Appeal allowed for ITA No. 563/Bang/2022, dismissed for ITA No. 584/Bang/2022. Assessee granted physical hearing.

The appeal in ITA No. 563/Bang/2022 was allowed for statistical purposes, while the appeal in ITA No. 584/Bang/2022 was dismissed as infructuous. The Assessing Officer was directed to provide the assessee with an opportunity for a physical hearing and to consider their claims in accordance with the law.

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Issues Involved:
1. Confirmation of order passed by the Assessing Officer (AO) disposing of the application filed u/s 154.
2. Rejection of exemption claim u/s 10(23C)(vi).
3. Non-allowance of accumulation made u/s 11(2).
4. Denial of credit for TDS.
5. Levying of interest u/s 234B and 234C.
6. Procedural errors and lack of opportunity for the assessee to present their case.

Detailed Analysis:

1. Confirmation of Order Passed by AO Disposing of the Application Filed u/s 154:
The learned Commissioner of Income Tax (Appeals) [CIT(A)], NFAC, Delhi confirmed the order passed by the AO disposing of the application filed u/s 154. The assessee contended that the orders were erroneous both on facts and law and should be quashed. The AO held that the application filed by the assessee u/s 154 stands disposed of as the proceedings are subjudice due to an interim stay granted by the Honourable High Court of Karnataka with respect to notice u/s 143(2) of the Act.

2. Rejection of Exemption Claim u/s 10(23C)(vi):
The CIT(A) held that since no order granting approval was passed in favor of the appellant u/s 10(23C)(vi), the request for exemption was rejected. The authorities did not appreciate that the application for approval u/s 10(23C)(vi) not being disposed of within the prescribed due date amounts to deemed approval. The AO also erred in holding that the appellant is not entitled to make a fresh claim of deduction other than by filing a revised return of income. The appellant argued that they are eligible for deduction u/s 10(23C)(vi) and the same should be granted.

3. Non-Allowance of Accumulation Made u/s 11(2):
The DCIT (CPC) did not allow the accumulation made u/s 11(2) and the CIT(A) confirmed this on the ground that the appellant had not complied with the provisions of section 11(5). The appellant argued that they had complied with section 11(5) by investing the accumulation in specified investments and rightly claimed the accumulation u/s 11(2). The CIT(A) noted that the taxpayer had not furnished Form 10, without which accumulation of funds u/s 11(1) and 11(2) cannot be allowed. The AO was directed to allow Rs. 26,54,95,755 towards accumulation of funds u/s 11(1).

4. Denial of Credit for TDS:
The denial of credit for TDS was contested by the appellant as erroneous both on facts and law. The appellant requested that the credit for TDS should be allowed.

5. Levying of Interest u/s 234B and 234C:
The DCIT (CPC) levied interest u/s 234B and 234C, which the appellant contested as erroneous both on facts and law, requesting that the interest levied be deleted.

6. Procedural Errors and Lack of Opportunity for the Assessee to Present Their Case:
The primary contention was that the disallowance made by the CPC in an intimation issued u/s 143(1) denied the exemption claimed u/s 11 without granting an opportunity for the assessee to be heard. The mechanism of application of Section 143(1) mandates that "no adjustments" except for arithmetical mistakes and/or an incorrect claim apparent from any information in the return. The Hon'ble Bombay High Court observed that a claim requiring further inquiry cannot be disallowed without hearing the parties. The issue was remanded back to the AO to grant the assessee an opportunity of being heard in a physical hearing and to consider the claim in accordance with law.

Conclusion:
The appeal in ITA No. 563/Bang/2022 was allowed for statistical purposes, and the appeal in ITA No. 584/Bang/2022 was dismissed as infructuous. The AO was directed to grant the assessee an opportunity for a physical hearing and to consider their claims in accordance with the law.

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