New Star Skyland Education Society Vs ITO (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal, Delhi Bench concerned processing of the assessee’s return for Assessment Year 2020–21 under Section 143(1)(a) of the Income-tax Act. The assessee challenged the addition of ₹1,31,67,939 made while issuing the intimation, contending that the adjustment was beyond the scope of Section 143(1)(a), which permits only prima facie adjustments based on mistakes apparent from the return. It was argued that the addition was made solely due to delay in filing Form 10B and ITR-7, without granting reasonable opportunity of being heard, thereby violating principles of natural justice.
The assessee submitted that the delay occurred during the COVID-19 period, when timelines were extended by the Supreme Court, and that non-filing of Form 10B was a technical lapse which could not justify denial of exemption. Alternatively, it was contended that even otherwise, the addition was wrongly computed by treating gross school fee receipts as income without allowing expenses.
The Tribunal, after considering the submissions, held that the assessee had not been given adequate opportunity, particularly in light of the Supreme Court’s extension of limitation during the COVID period. The Tribunal found that interests of justice required fresh consideration. Accordingly, the matter was restored to the file of the CIT(A) with a direction to decide the appeal afresh after granting reasonable and adequate opportunity of hearing. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is preferred against the order dated 11.08.2023 by NFAC, Delhi pertaining to A.Y. 2020-21.
2. The grievance of the assessee read as under :-
“1. Because the action for initiation, continuation and conclusion proceedings u/s 143(1) is being challenged on facts and law.
2. Because the action is being challenged on facts and law for not providing reasonable opportunity of being heard. The assessment order being passed is in violation of the principle of natural justice and without giving adequate time and opportunity to the appellant to present the case.
3. Because the action u/s 143(1)(a) is being challenged on facts and law as only mistake apparent from return can be made adjustment in 143(1)(a). If the adjustment required detailed discussion, no adjustment can be made in intimation u/s 143(1) (a).
4. Because the action is being challenged on facts and law for making addition of Rs.1,31,67,939 as income of the society overlooking that due to Covid there was delay in fling Form 10B and ITR7 both. Moreover, Honourable Supreme Court has extended the time limit between 20.03.2020 to 28.02.2022.
5. Because the action is being challenged on facts and law for making addition of Rs. 1,31,67,939 for non-fling of Form No. 10B and ITR7 which is a technicality and cannot be utilized for declining the claim of exemption u/s 12AA (2017) 145 DTR 0415 (Kar).
6. Alternatively, and without prejudice to above, the action is being challenged on facts and law for making addition of Rs. 1,31,67,939 by taking the total School Fees receipts as income overlooking that assessee has claimed expenses against said receipts and there is no donation received during the year.
7. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee.”
3. The sum and substance of the grievance of the assessee is that without affording adequate opportunity return has been processed u/s. 143 (1)(a) of the Act and without affording any reasonable opportunity addition of Rs. 131677939/- has been made for delay in filing form 10B and ITR 7.
4. We have given a thoughtful consideration to the grievance of the assessee. When the grievance of the assessee is considered in the light of the decision of Hon’ble Supreme Court extending the time limit during covid period we find that the assessee was not given adequate opportunity to present its case. Therefore, in the interest of justice and fair play we restore the appeal to the files of the CIT(A) with a direction to decide the appeal afresh after affording a reasonable and adequate opportunity of being heard to the assessee.
5. In the result, the appeal of the assessee is allowed for statistical purpose.
6. Decision announced in the open court on 31.01.2024.
