SHRI RAMJANKI TAPOVAN MANDIR , RANCHI V. ITO EXEMPTION WARD , RANCHI

ITA 139/RAN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9744 (ITAT-RANCHI)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 15-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJIT SINGH CIT LD
• Assessee Lawyers: S S RAJGARHIA LD
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3); 12AA; 263; 11

Judgement Text

1 ITA NO. 139/RAN/18 SHRI RAM JANKI TAPOVAN MANDIR IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, RANCHI (BEFORE SHRI S. S. GODARA , J.M. & DR.A.L.SAINI, A.M.) IT A NO. 139 /RAN/1 8 : ASSTT. YEAR : 20 13 - 14 SHRI RAMJANKI TAPOVAN MANDIR PAN:A ALLTS3433L VS I.T.O (EXEMPTION), WARD - RANCHI , RANCHI (A PPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.S. RAJGARHIA, ADVOCATE, LD.AR RESPONDENT BY : SHRI IND ERJIT SINGH, CIT, LD.DR DATE OF HEARING : 07 - 01 - 2019 DATE OF PRONOUNCEMENT: 20 - 0 2 - 2019 ORDER PER BE NCH : THE CAPTIONED APPEAL FILED BY THE ASSESSEE , PERTAINING TO ASSESSMENT YEAR 20 13 - 14 , IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME - TAX ( EXEMPTIONS ) UNDER SECTION 263 OF THE INCOME TAX ACT,1961, FOR THE A.Y 2013 - 14 , DATE D 15.03.201 8. 2. THE GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS: - 1. FOR THAT THE REASON STATED HEREINABOVE THE ORDER PASSED U/S. 263 BY THE CIT (EXEMPTION ) SETTING ASIDE AOS ORDER IS BAD IN LAW & FIT TO BE QUASHED. 2. FOR THE OTHER GROUNDS, IF ANY SHALL BE URGED AT THE TIME OF HEARING. 2 ITA NO. 139/RAN/18 SHRI RAM JANKI TAPOVAN MANDIR 3. THE BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSE E IS A TRUST . IT FILED ITS RETURN OF INCOME FOR THE A.Y . 2013 - 14 ON 31 - 08 - 2013 , SHOWING TOTAL INCOME AT RS. NIL. THE CASE OF THE ASSESSE WAS SELECTED FOR SCRUTINY AN D T HE AO COMPLETED THE ASSESSMENT ON 03 - 03 - 2016 UNDER SECTION 143(3) OF THE ACT. 4. LATER , THE LD. CIT (EXEMPTIONS) HAS EXERCISED HIS JURISDICTION U/S. 263 OF THE ACT AND ACCORDINGLY NOTICE U/S. 263 OF THE ACT WAS ISSUED TO THE ASSESSEE TRUST, M/S. RAMJA NKI TAPOWAN MANDIR TRUST, NIWARANPUR, CHUTIA, DORANDA, RANCHI. THE LD COMMISSIONER OF INCOME TAX (EXEMPTION) , H AVING GONE THROUGH THE ASSESSMENT RECORDS , FOUND THAT THE ASSESSMENT ORDER D A T E D 03 - 03 - 2016 FOR THE A.Y UNDER CONSIDERATION PASSED U/S. 143(3) OF THE ACT BY THE ITO (EXEMPTION), WARD - RANCHI, IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. CIT( E ) NOTED THAT THE AO HAD NOT EXAMINED THE DEVELOPMENT AGREEMENT ENTERED INTO BETWEEN THE ASS E SSEE AND M/S. SARANG ENGICON P.LTD A ND THEREFORE RECEIPT OF RS.1,50,00,000/ - , WHICH WAS CLAIMED AND WAS APPLIED FOR CREATION OF FIXED DEPOSITS , HAS ESCAPED ASSESSMENT . IN VIEW OF THE ABOVE REASONS, THE SAID ASSESSMENT ORDER D A T ED 3 - 3 - 2016 WAS TREATED BY THE LD. CIT ( E ) AS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE IN TERMS OF PROVISIONS OF SECTION 263 OF THE ACT . 5. AGGRIEVED BY THE ORDER OF CIT (E ), THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE NOTE THAT T HE TRUST WAS AGAIN CREATED IN 2005 BY CANCELLING THE OLD TRUST. AND ON THE BASIS OF TRUST DEED OF 2005 THE TRUSTEE HAS ENTERED INTO THE DEVELOPMENT AGREEMENT WITH M/S. SARANG ENGICON PVT. LTD , O N 03.11.2009 FOR CONSTRUCTION OF BUILDING/FLAT ON THE LA ND OF THE TRUST. WE NOTE THAT TRUST HAS ENTERED INTO DEVELOPMENT AGREEMENT AS PER THE OBJECTS OF THE SAID TRUST. THAT IS, WHEN THE ACTIVITY IS DONE AS PER THE OBJECT 3 ITA NO. 139/RAN/18 SHRI RAM JANKI TAPOVAN MANDIR CLAUSE OF THE TRUST AND THE AO HAS EXAMINED THE SAME WHILE MAKING ASSESSMENT UNDER SECTION 143(3) OF THE ACT. IN THIS SCENARIO, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT DATED 03.03.2006 CAN NOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 7. WE NOTE THAT HON`BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) , HAS OBSERVED AS UNDER : 'A BARE READING OF S. 263 OF THE IT ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE CIT SUO MOTU UND ER IT, IS THAT THE ORDER OF THE ITO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CIT HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE AO SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORDER OF THE ITO IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO S. 263(1) OF THE ACT. THE PROVISION CANN OT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMEN T OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFIN ED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE ITO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE AO. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE AO, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN ITO ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF RE VENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW.' 4 ITA NO. 139/RAN/18 SHRI RAM JANKI TAPOVAN MANDIR 8 . FR OM THE ABOVE OBSERVATIONS MADE BY THE SUPREME COURT, IT IS CLEAR THAT THE PROVISIONS OF S ECTION 263 OF THE ACT CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO, IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED AND INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. THE SUPREME COURT HAS ALSO MADE IT CLEAR THAT THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE AO AND THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS FURTHER EMPHATICALLY STATED THAT WHEN AN ITO ADO PTS ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF T HE REVENUE UNLESS THE VIEW TAKEN BY THE ITO IS UNSUSTAINABLE IN LAW. 9 . COMING TO THE FACTS OF THE PRESENT CASE, WE NOTE THAT LD CIT(E ) EXERCISED THE JURISDICTION UNDER SECTION 263 OF THE ACT SOLELY ON THE GROUND THAT THE AO HAD NOT EXAMINED THE DEVELO PMENT AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND M/S. SARANG ENGICON P.LTD AND THEREFORE RECEIPT OF RS.1,50,00,000/ - , WHICH WAS CLAIMED AND WAS APPLIED FOR CREATION OF FIXED DEPOSITS, HAS ESCAPED ASSESSMENT . WE NOTE THAT AO HAS EXAMINED THE DEVELOPM ENT AGREEMENT WITH THE OBJECT OF THE TRUST AND SATISFIED HIMSELF THAT DEVELOPMENT AGREEMENT WAS AS PER THE OBJECT OF THE TRUST DEED CREATED IN 2005 . IT IS SUBMITTED THAT EARLIER TRUST DEED OF 1948 AND 1987 ARE NOT RELEVANT FOR ALLOWABILITY OF EXEMPTION U/S . 11 OF IT ACT BECAUSE REGISTRATION U/S. 12AA OF IT ACT WAS GRANTED ON THE BASIS OF TRUST DEED DATED 20/09/2005. THEREFORE, ORDER OF THE AO, IN THESE CIRCUMSTANCES CAN NOT BE TREATED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE ORDER OF THE ASSESSING OFFICER 5 ITA NO. 139/RAN/18 SHRI RAM JANKI TAPOVAN MANDIR CANNOT BE HELD TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IN THE FACTS AND CIRCUMSTANCES NARRATED ABOVE, THE USURPATION OF JURISDICTION EXERCISING REVISIONAL JURISDICTION BY THE PRINCIPAL CIT IS NULL IN THE EYES OF LAW AND, THEREFORE, WE ARE INCLINED TO QUASH THE VERY ASSUMPTION OF JURISDICTION TO INVOKE REVISIONAL JURISDICTION U/S 263 BY THE CIT (E ) . THEREFORE, WE QUASH THE ORDER OF THE CIT (E ) DATED 15.03.2018, BEING AB INITIO VOID. 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 20 - 0 2 - 2019 SD/ - SD/ - ( S. S. GODARA ) (DR. A.L.SAINI) JUD ICIAL MEMBER ACCOUNTANT MEMBER DATED: 20 - 0 2 - 2019 *PRADIP (SR.PS) COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT/ ASSESSEE : S RI RAM JANKI TAPOVAN MANDIR (TRUST) NIWARANPUR, CHUTIA, DORANDA, RANCHI - 834002. 2 THE RESPONDENT/ REVENUE : THE ITO (EXE MPTIONS), WARD - RANCHI ,RANCHI . 3. THE CIT - , 4. THE CIT(A) - , 5. DR, RANCHI BENCHES, RANCHI TRUE COPY, BY ORDER, SENIOR P.S ITAT, RANCHI BENCHES