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2015 (2) TMI 2 - AT - Income TaxUnaccounted donations - CIT(Appeals) not accepting the status of appellant as EDUCATIONAL INSTITUTION - whether Assessing Officer has not afforded proper opportunity of being heard to the appellant, even after narrating the facts - Held that - the present case it is an admitted fact that the AO allowed the last opportunity to the assessee by fixing hearing of the case on 03.11.2006. On the said date, the assessee could not appear and the explanation was given that the local elections being held in some parts of the District Bulandshahar, Gautam Budh Nagar, Noida, and the boarders were sealed, so there was a reasonable cause for not attending the proceedings on 03.11.2006. The contention of the assessee that on 06.11.2006 counsels as well as the president of the assessee society appeared before the AO had not been rebutted. It is also noticed that the assessment order has been passed by the AO on 06.11.2006. In the present case the assessee furnished the details of the donors in which the old and new addresses were mentioned, but the ld. CIT(A) had not considered the said list of the donors while passing the impugned order. It is well settled that nobody should be condemned unheard as per the maxim Audi Alteram Pertam . In our opinion, in the present case a proper opportunity of being heard was not given to the assessee by the AO to explain its case. We, therefore, deem it proper to set aside the impugned order passed by the ld. CIT(A) and the issue is remanded back to the file of the AO for fresh adjudication in accordance with the law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statical purposes.
Issues Involved:
1. Addition of Rs. 20,16,000/- to the assessee's income. 2. Status of the appellant as an 'Educational Institution'. 3. Opportunity of being heard not provided to the appellant. 4. Penalty levied under section 271(1)(c) of the Income Tax Act. Detailed Analysis: 1. Addition of Rs. 20,16,000/- to the Assessee's Income: The assessee declared a loss of Rs. 17,600/- and showed a corpus fund of Rs. 26,15,775/- in its balance sheet, including a donation of Rs. 20,16,000/-. The Assessing Officer (AO) questioned the genuineness of the donation, as the assessee did not have registration under section 12A of the Income Tax Act. The AO observed that the entire donation amount was received and withdrawn on the same day, and summons issued to the donors were returned undelivered. The AO concluded that the assessee failed to prove the genuineness of the donations and added Rs. 20,16,000/- to the assessee's income. 2. Status of the Appellant as an 'Educational Institution': The assessee claimed exemption under section 10(23C) of the Income Tax Act, asserting that it was formed solely for educational purposes. However, the AO noted that the society had not started any educational activities, as it had not received physical possession of the plot allotted for setting up a school. Consequently, the AO rejected the claim for exemption, stating that the society had not demonstrated genuine educational activities. 3. Opportunity of Being Heard Not Provided to the Appellant: The assessee contended that proper opportunity of being heard was not provided, as the AO fixed the hearing date on 03.11.2006, coinciding with local elections, which restricted the assessee's ability to attend. The assessee's representatives appeared on 06.11.2006, but the AO had already passed the assessment order on the same day. The CIT(A) upheld the AO's decision, but the Tribunal noted that the assessee had provided new addresses of the donors, which were not considered by the CIT(A). The Tribunal emphasized the principle of "Audi Alteram Partem" (no one should be condemned unheard) and remanded the issue back to the AO for fresh adjudication after providing a reasonable opportunity of being heard to the assessee. 4. Penalty Levied Under Section 271(1)(c) of the Income Tax Act: The penalty under section 271(1)(c) was levied based on the addition made by the AO. Since the Tribunal remanded the issue of the addition back to the AO, the penalty issue was also remanded for fresh consideration. The AO was directed to decide the penalty issue afresh after providing due and reasonable opportunity of being heard to the assessee. Conclusion: The Tribunal set aside the CIT(A)'s order and remanded the case back to the AO for fresh adjudication on both the addition of Rs. 20,16,000/- and the penalty under section 271(1)(c), ensuring that the assessee is given a proper opportunity to present its case. Order Pronounced: The order was pronounced in the open court on 19/12/2014, with both appeals allowed for statistical purposes.
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