2020 (11) TMI 736 - AT - Income Tax

Partial appeal success: expenses disallowed, contributions upheld, penalty proceedings initiated. E-appeal rights granted.

Vasupujya Maharaj Dehrasar Trust Versus Income Tax Officer, (E) Ward-2

The appeal was allowed in part. The addition of administrative expenses, donation, and trust expenses was disallowed as they were not wholly and ... Non filing of appeal electronically - Penalty proceedings u/s. 271(1)(c) - Exemption u/s. 11 (1)(d) denied - voluntary contributions received in the name of various funds and is considered as the corpus donation - HELD THAT:- In this case, Ld. CIT(A) dismissed the appeal because assessee could not file its appeal electronically and appeal was dismissed as non-est and on merit appeal of the assessee was not heard. Assessee should have been given a chance to rectify his omission for filing physical appeal instead of e-appeal and Ld. CIT(A) should have decided the matter on merit instead of dismissing assessee's appeal in limine. We accept the plea of the assessee and assessee shall file e-appeal before the Ld. CIT(A) and intervening period of delay is condoned and Ld. CIT(A) is directed to decide assessee's appeal on merit. Appeal filed by the Assessee is allowed. Issues:1. Addition of administrative expenses, donation, and expenses incurred for the object of the Trust.2. Addition of voluntary contribution received by the Trust.3. Waiver of income tax amount and other levied amounts.4. Stay of demand till the disposal of Income Tax Appellate Tribunal Ahmedabad Benches.Analysis:Issue 1: Addition of Administrative Expenses, Donation, and Trust ExpensesThe appeal was against the addition of Rs. 17,83,549 on account of administrative expenses, donation, and expenses incurred for the trust's object. The Assessee argued that being duly registered under section 12AA, all expenses were for the trust's object and the addition was unjustified. However, it was found that the expenses were not wholly and exclusively for earning income from other sources, as required by law. Citing relevant case law, it was concluded that the expenses claimed were not allowable deductions. Consequently, the addition of Rs. 17,83,549 was disallowed and added back to the total income, with penalty proceedings initiated for inaccurate particulars of income.Issue 2: Addition of Voluntary ContributionThe addition of Rs. 50,53,755 on account of voluntary contributions received by the Trust was disputed. The Assessee contended that as a registered trust under section 12AA, the voluntary contributions should not be treated as income. However, without the registration, the exemptions claimed were denied. The voluntary contributions were considered corpus donations and added to the total income. Penalty proceedings were initiated under section 271(1)(c) for inaccurate particulars of income.Issue 3: Waiver of Income Tax AmountThe Assessee requested a waiver of the income tax amount of Rs. 26,25,410 along with interest, penalty, and other levied amounts. However, the judgment did not explicitly address the waiver request in detail.Issue 4: Stay of DemandThe Assessee sought to stay the demand until the disposal of the Income Tax Appellate Tribunal Ahmedabad Benches. However, the judgment did not provide specific details on the decision regarding this request.In conclusion, the appeal was allowed, emphasizing the Assessee's right to file an e-appeal and have the appeal heard on merit. The judgment highlighted the importance of giving the Assessee an opportunity to rectify procedural errors and have their case considered on its merits.