2018 (1) TMI 1511 - AT - Income Tax

Appellate tribunal remands assessee's tax exemption denial, emphasizes compliance & recent laws

The appellate tribunal allowed the assessee's appeal regarding the denial of exemption under section 11 of the Income Tax Act for the assessment year ... Exemption u/s 11 denied - assessment ex-parte u/s. 144 - denial of exemption as no evidence has been provided by the assessee to substantiate the claim for the purpose of trust - HELD THAT:- Assessee had made its first submission before the ld. CIT(A) along with paper books. The ld. CIT(A) has called a remand report from the assessing officer and after considering the remand report and submission of the assessee stated that it has rightly been held by the assessing officer in the assessment order as well as in the remand report that the case of the assessee is squarely covered by the proviso to section 2 sub-section 15 of the act. In the case of Ahmedabad Urban Development Authority [2017 (5) TMI 1468 - GUJARAT HIGH COURT] the assessee society was constituted under Gujarat Town Planning and Urban Development Act, 1976 to undertake preparation and execution of town planning scheme and to execute works in connection with supply of water, disposal of sewerage and provision of other services and amenities and held it could be said to be providing general public utility services within meaning of section 2(15) and thus its claim of exemption of income under section 11 was to be allowed. Similarly, the case of GIDC [2017 (7) TMI 811 - GUJARAT HIGH COURT] was also decided by the Hon’ble Gujarat High Court in favour of the assessee. Above exercise required thorough examination of primary level record material and activities performed by the assessee - We are of the view that restoring this case to the Ld. CIT(A) instead of assessing officer will increase the litigation work at multistage level first at the level of CIT(A) then again in the form of remand report at the level of assessing office - we restore the impugned issue to the file of the assessing officer for deciding afresh as directed above after affording adequate opportunities to the assessee. Appeal of the assessee is allowed for statistical purposes. Issues:1. Denial of exemption under section 11 of the Income Tax Act, 1961.2. Addition of a specific amount to the total income of the assessee company.Analysis:Issue 1: Denial of exemption under section 11 of the Income Tax Act, 1961The assessee's appeal pertained to the denial of exemption under section 11 for the assessment year 2011-12. The assessing officer passed an ex-parte order under section 144 of the act due to the assessee's failure to provide evidence to substantiate the claim for trust purposes. The CIT(A) upheld the assessing officer's decision, citing that the activities undertaken by the assessee fell under the first proviso to section 2(15) and section 13(8) of the act. The CIT(A) considered the legislative changes brought by the Finance Act 2002 and the nature of activities carried out by the assessee. Various judicial pronouncements were relied upon to support the decision. The appellate tribunal observed the failure of the assessee to comply during the assessment proceedings and decided to restore the issue to the assessing officer for a fresh determination, considering the recent judicial pronouncements from the jurisdictional high court.Issue 2: Addition of a specific amount to the total income of the assessee companyThe assessing officer made an addition of a substantial amount to the total income of the assessee company based on the failure to provide necessary details during the assessment proceedings. The CIT(A) sustained a partial addition after considering the remand report and submissions made by the assessee. The appellate tribunal noted the importance of examining the operations of the assessee in light of recent judicial pronouncements from the jurisdictional high court. Consequently, the tribunal decided to remand the issue back to the assessing officer for a fresh determination to ensure fairness and objectivity in the assessment process. The appeal of the assessee was allowed for statistical purposes.In conclusion, the appellate tribunal's decision highlighted the significance of compliance during assessment proceedings, the impact of legislative changes, and the relevance of recent judicial pronouncements in determining tax exemptions and additions to the total income of the assessee company. The restoration of the issues to the assessing officer aimed at ensuring a thorough examination of the case in line with equity and legal principles.