9911796707
TMI Blog2025 (4) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... etails required. 2.1 The assessee is registered as a society under the Rajasthan Societies Registration Act, 1958. The certificate issued u/s. 12AA of the Income Tax Act, 1961 was withdrawn by the Commissioner of Income Tax-I, Jaipur on 28.12.2010 w.e.f. 2005-06 which was subject matter of appeal and our own Hon'ble Rajasthan High Court disposed of that appeal in favour of the assessee. 2.2 In the return of income filed, association has declared total receipts at Rs. 1,80,34,791/- out of which Rs. 1,53,29,572/- claimed as application of income and claimed income accumulated or set a part u/s. 11(1)(a) of the Act upto 15 % at Rs. 27,05,219 [ 15 % of 1,80,34,791/- ] and thereby assessee trust declared Nil total income. 2.3 Ld. AO in the assessment proceeding noted that during the year under consideration the assessee has shown receipt at Rs. 1,80,34,791/- against which expenditure of Rs. 4,88,80,927/- resulting in excess of expenditure over income at Rs. 3,08,46,136/-. Based on that observation the claim made by the assessee to the extent of 15 % of income for an amount of Rs. 27,05,219/- was denied as claimed as per provision of section 11(1)(a) of the Act and thereby the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income tax liabilities". If it is not so, then the present narrative will a obviously collapse. In these circumstances, as is clear, debatable issues are outside the ambit of provisions 154 of the Act. On the other than hand, if it is presumed that these are set-apart amounts u/s 11(1)(a), then also the stand adopted by the assessee is subject to long discussion and debate as set apart u/s 11(1)(a) of the Act is permissible on the unspent receipts of out of current years receipts and expenditure subject to maximum of 15% of gross receipts of the year. There is no ambiguity in so far as set-apart allowed u/s 11(1)(a) is concerned as it states that if assessee could not spent 100% of current years receipts but spent at-least 85% out of current years receipts, then it is permitted to set-apart remaining 15% without any conditions. Things gives further clarity from the fact that if the amount expended towards the objects is more than 85%, then only the remaining portion out of current years receipts is allowed to be set-apart u/s 11(1)(a). This means, 15% set-apart is not a fixed standard deduction. Total receipts as per assessment records for A.Y. 2016-17 is Rs 1.80,34,791/- agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO. The rectification application rejected by the AO vide its order dated 15.12.2020 as under- "The explain discrepancies found on the documents furnished during the course of assessment proceedings. Now assessee has filed application us/ 154 with the explanation that the excess expenditure was met out from accumulated funds of earlier years i.e. F.Y.2011-12, 2012-13 & 2012-13 and therefore, set-apart of 15% claimed is correct and therefore, requested to rectify the same by passing order u/s 154 of I.T. Act, 1961. The justification furnished in the application in support of its submission is as under:- Details of income applied during the years ended 31.03.2016 Particular Amount Gross expenses as per I & E account 4,88,80,927 Less: Depreciation 1,24,78,834 Add: Income Tax Demand deposited 4,25,00,000 Add: Acquisition of fixed assets for the objects of the Association 83,413 7,89,85,506 Less: Application out of the amount accumulated during F.Y. 2011-12 1,26,00,000 Less: Applications out of the amount accumulated during the F.Y. 2012-13 1,56,89,251 Less: Applications out of the amount accumulated dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit/furnish such details/information called for by the AO during assessment proceedings, the same cannot be given any cognizance in the present application as the same are outside the ambit of provisions of section 154 of the Act. Therefore, after considering the above facts and position of the case, the present rectification application cannot be accepted and accordingly rejected as the same lack merits." As discussed above by AO in his rectification order, the matter needs verification and analysis on the claims made by appellant and is not some mistake apparent on record. Hence, this issue cannot be dealt u/s. 154. In view of this action of AO is upheld and grounds of appeal are dismissed." 4. Feeling dissatisfied with the finding so recorded by the ld. CIT(E) the assessee preferred the present appeal on the following grounds before this tribunal : "1. That the Ld. CIT(A) erred in upholding the AO's conclusion that the appellant association failed to provide necessary evidence in support of its claim. 2. That the Ld. CIT(A) failed to consider that the assessment order passed by the AO contained a computational error and a misapplication of law, both of which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is apparent that the Learned AO erroneously passed the order without making proper computation of the applications of income detailed by the appellant in the Income Tax Returns along with the Form 10 filed and other documents/information attached thereto. The same was also explained by way of submissions and details filed during assessment proceedings. In the Return filed the computation was submitted for the application of income as per the provisions of section 11 and the balance of Rs. 27,05,219/-, being within 15% of the income, eligible as set apart u/s 11(1)(a) was mentioned. And thereafter, the total income which comes to NIL was mentioned. The Ld. AO not disputed the expenditure and income as per the Income and Expenditure account and also passed the order at NIL income but has wrong fully mentioned that the claim of set apart u/s 11(1)(a) (upto 15% of total income) is only available if there is a surplus. Though there was no tax effect but due to improper computation made by the Ld. AO, the appellant filed application u/s 154 of the I.T. Act, 1961 on 19.11.2020 explaining that theLd. Assessing Officer has made wrong computation at his own and has not made computation on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose, including the annual accounts, return of income, Audit report in Form 10B, computation of income etc. The copy of the submission made on 19.11.2018is also forming part of the paper book at page 1-2. 3. It is already settled that the appellant is registered under section 12A, benefits of section 11 and 12 are available for which the return of income in the prescribed format was filed, the details and information as required were submitted, thereafter, neither any specific information/document was asked for nor it was required. 4. That, it is a well-settled law that the set apart under section 11(1)(a) is unfettered and not subject to any conditions, there was no such necessary evidence which may have been submitted by the appellant Association. We rely on the decision of the Hon'ble Supreme Court in the case of A.L.N. Rao Charitable Trust(supra), wherein, it is held that exemption available u/s 11(1)(a) i.e. 15% of income is unfettered and not subject to any conditions. 5. However, instead of rectifying the mistake apparent on record, the Ld. AO passed an order under section 154, mentioning at page 3 of the 154 order that, "Since, assessee had failed to submit / furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80,34,791/- against which it had incurred expenditure at Rs 4,88,80,927/- resulting in excess of expenditure over income at Rs 3,08,46,136/-." 2. However, the applications made as per the Income Tax Return, computation of income, and the Form 10B were 1,53,29,572/- only. Further, there was no disallowance of any application by the Ld. AO as claimed in the income tax return by the appellant. The copy of the ITR and Form 10B (duly filed), is available with at paper book page 86 to 95 and page 75 to 79 respectively. The details as available on record before the Ld. Assessing Officer make it evident that out of the total expenditure of Rs. 3,64,02,093/- as per the income & expenditure accounts, only 1,53,29,572/- were applied out of the current year's income and the balance applications were made out of last year's income accumulations. The same is also evident from Annexure A to the audit report available at page79of the paper book. 3. That this evidently suggests, the Ld. AO has not gone through the Income Tax return and details for application claimed under section 11 of the Income Tax Act, 1961 Further at Para 5 of the Ld. AO's assessment order (concluding para) it was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order that, "Here it is not known either from the present application or assessment records that the assessee has filed Form No.10 within the stipulated time in the prescribed form and procedure and the purpose for which the same were filed in F.Ys.2011-12 to 2013-14. This is particularly so despite affording reasonable and sufficient opportunities to the assessee during assessment proceedings. Now, the only way left out to the AO by the assessee in assessment proceedings is to assume and complete assessment proceedings as it desires. It is clear from the above statement of ld. AO that, he has grossly erred in mentioning that the Form 10 for FY 2011-12 to FY 13-14 have to be verified now at the time when rectification has been sought of the mistake, while it is well known to the ld. AO that the assessment of all those previous years have already been completed under scrutiny assessment and further order under section 250 of the I.T. Act, 1961. Hence, it is very clear that all such records were available in his own files and knowingly mentioning the wrong facts were just with the intend to reject the application for rectification. Further, as per the assessment record which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balaram Vs. Volkart Bros. [(1971) 82 ITR 50 (SC)] 112-115 13. Written Submission 116-123 6. In addition to the written submission so filed by the assessee vehemently argued that claim of the assessee is separate claim as per provision of section 11(1)(a) of the Act can not be denied merely because the assessee incurred more expenditure in the year under consideration then the receipt. When the matter carried before the ld. CIT(A) he disposed of the appeal relying on the finding of the ld. AO that it requires verification of the forms filed for earlier years by the assessee and whether those forms were in time or not. Irrespective of that fact claim made by the assessee for the year under consideration as per provision of section 11(1)(a) of the Act cannot be denied as the claim and that of the expenditure cannot be linked together. 7. Per contra, Ld. DR relied upon the findings recording in the orders of the lower authority and submitted that the claim of the assessee is on the notional claim the same has rightly been denied. 8. We have heard the rival contentions and perused material available on record. In this appeal though the assessee has raised as much as six grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
