Sri Devaraj Urs Educational Trust , Kolar V. Principal Commissioner of Income Tax (Central) , Bangalore

ITA 1463/BANG/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3400 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-10-2021
• Assessment Year: 2018-2019
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Retrospective amendment; Set aside
• Section: 153A; 12A; 12AA; 132

Judgement Text

ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.1463/BANG/2018 ASSESSMENTYEAR:2018-19 SHRI DEVARAJ URS EDUCATIONAL TRUST FOR BACKWARD CLASSES TAMAKA KOLAR 563 101 C/O MSSV & CO. CHARTERED ACCOUNTANTS 2 ND FLOOR, ABOVE CANARA BANK 63/2, RAILWAY PARALLEL ROAD K.P. WEST, BANGALORE 560 020 PAN NO :AAATS5344P VS. PR. CIT (CENTRAL) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI S. RAMASUBRAMANIAN, A.R. RESPONDENT BY : SHRI SUMER SINGH MEENA, D.R. DATE OF HEARING : 14.10.2021 DATE OF PRONOUNCEMENT : 20.10.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 23.3.2018 PASSED BY LD. PRINCIPAL CIT(CENTRAL ) BENGALURU. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. PR . CIT (CENTRAL) IN CANCELLING THE REGISTRATION GRANTED TO IT U/S 12A O F THE ACT. ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR PAGE 2 OF 8 2. THE GROUNDS OF APPEAL URGED BY THE ASSESSEE READ AS UNDER: THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS PREJUDICIAL TO THE INTERESTS OF THE APPELLANT, IS HAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.0 JURISDICTION 2.1 THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME T AX (CENTRAL) ERRED IN LAW AND ON FACTS IN HOLDING THAT SHE HAS JURISDICTION T O CANCEL THE REGISTRATION BY PASSING AN ORDER U/S 12AA(3) OF THE ACT. 2.2 THAT THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) PASSED U/S 12AA(3) IS WITHOUT JURISDICTION AS THE O RDER CANCELLING THE REGISTRATION CAN BE PASSED ONLY BY REGISTERING AUTHORITY. 3.0 GROUNDS REGARDING FINDING OF ALLEGED FACTS: 3.1 THAT THE FINDING OF THE LEARNED PRINCIPAL COMMI SSIONER OF INCOME TAX (CENTRAL) IN PARAGRAPHS 3.2 TO 3.3.47 ARE PERVERSE AS BEING NOT SUPPORTED BY ANY EVIDENCES ON RECORDS AND IN FACT BEING CONTRARY TO THE MATERIALS ON RECORDS. 3.2 THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCO ME TAX (CENTRAL) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT HAD COLLECTED CAPITATION FEES, PAID COMMISSION TO AGENTS TO PROCURE CANDIDATES, ADOPTED DUBIOUS METHODS TO ROUTE THE CAPITATION FEE COLLECTED INTO THE BOOKS OF THE APPELLANT, VIOLATED PROVISION OF S.13 MERELY ON THE BASIS OF THE STATEMENT ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR PAGE 3 OF 8 MR. V. SRINIVAS AND FEW OTHER PERSONS AND ALL THE A LLEGED FINDINGS IN 12AA(3) ORDER ARE PERVERSE. 3.3 THAT THE FINDING OF THE LEARNED PRINCIPAL COMMI SSIONER OF INCOME TAX (CENTRAL) IS VIOLATIVE OF PRINCIPLES OF NATURAL JUS TICE AS THE APPELLANT HAD NOT BEEN GIVEN AN OPPORTUNITY TO CROSS EXAMINE SOME OF THE PARTIES. 3.4 THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCO ME TAX (CENTRAL) ERRED IN LAW AND ON FACTS IN RELYING ON THE FINDINGS IN THE ASSESSMENT ORDER EVEN THOUGH SUCH FINDINGS HAVE NOT BECOME FINAL AS THE A PPELLANT HAD FILED AN APPEAL. 4.0 GROUNDS REGARDING RETROSPECTIVE CANCELLATION: 4.1 THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCO ME TAX (CENTRAL) ERRED IN LAW AND ON FACTS IN CANCELLING THE REGISTRATION W.E .F ASSESSMENT YEAR 2010- 11 ONWARDS EVEN THOUGH THE S.12AA (3) DOES NOT PERM IT RETROSPECTIVE CANCELLATION 5.0 OTHER GROUNDS: 5.1 WITHOUT PREJUDICE TO THE GROUNDS NO. 3.1 TO 3.4 ASSUMING BUT WITHOUT ADMITTING THAT THE FACTS FOUND ARE CORRECT, THE LEA RNED PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) IN CANCELLING THE REGISTRATION IGNORING THE FACT THAT THE APPELLANT IS ACTUALLY CA RRYING ON THE EDUCATIONAL ACTIVITIES. 5.2 THE FINDING OF THE LEARNED PRINCIPAL COMMISSION ER OF INCOME TAX (CENTRAL) THAT JUST BECAUSE THE APPELLANT HAD ALLEGEDLY COLLE CTED CAPITATION FEES AND ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR PAGE 4 OF 8 ALLEGEDLY CARRIED ON SUCH ACTIVITIES CANNOT BE SAID THAT THE ACTIVITIES OF THE TRUST HAVE NOT BEEN CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. 5.3 THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCO ME TAX (CENTRAL) OUGHT TO HAVE HELD THAT THE ALLEGED ACTIVITIES OF THE TRUST MAY AT WORST LEAD TO DISALLOWANCE U/S 11 OF THE ACT IN RESPECT OF THE IN COME EARNED FROM SUCH ACTIVITIES. BUT IT CANNOT FORM BASIS FOR CANCELLAT ION OF REGISTRATION. 5.4 ASSUMING BUT WITHOUT ADMITTING THAT THE ALLEGAT IONS ARE TRUE, THAT THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT TRUST HAS COMMITTED SUCH ACTS EVEN THOUGH SUCH ACTS ARE PURPORTED TO BE COMM ITTED BY THE PARTIES. 3. THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS A TR UST ESTABLISHED VIDE TRUST DEED DATED 14.11.1984 WITH T HE OBJECT OF ESTABLISHING EDUCATIONAL INSTITUTIONS AND TO FURTHE R THE CAUSE OF BACKWARD CLASSES THROUGH THE EDUCATION. THE ASSESS EE WAS GRANTED REGISTRATION U/S 12A OF THE ACT BY THE COMMISSIONER OF INCOME TAX 1 KARNATAKA, VIDE HIS ORDER DATED 20.1.1992. THE ASSESSEE IS RUNNING VARIOUS EDUCATIONAL INSTITUTIONS. 4. THE ASSESSEE WAS SUBJECTED TO SEARCH U/S 132 OF THE ACT ON 06.8.2015. CONSEQUENT THERETO, THE ASSESSMENTS WER E FRAMED IN THE HANDS OF THE ASSESSEE U/S 153A OF THE ACT ON 30 .12.2017 FOR VARIOUS YEARS. IN THE ASSESSMENT ORDERS, THE A.O. MADE VARIOUS ADDITIONS AND ALSO REJECTED THE CLAIM FOR EXEMPTION U/S 11 OF THE ACT. THE LD. A.R. SUBMITTED THAT THE LD. CIT, ON N OTICING THE OBSERVATIONS MADE BY THE AO AND ALSO FINDINGS GIVEN BY SEARCH ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR PAGE 5 OF 8 OFFICIALS, HE TOOK THE VIEW THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. ACCORDINGLY, BY PLACING RELI ANCE ON THE DECISION RENDERED BY TRIBUNAL IN THE CASE OF LATE S HRI MOHANLAL KANJIBHAI PANSARA EDUCATION & CHARITABLE TRUST VS. CIT (2013)36 TAXMANN.COM 338 AND ALSO THE DECISION RENDERED BY H YDERABAD BENCH OF TRIBUNAL IN THE CASE OF VODITHALA EDUCATIO N SOCIETY VS. ADIT (2008) 20 SOT 353, THE LD. CIT(A) CANCELLED TH E REGISTRATION GRANTED U/S 12A OF THE ACT TO THE ASSESSEE WITH RET ROSPECTIVE EFFECT FROM ASSESSMENT YEAR 2010-11. 5. THE LD. A.R. FURTHER SUBMITTED THAT THE ASSESSME NTS COMPLETED BY THE AO FOR ASSESSMENT YEARS 2010-11 TO 2016-17 BY MAKING VARIOUS ADDITIONS AND ALSO REJECTING THE EXE MPTION CLAIMED U/S 11 OF THE ACT WERE CHALLENGED BEFORE LD. CIT(A) AND THEN BEFORE THE TRIBUNAL. HE SUBMITTED THAT BANGALORE BENCH OF TRIBUNAL HAS SINCE DISPOSED OF THE APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 TO 2016-17, VIDE ITS ORDER DATED 16.8. 2021 IN ITA NOS.500 TO 506/BANG/2020, AND TRIBUNAL HAS DELETED ALL THE ADDITIONS MADE BY THE AO AND ALSO HELD THAT THE ASS ESSEE IS ELIGIBLE FOR DEDUCTION U/S 11 OF THE ACT. THE LD. A.R. SUBM ITTED THAT THE GROUNDS ON WHICH THE REGISTRATION WAS CANCELLED BY LD. PR. CIT NO LONGER EXIST AFTER PASSING OF THE ORDER BY THE TRIB UNAL. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT THE ORDER PASSED BY LD. PR. CIT SHOULD BE CANCELLED. 6. THE LD A.R. ALSO SUBMITTED THAT THE ASSESSEE HAS RAISED A SPECIFIC GROUND CHALLENGING THE JURISDICTION OF THE PRINCIPAL CIT IN ASSUMING CHARGE OVER THE ASSESSEE AND IN CANCELLING THE ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR PAGE 6 OF 8 REGISTRATION BY PASSING ORDER U/S 12AA(3) OF THE AC T, THAT TOO WITH RETROSPECTIVE EFFECT. THE LD. A.R. SUBMITTED THAT THE REGISTRATION WAS GRANTED TO THE ASSESSEE BY LD. CIT (EXEMPTION) AND HENCE THE PRINCIPAL CIT WILL NOT HAVE JURISDICTION WITH REGAR D TO THE MATTERS RELATING TO REGISTRATION AND CANCELLATION U/S 12AA OF THE ACT. 7. THE LD. D.R., ON THE CONTRARY, SUBMITTED THAT TH E LD. PRINCIPAL CIT HAS DULY ADDRESSED THE ISSUE OF JURIS DICTION AND ALSO HAS GIVEN DETAILED INDEPENDENT REASONING TO SUPPORT HIS CONCLUSION THAT ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE. H E SUBMITTED THAT IT IS NOT CORRECT TO SAY THAT THE LD PCIT ENTIRELY REL IED UPON THE ASSESSMENT ORDERS. ACCORDINGLY, LD. D.R. SUBMITTED THAT THE LD. PRINCIPAL CIT HAS CANCELLED THE REGISTRATION ON PRO PER REASONING AND HENCE HIS ORDER DOES NOT CALL FOR ANY INTERFERE NCE. 8. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE R ECORD. IT IS THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED OR DER CANCELLING THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE ACT HAS BEEN PASSED BY THE LD PRINCIPAL CIT ON THE BASIS OF FIND INGS NOTICED BY THE SEARCH OFFICIALS AND ALSO BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS THE CONTENTION OF TH E LD. A.R. THAT ALL THE FINDINGS AND ADDITIONS HAVE SINCE BEEN DELETED BY THE TRIBUNAL. ACCORDINGLY, IT WAS SUBMITTED THAT THE GROUNDS ON W HICH THE REGISTRATION WAS CANCELLED NO LONGER SURVIVE NOW. BESIDES, THE ABOVE, THE ASSESSEE IS ALSO QUESTIONING THE VALIDIT Y OF JURISDICTION ASSUMED BY THE LD. PRINCIPAL CIT WHILE CANCELLING T HE REGISTRATION U/S 12AA(3) OF THE ACT AND ALSO CHALLENGING THE VAL IDITY OF CANCELLING THE REGISTRATION WITH RETROSPECTIVE EFFE CT. ON THE ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR PAGE 7 OF 8 CONTRARY, IT IS THE CONTENTION OF THE LD D.R THAT T HE ASSESSMENT ORDERS PASSED BY THE AO WERE NOT ENTIRELY RELIED UP ON BY LD PCIT. 9. BE THAT AS IT MAY, THE FACT REMAIN THAT THE TRIBUNAL HAS NOW PASSED ORDERS FOR AY 2010-11 TO 2016-17 AGAINST THE ASSESSMENT ORDERS PASSED FOR THE ABOVE SAID YEARS U/S 153A OF THE ACT. THERE IS NO DISPUTE THAT THE LD PCIT HAS ALSO REFERRED TO THE ASSESSMENT ORDERS PASSED U/S 153A OF THE ACT. NOW THERE IS CH ANGE IN CIRCUMSTANCES ON ACCOUNT OF PASSING OF THE ORDERS B Y THE TRIBUNAL. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT T HE ENTIRE ISSUES URGED BY THE ASSESSEE BEFORE US REQUIRE RE-EXAMINAT ION AT THE END OF LD. PRINCIPAL CIT, WHO CAN TAKE JUDICIAL VIEW OF THE MATTERS AFTER CONSIDERING THE ORDER PASSED BY THE TRIBUNAL. 10. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED B Y LD. PRINCIPAL CIT AND RESTORE ALL THE ISSUES TO HIS FILE FOR EXAM INING THE CLAIMS OF THE ASSESSEE. AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE ASSESSEE, LD. PRINCIPAL CIT MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW ON ALL THE ISSUES. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH OCT, 2021 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 20 TH OCT, 2021. VG/SPS ITA NO.1463/BANG/2018 SHRI DEVARAJ URS EDUCATIONAL TRUST, KOLAR PAGE 8 OF 8 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.