MURARJI EDUCATIONAL SOCIETY,WEST GODAVARI V. INCOME TAX OFFICER, WARD-1, AMALAPURAM

ITA 51/VIZ/2025

AI Insights

The case involves the Murarji Educational Society, which appealed against the order of the Learned Addl/Joint Commissioner of Income Tax (Appeals)-1, Delhi, concerning an intimation order passed under section 143(1) of the Income Tax Act, 1961. The Society, an educational institution, had its gross receipts treated as taxable income, leading to a significant tax demand. The CIT(A) dismissed the Society's appeal ex-parte, prompting the Society to approach the ITAT. The ITAT found procedural lapses in the handling of the Society's appeal, particularly the lack of a proper hearing, and remitted the case back to the AO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633217 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice
• Section: 11; 12A; 12

Judgement Text

"ITA NO 51/VIZ/2025 Murarji Educational Society vs. ITO Page No. 1 आयकरअपीलीयअधिकरण, धिशाखापटणमपीठ, धिशाखापटणN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM श्री वी. दुर्गा रगव, न्याधयक सदस्य, एिं श्री एस बालाक ृष्णन, लेखा सदस्य क े समक्ष BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No. 51/Viz/2025 (निर्गारण वर्ा/ Assessment Year: 2021-22) Murarji Educational Society, West Godavari, Andhra Pradesh-533249. PAN: AAGTM7780H v. Income Tax Officer, Ward-1, Amalapuram. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाताकाप्रतततितित्व/ Assessee Represented by : Shri C. Subrahmanyam, CA राजस्वकाप्रतततितित्व/ Department Represented by : Dr. Aparna Villuri, Sr. AR सुिवाईसमाप्तहोिेकीततति/ Date of Conclusion of Hearing : 02/06/2025 घोर्णगकीतगरीख/Date of Pronouncement : 09/06/2025 आदेश /O R D E R PER V. DURGA RAO, JM: This appeal filed by the assessee is against the order of the Learned Addl/Joint Commissioner of Income Tax (Appeals)-1, Delhi (in short “Ld. CIT(A)”) vide DIN & Order No. ITBA/APL/S/250/2024- 25/1070709295(1), dated 28/11/2024 arising out of the order passed U/s. 143(1) of the Income Tax Act, 1961 (in short “the Act”), dated 25/11/2022 for the AY 2021-22. ITA NO 51/VIZ/2025 Murarji Educational Society vs. ITO Page No. 2 2. Briefly stated the facts of the case are that the assessee is an Educational Society filed its return of income on 31/03/2022 for the AY 2021-22 declaring a total income of Rs. 4,93,210/-. Thereafter, the assessee’s return of income was processed U/s. 143(1) by the Central Processing Centre, Bangalore (in short “CPC”) and treated the entire gross receipts of Rs. 93,32,565/- as taxable income and determined the total income at Rs. 98,25,772/- and passed the Intimation order U/s. 143(1), dated 25/11/2022 and raised a demand of Rs. 40,22,830/-. Aggrieved by the order passed by the Ld. AO, the assessee carried the matter in appeal before the Ld. CIT(A). 3. On appeal, the Ld. CIT(A) dismissed the appeal of the assessee by passing ex-parte order holding that there was no compliance to the notices by the assessee nor the assessee has filed any submissions to substantiate its claim. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us by raising the following grounds of appeal: “1. That on the facts and circumstances of the case and in law, the intimation order passed U/s. 143(1) of the Act, dated 25/11/2022 as confirmed by the Ld. CIT(A) vide order dated 28/11/2024 is erroneous, being contrary to the facts of the case and the applicable provisions of the case. 2. That the Ld. CIT(A) disposed of the appeal ex-parte without affording a reasonable opportunity of being heard to the assessee, thereby violating the principles of natural justice. 3. That the ex-parte disposal of the appeal by the CIT(A) is in contravention of section 250(6) of the Act, which mandates the CIT(A) to adjudicate the appeal on merits by passing a reasoned order. ITA NO 51/VIZ/2025 Murarji Educational Society vs. ITO Page No. 3 4. That the Ld. CIT(A) erred in not appreciating the CPC, Bangalore, incorrectly made adjustments by bringing to tax the gross receipts along with the excess of income over receipts, which is beyond the permissible scope of adjustments U/s. 143(1) of the Act. 5. That the Ld. CIT(A) failed to recognize that the adjustments made during the processing of the return U/s. 143(1) of the Act were not legally sustainable and, therefore, ought to have been deleted. 6. Without prejudice to the above grounds, the Ld. CIT(A) ought to have concluded that the entire gross receipts cannot be subjected to tax in isolation and should have considered the related expenses while determining the taxable income. 7. That, in view of the foregoing and other grounds that may be urged at the time of hearing, the appellant prays that the order passed U/s. 250 of the Act be set aside, and the additions made by the AO and sustained by the CIT(A) be deleted.” 4. At the outset, the Ld. AR submitted that the appeal of the assessee may be remitted back to the file of the Ld. A.O. because the Ld. Revenue Authorities did not provide proper opportunity to the assessee of being heard. He further submitted that the Auditor of the assessee, while filing the return of income in ITR-7, has inadvertently selected / ticked the columns intended for claiming exemption U/s. 11 and 12 of the Act, although the assessee was not registered U/s. 12A of the Act and having no registration number U/s. 12A of the Act. The Ld. AR further submitted that since the assessee’s gross receipts are below the prescribed threshold limit of Rs. 1 Cr, there is no need for the assessee to obtain registration U/s. 12A of the Act as per the provisions of section 10(23C) of the Act. He further submits that the action of the Ld. AO / CPC in taxing the gross receipts of the assessee is not unsustainable in ITA NO 51/VIZ/2025 Murarji Educational Society vs. ITO Page No. 4 law. The Ld. AR also submitted that the Ld. CIT(A) did not provided proper opportunity of being heard to the assessee and passed ex-parte order and therefore, he prayed for remitting the matter back to the file of the jurisdictional Assessing Officer by providing one more opportunity of being heard to the assessee. 5. The Ld. DR on the other hand argued by stating that proper opportunity was given to the assessee but the assessee or its Counsel failed to appear before the Ld. Revenue Authorities due to which the Ld. Revenue Authorities did not have any other option but to pass order based on the materials available on record. 6. We have heard both the sides and perused the orders of the Ld. Revenue Authorities and also the material available on record. It is apparent from the order of the Ld. CIT(A) that the appeal of the assessee was dismissed by passing ex-parte order. Before us, the Ld. AR made various submissions as well as filed a paper book wherein it was submitted that since assessee’s total receipts were Rs.93,32,565/- for the AY under consideration, as per the provisions of section 10(23C) of the Act, the income would be exempt if the gross receipts are less than Rs. 1 Cr. It was also the claim of the assessee that since the Ld. AO has considered the status of the assessee as AoP, in which case the Ld. AO ought to have considered the expenses from the receipts. However, the Ld. Revenue Authorities without considering all these aspects passed ITA NO 51/VIZ/2025 Murarji Educational Society vs. ITO Page No. 5 the orders. In our considered opinion, the Ld. CIT(A) ought to have passed the order on merits instead of passing the ex-parte order. Considering all the above facts and circumstances of the case, we are of the opinion that it is a fit case to remit the matter back to the file of the Ld. AO to decide the case afresh after affording a reasonable opportunity of being heard to the assessee as per the principles of natural justice. Further, the assessee is also hereby directed to cooperate with the Ld. Revenue Authorities in their proceedings, otherwise, they are at liberty to pass orders based on the material available on record. 7. In the result, appeal filed by the assessee is allowed for statistical purposes as indicated herein above. Order passed int the open court on 09th June, 2025. Sd/- (एस बालाक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (वी. दुर्गा रगव)Sd/- (V. DURGA RAO) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 09/06/2025 Okk, Sr.PS आदेशकीप्रनतनलनपअग्रेनर्त/ Copy of the order forwarded to :- 1. निर्गाररती/ The Assessee : Murarji Educational Society, 3-231, Market Street, Tatipaka Razole Mandal, West Godavari-533249, Andhra Pradesh – 533249. 2. रगजस्व/ The Revenue : Income Tax Officer, Ward-1, Amalapuram. 3. The Principal Commissioner of Income Tax 4. नवभगर्ीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशगखगपटणम/DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. र्गर्ाफ़गईल/ Guard file आदेशगिुसगर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "