M/s Minerva Educational Society, V. The Income Tax Officer, Bilaspur

ITA 1399/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5149 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Opportunity of being heard; Maximum Marginal Rate
• Section: 143(3); 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES(SMC), CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1399/CHD/2016 ASSESSMENT YEAR: 2009-10 M/S MINERVA EDUCATIONAL SOCIETY VS. THE ITO C/O MINERVA SR. SEC. SCHOOL, BILASPUR (HP) GHUMARWIN, DISTT. BILASPUR (HP) PAN NO. AAECM1573F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI S.K. MITTAL DATE OF HEARING : 29/05/2017 DATE OF PRONOUNCEMENT : 30/05/2017 ORDER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A), PALAMPUR DT. 29/09/2016 FOR ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THAT THE ASSESSEE HAD USED PROPERTY OF THE SOCIETY FOR THE BENEFIT IF THE PERSONS REFERRED TO IN SECTI ON 13(3) THUS INVOKING PROVISIONS OF SECTION 13(1)(C), 13(2)(A)/13(2)(B) AND 13(2)(C) WH ICH IS FACTUALLY INCORRECT AND AS SUCH THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS ARBITRARY AND UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN HOLDING THAT THE EXEMPTION UNDER SECTION 11 OF THE ACT IS NOT ALLOWABLE TO THE ASSESSEE WHICH IS ARBITRARY AND UNJUSTIFIED. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN UPHOLDING THE CHARGING OF TAX AT MAXIMUM MARGINAL R ATE AS PER SECTION 164(2) OF THE ACT ON EXCESS OF INCOME OVER EXPENDITURE OF RS. 6,58,491/- AS DECLARED BY THE ASSESSEE RESULTING IN A DEMAND OF RS. 2,58,410/ - WHICH IS ARBITRARY AND UNJUSTIFIED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO CIETY IS RUNNING AN EDUCATIONAL INSTITUTION. THE SOCIETY IS REGISTERED UNDER REGISTRATION OF SOCIETIES ACT AND IS ALSO REGISTERED WITH THE COMMISSIONER OF INCOME TAX UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961. THE ASSESSEE IN A SSESSMENT YEAR UNDER APPEAL FILED RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT IN RESPECT OF EXCESS OF INCOME OVER EXPENDITURE AT RS. 6,58,491/- AS SHOWN IN THE INCOME AND EXPENDITU RE ACCOUNT. THE AO AFTER EXAMINATION OF THE ACCOUNT NOTED THAT SALARY HAVE B EEN PAID TO THE MEMBERS OF THE MANAGEMENT COMMITTEE OR THEIR FAMILY MEMBERS WHICH IS EXCESSIVE. 2 SIMILARLY THERE ARE ADVANCES SHOWN TO THE SAME PERS ONS AND MOBILE PHONE HAVE BEEN PROVIDED TO THE PRESIDENT OF THE SOCIETY FOR PERSONAL PURPOSES AND RENT HAS ALSO BEEN PAID EXCESSIVE TO THOSE PERSONS WHO ARE DIRECTLY CONNECTED WITH MANAGEMENT. THE AO WAS THEREFORE OF THE VIEW T HAT PROVISION OF SECTION 13(1)(C) AND SECTION 13(2) OF THE INCOME TAX ACT AR E APPLICABLE IN THE CASE OF THE ASSESSEE THEREFORE, EXEMPTION UNDER SECTION 11 IS NOT AVAILABLE TO THE ASSESSEE FOR MAKING PAYMENTS IN EXCESS TO THE SPECI FIED PERSONS UNDER SECTION 13(3) OF THE INCOME TAX ACT. THE AO AFTER CONSIDER ING EXPLANATION OF THE ASSESSEE AND MATERIAL AVAILABLE ON RECORD HELD THAT EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT IS NOT AVAILABLE TO THE AS SESSEE AND THEREFORE, EXCESS OF INCOME OVER EXPENDITURE AT RS. 6,58,491/- WAS AS SESSED AS INCOME OF ASSESSEE AND IS TAXED AT MAXIMUM MARGINAL RATE AS PROVIDED U NDER SECTION 164(2) OF THE INCOME TAX ACT. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEF ORE THE LD. CIT(A). THE DETAILED SUBMISSION OF THE ASSESSEE ARE NOTED IN TH E ASSESSMENT ORDER, HOWEVER LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AO I N SUBSEQUENT ASSESSMENT YEAR 2010-11 AND 2011-12 PASSED THE ASSESSMENT ORDE R IN THE CASE OF THE ASSESSEE UNDER SECTION 143(3) DT. 29/03/2013 AND DT . 04/02/2014 AND SIMILAR CLAIM OF THE ASSESSEE HAVE BEEN ACCEPTED AND EXEMPT ION UNDER SECTION 11 HAVE BEEN GRANTED. COPIES OF BOTH THE ASSESSMENT OR DER ARE FILED IN THE PAPER BOOK. HE HAS FURTHER SUBMITTED THAT ALL THE ITEMS O F EXCESS PAYMENTS AS CONSIDERED IN ASSESSMENT YEAR UNDER APPEAL ARE SAME IN PRECEDING ASSESSMENT YEAR AS WELL AS IN SUBSEQUENT ASSESSMENT YEARS. HE HAS THEREFORE SUBMITTED THAT MATTER COULD BE REMANDED TO THE AO FOR RE-EXAMINATI ON OF THE CASE AFRESH. 5. ON THE OTHER HAND LD. DR ALSO STATED THAT MATTER MAY BE REMANDED TO THE AO FOR FRESH CONSIDERATION. 6. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES AND ASSESSMENT ORDE RS PASSED BY THE AO IN SUBSEQUENT ASSESSMENT YEARS 2010-11 AND 2011-12 UND ER SECTION 143(3) OF THE INCOME TAX ACT (SUPRA), I AM OF THE VIEW THE MATTER REQUIRED RECONSIDERATION AT THE LEVEL OF THE AO. IT IS WELL SETTLED LAW THAT RU LE OF CONSISTENCY APPLIES TO THE INCOME TAX PROCEEDINGS. WHEN THE INCOME TAX AUTHORI TIES HAVE ACCEPTED SIMILAR CLAIM OF ASSESSEE OF EXEMPTION UNDER SECTIO N 11 OF THE ACT IN SUBSEQUENT ASSESSMENT YEARS AND EARLIER YEAR ON THE SAME EXPEN DITURE AS HAS BEEN CLAIMED IN ASSESSMENT YEAR UNDER APPEAL, THE REVENU E AUTHORITIES SHOULD NOT HAVE TAKEN CONTRARY VIEW, UNLESS NEW MATERIAL HAS C AME AGAINST THE ASSESSEE. 3 CONSIDERING THE ABOVE FACTS, I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATTER IN ISSUE TO THE FILE OF AO WITH DIRECTION TO RE-DECIDE THE MATTER IN ISSUE IN THE LIGHT OF THE SUBSEQUENT ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) FOR ASSESSMENT YEAR 2010-11 AND 2011-12 BY G IVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 30/05/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, THE CIT(A), THE DR