Asst.C.I.T., Mangalore V. North Western Karnataka Road Transport Corporation, Hubli

ITA 1285/BANG/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7217 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 19-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRATIBHA SHRI BISWARANJAN
• Keywords: Benefit of exemption
• Section: 12A; 12AA; 12; 15

Judgement Text

ITA.1285/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIT KUMAR, JUDICIAL MEMBER I.T.A NO.1285/BANG/2015 (ASSESSMENT YEAR : 2011-12) ASST. COMMISSIONER OF INCOME-TAX (EX), CIRCLE -1, MANGALURU .. APPELLANT V. NORTH WESTERN KARNATAKA ROAD TRANSPORT CORPORATION, CENTRAL OFFICE, GOKUL ROAD, HUBBALLI .. RESPONDENT PAN : AAATN5043Q CROSS OBJECTION NO.36/BANG/2016 (IN I.T.A NO.1285/BANG/2015) (ASSESSMENT YEAR : 2011-12) (BY THE ASSESSEE) ASSESSEE BY : SMT. PRATIBHA, ADVOCATE REVENUE BY : SHRI. BISWARANJAN SURMAL, CIT - DR HEARD ON : 13.11.2017 PRONOUNCED ON : 17.11.2017 O R D E R PER LALIT KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL AND CROSS OBJECTION ARE FILED B Y THE REVENUE AND THE ASSESSEE RESPECTIVELY AGAINST THE ORDER OF THE CIT(A), HUBBALLI, DT.30.07.2015, FOR THE ASSESSMENT YEAR 20 10-11. ITA.1285/BANG/2015 PAGE - 2 02. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 03. THE GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTION ARE AS UNDER : 04. THE BRIEF FACTS ARE, THE ASSESSEE IS AN UNDERTA KING OF THE GOVERNMENT OF KARNATAKA WHICH IS IN THE BUSINESS OF PLYING BUSES AND TRANSPORT SERVICES. THE ASSESSEE FILED A RETURN OF INCOME DECLARING NIL INCOME. THE CASE WAS PICKED FOR SCRUTINY AND ASSES SMENT ORDER U/S.143(3) OF THE ACT WAS PASSED DETERMINING THE TO TAL INCOME AT RS.18,87,83,480/-. THIS WAS CHALLENGED BY THE ASSE SSEE IN ITS APPEAL BEFORE THE CIT (A). ITA.1285/BANG/2015 PAGE - 3 05. THE CIT (A) HAS SIMPLY RESTORED THE MATTER BACK TO THE FILE OF THE AO, WITH A DIRECTION TO PASS A FRESH ASSESSMENT ORDER, BY OBSERVING AS UNDER IN HIS ORDER : IT IS SEEN THAT THE ORDER U/S.143(3), WHICH IS UNDE R APPEAL FOR THE ASSESSMENT YEAR 2011-12, HAS BEEN FRAMED BY THE ASSESSING OFFICER, ACIT, CIRCLE -3(1), HUBLI, TREAT ING THE ASSESSEE AS AOP AND DETERMINED THE TOTAL INCOME AS IF THE ASSESSEE WAS NOT HAVING THE BENEFIT OF REGISTRATION U/S.12A(A) OF THE ACT. NOW THAT THE ORDER OF THE C IT, HUBLI, HAS BEEN SET ASIDE BY THE HONBLE ITAT A BENCH, BANGALORE, HOLDING THAT CANCELLATION OF REGISTRATIO N WAS NOT AS PER LAW. IN VIEW OF THIS, THE AO IS DIRECTE D TO GIVE EFFECT TO THE ORDER OF THE HONBLE ITAT, BANGALORE, AND PASS A FRESH ASSESSMENT ORDER AS IF THE ASSESSEE IS ENJOYING THE BENEFIT OF REGISTRATION U/S.12A(A) OF THE ACT. REVENUE IS AGGRIEVED BY THE ABOVE ORDER OF THE CIT (A) AND IS IN APPEAL BEFORE US. 06. THE LD. DR HAS SUBMITTED THAT THE CIT (A) WHILE RESTORING THE MATTER BACK TO THE FILE OF THE AO HAD EXCEEDED THE JURISDICTION AS LAID DOWN IN SECTION 251 OF THE ACT AND IT WAS SUBMITTED THAT THE CIT (A) IN THE FITNESS OF CIRCUMSTANCES SHOULD HAVE ADJUDIC ATED THE GROUNDS RAISED BEFORE HIM AFTER FOLLOWING THE ORDER OF THE TRIBUNAL AND ALSO OF THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO.109 /BANG/2016, DT.01.07.2016, IN THE ASSESSEES OWN CASE. 07. ON THE OTHER HAND THE LD. AR HAS SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT IN ITS ORDER IN ASSESSEE S OWN CASE (SUPRA), AFTER GOING THROUGH THE ORDER PASSED BY THE TRIBUNA L HAS DISMISSED THE ITA.1285/BANG/2015 PAGE - 4 APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER O F THE TRIBUNAL, DT.08.05.2015. IT WAS THEREFORE SUBMITTED THAT INS TEAD OF REMANDING THE MATTER TO THE FILE OF THE CIT (A), THE TRIBUNAL SHOULD HAVE DECIDED THE MATTER ON MERIT. 08. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE ARE OF THE OPINION THAT BOTH THE APP EAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE R EQUIRED TO BE SENT BACK TO THE FILE OF THE CIT (A) TO BE ADJUDICATED B Y HIMSELF, AFTER GOING THROUGH THE ORDER PASSED BY THE HONBLE JURIS DICTIONAL HIGH COURT AND THE TRIBUNAL IN ASSESSEES OWN CASE (SUPR A). FOR READY REFERENCE WE ARE HEREBY REPRODUCING THE ORDER PASSE D BY THE HONBLE JURISDICTIONAL HIGH COURT IN PARA 9, WHICH IS AS UN DER : 9. IT IS NOT IN DISPUTE THAT THERE IS NO VIOLATION OF THE SAID TWO CONDITIONS BY THE ASSESSEE. THE ACTIVITIES CARRIED ON BY THE ASSESSEE IS A GENUINE ONE. AS COULD BE SEEN FROM THE PROFITS THEY HAVE GENERATED, THE SAID PROFIT IS EAR NED BY CARRYING ON THE ACTIVITIES IN ACCORDANCE WITH THE OBJECT OF THE TRUST. THEREFORE, THE TWO CONDITIONS STIPULATED IN SUBSECT ION (3) OF SECTION 12AA OF THE PCT, WHICH EMPOWERS THE AUTHORI TY TO CANCEL REGISTRATION, DO NOT EXISTS IN THIS CA-SE. THE REGI STRATION GRANTED IS CANCELLED IN VIEW OF THE AMENDMENT OF FI RST PROVISO TO SECTION 2(15) OF THE ACT. THAT IS NOT A GROUND SPECIFIED IN THE STATUTE FOR CANCELLATION OF THE RE GISTRATION. IN FACT, SUB-SECTION(S) TO SECTION 13 WHICH IS INTRODU CED BY ITA.1285/BANG/2015 PAGE - 5 FINANCIAL ACT, 2012 WHICH CAME INTO EFFECT FROM 1.4 .2009 CATEGORICALLY PROVIDES THAT, NOTHING CONTAINED IN S ECTION II OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OR ANY RECEIP T THERE OF. IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE 15 OF SECTION 2 BECOMES APPLICABLE IN THE CASE OF SUCH PERSON IN TH E SAID PREVIOUS YEAR, THE STATUTE HAS PROTECTED THE INTERE ST OF REVENUE. NOTWITHSTANDING THE FACT THAT THE ASSESSEE IS CONFE RRED REGISTRATION UNDER SECTION 12A OF THE ACT, UNLESS T HE ASSESSEE FALLS WITHIN SECTION 2(15) OF THE ACT, EXC LUDING THE FIRST PROVISO, THE ASSESSEE WOULD NOT BE ENTITLED T O THE BENEFIT OF EXEMPTION FROM THE TAX. IF THE CASE OF THE ASSESSEE FALLS WITH FIRST PROVISO TO SECTION 2(15) OF THE ACT, THE BENE FIT OF REGISTRATION WHICH FLOW FROM SECTION 12A OF THE ACT IS NOT AVAILABLE. ANYHOW, THAT IS A MATTER TO BE CONSIDERE D BY THE ASSESSING AUTHORITY. BUT ON THAT GROUND, REGISTRATI ON CANNOT BE CANCELLED, WHICH IS PRECISELY THE TRIBUNA L HAS HELD. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT. THE SUBSTANTIAL QUESTIONS OF LAW ARE ANSWERED II FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 09. FURTHER IN OUR VIEW, THE MANDATE OF SECTION 251 IS QUITE CLEAR THAT THE CIT (A) WHILE HEARING THE APPEAL ARISING O UT OF THE ORDER PASSED BY THE AO HAD COTERMINOUS POWER AND THEREFOR E HAS NO POWER TO RESTORE THE MATTER BACK TO THE FILE OF THE AO, T HEREFORE CIT(A) INSTEAD OF RESTORING THE MATTER BACK TO THE AO, A) SHOULD HAVE DECIDED ITA.1285/BANG/2015 PAGE - 6 THE APPEAL ON HIS OWN. BY REFERRING THE MATTER BAC K TO THE AO THE CIT (A) HAS VIOLATED THE PROVISIONS OF SECTION 251. TH EREFORE, WE HAVE NO HESITATION TO SET ASIDE THE ORDER OF THE CIT (A) , AND RESTORING BACK THE MATTER TO THE FILE OF CIT (A) WITH A DIRECTION TO DECIDE THE ISSUES AFRESH AFTER CONSIDERING THE BINDING JUDGEMENT OF T HE HONBLE JURISDICTIONAL HIGH COURT AS WELL AS THE DECISION O F THE TRIBUNAL, IN THE CASE OF ASSESSEE . 10. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A ND THE CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED FOR STATISTIC AL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH DAY OF N OVEMBER, 2017. SD/- SD/- (A. K. GARODIA) (LALIT KUMAR) ACCOUNTANT MEMBER JUDICIAL M EMBER BENGALURU DATED : 17.11.2017 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY