PANNU GROUP OF EDUCATIONAL SOCIETY , BATALA V. INCOME TAX OFFICER ( EXEMPTIONS), AMRITSAR

ITA 82/ASR/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6233 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-05-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 21-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Opportunity of being heard; Principle of natural justice; Condonation of delay; Set aside
• Section: 147; 12; 144; 11; 40A(3); 143(3); 12A; 12AA; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 Pannu Group of Educational Society VPO Marri Panwan, Batala, Punjab. [PAN:-AADAS6721Q] (Appellant) Vs. ITO-(Exemption), Ward- Amritsar. (Respondent) Appellant by Sh. Surinder Mahajan, CA. Respondent by Smt. Priyanka Patel, Sr. DR Date of Hearing 09.05.2024 Date of Pronouncement 28.06.2024 ORDER Per: Udayan Dasgupta, JM: This appeal is preferred against the order of the ld. CIT(Appeal) NFAC, Delhi, passed u/s 250 of the Act 61, dated 17/10/2023, which has arisen out of the order of the ITO (Exemption), Amritsar dated 11.09.2017 passed u/s 143(3) of the Income Tax Act 1961. 2. The appeal of the assessee was filed belated by 68 days. The assessee filed a condonation petition alongwith affidavit. That applicant has filed appeal against I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 2 order u/s 250 of the Act dated 17.10.2023 passed by Commissioner of Income Tax(Appeals), Income Tax Department received by assessee on 18.12.2023. That appeal against order u/s 250of the Act was required to be filed on or before 16.12.2023 being sent through speed post on 20.02.2024 which is expected to be received in ITAT office on or before 22.02.2024 resulting in delay of 68 days. That in fact there is no delay in filing the appeal because President Vikramjit Singh was not attending office due to illness of his sister who was suffering from cancer. Sister of Vikramjit Singh president of the trust unfortunately died on 12.11.2023, and performing rituals Vikramjit Singh president of the society started attending society office affairs in the first week of December 2023 and came across appellate order on 18.12.2023. However, in view of date of the order delay in filing of appeal has been calculated by taking date of order as date of receipt. That delay in filing of appeal is due to the circumstances beyond control of the assessee. These facts taken together resulted in delay in filing of appeal. That the delay in filing the appeal before Honourable Bench is neither intentional nor will full but due to the good and sufficient reasons shown herein above. Interest of justice demands that the ’present application is allowed and the delay in filing appeal be condoned so that the matter can be adjudicated upon on its merits. The ld. DR had not made any objection for condonation of delay. Considering the explanation of the assessee, the delay of 68 days is condoned. I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 3 3. The assessee has taken the following grounds: - 1. That on the facts and circumstances of the case, Learned Commissioner of Income Tax (Appeals) [‘CIT(A)’] has grossly erred in law in holding that income of the appellant was not exempt u/s 11/12 of the Act since during the year under consideration., appellant was not registered as an entity u/s 12AA of the Act Conclusion drawn by the Learned Commissioner of Income Tax (Appeals) [‘CIT(A)’] is illegal and bad in law in view of amendment brought in section 12A by Finance Act 2014 w.e.f. 01.10.2014 by way of insertion of first proviso to section 12A(2) of the Act. 2. That on the facts and circumstances of the case, Learned AO has grossly erred in law by making best judgment assessment under s. 143(3) without invoking the provisions of s. 145(3) of the Act instead of making assessment under s. 144 of the Act. Assessment framed u/s 143(3) of the Act as against required to be framed u/s 144 of the Act is illegal and bad in law. 3. That on the facts and circumstances of the case, Learned Commissioner of Income Tax (Appeals) [‘CIT(A)’] has grossly erred in confirming addition of Rs. 25,41,741/- being adhoc disallowance of all expenses debited in income and expenditure account of Pannu Polytechnic College. Addition confirmed is illegal and bad in law. I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 4 4. That on the facts and circumstances of the case, Learned Commissioner of Income Tax (Appeals) [‘C1T(A)’] has grossly erred in confirming addition of Rs. 2,34,920/- being adhoc disallowance of all expenses debited in income and expenditure account of Sri Hargobind Sahib Modern School. Addition confirmed is illegal and bad in law. 5. That on the facts and circumstances of the case, Learned Commissioner of Income Tax (Appeals) [‘CIT(A)’] has grossly erred in confirming addition of Rs. 1,21,876/- being adhoc disallowance of all expenses debited in income and expenditure account of Pannu Nursing College. Addition confirmed is illegal and bad in law. 6. That on the facts and circumstances of the case, Learned Commissioner of Income Tax (Appeals) [‘CIT(A)’] has grossly erred in law in confirming additions made by the Ld. Assessing officer which have never been confronted to the assessee. Addition made without confronting to the assessee lacks principles of natural justice. 7. That on facts and circumstances of the case, order passed by the Learned Commissioner of Income Tax (Appeals) [‘C1T(A)’], is illegal and bad in law since same has been passed without considering the submissions of the assessee and facts of the case.” 4. Brief fact of the case is that the appellant is a registered society under section 12AA of Income Tax Act and running educational institutions under the I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 5 name and style of Panuu Polytechnic College, Pannu Nursing College and Shri Guru Hargobind Sahib Modern School. The case of appellant was selected for scrutiny under section 143(3) of Income Tax Act. While framing assessment, Learned Assessing Officer has made certain additions on adhoc basis, based on assumptions and presumptions. The AO observed that the registration certificate u/s 12A of the Act is effective from Assessment year 2016-17 (FY 2015-16) and not for the year under assessment. The assessee filed return of income disclosing total income at Rs. 3,61,253/- along with copies of audited income and expenditure accounts, balance sheet, maintained separately for different units and audit reports. In course of scrutiny proceedings, in spite of repeated requests by the AO, the books of accounts, and supporting bills, vouchers, and other supporting evidences regarding receipts and payments, were never produced for examination. In absence of any supporting documentary evidences, and in absence of any cash book being actually produced, the AO made ad hoc disallowance, on various heads of expenditure claimed by the assessee, and completed the assessment on a total income of Rs. 32,39,790/- by taking the status of the assessee as an AOP. The matter was carried in first appeal, and even before the CIT(A) also, the appeal was not represented by the assessee, even after issue of four hearing notices, delivered at the email id available on records. I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 6 5. On the face of such non-compliance, the first appellate authority vide order dated 17th October, 2023, has rejected the appeal by observing as follows: “3.4. I have perused the grounds of appeal, statement of facts and the assessment order. The appellant has not produced any material to controvert the finding of AO. On merits AO’s order seems reasonable. The AO has categorically mentioned that the appellant was not registered as an entity registered u/s 12AA of the Act in the year under consideration. The said fact has also not been challenged either, by the appellant. Hence the assessment was completed by the AO in the status of an AOP. In absence of bills vouchers and other materials and necessary explanation in respect of the expenditures booked in final accounts, the AO disallowed certain percentage of expenses booked in accounts while completing assessment for the year. Due to noncompliance on the part of the appellant, during assessment proceeding, the AO could not examine applicability of section 40(a)(ia), 40A (2), 40A(3) section 37, 32(1) etc. In the appeal memo in Form No.35, Point No.12 the appellant has claimed to have filled bill/vouchers of expenses debited in income and expenditure account as additional evidence. However, nothing could be found annexed with appeal memo in ITBA. No reason has been attributed, as well, for not furnishing the details as called for by the AO, during assessment. From the above conduct of the assessee, it is clear that the appellant is not interested in prosecuting its appeal. In the event, I have no I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 7 reason to interfere with the findings of the AO. In such circumstance, I dismiss the claim of the appellant.” 6. Now the assessee is in appeal before the Tribunal on the various grounds contained in the memorandum of appeal in Form 36. 6.1 On the first ground the ld. AR relied on CBDT Circular dated 01/2015 dated 21.01.2015. 7. The ld. AR argued that the provisions of section 12A of the Income-tax Act, is applicable to the facts of this case: “8. Applicability of the registration granted to a trust or institution to earlier years 8.1 The provisions of section 12A of the Income-tax Act, before amendment by the Act, provided that a trust or an institution can claim exemption under sections 11 and 12 only after registration under section 12AA of the said Act has been granted. In case of trusts or institutions which apply for registration after 1st June, 2007, the registration shall be effective only prospectively. 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organisations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, the power of condonation of delay in seeking registration was not available. I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 8 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 1 2AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the registration under section 12AA for the said assessment year. 8.5 However, the above benefits would not be available in the case of any trust or institution which at any time had applied for registration and the same was refused under section 12AA of the Income-tax Act or a registration once granted was cancelled. 8.6 These amendments take effect from 1 st October 2014.” 8. The ld. DR relied on the order of the ld. CIT(A) and argued that in absence of any cooperation or representation by the assessee before the first appellate I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 9 authority the matter has been rightly dismissed by the ld. CIT(A). Moreover, the assessee has not filed any documentary evidence and has not produced any books of account before the first appellate authority, to substantiate its case. He prayed that the order of the ld. CIT(A) may please be upheld. 9. We have gone through the material on records and the submissions of both the parties and we are of the opinion that no documentary evidences has been filed by the assessee neither before the AO nor before the first appellate authority, in support of the income and expenditure account and the balance sheet and no books of account has been produced at any stage. 9.1 We also find that the ld. CIT(A) has issued four notices through the departmental portal and also in the given E-mail ID available in the departmental portal but there was no compliance of the assessee at any stage. 9.2 Before the tribunal, the assessee has taken a fresh grounds regarding applicability of section 12AA of the Act, where the benefits of section 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceedings for an earlier assessment year which is pending before the AO as on the date of such registration. 9.3 Moreover, the CBDT Circular No. 01/2015 dated 21.01.2015 has also been cited by the ld. AR to argue the point that insertion of first proviso to section 12A(2) of the Act w.e.f. 01.10.2014 should be read as retrospective in operation. I.T.A. No.82/Asr/2024 Assessment Year: 2015-16 10 9.4 We find that this issue has neither been raised nor considered by the AO in course of assessment proceedings. We think it fit and proper to set aside the matter back to the file of the ld. AO for de novo fresh assessment after considering all arguments of the assessee including all applicable CBDT Circular, and after examination of all books of accounts and supporting documentary evidences as required as per provisions of law after allowing proper opportunity of being heard. 10. In the result, the appeal of the assessee bearing ITA No. 82/Asr/2024 is allowed for statistical purposes. Order pronounced in the open court on 28.06.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DASGUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order