ITAT repeals order passed under the IT Act

ITAT repeals order passed under the IT Act

The tribunal maintained that the department assumed the assessment mandate was erroneous

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has quashed an order passed under the Income Tax Act, 1961.

ITAT observed that the order had not stated any specific reason why the assessment demand allowing an exemption of 15 percent for the income from the government grants was erroneous or prejudicial to the revenue.

The assessee, Society For Gujarat Dental Health Education And Research had filed its Income Tax Return (ITR) for the Assessment Year 2014-2015. Therein, after claiming its income exempt under the IT Act, it declared NIL income.

The case came under scrutiny and the income was assessed at Rs.96,24,705. On verification of the records, the Ld. Commissioner of Income Tax (Exemption) found that the assessing officer (AO) had not assessed the income correctly. The assessee had been granted excess exemption of 15 percent of its income on grants from the state government for Rs.4.72 crores.

Thereafter, an order was passed against the assessee under the IT Act.

The tribunal bench comprising Madhumita Roy (JM) and Annapurna Gupta (AM) held that the IT department had just assumed that the assessment order was erroneous.

The tribunal questioned why the assessee was not entitled to an exemption. The bench stated, "There is nothing in the entire show-cause notice bringing out how and why the assessee was not eligible, as per the provisions of the law to claim the exemption of 15 percent of the grants received."

It further stated, "We, therefore, hold that the CIT(E) failed to find any error causing prejudice to the revenue. The order passed is, therefore, not sustainable in law and is accordingly set aside."

The appellants were represented by advocate KC Thaker.