TaxTMI 
TaxTMI 
2025 (6) TMI 475
X X X X Extracts X X X X
X X X X Extracts X X X X
....iven facts, circumstances and judicial pronouncements Ld. NFAC erred in confirming action of Ld. AO in denying all expenses other then expenses categorized as Expense incurred on Objects of the trust and such denial of application is bad in facts and in law and liable to be allowed as application. 3 Without prejudice to the above, On the given facts, circumstances and judicial pronouncements Ld. NFAC erred in confirming action of Ld. AO in denying entire expenses other then expenses categorized as Expense incurred on Objects of the trust and such denial of application is excessive in facts and in law and liable to be reduced. 4 The appellant craves leave to add, amend, alter or delete all or any of the previously mentioned grounds of appeal." 3. Briefly stated fact of the case are that the assessee trust was engaged in carrying out educational activities by way of running schools and colleges. The assessee trust was registered under Bombay Public Trust Act, as well as u/s 12A of the Income-Tax Act, 1961 (in short the 'Act'). For year under consideration, the assessee filed its return of income on 07.03.2018 declaring taxable income at Rs. NIL. The return ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it filed additional evidences in form of following documents 1. Income tax return of the year under question 2. Sample rent agreement. 3. Sample invoices of expenses incurred. The appellant has not filed any cogent reason why these documents were not furnished before the assessing officer. However in light of principle of natural justice the additional evidence of the appellant are admitted and being evaluated for the purpose of adjudication of impugned appeal. During the year under consideration the income and expenditure of the appellant stood as under: Particular Note Amount Total Revenue During the Year 4,68,70,198.00 Total Expenditure claimed during the year Admin. Expenses & Expenditure relating to property 1 62,14,269.00 Expenses on the object of the Trust 2 1,78,97,163.00 Excess Expenditure of current year carried forward 2 1,78,82,696.00 Investment in Capital Assets 3 7,87,551.00 During the assessment proceedings, the Ld. AO had allowed only expenses pertaining to current year i.e. Rs. 1,78,97,163/- but the Ld. AO disallowed rest of exp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and based on information/documents available on records. Ground 4 and 5 These are general grounds of appeal and thus no adjudication is warranted." 3.1 Aggrieved, the assessee is in appeal before the Income-tax Appellate Tribunal (in short the Tribunal) by way of raising grounds as reproduced above. 4. The Ld. counsel for the assessee submitted that the Ld. CIT(A) admitted the additional evidences without following due procedure of law laid down in Rule 46A of Income-tax Rules, 1962(In short the 'Rules'). He further submitted that before pointing out defects in additional evidences the Ld. CIT(A) did not provide any opportunity to the assessee to explain the anomalies observed by him. He explained that bills received from 'M/s Allied marketing link' was initially marked as 'bills not paid' but later on in the relevant financial year said bill was paid. Further, regarding bill in the name of 'Bombay Cambridge School', he submitted that said school was also one of the school operated by the assessee. Regarding the telephone bill in the name of 'Bombay institute for deaf and mutes' is considered, the Ld. counsel submitted that bill was reimbursed by the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n defects or anomalies in the additional evidences, no opportunity was granted to the assessee to furnish any explanation. Before us, the learned counsel for the assessee has made certain submissions in an attempt to clarify the objections raised by the Ld. CIT(A). But, it is noted that only sample invoices and rent agreements had been placed on record in additional evidences, and comprehensive supporting material, including vouchers and books of account substantiating the claim under Section 11 of the Act, had not been filed. 6.2 In view of the foregoing and having regard to the facts and circumstances of the case, as also in the interest of substantial justice, we deem it appropriate to set aside the impugned order passed by the Ld. CIT(A) on this issue. The matter is accordingly remanded to the file of the Ld. CIT(A) for adjudication afresh in accordance with law after following due procedure laid down in Rule 46A of Rules. The assessee is directed to produce all relevant documentary evidence, including vouchers and books of account, in support of its claim before the ld CIT(A) as additional evidences. The Ld. CIT(A) shall ensure that both parties are granted a reasonable opp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for the assessee also filed an additional ground which is reproduced as under: 1. The application is hereby made requesting for the admission of following Ground which is as under. "On the given facts, circumstances and judicial pronouncements; Ld. Assessing Officer has erred in completing the assessment without valid issue of notice u/s 143(2). Such assessment order without valid issue of notice u/s 143(2) is bad in law and liable to be quashed." 8.1 The additional ground being purely legal in nature and goes to the root of the matter, same was admitted for adjudication after hearing both the parties. 8.2 Before us the Ld. counsel for the assessee submitted that no notice u/s 143(2) of the Act was issued in the case of the assessee and therefore the assessment completed u/s 143(3) is liable to be quashed. On the other hand, the Ld. DR submitted that Ld.AO in the impugned assessment order has duly mentioned that return of income filed by the assessee was selected for compulsory scrutiny and notice u/s 143(2) of the Act was issued on 27.09.2011 which was duly served. In view of this clear finding there was no reason for suspicion notice that u/s 143(2) of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ning to A.Y.2010-11 is more than 10 years old. In view of the above the application referred is hereby disposed off." 8.4 In our opinion said reply has no basis to presume that no notice u/s 143(2) of the Act was issued. The contention of the assessee are purely imaginary and on the basis of the presumption and surmises without any evidence that no notice u/s 143(2) of the Act was issued and accordingly, we reject the contention of the ld. counsel for the assessee. The additional ground raised by the assessee is accordingly dismissed. 9. The facts in brief qua the regular grounds raised are that the assessee filed its return of income on 03.01.2011 declaring total income at Rs. NIL. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the 'Act' were issued and complied with. During the course of scrutiny proceeding, the Assessing Officer observed that assessee trust gave advance/deposit to two trustees, namely Shri. Sukesh S. Shetty and Rakesh S. Shetty amounting to Rs. 2,09,427/- and 2,40,276/- respectively. According to the Assessing officer, those two persons being in the category of specified persons as provi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- ........ ........ (c) states that in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or Indirectly for the benefit of any person referred to in sub-section (3) 6.8 On perusal of provision of section 13 it is very clear that provision of section 11 and 12 shall not operate if the conditions of section 13 are encountered. 6.9 In view of the above I am of the considerate opinion that the addition carried out by Ld.AO is appropriate and the alternative contentions raised by the appellant that the portion of income which is not utilized towards the objectiv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o be restricted only to the quantum of income that has been applied or utilised for the benefit of the specified person referred to in Section 13(3) of the Act. For ready reference, the relevant part of section 13(1)(c ) of the Act is reproduced as under: "Section 13(1)(c) in The Income Tax Act, 1961 13. (1) Nothing contained in section 11 "[or section 12] shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) ....... (b) ....... (bb) ....... (c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i)if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii)if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3): [such part of income as referred to in sub-claus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itutions (supra) inter alia, places reliance upon the decision of this Court in DIT(Exemption) v. Sheth Mafelal Gagalbahai Foundation Trust [2001] 114 Taxman 19/249 ITR 533 (Bom.) and the Delhi High Court the case of IT (Exemption) v. Agrim Charan Foundation [2002] 253 ITR 3 ITR 593/[2001] 119 Taxman 569. 1119 Taxman 569. Moreover, on a plain reading of Sections 11 and 13 of the Act, it is clear that the legislature did not contemplate the denial the benefit of Section 11 of the Act to the entire income of the Trust. If the interpretation sought to be advanced by the Revenue is accepted, it would lead to grave injustice as any mistake minor and/or misdemnour involving a small amount takes place by the Trust, the consequence would be denial of the benefit of exemption to the entire income otherwise admittedly used for charitable purposes. It is pointed out to us that the decision of the Karnataka High Court in Fr. Mullers Charitable Institutions (supra) was carried by the Revenue to the Supreme Court and its SLP was dismissed on 19th September, 2014 Fr. Mullers Charitable Institutions (supra)." 9.7 The Hon'ble High Court has clearly held that in case of violation u/s 13 of the Ac....