2024 (6) TMI 1049

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....ear (AY) 2018-19 vide order u/s. 154 of the Act dated 08.01.2020. 2. None appeared for and on behalf of the assessee when the appeal was called out despite service of notice of hearing, nor was there any adjournment motion. There has in fact been no representation by/for the assessee in this case throughout, with the Bench on each occasion the matter was listed for hearing, observing this, allowing opportunity toward the same, also requiring filing of Vakalath/PoA. Under the circumstances, hearing in the matter was proceeded with ex parte the assessee- appellant, who stands allowed an opportunity even after a final opportunity. 3. The brief facts of the case are that the assessee, a charitable trust, registered u/s. 12A of the Act (on 15.....

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....ted total income of Rs. 87,433/- in its return of income. However, the deduction claimed by the appellant for Rs. 15,429/- being 15% of the gross receipts accumulated or set apart for application to charitable or religious purposes is not allowable to the appellant because the appellant has not reflected any application of funds for its purposes in respect of the remaining 85% of the gross receipts. Therefore, the adjustment made by the CPC is upheld and the grounds nos. 2 & 3 are dismissed.' (emphasis, ours) 4.2 Section 11(1)(a) of the Act, also read out during hearing, reads as under: Income from property held for charitable or religious purposes. 11. (1) Subject to the provisions of sections 60 to 63, the following income shall no....

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....ereto, i.e., 85% of it's total income. A reading of Explanation 1 to section 11(1), reproduced hereunder, makes it abundantly clear that in the absence of option being exercised, the deeming qua application of income, which extends to the shortfall w.r.t. eighty-five percent of income derived from property held under trust, shall not apply: Explanation 1.-For the purposes of clauses (a) and (b),- (1) in computing the fifteen per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be deemed to be part of the income; (2) if, in the previous year, the income applied to charitable or religious purposes in India falls short of eighty-five per cent of the income d....

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....tely following the previous year in which the income was derived. The application in the instant case being nil, the shortfall extends to the entire 85%. 4.4 We are conscious that the assessee did not file an appeal against the Intimation u/s. 143(1)(a) of the Act raising the impugned demand, preferring instead rectification thereof, scope of which is severely limited. This, to our mind, would not constrain us inasmuch as the Revenue itself has made the impugned adjustment under summary proceedings u/s. 143(1)(a), the scope of which is, again, limited to apparently incorrect claims, which is not the case. The assessee shall accordingly be assessed at the returned income of Rs. 87,430. 4.5 Continuing further, even as observed by the Bench....