DCIT vs. SAR Educational Society, ITA No. 3429/Del/2024
Delhi Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeal against an order passed under Section 144 of the Income Tax Act, 1961, holding that the Commissioner of Income Tax (Appeals) was justified in accepting additional evidence submitted by the assessee under Rule 46A due to non-submission of a remand report by the Assessing Officer (AO).
Background:
The case involved assessment proceedings for AY 2016–17, where the AO passed an ex parte order under Section 144 due to alleged non-compliance by the assessee. In the assessment:
- Only 50% of revenue expenditure was allowed (instead of 100% claimed under Sections 11 & 12).
- Capital expenditure towards fixed asset purchases was disallowed.
- Certain donations were treated as anonymous, and corpus donations were excluded.
- The AO even proposed cancellation of registration under Sections 12AA(3) and 12AA(4).
The assessee later filed an appeal with CIT(A), submitting additional evidence including bills, vouchers, and audited accounts.
CIT(A) Findings:
The CIT(A):
- Accepted the additional evidence under Rule 46A, having called for a remand report multiple times — but received no response from the AO or NFAC.
- Noted that all such expenses had been allowed in earlier years.
- Observed that there were no corpus or anonymous donations during the relevant year.
- Found that proper books of accounts were maintained and audited.
The issue of proposed cancellation of registration under Section 12AA was held to be beyond the scope of appellate jurisdiction.
ITAT Verdict:
The ITAT upheld the findings of the CIT(A), stating:
“In the light of the facts discussed, we are of the considered view that the grounds of challenge have no substance. The appeal of Revenue is dismissed.”
It concluded that non-cooperation by the AO during remand proceedings justified the CIT(A)’s reliance on additional evidence. The tribunal emphasized that procedural fairness was followed, and the Revenue’s objections lacked merit.
Key Takeaway:
This case underscores the importance of departmental cooperation during appeal proceedings. Where the AO fails to respond to remand reports or contest additional evidence meaningfully, appellate authorities are well within their rights to adjudicate in favour of the taxpayer.