Exemptions), Hyderabad dated 14.3.2022 passed u/s.263 of the Act ITBA/Rev/F/Rev5/2021-22/1040692701(1 18. Shri S.K.Agarwal, ld AR appeared for the assessee and Shri M.K.Gautam, ld CIT DR appeared for the revenue. It was submitted by ld AR that the original assessment in assessee’s case came to be completed u/s.143(3) on 14.8.2019 accepting the returned Page1 | 6 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER CIT (Exemptions), Hyderabad Respondent) S.K.Agarwal, AR : Shri M.K.Gautam, CIT DR 9/2022 9/2022 gainst the order of the ld 14.3.2022 passed u/s.263 of the Act in ) for the assessment Shri S.K.Agarwal, ld AR appeared for the assessee and Shri It was submitted by ld AR that the original assessment in assessee’s case came to be completed u/s.143(3) on 14.8.2019 accepting the returned ITA No.50/CTK/2022 Assessment Year : 2017-18 Page2 | 6 income. It was the submission that subsequently a show cause notice had been issued u/s.263 of the Act on 12.1.2022, wherein, the Ld CIT (E) had proposed to include an amount of Rs.1,82,94,043 representing the income receivable from Bhubaneswar Municipal Corporation. It was the submission that in the audit report, the assessee had declared total income of Rs.40,71,04,794/-, which included the amount of Rs.1,82,94,043/- but the assessee is following cash system of accounting as has been prescribed by the CBDT in its Circular No.5-O(LXX-6) of 1968, dated 19.6.196, in para 2, the assessee had disclosed its income at Rs.38,88,10,751/-. On the ground that the difference of Rs.1,82,94,043/- had not been offered by the assessee as its income, the ld CIT (Exemptions) had proposed to bring the same to tax. The assessee has filed its reply on 22.1.2022, wherein, it had mentioned that if the basic exemption itself provided under section 11(1) representing 15%, accumulation is considered on the amount of Rs.40,71,04,794/-, then the accumulation would be to an extent of Rs.6,10,65,719/-, which has far exceeded the proposed addition made by the ld CIT(E) in his show cause notice u/s.263 of the Act. It was further submitted that even in view of the circular issued by CBDT No. 5-0(LXX-6) of 1968, dated 19.6.1968 (supra), the amount of Rs.1,82,94,043/- is not liable to be included in the income of the assessee though the same is liable to be considered in the total income as has been rightly done by the assessee. It was the submission that the reference to the circular issued by ITA No.50/CTK/2022 Assessment Year : 2017-18 Page3 | 6 CBDT (supra) has also been brought to the attention of the ld CIT(E) in the reply of the assessee. It was the submission that without considering the explanation of the assessee and without doing any verification, the ld CIT(E) has proceeded to set aside the assessment order passed u/s.143(3) of the Act and directed the Assessing Officer to examine the issues afresh in accordance with law. It was his prayer that the order passed under section 263 of the Act may be quashed. 4. In reply, ld CIT DR drew our attention to page 24 of Assessee Paper Book, which was a copy of the questionnaire issued u/s.142(1) of the Act in the course of original assessment. It was his submission that none of the question in the said questionnaire referred to the issue as raised by the ld CIT(E). It was his submission that as the issue had not been considered nor enquired by the Assessing Officer, the ld CIT (E) was well within his power u/s.263 of the Act to question the issue on account of the failure on the part of the Assessing Officer to do proper assessment. 5. On this point, ld AR replied that the question No.2 in the questionnaire reading “Please furnish the statement/computation of total income for the A.Y. 2017-18” covered the issue insofar as the said computation in its entirety had been filed before the Assessing Officer. 6. In reply, ld CIT DR submitted that the assessee is attempting to make a general question raised by the Assessing Officer to be specific to the ITA No.50/CTK/2022 Assessment Year : 2017-18 Page4 | 6 issue. It was the submission that there is no comment from the assessee or the Assessing officer as to whether the assessee is following cash system of accounting in respect of its expenditure. It was the submission that the order u/s.263 is liable to be upheld. 7. We have considered the rival submissions. At the outset, what comes to our mind is as to how the assessee, who is registered u/s.12A of the Act, can apply its income accrued to it but has not been received by it. On this ground itself, most of the assesses, who are registered under section 12A could lose its registration u/s.12A. This is exactly what the CBDT in its wisdom has issued circular No,.5 dated 19.6.1968 (supra). Admittedly, the assessee is following cash system of accounting. There is no difference between the figures disclosed by the assessee and as arrived at by the ld CIT(E). The only difference is in respect of total income declared by the assessee at Rs.40,71,04,794/- and income declared at Rs.38,88,10,751/-. The difference being the amount of Rs.1,82,94,043/- which has accrued to the assessee. The reply of the assessee as extracted by the ld CIT (E) in his order at page 5 shows that the assessee has shown the calculation which included 15% of the gross revenue as accumulation u/s.11(1) to be an amount of Rs.6,10,65,719/-. This amount far exceeded the proposed addition of Rs.1,82,94,043/-. Further, a perusal of the order of the ld CIT(E) at page 4 para 6 clearly shows that the assessee has brought to the attention to the ld CIT (E) the Circular No.5 (supra) ITA No.50/CTK/2022 Assessment Year : 2017-18 Page5 | 6 issued by CBDT. A perusal of the order of ld CIT(E) shows that the reply filed by the assessee has not been found to be false or erroneous. In fact, the ld CIT(E) has not even examined the reply much less rejected the same. Clearly, there is no enquiry by the ld CIT(E) after the reply filed by the assessee. 8. It would be worthwhile to mention here the fact that the ld. CIT(E) has also made a calculation which attempts to show escapement of income u/s.11 of the Act which is taxable, by excluding the application of income which is permissible u/s.11(1) of the Act, is nothing but a jugglery in arithmetic. This is not a case where there is incorrect application of law. This being so, we are of the view that the principle of law laid down by the Hon’ble Jurisdictional High Court of Orissa in the case of Orissa State Police Housing & Welfare Corporation Ltd, [2022] 139 taxmann.com 207 (Orissa), is squarely applicable in the case of present assessee, insofar as there is no enquiry done by the ld. CIT(E) after receipt of the reply filed by the assessee. This view of ours also support by the decision of the coordinate bench of the Tribunal in the case of Saroj Kumar Mishra (supra) and in the case of M/s Earth Minerals Co. Ltd., in ITA No.223/CTK/2019, order dated 29.08.2022. In these circumstances, we are of the view that the order passed by the ld. CIT(E) is unsustainable and consequently, the same stands quashed. ITA No.50/CTK/2022 Assessment Year : 2017-18 Page6 | 6 9. In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 14/9/2022. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 14/9/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Jagruti Welfare Organisation, Plot No.PP-46, Badagada Brit Colony, Pandav Nagar, Lane-3, Badagada, Bhubaneswar 2. The Respondent: CIT (Exemptions), Hyderabad 3. The CIT(A)- Bhubaneswar 4. DR, ITAT, Cuttack 5. Guard file. //True Copy//