2015 (10) TMI 1503 - AT - Income Tax

Entitlement to accumulate the unutilised fund - claim exemption under S.11 - Held that - As gone through the order passed by the CIT(A) in assessee s own case for assessment year 2002-03, wherein in identical circumstances, the assessee was given the benefit of doubt and concluded that the assessee is entitled to accumulate the unutilised fund, since From 10 alongwith the auditor s report was furnished alongwith the revised return. Having regard to the circumstances of the case, I deem it fair and reasonable to set aside the order passed by the CIT(A) and restore the matter to his file with a direction to the learned CIT(A) to reconsider the matter in the light of the view taken in assessee s own case for assessment year 2002-03; if, by the time case is reconsidered by the CIT(A), the Tribunal takes any view in assessee s own case for the earlier year, the same can also be taken into consideration by the learned CIT(A). CIT(A) is directed to reconsider the matter by assuming that the accumulation is not more than the actual amount received in this year, unless it is proved that the assessee has admitted at any stage of the proceeding with regard to accumulation in excess of the receipts - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
Assessment of income for a charitable trust under section 11 of the Income Tax Act, 1961 based on accumulation of unutilized funds and compliance with Form No.10 and auditor's report.

Analysis:

Issue 1: Compliance with Form No.10 and auditor's report
The appeal by the assessee trust challenged the order passed by the Commissioner of Income Tax (Appeals) regarding the assessment year 2003-04. The Assessing Officer contended that the trust did not file Form No.10 along with the original return of income, leading to the denial of exemption under section 11 of the Act. However, the assessee argued that they had accumulated unutilized funds under section 11(2) and filed Form 10 with the revised return of income. The CIT(A) in the previous year's assessment accepted the claim of exemption when the Assessing Officer failed to provide records. The issue in contention was the discrepancy in the accumulated amount claimed by the Assessing Officer and the actual income earned by the trust, leading to a disagreement between the parties.

Issue 2: Discrepancy in accumulated amount
The Assessing Officer and the CIT(A) claimed that the trust accumulated an amount exceeding the income earned, which was not permissible under section 11(2) of the Act. The counsel for the assessee argued that the figure of accumulation was incorrect and not supported by evidence. The trust maintained that the total receipts were lower than the claimed accumulation, emphasizing consistency with the previous year's assessment where exemption was allowed. The Learned Departmental Representative contended that the burden of proof lay with the assessee to demonstrate the accuracy of the accumulated amount.

Judgment:
The Vice President of the Appellate Tribunal, after considering the submissions and records, observed that the CIT(A) had given the benefit of doubt to the assessee in a similar case for the previous assessment year. Therefore, the Vice President set aside the order of the CIT(A) and directed a reconsideration of the matter, instructing the CIT(A) to review the issue in line with the previous year's decision. The CIT(A) was directed to ensure that the accumulation did not exceed the actual receipts unless proven otherwise by the assessee during the proceedings. The appeal filed by the assessee was treated as allowed for statistical purposes, and the matter was dismissed in the open court at the conclusion of the hearing.