2020 (11) TMI 763 - AT - Income Tax

Exemption u/s 11 12 denied - addition u/s 68 towards the loan amount received from its members - assessee has not been granted registration u/s 12A/12AA though the assessee has claimed to have submitted an application on 01/10/2003 - HELD THAT - This is a question of fact regarding submitting of the application on behalf of the assessee as claimed on 01/10/2003 seeking registration u/s 12A - assessee has not filed any record or copy of the alleged application either before the authorities below or before the Tribunal. The assessee is strongly relied upon a letter dated 31/03/2005 issued by the ITO, Dausa wherein it is stated that till application of the assessee is disposed off for grant of registration U/s 12A of the Act, the assessee will get the benefit of exemption u/s 11 and 12 It is no clear that in what capacity, the said letter dated 31/03/2005 was issued by the ITO, Dausa whether he was functioning on behalf of the ld. CIT(Exemptions), Jaipur or not. Further all these facts require a proper scrutiny of the record and particularly any documentary evidence to be filed by the assessee to show that any application on behalf of the assessee was submitted for seeking registration U/s 12A and which has not been decided till date. There is no dispute in this appeal regarding the registration U/s 12A of the Act but the assessee is seeking an exemption U/s 11 and 12 of the Act. Since the ld. CIT(A) has decided the appeal of the assessee ex parte and that too by a summary non-speaking order, therefore, we grant one more opportunity to the assessee to present its case before the ld. CIT(A) and also to produce the supporting evidence for the claim of pendency of the application for registration U/s 12A of the Act and consequential claim of exemption u/s 11 and 12 of the Act. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Denial of exemption under section 11 & 12 of the Income Tax Act 1961
2. Validity of computation of total income by the Assessing Officer (AO)
3. Addition made under section 68 of the Income Tax Act 1961
4. Computation of tax liability by applying the maximum marginal rate
5. Initiation of penalty under section 271(1)(c) of the Income Tax Act

Analysis:

1. The appeal was against the order of the ld. CIT(A) denying exemption under sections 11 & 12 of the Income Tax Act 1961. The assessee, a society engaged in charitable works, claimed exemption but was found ineligible due to lack of registration under section 12A/12AA. The AO disallowed the exemption and made additions under section 68. The assessee's challenge before the ld. CIT(A) was dismissed due to non-appearance. The AR argued that the application for registration was pending since 2003, supported by a letter from the ITO acknowledging the pending application. The department contended that no evidence of application was produced. The Tribunal granted one more opportunity for the assessee to produce evidence before the ld. CIT(A) to decide the appeal on merit.

2. The validity of the computation of total income by the AO was questioned by the assessee. The AR argued that denial of exemption was unjustified due to the pending registration application. The department maintained that without registration, the assessee was not entitled to exemption. The Tribunal directed the assessee to provide supporting evidence for the pending application to determine the validity of the computation.

3. An addition under section 68 of the Income Tax Act 1961 was made by the AO towards a loan amount received from members. The assessee challenged this addition, citing the pending application for registration. The Tribunal allowed the appeal for statistical purposes, granting the assessee an opportunity to present evidence before the ld. CIT(A) for a proper decision on the addition.

4. The computation of tax liability by applying the maximum marginal rate was contested by the assessee as invalid. The AR argued that due to unavoidable circumstances, the assessee could not appear before the ld. CIT(A), resulting in an ex parte dismissal. The Tribunal's decision to grant another opportunity to the assessee aimed to address the computation issue along with other grounds raised in the appeal.

5. The initiation of penalty under section 271(1)(c) of the Income Tax Act was also challenged. The Tribunal's decision to allow the appeal for statistical purposes indicated a procedural victory for the assessee, emphasizing the need for a fair opportunity to present evidence and arguments before the authorities for a just decision.