Appeal Dismissed Due to Procedural Error: Importance of Correct Section Selection for Fair Consideration

The ITAT Chandigarh dismissed the appeal challenging the order under section 143(1) instead of section 154, due to a procedural error. The tribunal noted the appellant's lack of legal understanding but emphasized the importance of fair consideration if the correct order is challenged in the future. The dismissal was based on the incorrect choice of appeal section, highlighting the need for proper procedural adherence.

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Issues:
1. Correctness of order dated 17.12.2021 of CIT(A) NFAC Delhi regarding the addition of FDRs interest.
2. Appeal filed against order under section 143(1)(a) instead of section 154.
3. Violation of principles of natural justice.
4. Charging of interest under sections 234B and 234C.

Analysis:

Issue 1: Correctness of CIT(A) NFAC Order
The appeal challenged the order of CIT(A) NFAC rejecting the appeal summarily and sustaining an addition of Rs. 1667017 on account of FDRs interest. The appellant contended that the interest accrued on FDRs is incidental to carrying out charitable activities and exempt under section 10(23C)(iiiab) read with section 11 of the Income Tax Act. The AO had added the interest income twice, resulting in an incorrect total. The appellant argued for the deletion of the sustained interest amount.

Issue 2: Appeal Against Incorrect Order
The appellant filed an appeal against the order passed under section 143(1)(a) instead of section 154, believing the issues were the same. The AR reiterated that the AO acted contrary to law and facts by determining the total income incorrectly. The appellant's trust, being an educational institution, claimed exemption under sections 10(23C)(iiiab) and 11 of the Act. The AO's adjustment under section 143(1) was challenged as not permissible for contentious issues.

Issue 3: Violation of Natural Justice
The appellant argued that the principles of natural justice were violated by both CIT(A) NFAC and AO CPC in passing their respective orders. The interest income against FDRs, exempt under section 10(23C)(iiiab) and section 11, was considered incidental to the appellant's educational objectives. The appellant contended that the AO erred in charging interest under sections 234B and 234C, which should be deleted from the assessment order.

Conclusion:
The ITAT Chandigarh dismissed the appeal, noting that the appellant challenged the order under section 143(1) instead of section 154, where a rectification application had been filed. The tribunal observed that the appellant's ignorance led to the incorrect choice of appeal, but highlighted the need for fair consideration if the appellant decides to challenge the correct order in the future. The dismissal was based on the procedural error in selecting the order to appeal against, despite acknowledging the appellant's lack of legal understanding.

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