MEDICAL EDUCATIONAL & CULTURAL DEVELOPMENT SOCIETY,KANPUR V. ITO (EXEMPTION), KANPUR

ITA 650/LKW/2024

AI Insights

The case involves the Medical Educational & Cultural Development Society appealing against the order of the Ld. CIT(A) which dismissed their appeal in limine for non-compliance regarding the exemption under section 11 of the Income Tax Act, 1961. The primary contention was the incorrect disallowance of exemption due to the alleged non-submission of an audit report under section 44AB, which the assessee argued was not applicable as they are a society registered under section 12A. The Tribunal found that the CIT(A) erred by not addressing the merits of the case and dismissed the appeal without a substantive discussion.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31908 (ITAT-LUCKNOW)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR RAJWANSHI
• Assessee Lawyers: P.K. KAPOOR
• Keywords: Set aside; Reasonable cause; Principle of natural justice; Non compliance
• Section: 147; 250; 143(1); 11; 12A; 44AB

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No.650/LKW/2024 (Assessment Year: 2017-18) Medical Educational & Cultural Development Society 122/232-B, Fazalganj, Kanpur- 208012. v. Income Tax Officer (Exemption) Aayakar Bhawan, 16/69, Civil Lines, Kanpur- 208001. PAN: AABTM7022M (Appellant) (Respondent) Appellant by: Shri P.K. Kapoor, C.A. Respondent by: Shri Sunil Kumar Rajwanshi, Addl. CIT(DR) O R D E R PER ANADEE NATH MISSHRA, A.M.: 1. The present appeal has been filed by the assessee against the order dated 09.09.2024 passed by the learned Addl/Joint Commissioner of Income Tax (Appeals), Mysore [hereinafter, “the Ld. Addl/JCIT(A)”] under section 250 of the Income Tax Act, 1961 (hereinafter “the Act”), for the assessment year 2017-18 wherein, the assessee’s appeal has been dismissed in limine for the reason of non compliance. The grounds of appeal of the assessee are as under: - “1. BECAUSE the Id.” Addl/JCIT(A)” has erred in law and on facts in confirming the disallowance of exemption u/s 11 of the “Act”, amounting to Rs. 98,83,521/- made by CPC, Bangalore by way of adjustment u/s 143(1)(a)(ii) in the intimation order passed u/s 143(1) of the “Act” on the ground that the audit report u/s 44AB was not filed by the assessee within the prescribed due date. 1.2. BECAUSE the Id. “Addl/JCIT(A)” has grossly erred in confirming the disallowance of exemption u/s 11 of the “Act” on a wholly wrong premise that the assessee had not submitted the audit report u/s 44AB of the “Act”, whereas as per the material and information on ITA No.650/LKW/2024 Page 2 of 5 record the provisions of Section 44AB of the Act are not applicable to the assessee, it being a society registered u /s 12A of the “Act”. 2. BECAUSE the Id “Addl/CIT(A)” has erred in law and on facts in upholding the action of CPC in making disallowance by way of adjustment u/s 143(1)(a)(ii) of the “Act”, whereas on the facts and in the circumstances of the case, such an adjustment was not permissible under the relevant provisions of law and CBDT instructions. 3. BECAUSE the Id. “Addl/JCIT” has grossly erred in confirming the disallowance of exemption u/s 11 of the Act” made by CPC, Bengaluru in the intimation order passed u/s 143(1) of the “Act” even though no in-correct claim was apparent from any information provided in the return of income filed by the assessee. 4. BECAUSE, without prejudice to the grounds herein-fore, the return of income filed by the assessee without furnishing Tequisite audit report was a defective return for which the Assessing Officer ought to have provided the opportunity to the assessee to rectify the defect, as Provided in sub-section (9) of section 139, and such an opportunity having not been given to the assessee, No adjustment under section 443(1)(a) (ii) of the “Act” could have been made by the CPC/ sustained by “CIT(A)”, 5. BECAUSE, without prejudice to the grounds hereinfore, while confirming the disallowance of exemption claimed u/s 11 of the Act, the ld.”Addl/JCIT(A)” failed to appreciate that there was sufficient and reasonable cause for not filing the requisite audit report under section 12A of the “ACT” within the prescribed due ate. 6. BECAUSE issue of allowability/disallowability of claim of exemption u/s 11 of the “Act” due to non-filing of audit report within the prescribed due date, being debatable, was beyond the scope of permissible adjustments u/s 143(1)(a) of the “Act” and consequently the “Addl/JCIT(A)” ought to have deleted the addition made by CPC by way of adjustment under section 143(1)(a)(ii) of the “Act”. 7. BECAUSE, without prejudice to the aforesaid grounds, even in the case of disallowance of claim of exemption u/s 11 of the “Act”, the expenses incurred by the assessee for earning the gross receipts were liable to be deducted from the gross receipts, and only the surplus of Rs. 5,33,884/-, i.e., the excess of income over the expenditure could have been subjected to taxation instead of taxing the entire gross receipt Rs. 98,83,520/-. 8. BECAUSE, as per the scheme of taxation under the Income Tax Act, only real income, ie., the income as reduced by the expenditure incurred to earn the income, Can be taxed and the authorities below have grossly erred in not allowing the deduction of expenses so incurred even though the relevant information of the expenses incurred by the assessee was available on record. 9. BECAUSE the impugned order is in violation of principles of natural justice the opportunity of personal hearing sought by the assessee was not granted by the Ld. Addl/JCIT(A).” ITA No.650/LKW/2024 Page 3 of 5 10. Because the order appealed against is contrary to facts, law and principles of natural justice. 11. Because each ground taken in appeal is mutually exclusive and without prejudice to each other. 12. The appellant craves leave to add, delete or modify any of the grounds before or at the time of hearing of appeal.” 1.1 In this case, the assessment order dated 28/03/2023 was passed by the Assessing Officer (“AO”), u/s 147 read with section 144B of the Act whereby the assessee’s total income was assessed at Rs.98,83,521/- as against the returned income of Rs. Nil. The assessee’s appeal against the aforesaid assessment order was dismissed by the Ld. CIT(A) vide impugned appellate order dated 09.09.2024. The present appeal has been filed by the assessee against the aforesaid impugned appellate order dated 09.09.2024 of the Ld. CIT(A). 2. At the time of hearing before us, the Ld. Authorized Representative (“AR”) for the Assessee submitted that the Ld. CIT(A) has not passed a speaking order on merits of the addition made. He further submitted that the assessee’s appeal was dismissed in limine for want of prosecution without any discussion on the merits of the addition. He submitted that the issue in dispute should be restored back to the file of the Ld. CIT(A) with a direction to pass a speaking order on merits of the case after providing reasonable opportunity to the assessee. The Ld. CIT-DR for Revenue expressed no objection to this. 2.1 We have heard both sides. We have perused the materials available on records. Ld. CIT(A) has statutory duty to pass speaking order on merits of the various grounds of appeal. The order of the Ld. CIT(A) in disposing of the assessee’s appeal, is required to be in writing, and the order is further required to ITA No.650/LKW/2024 Page 4 of 5 contain the point for determination, the decision thereon and the reason for the decision. Thus, it is the statutory duty of the Ld. CIT(A) to pass a speaking order on merits of the case. It can be readily inferred that dismissing the assessee’s appeal in limine, for want of prosecution, without going into the merits of the case was erroneous on the part of the Ld. CIT(A) having regard to provisions contained under section 250(6) of the Act. In view of the foregoing, and as representatives of both sides are in agreement with this, in the specific facts and circumstances of the present case before us; we set aside the impugned order of the Ld. CIT(A) dated 09/09/2024 and we direct the Ld. CIT(A) to pass denovo order in accordance with law, after providing reasonable opportunity to the assessee and with due regard for Section 250(6) of the Act. All grounds of appeal are treated as disposed of in accordance with the aforesaid direction. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 07/03/2025. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [ANADEE NATH MISSHRA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/03/2025 Vijay Pal Singh, (Sr. PS) ITA No.650/LKW/2024 Page 5 of 5 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard file By order //True Copy// Assistant Registrar "