Bhuvneshwari Educational Society, Mandi V. ACIT, Circle, Mandi

ITA 809/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1466 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 31-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SUDERSHAN
• Assessee Lawyers: B M MONGA; ROHIT KAURA S
• Keywords: Charitable institution; Period of limitation; Time period of passing order; Condonation of delay; Set aside
• Section: 12A; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, SMC, CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 809 & 810/CHD/2018 / ASSESSMENT YEAR : 2010-11 BHUVNESHWARI EDUCATIONAL SOCIETY, VILLAGE BAHOT, PO CHATROKHARI, TEHSIL SUNDER NAGAR,] DISTT. MANDI H.P. VS. THE ACIT, CIRCLE MANDI, BHIULI, DISTT. MANDI ./PAN NO: AAAAB1785G / APPELLANT /RESPONDENT /ASSESSEE BY : SH, B.M. MONGA & SH ROHIT KAURA, AD VOCATES ! / REVENUE BY : SH. ARVIND SUDERSHAN, SR DR ' #$ /DATE OF HEARING : 06.06.2019 %&'($ / DATE OF PRONOUNCEMENT : 06. 06.2019 / ORDER THE PRESENT ARE THE APPEALS PREFERRED BY THE ASSESS EE AGAINST THE SEPARATE ORDERS DATED 21.06.2017 OF THE COMMISSIONE R OF INCOME TAX(APPEALS), PALAMPUR [HEREINAFTER REFERRED TO AS CIT(A)]. 2. ITA NO. 809/CHD/2018 IS AN APPEAL AGAINST THE CO NFIRMATION OF THE QUANTUM ADDITION BY THE LD. CIT(A) VIDE ORDER DATED 21.6.2017, WHEREAS, ITA NO. 810/CHD/2018 IS AGAINST THE CONF IRMATION OF PENALTY BY THE LD. CIT(A) IMPOSED BY THE ASSESSING OFFICER ON THE ASSESSEE U/S 271 (1)(C) OF THE ACT. ITA NOS. 809 & 810--CHD-2018- BHUVNESHARI EDUCATIONAL SOCIETY, MANDI 2 3. BOTH THE APPEALS ARE BARRED BY LIMITATION PERIOD OF 270 DAYS. SEPARATE APPLICATIONS FOR CONDONATION OF DELAY HAVE BEEN FILED. IT HAS BEEN PLEADED IN THE APPLICATIONS THAT IN THE IMPUGN ED ORDER OF THE CIT(A) DATED 21.6.2017 PASSED IN RELATION TO THE IM POSITION OF PENALTY U/S 271 (1)(C) OF THE ACT. THE LD. CIT(A), IN THE L AST LINES / CONCLUSION HAS MENTIONED THAT THE APPEAL OF THE ASSESSEE IS AL LOWED, HOWEVER, AS PER THE DISCUSSION IN THE BODY OF THE ORDER IT APPE ARS THAT LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. THAT SM T. KALPANA SHARMA, THE PRESIDENT OF THE ASSESSEE SOCIETY WHO WAS NOT C ONVERSANT TO NITTY- GRITTIES OF LITIGATIONS, MISUNDERSTOOD THE ORDER AN D WAS UNDER THE IMPRESSION THAT THE APPEALS OF THE ASSESSEE HAVE BE EN ALLOWED. FURTHER, SHE DUE TO FAMILY CIRCUMSTANCES WAS UNDER EXTREME S TRESS AND COULD NOT CONSULT THE COUNSEL IN THIS RESPECT. 4. CONSIDERING THE ABOVE PLEADINGS AND ALSO IN THE INTEREST OF JUSTICE, APPLICATIONS FOR CONDONATION OF DELAY ARE HEREBY AL LOWED SUBJECT TO THE PAYMENT OF COST OF RS. 5,000/- IN EACH CASE TO BE D EPOSITED IN PRIME MINISTERS RELIEF FUND WITHIN 5 DAYS FROM THE DATE OF RECEIPT OF COPY OF THIS ORDER.] ITA NO. 809/CHD/2018 5. NOW WE TAKE UP ITA NO. 809/CHD/2018 ON MERITS. I N THIS APPEAL THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- ITA NOS. 809 & 810--CHD-2018- BHUVNESHARI EDUCATIONAL SOCIETY, MANDI 3 1. THAT THE ORDER OF LD. CIT(A) IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THAT THE LD. CIT(A), HAS WRONGLY UPHELD THE ORDERS OF THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THA T THE ASSESSEE-SOCIETY IS REGISTERED U/S 12A OF THE INCOM E TAX ACT AND IS TO BE ASSESSED AS PER THE PROVISIONS OF SECT ION 11 & 12 OF THE INCOME TAX ACT. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ORDER OF THE ASSESSING OFFICER WHILE UPHOLDING THE ESTIMATED ADDITIONS WITHOUT APPRECIATING THAT EVEN AFTER SUCH DISALLOWA NCES ASSESSEE HAD SPENT/UTILIZED MORE THAN 85% OF ITS RE CEIPTS FOR CHARITABLE PURPOSES AND NOT LIABLE FOR ANY INCOME T AX AS PER THE PROVISIONS OF SECTION 11 AND 12 OF THE IT ACT. 4. THAT THE LD. CIT(A) IS NOT JUSTIFIED WHILE UPHOLDIN G THE ADDITIONS ON THE ISSUES WHICH ARE ONLY ON DISALLOWA NCE OF CERTAIN PORTION OF EXPENSES WHICH ADMITTEDLY IS PUR E GUESS WORK, THAT TOO ON CONJECTURES AND SURMISES. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DI SPOSED OFF. 6. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HAS SUBMITTED THAT THE ASSESSEE SOCIETY HAS BEEN GRANTED REGISTRATION AS A CHARITABLE INSTITUTION U/S 12A OF THE INCOME TAX ACT, 1961 ( IN SHORT 'THE ACT'). THAT AS PER THE PROVISIONS OF SECTION 11 OF THE I.T . ACT, THE ASSESSEE HAS TO SPEND 85% OF THE TOTAL INCOME AND IS ENTITLED TO ACCUMULATE 15% OF THE TOTAL INCOME SUBJECT TO THE CONDITIONS AS PROVI DED UNDER THE RELEVANT PROVISIONS OF SECTION 11 OF THE I.T. ACT. THE LD. C OUNSEL HAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS MADE DISAL LOWANCE OF CERTAIN EXPENDITURE OUT OF TOTAL EXPENDITURE ON ADHOC BASIS . THE LD. COUNSEL HAS FURTHER SUBMITTED THAT EVEN IF THE AFORESAID DI SALLOWANCES ARE ITA NOS. 809 & 810--CHD-2018- BHUVNESHARI EDUCATIONAL SOCIETY, MANDI 4 AFFIRMED, EVEN THEN, THE TOTAL EXPENDITURE WHICH C ONSTITUTES APPLICATION OF INCOME FOR THE OBJECT OF ASSESSEE SOCIETY, IS MO RE THAN 85% AND, HENCE, THE ADDITIONS, IF ANY, MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADHOC DISALLOWANCE OF EXPENDITURE THOUGH, WILL BE TREATED AS INCOME OF THE ASSESSEE, BUT THE SAME WILL BE PART OF 15 % OF THE INCOME WHICH THE ASSESSEE IS ENTITLED TO ACCUMULATE TO BE USED IN SUBSEQUENT YEARS AS PER THE RELEVANT PROVISIONS OF THE SECTION 11 OF T HE ACT. 7. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THA T THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE THE ASSESS ING OFFICER, HENCE, THE MATTER SHOULD BE RESTORED TO THE FILE OF THE AS SESSING OFFICER FOR VERIFICATION OF THE ACCOUNTS AS WELL AS THE ABOVE C ONTENTION OF THE ASSESSEE. 8. IN VIEW OF THE ABOVE, THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE IF EVEN AFTER IMPUGNED DISALLOWANCE THE TOTAL APPLICATION OF INCOME FOR THE OBJECTS OF THE ASSESSEE EXCEEDS 85% OF THE INCOME OF THE YEAR, AND THE TOTAL INCOME OF THE ASSESSEE EVEN AFTER DISALLOWANCE FALLS WITHIN THE LIMIT OF 15%, WHICH T HE ASSESSEE IS ENTITLED TO ACCUMULATE AS PER THE PROVISIONS OF THE ACT, THE N TO ALLOW THE RELIEF ACCORDINGLY. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 809 & 810--CHD-2018- BHUVNESHARI EDUCATIONAL SOCIETY, MANDI 5 HOWEVER, THE ABOVE DIRECTIONS ARE SUBJECT TO DEPOSI T OF COSTS AS IMPOSED WITH THE PRIME MINISTERS RELIEF FUND, THE RECEIPT OF WHICH WILL BE SHOWN BY THE ASSESSEE TO THE ASSESSING OFFI CER IN THE SET ASIDE PROCEEDINGS. ITA NO.810/CHD/2018 9. NOW COMING TO THE APPEAL IN ITA NO. 810/CHD/2018 . THE ASSESSEE IN THIS APPEAL HAS AGITATED THE LEVY OF PENALTY IN RESPECT OF THE ADHOC DISALLOWANCE MADE BY THE ASSESSING OFFICER. 10. SINCE THE EXPENDITURE HAS BEEN DISALLOWED ON AD HOC BASIS BY THE ASSESSING OFFICER AND AS PLEADED BY THE ASSESSEE, EVEN OTHERWISE, THE INCOME OF THE ASSESSEE WILL FALL WITHIN THE 15% LIM IT, WHICH THE ASSESSEE OTHERWISE IS ENTITLED TO ACCUMULATE AS PER THE PROV ISIONS OF SECITON11 OF THE ACT, HENCE, UNDER THESE CIRCUMSTANCES, IT CANNO T BE SAID TO BE THE CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INAC CURATE PARTICULARS OF INCOME. HOWEVER, THE ASPECT THAT THE TOTAL INCOME O F THE ASSESSEE FOR THE YEAR, AFTER APPLICATION OF THE FUNDS, DID NOT E XCEED 15% AS PER OUR DIRECTIONS GIVEN ABOVE IS REQUIRED TO BE VERIFIED BY THE ASSESSING OFFICER. IN VIEW OF THIS, THIS MATTER IS ALSO REST ORED TO THE FILE OF THE ASSESSING OFFICER FOR THIS LIMITED PURPOSE ONLY. IF , THE CONTENTION OF THE ASSESSEE IS FOUND TO BE CORRECT, THEN NO PENALTY W ILL BE LEVIABLE. ITA NOS. 809 & 810--CHD-2018- BHUVNESHARI EDUCATIONAL SOCIETY, MANDI 6 THE ASSESSEE WILL SHOW THE RECEIPT OF THE DEPOSIT O F THE COST OF RS. 5000/- IN THIS CASE ALSO TO THE ASSESSING OFFICER O N THE FIRST DAY OF HEARING. THIS APPEAL OF THE ASSESSEE IS ALSO TREATED AS ALLO WED FOR STATISTICAL PURPOSES. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IMM EDIATELY ON COMPLETION OF HEARING. SD/- ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 06.06.2019 .. &* +,-, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' . / CIT 4. ' . ( )/ THE CIT(A) 5. ,/0 1 , $1 , 23405 / DR, ITAT, CHANDIGARH 6. 046# / GUARD FILE &* ' / BY ORDER, 7! / ASSISTANT REGISTRAR