PANDIT HARI SAHAY DHARMADA TRUST,GORAKHPUR V. INCOME TAX OFFICER, WARD - EXEMPTION, VARANASI

ITA 122/VNS/2023

AI Insights

The case involves Pandit Hari Sahay Dharmada Trust, a charitable institution, appealing against the order of the National Faceless Appeal Centre (NFAC), Delhi, which was related to a rectification order under section 154 of the Income Tax Act for the Assessment Year 2017-18. The Trust argued that the CPC Bangalore had incorrectly computed their income and ignored allowable expenditures, leading to an erroneous tax liability. The primary contention was that the income derived from educational activities, which is exempt under income tax law, was wrongly treated as taxable income. The CIT(A) had dismissed the Trust's appeal, suggesting that extensive verification and documentation were required, which should have been addressed under section 139(5) of the Act. The Tribunal, however, found that the matter had not been adequately examined on its merits and thus remanded it back to the Assessing Officer for a detailed examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26041 (ITAT-VARANASI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 21-12-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA MEENA
• Assessee Lawyers: SUBHASH CHA ND
• Keywords: Rectification of order; Charitable institution
• Section: 154; 143(1); 12A; 139(5)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, VARANASI BEFORE: SHRI B.R. BASKARAN, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No. 122/VNS/2023 (Assessment Year :2017-18) Pandit Hari Sahay Dharmada Trust Belghat, Khajani, Gorakhpur, Uttar Pradesh – 273001. Vs. The Asst. Director of Income Tax, CPC, Bangalore Jurisdictional Assessing Officer The Income Tax Officer Ward-Exemption, Varanasi PAN/GIR No.AAATP9373R (Appellant) .. (Respondent) Assessee by Shri. Subhash Chand, Adv. Revenue by Smt. Kavita Meena, Sr. DR Date of Hearing 13/09/2024 Date of Pronouncement 02/12/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 26/10/2023 passed by NFAC Delhi in relation to the order passed u/s.154 for the Assessment Year 2017-18. 2. Assessee has raised the following grounds:- “1.Because it was fully explained that the CPC Bangalore has also allowed the deduction of Rs. 1,78,96,928/-, 27,53,524/- and ITA No.122/VNS/2023 ITA No.122/VNS/2023 Pandit Hari Sahay Dharmada Trust 2 32,21,572/- but in the column of total he has taken Rs. 23872024/- as claimed by the assessee but in the column as computed u/s 143(1) he has skipped away the amount. The Ld. CPC Bangalore has erred and acted illegally in not allowing expenditure incurred by the assessee to the tune of Rs. 2,38,72,024/-. 2. Because it was fully explained that the assessee has derived income from imparting the education which is exempt under income tax law. The Ld. Assessing Officer has erred and acted illegally in ignoring this aspect of law and has erred and acted illegally in treating the total receipts from imparting the education as taxable income of the assessee. 3. Because it was fully explained that the computation of income is incorrect and the assessee is entitled to get the set off the expenses incurred for receipt of income the Ld. Assessing Officer has erred and acted illegally in not allowing the same and Ld. CIT(A) has also erred and acted illegally in confirming the same. 4. Because the Ld. Assessing Officer has erred and acted illegally in rejecting the application u/s 154 of the Act and Ld. CIT(A) has erred and acted illegally in confirming the same. 3. The brief facts are that assessee is a charitable institution which was granted registration u/s.12A and 80G. It has filed its return of income on 03/11/2017, however, while processing the return u/s.143(1), there was certain error which was pointed out and there was incorrect claim by the assessee and computed exempt income of Rs.2,09,21,255/- as taxable income. Accordingly, assessee filed rectification application on ITA No.122/VNS/2023 ITA No.122/VNS/2023 Pandit Hari Sahay Dharmada Trust 3 24/02/2021 which too has been rejected on 05/03/2021. The actual receipt and payment by the assessee was as under:- RECEIPTS Receipt s per Receipt and Payment for year ending 31.03.2017 Fee Receipt 2O166346 Donation Receipt 200000 Interest Income 5549O9 2O921255 Other Income- Agriculture Income 196OOO Total 21117255 Specific Donation 750OOO EXPENDITURE Amount applied to charitable purposes in India during the previous year - Revenue Account 17896928 Amount applied to charitable purposes in India during the previous year - Capital Account [Excluding application from Borrowed Funds and amount exempt u/s 11(1 A)] 2753524 ITA No.122/VNS/2023 ITA No.122/VNS/2023 Pandit Hari Sahay Dharmada Trust 4 Amount applied to charitable purposes in India during the previous year - Capital Account (Repayment of Loan) 3221572 23872024 4. Thus, it was stated that there was a loss instead of income and there was no reason to treat the expenses as ‘nil’. It has been stated before the ld. CIT(A) as well as before us that the details of expenditure debited were as under:- 1. Salary and wages to Staff- 1,34,62,000/ 2. Exam expenses-37,31,156/- 3. Corpus Donation 10,00,000/- supported by the registration certificate u/s 12A of the done / copy of receipt for donation.” 5. However, the ld. CIT(A) rejected the appeal against rectification of order u/s.154 holding that all these require extensive verification and perusal of documentation maintained by the assessee and assessee should have taken recourse to Section 139(5) and after citing various judgments has dismissed the assessee’s appeal. 6. From the perusal of the order, it is seen that neither the CPC nor the ld. CIT (A) has considered the issue on merits or examined the receipts and expenditure as shown in the audited accounts. Since assessee is a charitable institution registered u/s.12A, its income has to be computed according to Section 11. The ld. CIT (A) has merely quoted the Section 154 alongwith various amendments carried out in Section 154 as given in the ITA No.122/VNS/2023 ITA No.122/VNS/2023 Pandit Hari Sahay Dharmada Trust 5 statute book including the foot note and FAQs issued by the departmental website, instead of looking into the matter on merits. Accordingly, in the interest of justice we feel that matter should be restored back to the file of the ld. AO to examine as to why expenditure claimed by the assessee to the tune of Rs.2,38,72,024 cannot be allowed. Thus, the jurisdictional Assessing Officer will carry out proper verification and grant proper relief. 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 02/12/2024. Sd/- (B.R. BASKARAN) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Varanasi; Dated 02/12/2024 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, 1. The Appellant 2. The Respondent. 3. The CIT(A), Varanasi. 4. CIT 5. DR, ITAT, Varanasi 6. Guard file. //True Copy// ITA No.122/VNS/2023 ITA No.122/VNS/2023 Pandit Hari Sahay Dharmada Trust 6 (Asstt.Registrar) ITAT, Varanasi "