Case Law Details
Greenwel Children Society Vs ITO (ITAT Jodhpur)
ITAT Jodhpur restored the matter back to AO to examine the registration status under section 12AA vis-à-vis applicability of exemption under section 11 and section 12 of the Income Tax Act.
Facts- The present appeal is filed by Greenwel Children Society (the assessee/appellant) for A.Y. 2018-19 against the appellate order passed by the National Faceless Appeal Centre (NFAC), Delhi dated 18.12.2023 wherein the appeal filed by the assessee against the assessment order passed under Section (u/s.) 144 r.w.s. 144B of the Income Tax Act, 1961 (the Act) on 23.04.2021 by the National e-Assessment Centre, Delhi at a total amount of Rs. 29,58,940/- whereas assessee filed return of income at Rs. Nil, was dismissed, for the reason that assessee did not respond to the notices of the learned CIT(A), and in absence of the assessee.
Conclusion- Held that assessee did not represent before the learned assessing officer as well as before the learned CIT – A. The key issue hinges on the point that whether the assessee trust is having registration under section 12 double a not. If it is registered, it is entitled to preferential treatment to a charitable trust under section 11 and 12 of the act. Assessee claims that it has got such registration whereas the learned AO categorically denied that the application for registration of the trust has been rejected. In view of above facts, we restore this appeal back to the learned Assessing Officer with the direction to the assessee to substantiate the status of the assessee as trust and also eligibility of relevant provisions of Sections 11 and 12 by producing the registration u/s. 12AA of the Act.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
1. ITA No. 502/Jodh/2024 is filed by the Greenwel Children Society (the assessee/appellant) for Assessment Year (A.Y.) 2018-19 against the appellate order passed by the National Faceless Appeal Centre (NFAC), Delhi [ Thd Ld. CIT (A)] dated 18.12.2023 wherein the appeal filed by the assessee against the assessment order passed under Section (u/s.) 144 r.w.s. 144B of the Income Tax Act, 1961 (the Act) on 23.04.2021 by the National e-Assessment Centre, Delhi [ The Ld. AO ] at a total amount of Rs. 29,58,940/- whereas assessee filed return of income at Rs. Nil, was dismissed, for the reason that assessee did not respond to the notices of the learned CIT(A), and in absence of the assessee.
2. Assessee is aggrieved and has preferred this appeal before us raising following grounds:
“1. That without prejudice to any grounds of appeal the learned Authorities below have grossly erred in law and facts in making the disallowance even when the assessee is having both registration u/s 12AA and u/s 80G.
2. That without prejudice to the ground no. I the learned Authorities below have grossly erred in law and facts in not treating assessee as a trust and disallowing expenses of Rs. 29,54,421/-. The disallowance was made on assumption and presumption basis only. The addition was made without any basis or documentary evidence.
3. That without prejudice the learned Authorities below have grossly erred in law and facts in the case the disallowance of expenses made by Ld. AO was excessive and was made without any basis or adverse documents.
4. That the learned Authorities below have grossly erred in law and facts in charging interest u/s 234A, 234B and 234C of the Act.
5. That the appellant reserves his right to add, amend or alter the ground of appeal on or before the date of appeal hearing.
6. That the learned Authorities below have grossly erred in law and facts in the case of order passed by the learned AO is bad in law in facts.”
3. The assessee preferred an appeal for early hearing of the case on 13.09.2024 wherein as per the direction of the Hon’ble Vice President, it was placed before the Bench. As there is no objection from the other side, early hearing was granted to the assessee.
4. As both the parties agreed to argue the appeal on the spot, at the request, the hearing of the appeal itself was taken up.
5. At the outset, it was found that appeal is filed late by 107 days. The facts shows that the appellate order was passed on 18.12.2023 , served on the assessee on 22.12.2023, but the appeal was filed on 07.06.2024, resulted into delay of 107 days. For the condonation of the delay, assessee has submitted the application wherein it was stated that the Authorized Representative (AR) of the assessee Mr. Nitin Jalan, Chartered Accountant expired in COVID-2021 and the password of the Administrator of the Society was not available with him. Therefore income tax portal could not be accessed. The assessee received an order u/s. 270A on 05.3.2024. However, in absence of any other information, assessee immediately approached the Authorized Representative. An Advocate of the assessee, who advised them, who filed an appeal by payment of appeal filing fees of Rs.10,000/-. The assessee deposited Rs.10,000/- on 25.04.2024 and, thereafter, filed the appeal on 07.06.2024. It was further submitted that as the delay was caused for sufficient reason, it may be condoned.
6. The learned Departmental Representative (DR) vehemently objected to the delay and submitted that there is no sufficient cause and, therefore, the delay may not be condoned.
7. We have carefully considered the rival contention and have perused the reason for filing of appeal late by 107 days. The brief facts of the case show that the assessee is a trust, who filed its return of income claiming exemption. As case of the assessee was looked after by late Shri C.A,. Nitin Jalan, who passed away, When the appeal was filed before the learned CIT(A), it was also filed by Mr. K. Jallan and Company and it remained un-responded. Further when the penalty orders were passed, the assessee came to know about the appellate order passed by the learned CIT(A) and, therefore, the assessee approached the other counsel and based on that he was advised to file the appeal after payment of appeal fees. No doubt after that assessee has filed the appeal before the Tribunal but it has caused delay of 107 days. The delay needs to be explained by the assessee by proving the sufficient cause. We find that as there is death of the Chartered Accountant due to COVID-2021 who was managing the Income Tax Affairs of the assessee, could not persuade the appeal before the leaned CIT(A) and could not inform about the disposal of the appeal by the learned CIT(A) two. Assessee came to know only on receipt of penalty orders, and subsequently filing the appeal shows the bonafide. The litigation does not stand to benefit at all by lodging an appeal late. It is not necessary that pedantic approach should be made while finding out sufficient cause for late filing of the appeal. When substantial justice and technical consideration are pitted against each other cause of substantial justice deserves to be followed. Such is the mandate of the decision of the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag vs. Mst. Katiji & Ors. 28 ELT 185. Accordingly, we condone the delay in filing of the appeal and admit the same.
8. Coming to the merits of the case, we find that the assessee is a Charitable Trust, who filed its return of income for A.Y. 2018-19 at Rs.NIL on 10.12.2018. The assessee is stated to be non-profit society. The return of income was picked up for scrutiny for the reason that the registration and approval either have not been granted or have been cancelled. Accordingly, notice u/s. 143(2) of the Act was issued on 30.09.2019 and notice u/s. 142(1) of the Act was also issued to the assessee. The assessment was taken up through Faceless e-Assessment Scheme 2019 and, therefore, all the notices issued by the Assessing Officer to the assessee on system generated email on registered email I.D. of the assessee. During the course of the assessment proceedings, none appeared and, therefore, the learned Assessing Officer passed an assessment order u/s. 144 of the Act without granting benefit of section 11 and 12 but, wherein the proportionate disallowance of various expenses were made resulting into the disallowance of Rs.29,54,421/-. The Income Tax Officer was aware that the application filed by the assessee seeking registration u/s. 12AA of the Act was rejected by the learned CIT(E), Jaipur. As no documentary evidences were furnished by the assessee the total income of the assessee was assessed at Rs.29,58,940/- u/s. 144 of the Act.
9. The assessee preferred an appeal before the learned CIT(A). The assessee was issued notice on 19.10.2023 but no compliance was received. Another notice was issued on 30.10.2023 which was also not replied too and third notice was also issued on 22.11.2023 which was also remained not responded and, therefore, the learned CIT(A) without discussing the issue on the merits confirmed the order of the Assessing Officer. Therefore, the assessee is in appeal before us.
10. We find that in the grounds before the learned CIT(A) as per Ground No.2 which was specifically stated the expenditure was disallowed by the learned Assessing Officer when the assessee is having registration u/s. 12AA of the Act and u/s. 80G of the Act. Further even otherwise disallowance was made without any justification. Thus whole issue involved in this appeal is whether the assessee is having registration u/s. 12AA of the Act or not. If the assessee is registered under that section, it is entitled to the benefit of section 11 and 12. The claim of the assessee is as stated in Form No. 35 that it is having registration u/s. 12AA of the Act as well as Section 80G of the Act. Whereas the Assessing Officer has made the disallowance only because of the reason that the registration is not granted to the assessee. The learned CIT (A) did not look into the merits whether the assessee is having registration u/s. 12AA of the Act or not to confirm the action of the learned Assessing Officer.
11. It is stated before us that assessee is Charitable Trust, non-profit society, before the learned Assessing Officer it could not appear as all notices were sent on the registered email I.D. and the assessment was migrated to the e-assessment scheme. Before the learned CIT(A), the learned Chartered Accountant who was representing the assessee passed away. Therefore assessee did not get proper opportunity of hearing before the learned that lower authorities. It was the claim of the learned authorised representative that the matter may be restored back to the file of the learned assessing officer so that all the details and registration certificate et cetera can be shown to the assessing officer.
12. Though the learned departmental representative objected to the same but stated that if the registration is granted to the assessee under section 12 double a of the act, the consequential benefit under section 11 and 12 of the act may also be granted. But as assessee has not produced anything before the learned lower authorities, the issue may be restored back to the file of the learned AO.
13. On careful consideration of the above facts, it is apparent that assessee did not represent before the learned assessing officer as well as before the learned CIT – A. The key issue hinges on the point that whether the assessee trust is having registration under section 12 double a not. If it is registered, it is entitled to preferential treatment to a charitable trust under section 11 and 12 of the act. Assessee claims that it has got such registration whereas the learned AO categorically denied that the application for registration of the trust has been rejected. In view of above facts, we restore this appeal back to the learned Assessing Officer with the direction to the assessee to substantiate the status of the assessee as trust and also eligibility of relevant provisions of Sections 11 and 12 by producing the registration u/s. 12AA of the Act. The learned Assessing Officer may examine the same and then apply the provisions of the law for determining the total income. As The learned Assessing Officer has also disallowed the expenditure of the assessee on estimate basis at the rate of 50% of the total expenditure in absence of any details filed by the assessee, only those expenditure which are not incurred for the object of the trust could have been disallowed. Even otherwise, in absence of any detail also the proportionate expenditure allowed and proportionate expenditure disallowed is not the correct method. However, now, The assessee is also directed to show the details of the expenditure incurred by it which may be verified by the learned Assessing Officer and then decide the issue afresh.
14. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 23/09/2024)
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