9911796707
TMI Blog2025 (1) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. 3. The revenue has raised the following grounds of appeal: "1. The order of the Learned CIT(A) is contrary to the law and facts of the case. 2.1 When the exemption claimed by the assessee u/s. 11 and 12 of the Act was denied on more than one ground, whether the Ld.CIT(A)is right in deciding the appeal only on one ground viz. absence of accounts in respect of past period? 2.2 Whether the Ld.CIT(A) was right in omitting the fact that the audit report in Form 10B was not filed within stipulated time and thus the assessee failed to comply with the requirements of Section 12A(b)? 2.3 The ld.CIT(A) erred in not considering the fact that accounts submitted by the assessee for the AY 2007-08 were not full and complete without inclusion of the accounts of 'Balamurugan Hostel/ Mess '? 2.4 Whether the ld.CIT(A) was right in overlooking the auditor's report that "the accounts of Balamurugan Hostel/Mess have not been considered for audit"? 3. The ld.CIT(A) failed to appreciate the fact that the AO had clearly stated 'the receipts and payments account filed had many items relating to the hostel and mess including the receipt of Rs. 28,14,710/- towards hostel fee col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also without considering the balances as on 28.5.05. The accounts of Balamurugan Hostel/Mess have not been considered for audit " 7. In view of the above, the AO in his order u/s. 143(3) dated 03.12.2009, noted the following discrepancies and disallowed the exemption u/s. 11 of the Act: "Though, the Managing Trustee, Hon'ble Justice A, Ramamoorthy has elaborated on the intended activities of the trust, the question has not been answered as to why the trust should not be denied the exemption u/s 11 owing to the fact that the heavy balances of deposits and investments as on 28.5.05 have not come to light. The sums which were deposited, invested, extended as loan and advances during the period 1.4.04 to 28.5.05 are still in dark. I am of the considered opinion that the possibility of the funds of the trust lying with modes of deposits other than contemplated u/s 11(5) and misuse of funds by the concerned parties who had been running the trust cannot be ruled out. The opening balances as on 29.5.05 could not be certified by the auditors as to their accuracy and their true application during the blank period. The trust has not fulfilled the requirements of Sec. 12A(b) within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Rs.1,18,81,100 Add: Interest u/s. 234A Rs. 10,69,299 Interest u/s. 234B Rs. 39,20,763 Rs. 49,90,062 Total demand payable Rs.1,68,71,162 (Rupees one crore sixty eight lakhs seventy one thousand one hundred sixty two only) Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) and later migrated to CIT(A) - NFAC. 9. Before the ld.CIT(A), the assessee submitted that after appointment of Managing Trustee by the Hon'ble High Court of Madras on 29.04.2005, the return of Income for the A.Y.2007- 08 was filed under the direction of the Apex court with all statements along with an audit report in form No 10B of the Act. Under the Circumstances of non-filing of return for A.Y.2005-06 & 2006-07 the assessment for 2007-08 was completed u/s. 143(3), denied the exemption claimed u/s. 11 of the Act and opinion that the possibility of the funds of the trust lying with modes of deposits Other than contemplated u/s. 11(5) and misuse of funds by the concerned parties. Further the AO stated that the opening balances as on 29.05.2005 could not be certified by the auditors as to their accuracy and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low the exemption claimed u/s 11 of the act for AY 07-08 and allow the appeal and render justice. 10. On perusal of the submissions made by the assessee before the ld.CIT(A), the appeal of the assessee was allowed by passing an order dated 21.12.2023 holding as under: "6.4 The reply of the appellant is considered. It is noted that the exemption for the AY 2005-06 and AY 2006-07 already stand allowed by the AO in the remanded assessment proceedings after the original assessment orders were set aside by the ITAT, Chennai by its order No.1314 & 1315 dated 09.09.2011. It is also noted that there has been no change in the object of the trust, and as confirmed by the appellant, the trust continues to run the college under the control of a court appointed administrator. 6.5 Under these circumstances, the very basis of denial of exemption, Viz. absence of accounts in respect of past period leading to suspicions about the opening balances as on 01.04.2006 is now gone. There is no justification for denial of exemption u/s 11 to the appellant in the A.Y. 2007-08 in the light of the settled position of the assessments for the A.Y. 2005-06 and A.Y. 2006- 07, after two rounds of litigation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and hence there is no fault in the order of the Ld.CIT(A) in granting the exemption to the assessee. In light of the above submissions, the ld.AR prayed for dismissing the appeal of the revenue. 13. We have heard the rival contentions, materials available on record and gone through the orders of the lower authorities. It is admitted fact that the assessee is a trust having registered u/s. 12A and carrying on the activities of education. The AO had denied exemption u/s. 11 of the Act for the impugned assessment year for the reason that the books of accounts of the earlier two A.Ys.2005-06 & 2006-07, were not audited and the opening balances for the impugned A.Y. has been taken are incomplete and hence the application of funds for the purpose of objectives of the trust is not acceptable. The ld.CIT(A) has decided the issue in favour of the assessee by allowing the exemption to the trust u/s. 11 of the Act based on the fact that the accounts for the A.Y. 2005-06 & 2006-07 were later audited and the assessee also filed the returns for the said A.Ys. and the assessment order u/s. 144 of the Act was completed by the AO by denying exemption u/s. 11 of the Act for both the years. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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