Adhiparasakthi Charitable Medical Educational and Cultural Trust, Kancheepuram V. ACIT, CHENNAI

CO 127/CHNY/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3406 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 07-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: R M NARAYANAN
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Maximum Marginal Rate; Additional evidence; Capital receipt; Benefit of exemption
• Section: 143(3); 12A; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO.2214/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), CHENNAI 34. VS M/S. ADHIPARASAKTHI CHARITABLE MEDICAL EDUCATIONAL AND CULTURAL TRUST, GST ROAD, CHEYYUR, MELMARUVATHUR, KANCHIPURAM DISTRICT PAN: AAATA0722H ( /APPELLANT) ( /RESPONDENT) C.O. NO. 127/MDS/2016 (IN I.T.A. NO.2214/MDS/2016) M/S. ADHIPARASAKTHI CHARITABLE MEDICAL EDUCATIONAL AND CULTURAL TRUST, GST ROAD, CHEYYUR, MELMARUVATHUR, KANCHIPURAM DISTRICT VS THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), CHENNAI 34. PAN: AAATA0722H ( /APPELLANT) ( /RESPONDENT) /REVENUE BY : SHRI N MADHAVAN, JCIT /ASSESSEE BY : SHRI R.M. NARAYANAN, CA /DATE OF HEARING : 29.01.2018 !' /DATE OF PRONOUNCEMENT : 31.01.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY TH E ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-18, CHENNAI DA TED 2 ITA NO.2214/MDS/2016 & CO 127/MDS/2016 07.04.2016 IN ITA NO.312/15-16 FOR THE ASSESSMENT Y EAR 2012-13 PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT. 2. REVENUES APPEAL:- THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS ON FACTS OF THE CASE AND IN LAW. 2. THE LD.CLT(A) ERRED IN DIRECTING TO ALLOW EXEMPT ION U/S 11 OF THE IT ACT, 1961, WHEN THE ASSESSEE IN THE RETURN OF INCOM E FILED FOR THE A Y 2012-13 HAS CLAIMED EXEMPTION ONLY U/S 10(23C)(IV) OF THE IT ACT. 3. THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE TRUST IS ENTITLED TO EXEMPTION U/S 11 OF THE IT ACT, 1961. 4. THE LD.CLT(A) ERRED IN ALLOWING RELIEF TO THE AS SESSEE WITHOUT DISCUSSING ABOUT THE DETAILS AND THE NATURE OF ADDITIONAL EVID ENCES PRODUCED BY THE ASSESSEE BEFORE HIM. 4.1 THE LD.CIT(A} HAVING HELD THAT THE PROVISO TO S ECTION 2(15) OF THE IT ACT IS NOT ATTRACTED IN THE CASE OF THE ASSESSEE, O UGHT TO HAVE APPRECIATED THAT THE ASSESSEE TRUST HAS INDULGED IN CARRYING ON BUSINESS IN THE FORM OF PURCHASE AND SALE OF BOOKS AND THAT THE TOTAL TURNO VER IN THIS REGARD EXCEEDED THE SPECIFIED LIMIT OF RS.25 LAKHS. 4.2 THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT TH AT THE ASSESSEE WAS NOT SELLING THE BOOKS ON 'NO PROFIT BASIS' AND THAT THE PROFIT EARNED (RS.77,66,881/-) FOR THIS AY 2012-13 WORKS OUT TO 6 2% OF THE COST PRICE (RS.1,25,10,076/-) APPROXIMATELY AND FOR THE PREVIO US AY 2011-12, THE PROFIT ON SALE OF BOOKS WORKED OUT TO 68% APPROXIMA TELY. 4.3 THE LD.CIT(A} OUGHT TO HAVE APPRECIATED THAT TH E ASSESSEE HAS FILED DURING THE APPEAL REMAND PROCEEDINGS, ONLY SEPARATE BALANCE SHEET AND P&L ACCOUNT FOR PURCHASE AND SALE OF STATIONERY, IN STITUTION WISE, IN THE ADDITIONAL EVIDENCES, WITHOUT PRODUCING AND ESTABLI SHING, THE FACT OF MAINTENANCE OF SEPARATE BOOKS OF ACCOUNT IN RESPECT OF THAT INCIDENTAL BUSINESS OF PURCHASE AND SALE OF BOOKS AND HENCE, T HERE IS VIOLATION OF SECTION 11{4A) OF THE I T ACT AND THUS, THE ASSESSE E IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE IT ACT, 1961. 3 ITA NO.2214/MDS/2016 & CO 127/MDS/2016 5. THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT THE PAYMENT OF RS. 65.43 LAKHS MADE TO VARIOUS RELATIVES INCLUDING TRUSTEES, ARE EXCESSIVE AND NOT COMMENSURATE WITH THE SERVICES RENDERED BY THE CONC ERNED PERSONS AND THUS THERE IS VIOLATION OF PROVISIONS OF SEC. 13(2) (C) R.W.S. 13(L)(C) OF THE IT ACT, 1961 AND THEREBY THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE IT ACT, FOR AY 2012-13. 6. THE LD.CIT(A) ERRED IN NOT APPRECIATING THAT THE RE IS VIOLATION OF SEC. 13(1)(C) OF THE IT ACT, 1961, ON THE PART OF THE AS SESSEE, FROM PAYMENT MADE BY THE ASSESSEE TO M/S DEVI CONSTRUCTIONS, IN WHICH THE RELATIVES OF THE TRUSTEES ARE INTERESTED AND MOREOVER WHEN THE A SSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE PAYMENT MADE TO THAT CON CERN DURING THE YEAR IS COMMENSURATE WITH SERVICES RENDERED BY IT THEREBY L EADING TO DENIAL OF EXEMPTION U/S 11 OF THE IT ACT, FOR AY 2012-13. 7. THE LD.CLT(A) ERRED IN ALLOWING THE ASSESSEE'S C LAIM OF EXEMPTION U/S 11 ON THE CAPITAL RECEIPTS OF RS. 2,04,24,749/-, WHEN IT IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE IT ACT, 1961 . 8. FOR THESE GROUNDS AND ANY OTHER GROUND INCLUDING AMENDMENT OF GROUNDS THAT MAY BE RAISED DURING THE COURSE OF THE APPEAL PROCEEDINGS, THE ORDER OF LEARNED CIT{APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. ASSESSEES CROSS OBJECTION :- THE ASSESSE HAS RAISED THE FOLLOWING GROUNDS IN ITS CROSS OBJECTIONS:- 1) THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE AS SESSEES'S SUBMISSIONS THAT THE ASSESSMENT WAS IN COMPLETE VIOLATION OF TH E PRINCIPLES OF NATURAL JUSTICE. HE ALSO ERRED IN NOT ENTERTAINING THE APPE AL ON THE MATTER OF SECTION I 0(23C)(IV) EXEMPTION DENIAL. ASSESSMENT IN VIOLATION OF PRINCIPLES OF NATURAL JU STICE: 2) THE LEARNED CIT(A) GROSSLY ERRED IN OVERLOOKING THE FOLLOWING UNDISPUTED FACTS: 4 ITA NO.2214/MDS/2016 & CO 127/MDS/2016 THAT THE ISSUE REGARDING DENIAL OF 12A EXEMPTION WAS RAISED FOR THE FIRST TIME VIDE THE SHOW CAUSE NOTICE DATED 24-3-2015, RE CEIVED BY POST ONLY ON 4-4-2015, IE AFTER THE COMPLETION OF ASSESSMENT. THAT NO TIME WAS GIVEN TO THE ASSESSEE TO REPLY. THAT THE ASSESSMENT ORDER DOES NOT SATISFACTORILY ADDRESS THE SUBMISSIONS MADE BY ASSESSEE VIDE LETTERS DATED 30-3-2015 AND 3 1-3-2015. THAT THE ASSESSMENT WAS ACTUALLY COMPLETED ON 30- 3-2015 AS EVIDENCED BY THE DEMAND NOTICE, THOUGH ORDER WAS DATED 31-3-2 015. THAT THE SHOW CAUSE NOTICE ALSO DID NOT RAISE THE ISSUES REGARDING UNDUE BENEFIT TO SPECIFIED PERSONS AND TAXATION OF CAPITA L RECEIPTS WHICH IS A MAJOR TRAVESTY OF JUSTICE AND THAT THE REMAND REPORT OF THE ASSESSING OFFICER C ONCEDES THE ABOVE FACTS, IN EFFECT ACCEPTING THAT ADEQUATE OPPORTUNITY WAS I NDEED NOT AFFORDED TO THE ASSESSEE ON THE MATTER. 3) THE ASSESSEE THEREFORE HUMBLY SUBMITS THAT THE ASSESSMENT ORDER IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND THE MAXIM AUDI ALTERAMPARTEM WHICH IS S INE QUA NON OF EVERY CIVILIZED SOCIETY. THE ASSESSMENT IS VITIATED BY A SERIOUS PROCEDURA L ILLEGALITY AS LAID DOWN IN -M/S RAMESHWARAM PAPER MILLS (P) LIMITED VS. STATE OF UP. AND OTHERS (2009 NTN (VO!. 40) - 358 [ALLAHABAD HIGH CO URT]) -PADAM TRADERS & OTHERS V. STATE OF UP. & OTHERS, ( 2009) 47 STJ 392 THE URGENCY OF THE TIME FRAME CANNOT PRECLUDE A R EASONABLE OPPORTUNITY OF BEING HEARD AS HELD IN CB. GAUTAM V. UNION OF IN DIA, [1992) 65 TAXMAN 440 (SC)AND THEREFORE THAT THE ASSESSMENT IS COMPLETELY VOID AS PER THE PRINCIPLES OF THE FOLLOWING DECISIONS: - GREEN POWER REALTORS (P.) LTD V.DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE -11(2), [2013J 34 TAXMANN.COM 27 (MADRAS) 5 ITA NO.2214/MDS/2016 & CO 127/MDS/2016 - JK. SYNTHETICS LTD. V. O.S. BAJPAI, INCOME-TAX OFFI CER, [1976J 105ITR 864 (ALL) - SMT. RITU DEVI V. COMMISSIONER OF INCOME-TAX, [2004 J 141 TAXMAN 559 (MAD) - JAGDHAMBA INDUSTRIES V. INCOME-TAX OFFICER, [2010] 2ITR (TRIB.) 134 (DELHI) EXEMPTION U/S.10(23C)(IV): 4) WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT THE LEARNED CIT(A) GROSSLY ERRED IN NOT ENTERTAINING THE ASSESSEE'S CL AIM TO EXEMPTION U/S 10(23C)(IV) OVERLOOKING THE FOLLOWING: - THAT THE SHOW CAUSE NOTICE FROM THE DGIT (INV) FOR WITHDRAWAL OF EXEMPTION MENTIONED ONLY THE AY S 2006-07 TO 2011-1 2, BUT THE FINAL WITHDRAWAL ORDER WAS FOR AY 2006-07 AND ONWARDS. TH US THE WITHDRAWAL OF EXEMPTION FOR THE AY UNDER CONSIDERAT ION IS PATENTLY ILLEGAL AND WITHOUT ISSUE OF ANY SHOW CAUSE NOTICE. - THAT THE REASONS FOR WHICH THE SAID EXEMPTION WAS W ITHDRAWN BY THE DGIT(INV) WERE ALL ISSUES IN RESPECT OF AY S 2006-0 7 TO 2011-12 WHICH WERE SETTLED IN FAVOUR OF THE ASSESSEE BY THE HON'B LE SETTLEMENT COMMISSION. CONSEQUENTLY, THE ORDER OF THE DGIT(INV ) WITHDRAWING THE EXEMPTION AMOUNTED TO OVERTHROWING THE FINDINGS OF A HIGHER AUTHORITY. PRAYER: 5) THE ASSESSEE THEREFORE PRAYS THAT: - THE ASSESSMENT ORDER DT 31-3-15, BEING IN GROSS VIO LATION OF THE PRINCIPLES OF NATURAL JUSTICE, DESERVES TO BE STRUC K DOWN AS A NULLITY AND - IN THE ALTERNATIVE, ASSESSEE MUST NOT BE DENIED EXE MPTION UNDER SECTION 10(23C)(IV) BASED ON AN INVALID ORDER OF THE DGIT ( INV) WITHDRAWING SAID EXEMPTION. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A CHARITABLE TRUST AND OPERATES IN THE MELMARVATHUR V ILLAGE NEAR CHENNAI. IT RUNS EDUCATIONAL INSTITUTIONS SUCH AS E NGINEERING 6 ITA NO.2214/MDS/2016 & CO 127/MDS/2016 COLLEGES, MEDICAL COLLEGES, SCHOOLS AND ALSO A HOSP ITAL, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 27.01.2012 DECLARING NIL INCOME. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 23.09.2013 AND FINALLY ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT VIDE ORDER DATED 31.03.2015 WHEREIN THE LD.AO WITHDREW T HE BENEFIT OF EXEMPTION U/S.11 OF THE ACT CITING VARIOUS REASONS DISCUSSED IN THE ASSESSMENT ORDER AND ALSO TREATED THE ENTIRE RECEIP T OF RS.2,04,24,749/- AS INCOME OF THE ASSESSEE TAXABLE AT MAXIMUM MARGINAL RATE. THE DETAILS OF THE RECEIPT OF RS.2,0 4,24,749/- ARE AS UNDER:- 1. DONATION FROM BANGARUADIGALAR TRUST R S.17,30,000/- 2. DONATIONS FROM APSPWCT RS.10,00,000 /- 3. A.P. EDUCATIONAL INSTITUTIONS RS.1,76,94,749/ - TOTAL RS.2,04,24,749/- ============ 5. ON APPEAL THE LD.CIT(A) GRANTED RELIEF TO THE A SSESSEE BY HOLDING IN HIS ORDER THAT THE ASSESSEE HAS NOT VIOL ATED ANY OF THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND THEFO RE IT IS ELIGIBLE FOR EXEMPTION U/S.11 OF THE ACT. 7 ITA NO.2214/MDS/2016 & CO 127/MDS/2016 6. AT THE OUTSET THE LD.DR SUBMITTED BEFORE US THA T THE ENTIRE FINDING OF THE LD.CIT(A) WAS BASED ON ADDITIONAL EV IDENCE PRODUCED BEFORE THE LD.CIT(A) WHICH WAS NOT PART OF THE RECORD PRODUCED BEFORE THE LD.AO. HE THEREFORE ARGUED THAT THE LD.AO WAS NOT PROVIDED WITH AN OPPORTUNITY TO EXAMINE THE DETAILS FILED BEFORE THE LD.CIT(A) AND THEREFORE THE MATTER MAY B E REMITTED BACK. THE LD.DR FURTHER POINTED OUT THAT THE LD.CI T(A) HAS ALSO NOT OBTAINED REMAND REPORT FROM THE LD.AO BEFORE AR RIVING AT HIS DECISION. THE LD.AR COULD NOT CONTROVERT TO THE SU BMISSION OF THE LD.DR AND FURTHER AGREED FOR THE MATTER TO BE REMIT TED BACK TO THE FILE OF LD.AO FOR CONSIDERING THE ISSUE AFRESH BASE D ON THE FRESH MATERIALS PRODUCED BEFORE THE LD.CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. IT IS EVIDENT FROM THE FA CTS OF THE CASE THAT THE LD.CIT(A) HAS ARRIVED AT HIS CONCLUSION BASED O N FRESH MATERIALS PRODUCED BEFORE HIM WHICH WAS NOT PART OF THE RECORD PRODUCED BEFORE THE LD.AO AND FURTHER THE LD.CIT(A) HAD FAILED TO OBTAIN REMAND REPORT FROM THE LD.AO. THIS IS IN GRO SS VIOLATION OF RULE 46A OF THE RULES. THEREFORE AS POINTED OUT BY THE LD.DR THE LD.AO WAS DENIED WITH AN OPPORTUNITY TO EXAMINE THE ADDITIONAL 8 ITA NO.2214/MDS/2016 & CO 127/MDS/2016 EVIDENCE PRODUCED BEFORE THE LD.CIT(A) FOR THE FIRS T TIME. THESE FACTS ARE NOT DISPUTED BY THE LD.AR EITHER. FURTHER BOTH THE PARTIES HAVE AGREED FOR THE MATTER TO BE REMITTED BACK TO T HE FILE OF LD.AO FOR DE-NOVA CONSIDERATION. THEREFORE IN THE INTERES T OF JUSTICE, WE HEREBY REMIT BACK THE APPEAL OF THE REVENUE TO THE FILE OF LD.AO FOR FRESH CONSIDERATION. CONSEQUENTLY THE CROSS OB JECTION OF THE ASSESSEE DOES NOT SURVIVE. ACCORDINGLY BOTH THE APP EALS OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSES SEE ARE DISPOSED OFF. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 31 ST JANUARY, 2018 AT CHENNAI. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A . MOHAN ALANKAMONY ) # $% /JUDICIAL MEMBER $% / ACCOUNTANT MEMBER &# /CHENNAI, '$ /DATED 31 ST JANUARY, 2018 RSR $ )* +* /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. . ( )/CIT(A) 4. . /CIT 5. */0 1 /DR 6. 02 /GF