2020 (9) TMI 283 - AT - Income Tax

Exemptions u/s. 11 and 12 - appellant was allowed registration u/s. 12AA by the CIT concerned during the pendency of appeal - HELD THAT - In the present case it appears that when the A.O. framed the assessment and the Ld. CIT(A) decided the first appeal, the assessee could not produce the certificate of Registration granted under section 12AA of the Act which the Ld. Counsel for the Assessee claimed that now the assessee in a position to produce the said certificate. We therefore by keeping in view the peculiar facts of this case and the principles of natural justice, deem it appropriate to set aside this case back to the file of the A.O. to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. Appeal of the Assessee is allowed for statistical purposes.

Summary

Issues:
1. Appeal against the order of Ld. CIT(A), Karnal.
2. Denial of exemption u/s. 10(23) (iiiad) and addition of income.
3. Dispute regarding treatment of donation received.
4. Quantum of addition disputed.
5. Additional ground raised regarding registration u/s. 12AA.
6. Assessment based on lack of registration under section 12AA.
7. Request for restoration of matter to A.O. for fresh decision.

Analysis:
1. The appeal was filed against the order of Ld. CIT(A), Karnal, challenging the denial of exemption u/s. 10(23) (iiiad) and subsequent additions to the income. The appellant contended that the orders were illegal, erroneous, and perverse, seeking their quashing.

2. The Ld. CIT(A) concurred with the Assessing Officer's decision to deny exemption u/s. 10(23) (iiiad) and made additions to the income. The appellant disputed the treatment of surplus taxable income above a certain threshold, income from other sources, and the classification of donations as revenue receipts instead of capital receipts.

3. An additional ground was raised regarding the appellant's registration u/s. 12AA during the pendency of the appeal. The appellant argued that this registration qualified them for exemptions u/s. 11 and 12 of the Income Tax Act, 1961, citing legal precedence from the Supreme Court.

4. The Tribunal admitted the additional ground, emphasizing that it was a legal issue crucial to assessing the appellant's tax liability. The facts supporting this ground were on record, aligning with the principles of natural justice and the need for a fair hearing.

5. The Assessing Officer initiated proceedings under section 147 r.w.s. 148 of the Income Tax Act 1961 due to the appellant's failure to file the return of income. Various additions were made to the income, including surplus amounts, interest, and donations, resulting in the assessment of income at a specific figure.

6. The Ld. CIT(A) upheld the additions, noting the absence of registration under section 12AA. Lack of evidence regarding the treatment of donations further supported the decision to sustain the additions made by the Assessing Officer.

7. The Tribunal, after considering submissions from both parties, decided to set aside the case to the Assessing Officer for a fresh decision. This was based on the appellant's claim of possessing registration under section 12AA, which was not available during the initial assessment and appeal proceedings.

In conclusion, the appeal of the Assessee was allowed for statistical purposes, with the matter being remanded to the Assessing Officer for a fresh decision in light of the appellant's registration under section 12AA.