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2021 (6) TMI 891 - AT - Income TaxExemption u/s 11 - addition made in respect of the net surplus when the assessee failed to submit evidence in support of the amount spent and also failed to prove that the same was spent only for the aims and objectives of the society - CIT-A deleted the addition - HELD THAT - The assessee itself admitted that by filing a letter regarding the closure of business due to unhealthy competitions and several disputes and discrepancies among the board members of the society. In the absence of books of accounts and vouchers, the AO was unable to ascertain as to whether the receipts have been utilized only for the aims and objects of the society. The order of the CIT(A) is contrary in nature. Therefore, considering the totality of the facts of the case, to meet the ends of justice, we remit the issue back to the file of the AO with a direction to decide the appeal on merits after examining the documentary evidence as required for claiming exemption u/s. 11 by the Assessee, which will be put-forth by the assessee before him. Grounds raised by the revenue are treated as allowed for statistical purposes.
Issues:
1. Allowance of appeal by CIT(A) in favor of the assessee. 2. Deletion of addition made by AO regarding net surplus. 3. Disregarding lack of evidence for exemption u/s. 11 of the IT Act. 4. Disregarding closure of college and disputes among board members. 5. Grounds for appeal by the revenue before ITAT. Analysis: Issue 1: Allowance of appeal by CIT(A) in favor of the assessee The appeal filed by the Revenue was directed against the order of the CIT(A) for AY 2014-15 under proceedings u/s. 144 of the Income Tax Act, 1961. The CIT(A) directed the AO to grant exemption u/s. 11 and delete the addition of the net surplus amount based on a previous decision in the assessee's own case for AY 2009-10. This decision was the primary reason for the Revenue's appeal before the ITAT. Issue 2: Deletion of addition made by AO regarding net surplus The AO disallowed exemption u/s. 11 and treated the disclosed surplus income as the assessee's business income due to the lack of submission of books of account and vouchers by the assessee. The CIT(A) directed the AO to allow the exemption based on the previous assessment for AY 2009-10. The ITAT found discrepancies in the CIT(A)'s decision and remitted the issue back to the AO for a thorough examination of documentary evidence to substantiate the claim for exemption u/s. 11. Issue 3: Disregarding lack of evidence for exemption u/s. 11 of the IT Act The AO disallowed the exemption claimed u/s. 11 due to the assessee's failure to provide necessary documents for verification. The CIT(A) directed the AO to grant the exemption based on a previous assessment, which the ITAT found to be improper. The ITAT emphasized the importance of documentary evidence to support the claim for exemption u/s. 11. Issue 4: Disregarding closure of college and disputes among board members The CIT(A) relied on the assessee's submission regarding the closure of the college and disputes among board members but failed to establish that the society's activities were genuine and charitable. The ITAT noted the lack of evidence to ascertain whether the receipts were utilized for the society's aims and objects, leading to a remittance of the issue back to the AO for further examination. Issue 5: Grounds for appeal by the revenue before ITAT During the ITAT proceedings, the respondent-assessee did not appear. The ITAT considered the arguments presented by the ld. DR and the facts on record. The ITAT found discrepancies in the CIT(A)'s decision and remitted the issue back to the AO for a thorough examination of documentary evidence to substantiate the claim for exemption u/s. 11. The appeal of the revenue was treated as allowed for statistical purposes. In conclusion, the ITAT remitted the issue back to the AO for a detailed examination of the documentary evidence required to support the claim for exemption u/s. 11. The importance of providing necessary documentation to substantiate claims under the IT Act was emphasized throughout the judgment.
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