2024 (7) TMI 138 - AT - Income Tax

Best judgment assessment u/s 143(3) - as argued Assessment framed u/s 143(3) of the Act as against required to be framed u/s 144 of the Act is illegal and bad in law - Eligibility to exemption u/s 11/12 - adhoc disallowance of all expenses debited in income and expenditure account - HELD THAT - As no documentary evidences has been filed by the assessee neither before the AO nor before the first appellate authority, in support of the income and expenditure account and the balance sheet and no books of account has been produced at any stage. We also find that the ld. CIT(A) has issued four notices through the departmental portal and also in the given E-mail ID available in the departmental portal but there was no compliance of the assessee at any stage. Before the tribunal, the assessee has taken a fresh grounds regarding applicability of section 12AA of the Act, where the benefits of section 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceedings for an earlier assessment year which is pending before the AO as on the date of such registration. Moreover, the CBDT Circular No. 01/2015 dated 21.01.2015 has also been cited by the ld. AR to argue the point that insertion of first proviso to section 12A(2) of the Act w.e.f. 01.10.2014 should be read as retrospective in operation. We find that this issue has neither been raised nor considered by the AO in course of assessment proceedings. We think it fit and proper to set aside the matter back to the file of the ld. AO for de novo fresh assessment - Appeal of the assessee is allowed for statistical purposes.

Issues Involved:
1. Delay in filing appeal and condonation of delay.
2. Disallowance of expenses and assessment under section 143(3) of the Income Tax Act.
3. Non-compliance and dismissal of appeal by the first appellate authority.
4. Applicability of section 12A of the Income-tax Act and retrospective operation of amendments.

Issue 1: Delay in filing appeal and condonation of delay:
The appeal was filed belatedly by 68 days, and the assessee submitted a condonation petition citing valid reasons for the delay. The delay was attributed to the illness and subsequent demise of the president's sister, affecting the functioning of the society. The delay was deemed unintentional, and in the interest of justice, the Tribunal condoned the delay.

Issue 2: Disallowance of expenses and assessment under section 143(3) of the Income Tax Act:
The appellant, a registered society running educational institutions, faced scrutiny under section 143(3) of the Income Tax Act. The Assessing Officer made ad hoc disallowances based on assumptions due to lack of documentary evidence and non-production of books of accounts during scrutiny. The first appellate authority upheld the assessment, noting the lack of cooperation from the appellant and dismissed the appeal.

Issue 3: Non-compliance and dismissal of appeal by the first appellate authority:
The first appellate authority rejected the appeal due to the appellant's failure to produce material to challenge the AO's findings. Despite repeated requests, the appellant did not provide supporting documents, leading to the dismissal of the appeal for lack of interest in prosecuting it. The Tribunal noted the absence of cooperation and non-compliance by the appellant throughout the proceedings.

Issue 4: Applicability of section 12A of the Income-tax Act and retrospective operation of amendments:
The appellant raised grounds related to the applicability of section 12A of the Income-tax Act, citing CBDT Circular and amendments effective from 1st October 2014. The Tribunal found that the issue was not considered during assessment proceedings and remanded the matter to the AO for fresh assessment, considering all arguments, applicable circulars, and supporting documentary evidence. The appeal was allowed for statistical purposes.

In conclusion, the Tribunal addressed issues related to delay in filing the appeal, disallowance of expenses, non-compliance by the appellant, and the applicability of relevant provisions of the Income-tax Act, ensuring a fair and thorough examination of the case before reaching a decision.

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