2019 (10) TMI 1545 - AT - Income Tax

Exemption u/s 11 denied - As per AO assessee was involved in large scale commercial activity - DR argued that CIT(A) has straightway relied upon certain case laws and allowed the appeal of the assessee without discussing as to how those case laws were applicable to the facts of the case of the assessee especially to the quantum of income earned by the assessee or the generation of huge surplus - HELD THAT - As Both the Ld. representatives of the parties, therefore, submitted that since the matter has not been properly examined either by the Assessing Officer or by the CIT(A), hence, the same be restored to the file of the Assessing Officer for proper appreciation of the facts and the decision in accordance with law. The order of the lower authorities are set aside and the matter is restored to the file of the Assessing Officer for decision afresh in the accordance with law. Needless to say that the Assessing Officer will provide proper opportunity to the assessee to present its case. Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Exemption under section 11 of the Income Tax Act denied to the assessee by the Assessing Officer.
2. Appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals).
3. Allegations of commercial activity by the assessee society.
4. Disallowance of exemption under section 11 by the Assessing Officer.
5. Appeal by the assessee before the Ld. CIT(A).
6. Appeal by the Revenue against the decision of the Ld. CIT(A).
7. Proper examination of facts and figures for a decision in accordance with the law.

Analysis:
1. The case involved an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) regarding the denial of exemption under section 11 of the Income Tax Act to the assessee. The Assessing Officer had noted that the assessee was not fulfilling conditions under section 11 r.w.s. 2(15) of the Act, alleging commercial activity and diversion of receipts to a private Ltd. Company. The AO issued a show cause notice, which the assessee responded to by citing relevant circulars and judgments supporting its stance on surplus generation not being a ground for denial of exemption.

2. The Assessing Officer, however, did not accept the assessee's contentions and denied the deduction claimed under section 11. The assessee then appealed before the Ld. CIT(A), who allowed the appeal based on previous case laws stating that surplus generation alone was not sufficient to deny exemption. The Revenue, dissatisfied with this decision, appealed to the ITAT Chandigarh.

3. During the hearing, both parties argued that the matter had not been properly examined by the lower authorities. The Ld. Counsel for the assessee contended that the Assessing Officer's conclusion of large-scale commercial activity was incorrect, while the Ld. DR pointed out that the CIT(A) had not adequately considered the relevant income figures. Consequently, the ITAT Chandigarh set aside the orders of the lower authorities and remanded the matter to the Assessing Officer for a fresh decision in accordance with the law.

4. The ITAT Chandigarh directed the Assessing Officer to provide the assessee with a proper opportunity to present its case and instructed the assessee to cooperate without delaying the proceedings. The appeal of the assessee was allowed for statistical purposes, emphasizing the need for a thorough examination of facts and figures to reach a legally sound decision.

This detailed analysis outlines the progression of the case, highlighting the key legal issues, arguments presented by both parties, and the ultimate decision of the ITAT Chandigarh to remand the matter for a fresh assessment in adherence to legal principles.