AI Drafter 
TaxTMI 
TaxTMI 
2025 (4) TMI 920
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....assessee filed the reply and submitted the details required. 2.1 The assessee is registered as a society under the Rajasthan Societies Registration Act, 1958. The certificate issued u/s. 12AA of the Income Tax Act, 1961 was withdrawn by the Commissioner of Income Tax-I, Jaipur on 28.12.2010 w.e.f. 2005-06 which was subject matter of appeal and our own Hon'ble Rajasthan High Court disposed of that appeal in favour of the assessee. 2.2 In the return of income filed, association has declared total receipts at Rs. 1,80,34,791/- out of which Rs. 1,53,29,572/- claimed as application of income and claimed income accumulated or set a part u/s. 11(1)(a) of the Act upto 15 % at Rs. 27,05,219 [ 15 % of 1,80,34,791/- ] and thereby assessee trust declared Nil total income. 2.3 Ld. AO in the assessment proceeding noted that during the year under consideration the assessee has shown receipt at Rs. 1,80,34,791/- against which expenditure of Rs. 4,88,80,927/- resulting in excess of expenditure over income at Rs. 3,08,46,136/-. Based on that observation the claim made by the assessee to the extent of 15 % of income for an amount of Rs. 27,05,219/- was denied as claimed as per provision of s....
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.... as to whether the Form No.10 (if at all filed within the stipulated time) were filed for the specific purpose of "paying outstanding Income tax liabilities". If it is not so, then the present narrative will a obviously collapse. In these circumstances, as is clear, debatable issues are outside the ambit of provisions 154 of the Act. On the other than hand, if it is presumed that these are set-apart amounts u/s 11(1)(a), then also the stand adopted by the assessee is subject to long discussion and debate as set apart u/s 11(1)(a) of the Act is permissible on the unspent receipts of out of current years receipts and expenditure subject to maximum of 15% of gross receipts of the year. There is no ambiguity in so far as set-apart allowed u/s 11(1)(a) is concerned as it states that if assessee could not spent 100% of current years receipts but spent at-least 85% out of current years receipts, then it is permitted to set-apart remaining 15% without any conditions. Things gives further clarity from the fact that if the amount expended towards the objects is more than 85%, then only the remaining portion out of current years receipts is allowed to be set-apart u/s 11(1)(a). This ....
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....re, claim made in the return of income u/s. 11(1)(a) at Rs. 27,05,219/- is unacceptable and hence disallowed by AO. Against this appellant filed rectification application with AO. The rectification application rejected by the AO vide its order dated 15.12.2020 as under- "The explain discrepancies found on the documents furnished during the course of assessment proceedings. Now assessee has filed application us/ 154 with the explanation that the excess expenditure was met out from accumulated funds of earlier years i.e. F.Y.2011-12, 2012-13 & 2012-13 and therefore, set-apart of 15% claimed is correct and therefore, requested to rectify the same by passing order u/s 154 of I.T. Act, 1961. The justification furnished in the application in support of its submission is as under:- Details of income applied during the years ended 31.03.2016 Particular Amount Gross expenses as per I & E account 4,88,80,927 Less: Depreciation 1,24,78,834 Add: Income Tax Demand deposited 4,25,00,000 Add: Acquisition of fixed assets for the objects of the Association 83,413 7,89,85,506 Less: Ap....
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.....Y. 2016-17 is Rs 1.80,34,791/- against which it had utilized an amount of Rs 3.64,02,093/- In these circumstances, it cannot be said that the issue now raised before the AO in 154 application is rectifiable u/s 154 of the Act. Since, assessee had failed to submit/furnish such details/information called for by the AO during assessment proceedings, the same cannot be given any cognizance in the present application as the same are outside the ambit of provisions of section 154 of the Act. Therefore, after considering the above facts and position of the case, the present rectification application cannot be accepted and accordingly rejected as the same lack merits." As discussed above by AO in his rectification order, the matter needs verification and analysis on the claims made by appellant and is not some mistake apparent on record. Hence, this issue cannot be dealt u/s. 154. In view of this action of AO is upheld and grounds of appeal are dismissed." 4. Feeling dissatisfied with the finding so recorded by the ld. CIT(E) the assessee preferred the present appeal on the following grounds before this tribunal : "1. That the Ld. CIT(A) erred in upholding th....
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....n of Income. As already have been discussed above, its expenditure during the year exceeds revenue by Rs. 30846136/-, therefore, claim made in the return of income u/s 11(1)(a) at Rs. 27,05,219/- is unacceptable and hence disallowed." From the assessment order dated 13.12.2018 passed under section 143(3) of the Income Tax Act, 1961, it is apparent that the Learned AO erroneously passed the order without making proper computation of the applications of income detailed by the appellant in the Income Tax Returns along with the Form 10 filed and other documents/information attached thereto. The same was also explained by way of submissions and details filed during assessment proceedings. In the Return filed the computation was submitted for the application of income as per the provisions of section 11 and the balance of Rs. 27,05,219/-, being within 15% of the income, eligible as set apart u/s 11(1)(a) was mentioned. And thereafter, the total income which comes to NIL was mentioned. The Ld. AO not disputed the expenditure and income as per the Income and Expenditure account and also passed the order at NIL income but has wrong fully mentioned that the claim of set apart u/s 11....
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.... made from the return of income. The only issue was on the claim made for accumulation or set apart u/s 11(1)(a),which was not allowed by the Ld Assessing Officer on the basis of the wrong fact that the appellant does not have any surplus and hence the set apart cannot be claimed. 2. Further, it is also important to mention here that the appellant Association submitted all the relevant records required for the purpose, including the annual accounts, return of income, Audit report in Form 10B, computation of income etc. The copy of the submission made on 19.11.2018is also forming part of the paper book at page 1-2. 3. It is already settled that the appellant is registered under section 12A, benefits of section 11 and 12 are available for which the return of income in the prescribed format was filed, the details and information as required were submitted, thereafter, neither any specific information/document was asked for nor it was required. 4. That, it is a well-settled law that the set apart under section 11(1)(a) is unfettered and not subject to any conditions, there was no such necessary evidence which may have been submitted by the appellant Associati....
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....of the order passed under section 143(3) that, "In the return of income filed for A.Y. 2016-17, Association has declared total receipts at Rs 1,80,34,791/- out of which Rs 1,53,29,572/- has been claimed as application of income and claimed income accumulated or set-apart u/s 11(1)(a) upto 15% at Rs 27,05,219/- and declared Nil total income. However, examination of the audited Income &Expenditure account obtained during the course of assessment proceedings reveals that the gross receipts at Rs 1,80,34,791/- against which it had incurred expenditure at Rs 4,88,80,927/- resulting in excess of expenditure over income at Rs 3,08,46,136/-." 2. However, the applications made as per the Income Tax Return, computation of income, and the Form 10B were 1,53,29,572/- only. Further, there was no disallowance of any application by the Ld. AO as claimed in the income tax return by the appellant. The copy of the ITR and Form 10B (duly filed), is available with at paper book page 86 to 95 and page 75 to 79 respectively. The details as available on record before the Ld. Assessing Officer make it evident that out of the total expenditure of Rs. 3,64,02,093/- as per the income & expe....
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....s a complete violation of natural justice. Ground No. 4 That the order passed by the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, is bad in law and on facts. The Ld. CIT(A) erred in rejecting the appeal without appreciating the fact that the rectification application filed under section 154 of the Income Tax Act, 1961, was maintainable and was erroneously rejected by the Assessing Officer (AO). Our Submissions The rectification application was disposed of by the Ld. AO on 15/12/2020 after rejecting the application and held at page 2 of the order that, "Here it is not known either from the present application or assessment records that the assessee has filed Form No.10 within the stipulated time in the prescribed form and procedure and the purpose for which the same were filed in F.Ys.2011-12 to 2013-14. This is particularly so despite affording reasonable and sufficient opportunities to the assessee during assessment proceedings. Now, the only way left out to the AO by the assessee in assessment proceedings is to assume and complete assessment proceedings as it desires. It is clear from the above statement of ld. AO that, he ha....
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....u/s 12 AA (Order no. -544/JP/2013 dated 09.06.2016 5-22 5. Annexure-D Constitution of RCA 23-74 6. Annexure-E Copy of 10B for the A.Y. 2016-17 75-79 7. Annexure-FCopy of Statutory Audit Report A.Y. 2016-17 80-85 8. Annexure-G Copy of ITR for the A.Y. 2016-17 86-95 9. Assessment Order u/s 143(3) Order No. ITBA/ASTIS/143(3)/2018-19/1014263060(1) dated 13.12.2018 for the A.Y. 2016-17 96-99 10. Rectification Application for A.Y. 2016-17 dated 19.11.2020 100-103 11. The copy of the Hon'ble Supreme Court in case of A.L.N. Rao Charitable Trust (Supra) 104-111 12. The copy of the Hon'ble Supreme Court in case of T.S. Balaram Vs. Volkart Bros. [(1971) 82 ITR 50 (SC)] 112-115 13. Written Submission 116-123 6. In addition to the written submission so filed by the assessee vehemently argued that claim of the assessee is separate claim as per provision of section 11(1)(a) of the Act can not be denied merely because the assessee incurred more expenditure in the year under consideration then the receipt. When the matter carried before the ld. CIT(A) he disposed of the appeal relying on the finding of th....