ITO Vs Neonatal Health Academy (ITAT Varanasi)
Conference & Seminar Expenses—Deletion by CIT(A) Set Aside for Rule 46A Violation; Matter Remanded
In ITO, Varanasi v. Neonatal Health Academy (ITA Nos. 131 & 132/VNS/2024; AY 2019–20), the ITAT Varanasi Circuit Bench addressed Revenue’s challenge to (i) deletion of a large disallowance of conference and seminar expenses and (ii) consequential penalty under Section 270A.
The Assessing Officer had disallowed ₹2,34,93,962 claimed as conference/seminar expenses for want of details during assessment. The CIT(A) deleted the disallowance relying on additional evidence produced at the appellate stage (registrations, audited accounts, bank statements, photographs) and on the facts that the assessee is a non-profit engaged in neonatal health and payments were through banking channels.
The Tribunal held that while additional evidence may be admitted, Rule 46A(3) mandates giving the Assessing Officer a reasonable opportunity to examine such evidence or rebut it. Here, the CIT(A) neither examined the evidence on merits himself nor sought an AO remand report. Further, banking-channel payments and charitable status alone are insufficient to establish that the entire expenditure was genuine and incurred wholly and exclusively for charitable purposes.
Decision & Directions:
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CIT(A)’s deletion set aside for breach of Rule 46A.
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Quantum issue remanded to the AO for de novo adjudication, with directions to examine all additional evidence after granting due opportunity to the assessee.
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Penalty under Section 270A held consequential and also remanded, to follow the outcome of the fresh assessment.
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Appeals partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT VARANASI
(A) These two appeals have been filed by Revenue pertaining to assessment year 2019-20 against the respective impugned appellate orders dated 30/05/2024 (DIN & Order No.ITBA/NFAC/S/250/2024-25/1065255186(1) and dated 31/05/2024 (DIN & Order No. ITBA/NFAC/S/250/2024-25/1065294908(1) of Commissioner of Income Tax (Appeals) [“CIT(A)” for short]. The grounds of appeal are as under:
I.T.A. No.131/Varanasi/2024
“1. The learned CIT(A) has failed to appreciate the facts that the addition of Rs.2,34,93,962/- was made by the Assessing Officer under the head conference and seminar expenses as assessee failed to substantiate the same with support of documentary evidences during the course of assessment proceedings even after being provided with multiple opportunities.
2. Because the learned CIT(A) has wrongly accepted the submission of the assessee wherein the assessee has furnished improper details (not supported by documentary evidences) before him. Moreover, the learned CIT(A) has stated in the order that the Assessing Officer had not given a finding that conferences and seminars were not organized by the appellant in the state of UP. In this regard, it is pertinent to note that onus lies on the assessee to prove that the expenditure was incurred for defined purpose only, when the assessee discharges this onus, the assessee would be entitled to deduction under I. T. Act and in the case of assessee and in case of assessee no factual condition was laid by the assessee to establish the genuineness of the expenditure said to have incurred for conference/seminar for charitable purpose. Further, learned CIT(A) has laid great emphasis and relied heavily upon the fact that the payments of the expenses claimed had been made through banking channel. In this context, it is worthwhile to note that the fact that the amount is paid through banking channel does not make the transaction genuine. The assessee needs to explain the transaction properly based on the documents within the parameters of relevant section of I. T. Act.
3. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in law and on the facts that the order of the Assessing Officer was not justified.”
I.T.A. No.132/Varanasi/2024
“1. The Ld. CIT(A) has failed to appreciate the facts that the penalty U/s 270 A of the Income Tax Act, 1961 of Rs.1,71,07,822/- was imposed by the AO on the basis of addition made during the course of assessment proceeding after obtaining approval from the competent authority. It is pertinent to note that during the course of assessment proceedings, addition of Rs.2,34,93,962/- was made on account of expenses claimed under the head conference and seminar expenses. This amount of Rs.2,34,93,962/- remained unexplained during the course of assessment proceeding for want of detail and valid explanation from the assessee .In this regard, onus lies on the assessee to prove that the expenditure was incurred for defined purpose only, when the assessee discharges this onus, the assessee would be entitled to deduction under IT ACT, 1961 and in the case of assessee ,no factual condition was laid by the assessee to establish the genuineness of the expenditure said to have incurred for conferences/seminar.”
(A.1) For the sake of convenience and brevity; these two appeals are being disposed of through this consolidated order.
