Case Law Details
Academy of General Education Chikmagalur Vs ITO (ITAT Bangalore)
ITAT Bangalore held that there was no proper response during the assessment proceedings as well as in the appellate proceedings. Accordingly, issue remanded back to the file of AO subject to payment of costs of Rs. 5,000.
Facts- The case of the assessee was selected for limited scrutiny of substantial deduction under the head income from other sources u/s. 57. Statutory notices were issued to the assessee. The AO granted various opportunities, but the assessee did not respond. Finally a physical copy of notice was served to the Secretary of the assessee on 26.02.2021 to which the assessee did not comply. Therefore a draft assessment order proposing to disallow deduction of Rs.1,55,02,561 u/s. 57 was issued vide show cause dated 23.03.2021. The assessee submitted response. The AO after considering the submissions assessed total income of Rs.42,22,369. Aggrieved, the assessee filed appeal before the First Appellate Authority (FAA).
FAA issued various notices on 12.08.2021, 28.03.2024, 15.04.2024 and 30.04.2024 but there was no response from the assessee’s side. Accordingly, FAA dismissed the appeal of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Held that there was no proper response during the assessment proceedings as well as in the appellate proceedings and the reasons for the same submitted by the assessee in the affidavit noted supra. Considering the prayer of the assessee and in the interest of justice, we remit the issues to the file of Assessing Officer for fresh consideration and decision as per law, subject to payment of costs of Rs.5,000/- (Rupees Five Thousand Only) by the assessee and producing the proof of same before the AO.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal is filed by the assessee against the ex parte order dated 09.05.2024 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2018-19 on the following grounds:-
“ 1) The Order passed by the Learned Assessing Officer & confirmed by the First Appellate Authority is bad in law.
2) The learned Assessing Officer & FAA has erred in not allowing the expenditure claimed by the appellant.
3) The Learned Assessing Officer has erred in disallowing the expenditure amounting to Rs.32,09,760/-
4) The Learned Assessing Officer has erred in disallowing the expenditure amounting to Rs.2,77,345/-
5) The Learned Assessing Officer has erred in disallowing the expenditure amounting to Rs.38,78,879/-
6) The Appellant craves permission to add, alter, amend, and to modify, substitute, delete and to rescind all or any of the Grounds of Appeal, on or before the Hearing.”
2. Briefly stated the facts of the case are that the assessee filed return of income declaring loss of Rs.31,43,615. The case was selected for limited scrutiny of substantial deduction under the head income from other sources u/s. 57. Statutory notices were issued to the assessee. The AO granted various opportunities, but the assessee did not respond. Finally a physical copy of notice was served to the Secretary of the assessee on 26.02.2021 to which the assessee did not comply. Therefore a draft assessment order proposing to disallow deduction of Rs.1,55,02,561 u/s. 57 was issued vide show cause dated 23.03.2021. The assessee submitted response. The AO after considering the submissions assessed total income of Rs.42,22,369. Aggrieved from the above order, the assessee filed appeal before the First Appellate Authority (FAA).
3. The ld. FAA issued various notices on 12.08.2021, 28.03.2024, 15.04.2024 and 30.04.2024 but there was no response from the assessee’s side. Accordingly on the basis of material available before him, the ld. FAA dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before the ITAT.
4. The ld. AR submitted Affidavit the relevant portion of which reads as under:-
“ At our school level, we are not very much conversant with the procedures and practical issues in the area of submitting the responses to the income tax queries to departmental portals. At the assessment level, we engaged an Auditor for submitting the responses, in the assessment portal. It appears, he did not furnish details properly. At the Appeal level, though he had all the information’s, with him, he did not submit the responses in the appellant portal. Hence, the impugned order, was an ex party order.
The Appeal before the First Appellate Authority (FAA) was on the issues of disallowances of various expenses, but the Appellate Authority in his order, para 6.2 page 9, says that the Appellant failed to discharge its primary onus to prove the nature of sources of cash deposits during the year. This Is Totally Incorrect as this fact was not before the FAA, and this issue was not in the assessment proceedings also.
The Assessing Authority has not verified the documents submitted before him. His statements. “however, as can be seen from the ledgers, transactions to a large extent are routed through cash and not through banking channel. Also, many transactions are only journal entries. Cash book ledger or bank statement was not submitted by the Assessee. Considering this, an amount equivalent to 30% of such expenses is disallowed, i.e. an amount of Rs.32,09,760/- is disallowed”. The Appellant submits that the school is registered tv’s l2AA of the Income Tax Act 1961, (the ACT). The provisions of the Act relating 30% disallowance, is applicable from, 01-04-2019, only.
Therefore, I humbly pray that this matter maybe remanded to Assessing Authority for re-verification.”
5. The ld. DR relied on the order of lower authorities.
6. Considering the rival submissions, we note that there was no proper response during the assessment proceedings as well as in the appellate proceedings and the reasons for the same submitted by the assessee in the affidavit noted supra. Considering the prayer of the assessee and in the interest of justice, we remit the issues to the file of Assessing Officer for fresh consideration and decision as per law, subject to payment of costs of Rs.5,000/- (Rupees Five Thousand Only) by the assessee and producing the proof of same before the AO.
7. The assessee is directed to update its email id, communication address and other details and file necessary documents that would be essential and required for substantiating its case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings for early disposal of the case.
8. In the result, the appeal is allowed for statistical purposes.
Pronounced in the open court on this 23rd day of September, 2024.
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