Gelli Narayana Chetty Trust, Hyd, ... vs Assessee

ITA No.350/Hyd/15 : Assessment year 2003-04

Shri Gelli Narayana Chetty V/s. Director of Income-tax Trust, Hyderabad (Exemption), Hyderabad

(PAN - AAATG 4429 R )

(Appellant) (Respondent)

Appellant by : Shri P.Murali Mohan Rao

Respondent by : Shri Ramakrishna Bandi Date of Hearing 15.05.2015 Date of Pronouncement 15.05.2015

ORDER

This appeal by the assessee trust is directed against the order dated 18.7.2014 passed by the Commissioner of Income- tax(Appeals) IV, Hyderabad and it pertains to assessment year 2003-04.

2. The assessee is engaged in carrying on charitable activities. For the year under consideration, the assessee admitted 'nil' income after claiming exemption under S.11 of the Income Tax Act,1961, and the same was processed under S.143(1) of the Act. Subsequently, the same was reopened by issuing notice under S.148. In response to it, the assessee filed a revised return on 29.12.2004. It appears that the assessee has filed Form No.10 alongwith the revised return of income.

3. The case of the Assessing Officer, on the other hand, was that the assessee trust has not filed Form No.10 with the return of income filed on 19.9.2003, and copy of the Resolution 2 ITA No.350/Hyd/2015 M/s.Gelli Narayana Chetty Trust, Hyderabad

was also not filed with the return of income, and therefore, it cannot be said that the assessee trust has applied 85% of the income towards charitable activities, in order to claim exemption under S.11 of the Act. He accordingly brought to tax a sum of Rs.4,62,874.

4. Aggrieved, assessee contended before the CIT(A) that the assessee has accumulated unutilised amount under S.11(2) of the Income Tax Act,1961, and filed Form 10 alongwith the revised return of income, in which event, the claim of exemption should not have been denied. The total income earned in this year worked out to Rs.5,71,581, which consists of donations and interest received. The assessee applied only a sum of Rs.22,975 towards charitable purposes, and the balance was accumulated.

5. It deserves to be noticed hat in the immediately preceding year also, the Assessing Officer rejected the claim of exemption on the ground that the assessee did not file auditor's report and Form 10, alongwith the original return of income and when the matter was considered by the first appellate authority, the learned CIT(A) IV observed that the Assessing Officer could not furnish records and in the absence of records, it is difficult to ascertain as to whether the assessee has furnished form No.10 and copy of the resolution passed and auditors' report alongwith the revised return during the course of assessment proceedings, and thus concluded that the assessee would be entitled to claim exemption. However, for the assessment year 2003-04, on the same date another order was passed by considering the issue on the same terms, but from para 5.2 onwards, the learned CIT(A) noticed that the assessee accumulated amount of Rs.6,70,927 under S.11(2) of the Act, whereas the total income of the assessee 3 ITA No.350/Hyd/2015 M/s.Gelli Narayana Chetty Trust, Hyderabad

stands at Rs.5,71,586, in which event the accumulation is much more than the income earned, which is not permissible.

6. The learned counsel submitted that it is not known as to wherefrom the figure of Rs.6,70,927 emerged and noted by the Assessing Officer as well as the CIT(A), particularly when the same was pointed out before the CIT(A); as mentioned in para 5.4 of the CIT(A)'s order, the total income of the assessee as per Income and Expenditure Account is only Rs.5,71,586.62 and not Rs.6,70,927. In the absence of any evidence to the contrary, the learned CIT(A) was not justified in taking a diametrically opposite view on the same set of facts for the assessment year 2003-04, having accepted the plea of the assessee for assessment year 2002-03.

7. The Learned Departmental Representative, on the other hand, submitted that there is a categorical finding in the order passed by the CIT(A) that the accumulation is much more than the income, and hence, it is for the assessee to prove that factually it is not correct.

8. The learned counsel, joining the issue, submitted that pages 9 to 20 of the paper-book represent the papers filed before the CIT(A) and the figure Rs.6,70,927 does not emerge from these papers, and as an officer of the Court, he submits that the assessee has not furnished such figure and hence, it is not known as to wherefrom the Assessing Officer or CIT(A) has taken that figure. He emphasized that the total receipts are Rs.5,71,586 in which event, consistent with the view taken by the CIT(A) in assessee's own case for the immediately preceding year, the assessee should have been allowed to accumulate the amount under S.11(2) of the Act.

4 ITA No.350/Hyd/2015 M/s.Gelli Narayana Chetty Trust, Hyderabad

9. I have carefully considered the rival submissions and perused the record. I have carefully verified the material papers placed before me. I have gone through the order passed by the CIT(A) in assessee's own case for assessment year 2002-03, wherein in identical circumstances, the assessee was given the benefit of doubt and concluded that the assessee is entitled to accumulate the unutilised fund, since From 10 alongwith the auditor's report was furnished alongwith the revised return. Having regard to the circumstances of the case, I deem it fair and reasonable to set aside the order passed by the CIT(A) and restore the matter to his file with a direction to the learned CIT(A) to reconsider the matter in the light of the view taken in assessee's own case for assessment year 2002-03; if, by the time case is reconsidered by the CIT(A), the Tribunal takes any view in assessee's own case for the earlier year, the same can also be taken into consideration by the learned CIT(A). With these observations, the matter is set aside to the file of the CIT(A) and the learned CIT(A) is directed to reconsider the matter by assuming that the accumulation is not more than the actual amount received in this year, unless it is proved that the assessee has admitted at any stage of the proceeding with regard to accumulation in excess of the receipts. The learned CIT(A) is accordingly directed to redecide the issue in accordance with law and after giving reasonable opportunity of hearing to the assessee.

10 In the result, appeal filed by the assessee is treated as allowed for statistical purposes.

5 ITA No.350/Hyd/2015 M/s.Gelli Narayana Chetty Trust, Hyderabad

As pronounced in the open court at the conclusion of hearing, appeal of the assessee is dismissed.

Sd/-

(D.Manmohan) Vice President

Dt/- 15th May, 2015

Copy forwarded to:

1. Shri Gelli Narayana Chetty Trust, C/o. M/s.P.Murali & Co., Chartered Accountants, 6-3-6755/2/3, 1st Floor, Somajiguda, Hyderabad-82

2. Asstt. Director of Income-tax(Exemption) Hyderabad

3. Commissioner of Income-tax(Appeals) IV, Vijayawada

4. Commissioner of Income-tax III, Hyderabad

5. Departmental Representative, ITAT, Hyderabad.

B.V.S