M/s. International Knowledge Foundation, Nasik V. The Dy. Commissioner of Income Tax, Exemptions Circle, Aurangabad

ITA 765/PUN/2023

AI Insights

The case involves M/s. International Knowledge Foundation, an NGO registered under section 12AA of the Income Tax Act, 1961, which undertook projects under the Integrated Child Development Scheme without profit. The NGO faced disallowances and additions to its income for the assessment years 2013-14 to 2015-16, which were contested. The NFAC dismissed the appeals for non-prosecution and on merits, but the Tribunal found the NFAC's decision lacking in substantive legal and factual analysis, necessitating a remand for a detailed re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137215 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 19-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 27-06-2023
• Laws Referred To: Income Tax Act, 1961, Companies Act, 1956
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund
• Section: 147; 148; 144; 43B; 143(3); 40(a)(ia); 194C; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.765 to 767/PUN/2023 िनधाᭅरण वषᭅ / Assessment Years : 2013-14 to 2015-16 M/s. International Knowledge Foundation, Flat No.7, Shyam Villa Apartment, Screne Meadows, Gangapur Road, Nashik- 422013. PAN : AACCI2030F Vs. DCIT, Exemptions Circle, Aurangabad. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: These are the appeals filed by the assessee directed against the different order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 08.06.2023 and 03.05.2023 for the assessment years 2013-14 to 2015-16 respectively. Assessee by : None Revenue by : Shri Ramnath P. Murkunde Date of hearing : 20.07.2023 Date of pronouncement : 31.07.2023 ITA Nos.765 to 767/PUN/2023 2 2. Since the identical facts and common issues are involved in the above captioned three appeals of the assessee, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal of the assessee in ITA No.765/PUN/2023 for the assessment year 2013-14 are stated herein. ITA No.765/PUN/2023, A.Y. 2013-14 : 4. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of section 25 of the Companies Act, 1956. It was formed with the object to promote dissemination of knowledge all over the globe for setting up of Public Projects, with a view of developing localized economy using local resources for creating sustainable infrastructure; that meets people basic needs of Roti, Kapada, Makan and alternate energy thereby adding real and true value to their lives, (b) With this auspicious object of creatingease in the lives of deprived with economic and educational development, the NGO had undertaken the projects of Construction and Erection of Pre-Fabricated Structures of Anganwadi at Cost Basis without making any type of profit from this project. The Management of this NGO had ITA Nos.765 to 767/PUN/2023 3 sufficient sources of income from their sister concern Power Deal Pvt. Ltd. Company, (c) The above work was allotted to NGO under Integrated Child Development Scheme which is being implemented by Tribal Development Department of Maharashtra in various districts of Maharashtra State, (d) The NGO had given the proposal of construction of Anganwadi to the Government of Maharashtra at cost basis without making any profit from the projects. The appellant was also registered under the provisions of section 12AA of the Income Tax Act, 1961 (‘the Act’) vide Order No.Nsk/Pro/12AA/2010-11/59/41 dated 25.01.2011. The appellant had filed the Return of Income for the assessment year 2013-14 on 25.02.2014. Against the said return of income, the assessment was completed u/s 143(3) of the Act vide order dated 29.03.2016 after making addition of Rs.3,38,555/- on account of disallowance u/s 43B and addition of Rs.4,82,678/- u/s 40(a)(ia) of the Act. Subsequently, the assessment was reopened by issuing notice u/s 148 dated 31.03.2018 for the reasons set out vide page no.1 and 2 of the assessment order. The appellant had filed the return of income in response to notice u/s 148 of the Act. Against the said return of income, the assessment was completed by the Dy. Commissioner of ITA Nos.765 to 767/PUN/2023 4 Income Tax, Exemption Circle, Aurangabad (‘the Assessing Officer’) vide order dated 24.12.2018 passed u/s 144 r.w.s. 147 of the Act at a total income of Rs.4,01,76,910/-. While doing so, the Assessing Officer estimated the income at the rate of 7% of contract receipts of Rs.16,75,31,617/- i.e. Rs.1,34,02,529/-. Similarly, the Assessing Officer made addition of Rs.7,74,775/- on account of interest received from IDBI Bank Ltd.. The Assessing Officer also made disallowance of Rs.2,56,61,050/- u/s 40(a)(ia) on the ground that the appellant made payment to M/s. Powerdeal Energy Systems Pvt. Ltd., Nashik without deducting tax at source u/s 194C of the Act. The Assessing Officer also made disallowance u/s 43B of Rs.3,38,555/-. 5. Being aggrieved by the above disallowances, an appeal was filed before the NFAC challenging the above disallowances. 6. On perusal of the impugned order, it would be clear that the appeal was dismissed for non-prosecution, as the appellant had not complied with the notices of hearing dated 28.12.2022, 24.03.2023 and 23.05.2023. On the merits of the additions, the NFAC had dismissed the grounds of appeal raised before him in respect of each ground of appeal by observing as under :- ITA Nos.765 to 767/PUN/2023 5 “I am not inclined to interfere with the finding made by the AO and addition made by him is hereby confirmed.” 7. The NFAC had proceeded to dispose of appeal without discussing the factual background of the additions made by the Assessing Officer and as well as without referring to the legal position applicable to the facts of the case, in our considered opinion the approach adopted by the NFAC does not exhibit that the NFAC had applied mind to the facts of the present case and arrived at a conclusion. Therefore, it cannot be termed that the order passed by the NFAC is on merits. Thus, the order passed by the NFAC is hereby set-aside and remanded to the file of the NFAC with a direction that the issue in appeal should be adjudicated de novo in accordance with law after affording reasonable opportunity of being heard to the assessee. Accordingly, the grounds of appeal filed by the assessee stand partly allowed. 8. In the result, the appeal filed by the assessee in ITA No.765/PUN/2023 for A.Y. 2013-14 stands partly allowed. ITA Nos.766 & 767/PUN/2023, A.Y. 2014-15 & 2015-16 : 9. Since the facts and issues involved in remaining two appeals of the assessee are identical, therefore, our decision in ITA ITA Nos.765 to 767/PUN/2023 6 No.765/PUN/2023 for A.Y. 2013-14 shall apply mutatis mutandis to the remaining two appeals of the assessee in ITA Nos.766 & 767/PUN/2023 for A.Ys. 2014-15 & 2015-16 respectively. Accordingly, the remaining two appeals of the assessee in ITA Nos.766 & 767/PUN/2023 for A.Ys. 2014-15 & 2015-16 stands partly allowed. 10. To sum up, all the above captioned three appeals of the assessee stands partly allowed. Order pronounced on this 31 st day of July, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 31 st July, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.