Sangam Laxmibai Vidyapeet, Hyderabad V. ADIT(Exemption)-II, Hyderabad

CO 11/HYD/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9567 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Reopening of assessment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1317/HYD/13 : ASSTT. YEAR 2005 - 06 ASSTT. DIRECTOR OF INCOME - TAX(EXEMPTION) II, HYDERABAD V/S. SANGAM LAXMIBAI VIDYAPEET, HYDERABAD ( PAN - AAATI 1287 M) (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.11/HYD/2014 (IN ITA NO.1317/HYD/13) : ASSTT. YEAR 2005 - 06 SANGAM LAXMIBAI VIDYAPEET, HYDERABAD ( PAN - AAATI 1287 M) V/S. ASSTT. DIRECTOR OF INCOME - TAX(EXEMPTION) II, HYDERABAD (CROSS OBJECTOR) (APPELLANT - IN - APPEAL) DEPARTMENT BY : SHRI SOLGY JOSE T.KOTTARAM DR ASSESSEE BY : SHRI C.P.RAMASWAMY DATE OF HEARING 27.05.2014 DATE OF PRONOUNCEMENT 27.05.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD, DATED 26.07.2013 FOR THE ASSESSMENT YEAR 2005 - 06. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN EDUCATIONAL SOCI E TY, AND I T FIL E D ITS RETURN OF INCOME FO R THE ASSESSMENT YEAR 2005 - 06 ON 1.11.2005, ADMITTING NIL INCOME. ASSESSMENT WAS ORIGINALLY COMPLETED ON 28.12.2007 BY THE DDIT(E) - II HYDERABAD, ON A TOTAL INCOME OF RS .42,25,000. SUBSEQ UE NTLY, BASED ON THE AIR INFORMATION, ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE UNDER S.148 OF THE ACT BY THE ITO WARD - 9 ( 2), HYDERABAD, ON THE GROUND THAT THE ASSESSEE ACQUIRED RBI BONDS WORTH R S . 2 CRORES . T HE ASSESSING OFFICER, WHO MADE THE IMPUGNED ASSESSMENT , GOT THE RECORDS TRANSFERRED FROM I TA NO. 1317/HYD/2013 & CO THEREIN SANGAM LAXMIBAI VIDYAPEET, HYDERABAD . 2 ITO WARD 9(2), AND DURING THE COU R SE OF RE - ASSESSMENT PROCEE D INGS ASKED THE ASSESSEE TO PRODUCE THE COPY O F APPROVAL UNDER S.10(23C)(VI ) AND A COPY OF R EGISTRATION UNDER S.12A OF THE ACT. AS THE ASSESSEE COULD NOT PRODUCE THE APPROVAL UNDER S.10(23C) OF THE ACT, HE HELD THAT ASS ESSEE IS NOT ELIGIBLE FOR EXEMPTION OF ITS INCOME FROM TAX, AND FURTHER OBSERVING THAT SINCE THE ASSESSEE IS RUNNING AN EDUCATIONAL INSTITUTION, IT IS ELIGIBLE FOR EXEMPTION, IF AT ALL, UNDER S.10(23C ) OF THE ACT, AND NOT UNDER S.11 OF THE ACT, PROCEEDED TO COMPLETE THE ASSESSMENT ON THE SURPLUS INCOME OF THE ASSESSEE OVER ITS EXPENDITURE, WHICH WAS DETERMINED AT R S .1,61,28,030, VIDE ORDER OF ASSESSMENT DATED 22.11.2010 PASSED UNDER S.143(3) READ WITH S.147 OF THE ACT. 3 . ON APPEAL, THE ASSESSEE CONT ESTED NOT ONLY LEGALITY AND VALIDITY OF REOPENING OF ASSESSMENT UN D ER S.147, BUT ALSO THE RE - ASSESSMENT COMPLETED THEREAFTER, BY REJECTING THE ASSESSEES CLAIM FOR EXEMPTION, ON ITS MERITS. THE CIT(A), OBSERVING THAT NO SPECI F I C ARGUMENTS HAVE BEEN ADVAN CED ON THE ASPECT OF LEGALITY OF REOPENING OF ASSESSMENT, REJECTED THE GROUND S OF THE ASSESSEE ON THAT ASPECT. AS FOR THE ASSESSEES CLAIM FOR EXEMPTION , THE CIT(A) FOLLOWING HIS ORDER DATED 11.1.2013 FOR THE ASSESSMENT YEAR 2006 - 07, ACCEPTED THE CLAIM FO R EXEMPTION UNDER S.10(23C) OF THE ACT. 4 . AGGRIEVED, REVENUE FILED APPEAL BEFORE US CONTESTING THE EXEMPTION GRANTED BY THE CIT(A) UNDER S.10(23C)(VI) OF THE ACT , WHEREAS THE A SSESSEE THROUGH THE GROUNDS RAISED IN ITS CROSS - OBJECTION, CONTESTED THE LEGALITY AND VALIDITY OF REOPENING O F THE ASSESSMENT. 5 . LET US FIRST DEAL WITH THE APPEAL OF THE REVENUE, WHEREIN E FFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL READ AS FOLLOWS - 1. THE ORDER OF THE LEARNED CIT( A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LD. CIT(A) ERRED I N HOLDING THAT THE ASSESSEE W A S GRANTED APPROVAL U/S. 10(23C)(VII) W.E.F. 15.1.1964, WHEREAS THE SECTION ITSELF WAS INSERTED IN THE FINANCE ACT W.E.F. 01.04.1999. I TA NO. 1317/HYD/2013 & CO THEREIN SANGAM LAXMIBAI VIDYAPEET, HYDERABAD . 3 3. THE LD. CIT(A) OUGH T TO HAVE APP R ECI A TED THE FACT THAT APPROVAL UNDER SUB - CLAUSE (VI) TO THE SECTION 10(23C) OF THE I.T. ACT, 1961 IS DISTINCT FROM PROVISION S O F SECTION 88(5) OF THE I.T. ACT. 4. THE LD. CIT(A) OUGHT TO H AV E APPRECIATED T H A T SUB - CLAUSE (VI ) TO SECTION 10(23C), AS INSERTED BY THE FIN A NCE ACT, 1998 W.E.F. 01.04.1999, STATES THAT THE UNI V ERSITY OR OTHER EDUCA T IONAL INSTITUTION EXISTING SOCI E TY FOR EDUCATIONAL PU R PO S E, AND WHICH MAY BE APP R O V ED BY THE PRE S CRIBED AUTHORITY. THE ISSUE IS EXPLICITL Y DEALT WITH BY THE AC T ITSELF AND THE INTENTION OF THE LEGISLATURE IS QUITE CLEAR FROM IT. 5. THE LD. CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT OBTAINING APP R O V AL FROM THE PRESCRIBED AUTHORITY IS MANDATORY, AS PER THE PLAIN MEANING OF SECITON10(23C)(VI ) OF THE I.T. ACT, 1961,WHENEVER THE GROSS RECEIPTS OF AN EDUC A T I ONAL IN S T I TUTION EXCEEDED RS.ONE CRORE. 6., THE DECISION OF LD. CIT(A) THAT IT HAS RELIED ON THE PREVIOUS DECISION OF HER IN THE ASSESSEES OWN CASE FOR SUBSEQUENT YEAR I.E. ASST. YEAR 2006 - 07 VIDE O R DER NO.581/ADIT(E) - II/CIT(A) - IV./11 - 12 DATED 11.1.2013 IS ERRONEOUS. BOTH THE DECISIONS OF THE CIT(A) ARE ON DIFFERENT LINES. 7. .. 6 . WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT THE IMPUGNED ORDER OF THE CIT(A) IN GRANTING EXEMPTION TO THE ASSESSEE IN RESPECT OF ITS INCOME UNDER S.10(23C) OF THE ACT, IS BASED ON HER DECISION IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006 - 07, VIDE ORDER DATED 11.1.2013. IT APPEAR S FROM THE IMPUGNED ORDER OF THE CIT(A) THAT DURING THE COURSE OF APPELLATE PROCEEDINGS FOR THAT YEAR, THE ASSESSEE HAS FILED BEFORE THE CIT(A), COPY OF THE APPROVAL OBTAINED BY IT FROM THE PRESCRIBED AUTHORITY UNDER S.10(23C) OF THE ACT, AND BASED ON SUCH APPROVAL, EXEMPTION WAS GRANTED TO THE ASSESSEE FOR THAT YEAR. EXCEPT FOR THE AVERMENT MADE, AS IN THE GROUNDS EXTRACTED ABOVE, THAT BOTH THE DECISIONS OF THE CIT(A) ON THE ISSUE FOR THE SUCCEEDING YEAR AND THE YEAR UNDER APPEAL ARE ON DIFFERENT LINES , NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SUBSTANTIATE THE SAID CONTENTION. IT IS ALSO NOT KNOWN WHETHER ANY APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2006 - 07, OR WHETHER THE VIEW TAKEN BY THE CIT(A) FOR THAT YEAR HAS ATTAINED FINALITY. IN THIS I TA NO. 1317/HYD/2013 & CO THEREIN SANGAM LAXMIBAI VIDYAPEET, HYDERABAD . 4 VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A), WHICH IS ACCORDINGLY UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE REJECTED. 7 . AS FOR THE GRI EV ANCE OF THE ASSESSEE IN ITS CROSS - OBJECTION, WE FIND THAT THE PROCEEDINGS FOR REOPENING OF THE ASSESSMENT IN THIS CASE HAVE BEEN INITIATED AFTER COMPLETION OF FOUR YEARS. THAT BEING SO, SUCH REOPENING COULD BE HELD TO BE VALID, ONLY IF IT IS FOUND TO BE FOR THE FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE THE FULLY AND TRULY ALL THE MATERIAL RELEVANT FOR COMPLETION OF THE ASSESSMENT. IN THIS CASE, REOPENING OF ASSESSMENT HAS BEEN DONE, AS IT CAME TO NOTICE FROM THE AIR INFORMATION THAT THE ASSESSEE HAS ACQUIRED RBI BONDS WORTH RS.2 CRORES. BUT FOR THIS REASON STATED IN THE NOTICE OF REOPENING OF ASSESSMENT, THERE IS NO DISCUSSION WHATSOEVER IN THAT REGARD IN THE ASSESSMENT ORDER, MUCH LESS ANY ADDITION MADE IN THAT BEHALF. FURTHER, THE CIT(A) IN PARA 6 OF HIS ORDER HAS HELD AS FOLLOWS - 6. . I MUST RECORD THAT THE ASSESSING OFFICER HAS REFERRED IN HIS ORDER THE RECEIPT OF AIR INFORMATION THAT THE ASSESSEE HAS ACQUIRED RBI BONDS WORTH RS.2 CRORES. HOWEVER, THERE WAS NO DISCUSSION IN HIS ORDER TO THIS INVESTMENT NOR WAS ANY ADDITION MADE ON THIS ISSUE. IN THE COURSE OF APPELLATE PROCEEDINGS, THE CIT(A) REFERRED THIS ISSUE TO THE ASSESSING OFFICER FOR EXAMINATION. VIDE HIS LETTER DATED 15.2.2012, THE ASSESSING OFFICER SUBMITTED THAT THE ASSESSEE HAS INVESTED A SUM OF R S .2 CRORES IN GOVERNMENT OF INDIA 8% SAVINGS(T AXA B L E) BONDS, THAT THIS INVESTMENT WAS DULY REFLECTED IN THE BALANCE SHEET AND THAT THOUGH THE ASSESSMENT ORDER REFERRED TO RBI BONDS THE OTHER DETAILS AVAILABLE FOR THE INVESTMENT TAL L I E D WITH THE DETAILS SUBMITTED BY THE APPELLANT. FROM THE ABOVE EXTRACT FROM THE IMPUGNED ORDER OF THE CIT(A), IT IS CLEAR THAT THERE IS NO NEW MATERIAL WHICH HAS COME TO THE HANDS OF THE ASSESSING OFFICER, SO AS TO INITIATE THE PROCEEDINGS FOR REOPENING OF THE ASSESSMENT . CONSEQUENTLY, REOPENING OF ASSESSMENT IN THIS CASE HAS TO BE HELD TO BE INVALID AND ILLEGAL. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V/S. KELVINATOR INDIA LTD. (320 ITR 561), AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT V/S. USHA INTERNATIONAL LTD. (348 ITR 485), WHICH HAVE BEEN CITED BEFORE US BY THE LEARNED COUNSEL FOR THE ASSESSEE. EVEN THOUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE, SUPPORTING THE ORDERS OF THE REVENUE AUTHORITIES, RELIED UPON THE DECISION OF THE DELHI HIGH COURT IN THE CAE OF HONDA SIEL POWER PRODUCTS LTD. I TA NO. 1317/HYD/2013 & CO THEREIN SANGAM LAXMIBAI VIDYAPEET, HYDERABAD . 5 V/S. DCIT AND ANR. (340 ITR 53), CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VIEW, THAT THE SAID DECISION HAS NO APPLICATION TO THE FACTS OF THE PRESENT CAS E. IN THIS VIEW OF TH E MATTER, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A), AND HOLD THAT REOPENING OF THE ASSESSMENT IN THIS CASE IS NEITHER LEGAL NOR VALID, AND ACCORDINGLY ALLOW THE GROUNDS OF THE ASSESSEE IN ITS CROSS OBJECTIONS . 8. IN THE RESUL T, REVENUES APPEAL IS DISMISSED AND ASSESSEES CROSS OBJECTION IS ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF THE HEARING ON 27.5.2014 SD/ - SD/ - (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 27 TH MAY, 2014 COPY FORWARDED TO: 1. SANGAM LAXMIBAI VIDYAPEET, 17 - 1 - 209,SANTOSHNAGAR, X ROADS, SAIDABAD, HYDERABAD 2 . ASSTT. DIRECTOR OF INCOME - TAX(EXEMPTION) II, HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD 4. COMMISSIONER OF INCOME - TAX III HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S