Surabi Educational and Charitable Trust Vs CIT (Exemptions) (ITAT Chennai)
One More Chance for Charitable Trust: ITAT Remands Quantum Issues, Penalties Fall as Consequential
The Chennai Bench of the ITAT, in Surabi Educational and Charitable Trust v. ACIT (Exemptions) (AYs 2018-19 & 2020-21), dealt with substantial disallowances of expenditure and multiple penalty orders, all arising due to non-compliance and non-representation before lower authorities.
For AY 2018-19, the AO disallowed employee contribution to PF and entire charitable expenditure of ₹5.90 crore, solely because the assessee failed to furnish details. The CIT(A) confirmed both the quantum additions and penalty under section 270A ex parte. Before the Tribunal, the assessee explained that due to lack of proper professional guidance and Covid-related disruptions, it could not effectively represent its case. An undertaking was also filed assuring full cooperation if another opportunity was granted.
Considering the peculiar facts and in the interest of natural justice, the Tribunal set aside the assessment and remitted the matter to the AO for fresh adjudication after calling for necessary details. However, to balance equities, the ITAT imposed a cost of ₹5,000, payable to the Tamil Nadu State Legal Services Authority.
Since the quantum issue was restored, the penalty under section 270A for AY 2018-19 was held to be consequential and dismissed as infructuous.
For AY 2020-21, identical facts prevailed. The AO had made large disallowances towards excess expenditure, interest, and unexplained expenditure under section 69C, and levied penalties under sections 270A, 270AAC(1), 272A(1)(c) and 272A(1)(d). Applying the same reasoning as for AY 2018-19, the Tribunal remanded the quantum issues to the AO for fresh consideration. Consequently, all penalties for AY 2020-21 were also dismissed as infructuous.
Thus, the appeals were partly allowed for statistical purposes, granting the assessee a final opportunity to substantiate its claims on merits
FULL TEXT OF THE ORDER OF ITAT CHENNAI
