RAM PARSAD DAV PUBLIC SCHOOL SOCIETY,MARKANDA V. ITO (EXEMPTIONS), WARD, AMBALA

ITA 752/CHANDI/2022

AI Insights

The case involves the Ram Parsad DAV Public School Society, which appealed against the order of the CIT(A) for the Assessment Year 2016-17. The primary contention was the incorrect assessment of income and denial of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. The Assessing Officer had added a donation to gross receipts, assessing it as taxable income due to the society's lack of registration under Section 12AA and approval under Section 10(23C)(vi). The CIT(A) dismissed the appeal for non-prosecution without addressing the merits. The Tribunal found procedural lapses and remanded the case for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705352 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: CIT Vs Prem Kumar Arjundas Luthra (HUF) (2017) 154 DTR302(Bom), Kranti Associates Pvt Ltd vs Sh Masood Ahmed Khan(2010) 9SCC 496 (SC)
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: VIBHOR GARG; C.A
• Keywords: Principle of natural justice; Procedural lapse
• Section: 271(1)(c); 12AA

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 752/Chd/ 2022 िनधाŊरण वषŊ / Assessment Year : 2016-17 Ram Parsad DAV Public School Society Ladwa Road, Shahabad Markanda, 136135- Haryana बनाम The ITO (Exemptio) Ward, Ambala, Haryana ˕ायी लेखा सं./PAN NO: AABAR6299Q अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Vibhor Garg, C.A राजˢ की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 25/06/2025 उदघोषणा की तारीख/Date of Pronouncement : 30/06/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 26/10/2022 pertaining to Assessment Year 2016-17. 2. At the outset the Registry has pointed out that the present appeal is barred by limitation by 01 day. 3. After considering the reasons for condonation explained by the assessee in the present appeal, we condone the delay for which sufficient cause is shown, and admit the appeal for adjudication. 4. In the present appeal, Assessee has raised the following grounds: 1. Because the action is being challenged on facts & law for there being breach to the Provisions of Section 250(6) r.w. Section 250(4), 250(5), 251(l)(a), 251(l)(b) and Explanation to Section 251(2) of the Income Tax Act 1961 pursuant to the case of CIT Vs Prem Kumar Arjundas Luthra (HUF) (2017) 154 DTR302(Bom). 2. Because the action is being challenged on facts & laws since there being mis-understanding of law, mis-application of jurisdiction for not passing a speaking order pursuant to the case of Kranti Associates Pvt Ltd vs Sh Masood Ahmed Khan(2010) 9SCC 496 (SC). 2 3. Because the action is being challenged on facts & law while determining the assessed income at an amount of Rs 23,50,119/- . 4. Because the CIT(A) has erred is not adjudicating grounds/grievance raised by the assessee. 5. Because to grant the consequential relief and or legal claim and to allow amendment, addition, deletion in the grounds before the disposal of the Appeal with a further prayer to take a decision in accordance with law. 5. Briefly the facts of the case are that The Ram Parsad DAV Public School Society, an AOP running a school in Shahabad Markanda, Haryana, filed a Nil income return for A.Y. 2016-17, claiming a Rs. 2,52,325/- donation as \"Corpus Fund\" and a net surplus of Rs. 20,97,794/- as exempt under Section 10(23C)(vi). The Assessing Officer (AO), during scrutiny under Section 143(3), found the assessee neither registered under Section 12AA nor approved under Section 10(23C)(vi), rendering the donation taxable as income under Section 2(24)(iia) and ineligible for exemption under Section 11(1)(d). The AO recomputed the taxable income by adding the donation to gross receipts, resulting in a surplus of Rs. 23,50,119/-, which was assessed as taxable at normal rates. Penalty proceedings under Section 271(1)(c) were initiated for inaccurate claims, and interest under Sections 234A, 234B, and 234C was charged, with a demand notice issued on 28.12.2018. 6. Against the order of the AO the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal filed by Ram Parsad DAV Public School Society for A.Y. 2016-17, due to the assessee’s failure to pursue the appeal. Despite multiple hearing notices issued between January 2020 and July 2022, the assessee neither attended nor responded, nor requested adjournments, indicating a lack of interest in prosecuting the appeal. Citing the principle \"VIGILANTIBUS ET NONDORMIENTIBUS JURA SUB VENIUNT\" (the law aids the vigilant, not those who sleep on their rights) and judicial precedents, the CIT(A) noted that Section 250(6) requires a speaking order but restricts adjudication to available records when the assessee fails to appear or submit documents. Consequently, the appeal was dismissed on 26/10/2022 for lack of prosecution, without addressing the merits of the assessee’s grounds 3 regarding the denial of exemption under Section 10(23C)(vi) or the treatment of the donation as taxable income. 7. Against the order of the Ld CIT(A) the assessee preferred an appeal before the Tribunal. 8. During the course of the hearing, the assessee argued that the assessment order suffers from both factual and legal infirmities, alleging violations of Sections 250(4), 250(5), 250(6), 251(1)(a), 251(1)(b), and the Explanation to Section 251(2) of the Income Tax Act, 1961. It was submitted that the order lacks proper reasoning, thereby contravening the principles laid down in CIT v. Prem Kumar Arjundas Luthra (HUF) [(2017) 154 DTR 302 (Bom)]. The assessee further contended that the Assessing Officer misunderstood and misapplied the law, resulting in an arbitrary determination of the assessed income at Rs.23,50,119/- without adequate justification, in violation of the principles of natural justice as upheld in Kranti Associates Pvt. Ltd. v. Sh. Masood Ahmed Khan [(2010) 9 SCC 496 (SC)]. It was also pointed out that the CIT(A) failed to properly adjudicate the assessee’s grievances, thereby rendering the appellate process defective. Accordingly, the assessee seeks annulment of the impugned order, consequential relief, liberty to amend the grounds of appeal, and a fair adjudication in accordance with law. 9. We have heard the rival contentions and carefully perused the material available on record. In the present case, we find that the Ld. CIT(A) dismissed the assessee’s appeal for non-prosecution without adjudicating the matter on merits. This approach is in violation of the provisions of Sections 250(4), 250(5), 250(6), 251(1)(a), 251(1)(b), and the Explanation to Section 251(2) of the Income Tax Act, 1961, as well as the principles of natural justice upheld by the Hon’ble Courts in CIT v. Prem Kumar Arjundas Luthra (HUF) [(2017) 154 DTR 302 (Bom)] and Kranti Associates Pvt. Ltd. v. Sh. Masood Ahmed Khan [(2010) 9 SCC 496 (SC)]. The CIT(A) failed to pass a speaking order or examine the available material concerning the assessee’s claim for exemption under Section 10(23C)(vi) and the taxability of the donation 4 amounting to Rs. 2,52,325/- under Section 2(24)(iia). In light of these procedural lapses and the necessity for factual verification of the assessee’s claims, the matter is remanded to the file of the Assessing Officer for a fresh assessment. The Assessing Officer is directed to afford the assessee a fair opportunity to substantiate their claims, conduct a thorough inquiry, and pass a reasoned and speaking order. 10. In the result, appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 30/06/2025 Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "