M/s Priori Educational Society, Hyderabad V. Dy.Director of Income-Tax (Exemption)-II, Hyderabad, Hyderabad

ITA 69/HYD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2581 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Section: 12AA; 12; 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 69/HYD/2015 ASSESSMENT YEAR: 2010-11 M/S. PRIORI EDUCATIONAL SOCIETY, HYDERABAD [PAN: AAJFP4985C] VS DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS)-2, HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A. SRINIVAS, AR FOR REVENUE : SMT. SUMAN MALIK, DR DATE OF HEARING : 31-01-2018 DATE OF PRONOUNCEMENT : 09-02-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE EX-PARTE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, HYDE RABAD, CONFIRMING THE ACTION OF THE AOS ORDER U/S. 144 OF TH E INCOME TAX ACT [ACT], WHEREIN AO HAS DISALLOWED 20% OF EXP ENDITURE CLAIMED IN AN EX-PARTE ORDER. CONDONATION OF DELAY: 2. THE APPEAL WAS FILED WITH A DELAY OF SIXTY-FIVE D AYS. AN AFFIDAVIT WAS FILED BY THE PRESIDENT OF THE TRUST THAT THE RE WAS A CHANGE IN THE MANAGEMENT OF THE SOCIETY AND NEW MANAGEMENT WAS NOT AWARE OF THE PENDING LITIGATION AND O NLY WHEN TAXES ARE BEING DEMANDED, IT WAS REALIZED AND IMMEDIATELY THE APPEAL WAS FILED. LD. COUNSEL PLACED ON I.T.A. NO. 69/HYD/2015 :- 2 -: RECORD THE REGISTRATION OBTAINED FROM THE GOVERNMENT WITH REFERENCE TO THE NEW MANAGEMENT AND SUBMITTED THAT AT THE RELEVANT POINT OF TIME, THERE WAS DELAY DUE TO CHANGE OF MANAGEMENT AND PRAYED FOR CONDONATION. CONSIDERING T HE FACTS OF THE CASE AND THE AFFIDAVIT FILED BY THE PRESIDE NT OF ASSESSEE-TRUST, I HEREBY CONDONE THE DELAY IN FILING THE APPEAL AS THERE IS SUFFICIENT CAUSE. 3. ASSESSEE IS A TRUST AND IS RUNNING AN EDUCATIONAL INSTITUTION. ASSESSEE FILED RETURN OF INCOME CLAIMING BENEFIT OF SECTION 11 AND ALSO SECTION 10(23C). HOWEVER, BEFORE THE AO, ASSESSEE DID NOT COMPLY WITH THE NOTICES AND ALSO DID NOT SUBSTANTIATE THAT IT HAS BEEN REGISTERED UNDER THE PROVIS IONS OF IT ACT U/S. 12AA. AO REJECTED THE EXEMPTION CLAIMED U /S. 11 IN THE ABSENCE OF REGISTRATION U/S. 12AA AND ALSO CLAI M OF EXEMPTION U/S. 10(23C). SINCE ASSESSEE HAS NOT CO-OP ERATED WITH REFERENCE TO FURNISHING EVIDENCE OF VARIOUS EXP ENDITURES DUE TO NON-VERIFICATION OF THE SAME, AO DISALLOWED AN AMOUNT OF 20% OF THE EXPENSES AND ADDED TO THE INCOME SHOWN I N THE INCOME AND EXPENDITURE A/C. THE STATUS WAS TREATED A S AOP. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD.CIT(A) BUT HEREIN ALSO, ASSESSEE HAS NOT APPEARED BEFORE THE LD.CIT(A). IN THE ABSENCE OF REGISTRATION U/S. 12AA, N OR APPROVAL U/S. 10(23C) EVEN THOUGH GROSS RECEIPTS AMOU NTED TO 2.07 CRORES, THE LD.CIT(A) REJECTED THE CLAIMS AND D ISMISSED THE APPEAL IN THE EX-PARTE ORDER. I.T.A. NO. 69/HYD/2015 :- 3 -: 5. ASSESSEE HAS RAISED AS MANY AS 10 GROUNDS, BUT LD . COUNSEL WITHDREW THE GROUNDS 1 TO 7 ON THE ISSUE OF C LAIMING EXEMPTION U/S. 11 AND U/S. 10(23C)(VI), AS ASSESSEE DID NOT HAVE ANY APPROVAL UNDER THESE SECTIONS. THUS THESE GRO UNDS ARE DISMISSED AS WITHDRAWN. THE ONLY ISSUE CONTESTED IS WITH REFERENCE TO DISALLOWANCE OF 20% OF THE EXPENDITURE. I T WAS SUBMITTED THAT ASSESSEES EXPENDITURE CLAIMS ARE VERIFIA BLE AND DUE TO CHANGE OF MANAGEMENT AT PRESENT, ASSESSEE WOULD BE IN A POSITION TO SUBSTANTIATE THE CLAIMS IF AN OPPORTUNIT Y IS GIVEN. 6. LD.DR, HOWEVER, OBJECTED TO THE CONTENTIONS STATING THAT ASSESSEE HAS NOT CO-OPERATED EITHER DURING THE ASSES SMENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS BEFOR E THE LD.CIT(A). IN VIEW OF THAT, NO FURTHER BENEFIT MAY BE CONFERRED ON ASSESSEE. 7. I HAVE CONSIDERED THE RIVAL CONTENTIONS. IT IS TRUE THAT ASSESSEE-TRUST HAS NOT APPLIED FOR REGISTRATION U/S. 12 AA OF THE ACT NOR SOUGHT ANY APPROVAL U/S. 10(23C) OF THE ACT AS REQUIRED FOR CLAIMING EXEMPTION. THEREFORE, AO TREATE D ASSESSEE AS AOP AND BROUGHT TO TAX THE INCOME AS PER TH E INCOME AND EXPENDITURE STATEMENT. IN ADDITION, HE ALSO DISALLOWED EXPENDITURE AT 20% EXCLUDING THE DEPRECIATIO N. IT IS ALSO NOTICED THAT THE NON-COMPLIANCE BEFORE THE AUTHORI TIES IS BY THE OLD MANAGEMENT. THE NEW MANAGEMENT HAVING TAKEN OVER HAS PREFERRED THE PRESENT APPEAL WITH CONDONATION OF DELAY. CONSIDERING THE AFFIDAVIT FILED BY THE MANAGEM ENT, I AM OF THE OPINION THAT ONE MORE OPPORTUNITY CAN BE GIVEN TO ASSESSEE FOR SUBSTANTIATING THE EXPENDITURE CLAIMS. A O IS FREE I.T.A. NO. 69/HYD/2015 :- 4 -: TO EXAMINE THE ISSUES IN THE STATUS OF AOP. ASSESSEE SH OULD BE GIVEN DUE OPPORTUNITY AND IN CASE OF NON-COMPLIANCE AGAIN, AO IS FREE TO TAKE ANY DECISION IN THIS REGARD AS PER THE FACTS AND LAW OF THE CASE. 8. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH FEBRUARY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 9 TH FEBRUARY, 2018 TNMM I.T.A. NO. 69/HYD/2015 :- 5 -: COPY TO : 1. M/S. PRIORI EDUCATIONAL SOCIETY, C/O. MR. D. RAJ ASEKHAR, CHARTERED ACCOUNTANT, PLOT NO. 42, ANDHRA BANK COLO NY, NEAR KONARK DIAGNOSTICS, DILSUKH NAGAR, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION S)-2 , HYDERABAD. 3. CIT (APPEALS)-IV, HYDERABAD. 4. DIT (EXEMPTIONS)-HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.