CIT Vs Shree Nirman Foundation Charitable Trust (Gujarat High Court)
The issue under consideration is if Assessee remained absent on more than one occasions and appeal decided on merits then whether it will be called as Ex-parte order?
High Court states that if an order is passed by the CIT (A) on merits despite the fact that the assessee failed to appear before the CIT (A) at the time of the final hearing of the appeal, the order passed by the CIT(A) cannot be termed as ex-parte. An order having been passed by the CIT(A) after service of notices on the assessee, there is no question of failure of natural justice. It cannot be said that the assessee was not given an opportunity of hearing. The order of the CIT(A) is more than clear. On more than one occasion, the assessee remained absent before the CIT (A), and in such circumstances, the CIT had no option but to look into the records and decide the appeal on its own merit.
In the result, this appeal is allowed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. This tax appeal under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961) is at the instance of the revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Ahmedabad ‘B’ Bench dated 15th June, 2018 in the ITA No.2743/Ahd/2015 for the assessment year 2011-12.
2. This tax appeal came to be admitted vide order dated 8th January, 2019 passed by a Coordinate Bench on the following substantial question of law:
“Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in setting aside the matter to the Commissioner of Income Tax (Appeals) for fresh adjudication.”
3. It appears from the materials on record that the assessee filed his return of income on 16th February, 2012, declaring the total income of Rs.70,460/-. In the course of the assessment proceedings, the Assessing Officer noticed that the assessee-trust had undertaken activities of providing education to the students by running a school from nursery upto the 12th standard at Vastrapur. The assessee-trust had collected admission fees to the tune of Rs.1,52,00,000/- from the students and the same was credited directly to the balance-sheet treating it as a corpus donation without routing it through the income and expenditure account. The Assessing Officer held the receipts of admission fees as the revenue receipts instead of capital. The registration granted under Section 12AA of the Act was also cancelled by the DIT(E), Ahmedabad vide his order dated 16th March, 2011. The Assessing Officer held that the assessee was not eligible for deduction under Section 11(1)(d) of the Act, and in such circumstances, he made disallowance of Rs.1,52,00,000/-under Section 11(1)(d) of the Act.
4. The assessee, being dissatisfied with the order passed by the Assessing Officer, preferred an appeal before the CIT (A). It appears that despite number of notices issued by the CIT (A) to the assessee for the hearing of the appeal, the assessee failed to remain present and make his submissions. In such circumstances, the CIT (A) proceeded to decide the appeal on merits in the absence of the assessee. The CIT (A), ultimately, dismissed the appeal, thereby confirming the addition made by the Assessing Officer of Rs.1,52,00,000/-.
5. The assessee, being dissatisfied with the order passed by the CIT (A), preferred the appeal before the Appellate Tribunal. The Appellate Tribunal took the view that as the proceedings before the CIT(A) were ex-parte, and the assessee had no opportunity to make good his case, it thought fit to remand the matter to the CIT(A) for fresh consideration after giving an opportunity of hearing to the assessee. The revenue, being dissatisfied with such order passed by the Appellate Tribunal, is here before this Court with the present appeal.
6. M.R. Bhatt, the learned senior standing counsel appearing for the revenue ultimately submitted that the Tribunal committed a serious error in passing the impugned order. According to Mr. Bhatt, there was no good reason for the Appellate Tribunal to take the view that the principles of natural justice were not followed by the CIT(A). Mr. Bhatt submitted that despite giving number of opportunities to appear and conduct the appeal, if the assessee fails to remain present, then in such circumstances, the CIT(A) would be justified in looking into the records and decide the appeal on its own merits in the absence of the assessee or his representative. According to Mr. Bhatt, the Appellate Tribunal should have decided the appeal on its own merits having regard to the evidence on record instead of remitting the matter to the CIT(A).
7. In such circumstances, referred to above, Mr. Bhatt, the learned senior standing counsel appearing for the revenue prays that the substantial question of law formulated in the present appeal may be answered in favour of the revenue and the appeal be allowed.
8. On the other hand, this appeal has been vehemently opposed by Mr. Jaimin Dave, the learned counsel appearing for the assessee. Mr. Dave submitted that there is no question of law much less a substantial question of law involved in the present appeal. According to Mr. Dave what is involved in this appeal is essentially a question based on facts. According to Mr. Dave, the Tribunal, in its discretion, thought fit to give one opportunity of hearing to the assessee, and in such circumstances, remitted the matter to the CIT (A). According to Mr. Dave, if that be so, then no error could be said to have been committed by the Appellate Tribunal in passing such an order. In such circumstances, referred to above, Mr. Dave prays that there being no merit in this appeal and there being no substantial question of law as such involved, the appeal may be dismissed.
ANALYSIS
9. The Assessing Officer, in his order, observed as under:
“(i) The assessee had collected fees from the students at the time of admission and credited the same directly to the balance sheet treating this amount as corpus donation whereas, this amount was not reflected to the income and expenditure account, the nature of the receipt is revenue not capital. Hence the stand of assessee is not acceptable.
(ii) It’s activities were ascertained in commercial manner.
(iii) The registration granted u/s.12AA of the I.T Act by the Hon’ble DIT(E), Ahmedabad too has been cancelled vide his order dated 16.03.2011.
Therefore, the assessee is not eligible for deduction u/s.11(1)(d) of the I.T Act which he is claiming. Therefore, corpus donation u/s. 11(1)(d) of the I.T Act of Rs.1,52,00,000/- is disallowed and added to the total income of the assessee.
(Addition of Rs.1,52,00,000/-)
3. After scrutiny of the details furnished by the assessee the total income of the assessee is computed as under :
