Tribunal upholds notice validity despite late service, deems trust income commercial, denies exemption under Section 11.

The Tribunal upheld the validity of the notice served under Section 143(2) despite being served after the statutory deadline. It affirmed the AO's jurisdiction to assess the total income of the trust, which was deemed commercial rather than charitable due to substantial business receipts. The Tribunal also upheld the determination of total income at Rs. 2,20,250/- and dismissed the appeal challenging the CIT(A) order, concluding that the trust was not eligible for exemption under Section 11. The appeal was dismissed on 21st August 2023.

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Issues Involved:

1. Validity of service of notice under Section 143(2).
2. Jurisdiction of the AO due to alleged invalid service of notice.
3. Nature of activities carried out by the trust (charitable or commercial).
4. Non-disclosure of reasons for case selection for scrutiny.
5. Determination of total income by AO.
6. General grounds challenging the arbitrariness and legality of the CIT(A) order.

Summary:

1. Validity of Service of Notice under Section 143(2):
The assessee contended that the notice under Section 143(2) was served after the statutory deadline of 30.09.2011, rendering the assessment order null and void. However, the Tribunal upheld the validity of the notice and the subsequent assessment order.

2. Jurisdiction of the AO:
The assessee argued that the AO assumed jurisdiction due to invalid service of notice, thus lacking authority to assess the total income. The Tribunal dismissed this argument, affirming the AO's jurisdiction.

3. Nature of Activities (Charitable or Commercial):
The core issue was whether the assessee trust's activities, specifically running a Dharamshala, were charitable or commercial. The AO observed that the trust received substantial business receipts from renting the Dharamshala, exceeding the threshold of Rs. 10 lakhs, thus falling under the "advancement of any other object of general public utility" and not qualifying for exemption under Section 11. The CIT(A) upheld this view, noting the lack of evidence to substantiate the claim that the Dharamshala was provided to needy persons free of charge. The Tribunal agreed, emphasizing that the trust's activities were conducted on commercial lines.

4. Non-disclosure of Reasons for Case Selection for Scrutiny:
The assessee contended that the reasons for selecting the case for scrutiny were not conveyed, which was dismissed by the Tribunal as not affecting the validity of the assessment.

5. Determination of Total Income:
The AO determined the total income at Rs. 2,20,250/-, which was upheld by the CIT(A) and subsequently by the Tribunal. The Tribunal noted that the trust's receipts from commercial activities justified the AO's assessment.

6. General Grounds:
The assessee's general grounds challenging the arbitrariness and legality of the CIT(A) order were dismissed as not pressed.

Conclusion:
The Tribunal dismissed the appeal, upholding the AO's assessment and the CIT(A)'s order, concluding that the assessee trust's activities were commercial and not eligible for exemption under Section 11. The appeal was pronounced dismissed on 21st August 2023.

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