M/s Punjab Heritage & Tourism Promotion Board, Chandigarh V. ACIT, Chandigarh

ITA 157/CHANDI/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1301 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-08-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH ABROL
• Keywords: Charitable institution; Bonafide belief
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH BEYFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NOS. 157 TO 159/CHD/2015 ASSESSMENT YEARS : 2007-08, 2008-09 & 2009-10 M/S PUNJAB HERITAGE & TOURISM VS. THE ACIT, CIRCLE 4(1), PROMOTION BOARD, PLOT NO. 3, CHANDIGARH SECTOR 38-A, CHANDIGARH PAN NO. AAATP6562G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. TEJ MOHAN SINGH, ADVO CATE RESPONDENT BY : SH. ASHISH ABROL, CIT DR DATE OF HEARING : 21.08.2018 DATE OF PRONOUNCEMENT : 07.09.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE AS SESSEES AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(A), PATIALA [HEREINAFTER REFERRED TO AS CIT(A)] DAT ED 21.11.2014. 2. THE ASSESSEE IN ALL THE APPEALS ON IDENTICAL FAC TS HAS AGITATED THE LEVY OF PENALTY / CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ITA NO. 157/CHD/2015 FOR ASSESSMENT YEAR 2007-08 IS TAKEN AS A LEAD CASE FOR NARRATION OF FACTS. ITA NO. 157/CHD/2015 FOR AY 2007-08 3. THE ASSESSEE IS A SOCIETY CREATED BY THE PUNJAB GOVERNMENT. THE ASSESSEE APPLIED FOR REGISTRATION U/S 12AA OF T HE ACT TO THE ITA NOS. 157 TO 159//CHD/2015- PUNJAB HERITAGE & TOURISM PROMOTION BOARD, CHANDIG ARH 2 COMMISSIONER OF INCOME TAX AS CHARITABLE TRUST / SO CIETY ON 18.12.2006. THE COMMISSIONER OF INCOME TAX-II ISSUE D A LETTER DATED 22.6.2007 TO THE ASSESSEE STATING THEREIN AS UNDER: - SUBJECT : APPLICATION FOR REGISTRATION U/S 12A(A)O F THE INCOME-TAX ACT, 1961 REGARDING PLEASE REFER TO YOUR APPLICATION FOR REGISTRATION U /S 12A(A) OF INCOME-TAX ACT, 1961 FILED WITH OFFICE ON 18.12.2006. A PERUSAL OF THE DEED OF DECLARATION OF THE BOARD R EVEALS THAT CLAUSE 26 DEALING WITH THE DISSOLUTION IS IN VIOLATION OF SECTION 11 OF THE INCOME-TAX ACT, 1961 . THEREFORE, YOUR APPLICATION FOR REGISTRATION U/S 1 2AA OF THE INCOME-TAX ACT, 1961 MAY NOT BE CONSIDERED FAVORABLY. IT CAN ONLY BE CONSIDERED AN AMENDMENT OF THIS CLAUSE AND RECEIPT OF AMENDED RULES AND REGULATIONS . THEREAFTER THE ASSESSEE SOCIETY FILED RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION ON 31.10.2007 CLAIMING EXEMPTIO N OF INCOME U/S 11 OF THE ACT. IN THE RETURN OF INCOME UNDER COLUM N 8, IN RESPECT OF THE PARTICULAR DATE OF REGISTRATION U/S 12A OF THE ACT, IT WAS MENTIONED BY THE ASSESSEE AS APPLIED FOR. SUBSEQ UENTLY, AS REQUIRED BY THE COMMISSIONER OF I.TAX (CIT) VIDE LE TTER DATED 22.6.2007 , THE AMENDED CONSTITUTION INCORPORATING DISSOLUTION CLAUSE WAS FILED WITH THE CIT ON 1.1.2008. HOWEVER, THE O FFICE OF THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSEE TO FILE A FRESH FORM 10A / APPLICATION FOR REGISTRATION. THEREAFTER , THE ASSESSEE FILED A FRESH FORM NO. 10A ALONG WITH AMENDED TRUST DEED WITH THE DEPARTMENT VIDE LETTER DATED 19.3.2008. FINALLY, VI DE ORDER DATED 2.7.2008, REGISTRATION U/S 12A WAS GRANTED TO THE ASSESSEE BUT THE SAME WAS GRANTED W.E.F. ASSESSMENT YEAR 2009-10. ITA NOS. 157 TO 159//CHD/2015- PUNJAB HERITAGE & TOURISM PROMOTION BOARD, CHANDIG ARH 3 4. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD WRONGLY CLAIMED EXE MPTION U/S 11 OF THE ACT AS THE ASSESSEE WAS GRANTED REGISTRATION U/ S 12A OF THE ACT ONLY W.E.F. ASSESSMENT YEAR 2009-10. HE, THEREFOR E, DENIED THE CLAIM OF EXEMPTION TO THE ASSESSEE AND MADE THE ADD ITION IN RESPECT OF INTEREST INCOME EARNED BY THE ASSESSEE ON THE GR ANTS RECEIVED FROM THE GOVERNMENT. HE FURTHER NOTICED THAT THE ASSESS EE HAD NOT SHOWN THE RECEIPT OF INTEREST INCOME IN ITS PROFIT AND LO SS ACCOUNT RATHER THE SAME HAD DIRECTLY BEEN REFLECTED IN THE BALANCE SHE ET TO AVOID THE TAX LIABILITY. HE FURTHER NOTED THAT THE ASSESSEE SOC IETY CLAIMED EXPENDITURE OF RS. 7,29,721/- IN THE INCOME AND EX PENDITURE ACCOUNT AND THAT THE MAJOR PORTION OF THIS EXPENDIT URE WAS ON ACCOUNT 400 TH YEAR MARTYRDOM DAY (C). THAT THE GOVERNMENT HAD A LREADY PROVIDED HUGE GRANT IN AID FOR SUCH PURPOSE AND THA T THE APPLICATION OF THESE GRANTS COULD NOT BE ALLOWED OUT OF INTERES T ON FDRS. HE, THEREFORE, DISALLOWED THE EXPENDITURE OF RS. 7,29,7 21/- ON THIS ACCOUNT CLAIMED BY THE ASSESSEE AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE UNSUCCESSFULLY CONTESTED THE ABOVE ADDITION UPTO THE LEVEL OF THE TRIBUNAL. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED THE IMPUGNED PENALTY OF RS. 50,29,240/- IN THIS C ASE WHICH HAS BEEN FURTHER CONFIRMED BY THE CIT(A). 5. THE PLEA TAKEN BY THE LD. COUNSEL FOR THE ASSESS EE IS THAT THE ASSESSEE SOCIETY IS A GOVERNMENT UNDERTAKING AND TH AT THERE WAS NO DELIBERATE INTENTION EITHER ON THE PART OF THE ASSE SSEE OR ON THE PART OF ITS EMPLOYEES TO CONCEAL ITS INCOME OR TO AVOID THE TAX LIABILITY. ITA NOS. 157 TO 159//CHD/2015- PUNJAB HERITAGE & TOURISM PROMOTION BOARD, CHANDIG ARH 4 FURTHER, IT HAS BEEN PLEADED THAT SINCE THE LD. CIT (A) IN HIS LETTER DATED 22.6.2007 HAD NOT REJECTED THE APPLICATION O F THE ASSESSEE FOR REGISTRATION U/S 12A OF THE ACT, RATHER, IT WAS OBS ERVED THAT THE APPLICATION CAN BE CONSIDERED ON AMENDMENT OF THE C LAUSE AND RECEIPT OF AMENDED RULES AND REGULATIONS. THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE APPLICATION OF THE ASSESSE E FOR REGISTRATION WAS PENDING AND THAT IS WHY IN THE RETURN OF INCOME UNDER THE RELEVANT COLUMN, IT WAS MENTIONED THAT THE REGISTRA TION U/S 12A WAS APPLIED FOR. IT HAS BEEN FURTHER SUBMITTED THAT THE ASSESSEE RECEIVED GRANTS FROM THE GOVERNMENT FOR SPECIFIC PU RPOSE. THE REMAINDER OF SUCH GRANTS AFTER APPLICATION I.E. THE SURPLUSES, IF ANY, AND THE FURTHER INTEREST EARNED/ ACCRUED ON SUCH GR ANTS / SURPLUS WAS LIABLE TO BE REMITTED BACK TO THE GOVERNMENT, HENCE , THE ASSESSEE DID NOT SHOW THE SAME AS ITS INCOME. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT SINCE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT ITS APPLICATION FOR REGISTRATION U/S 12A WILL BE ACCEPTED AND THE REGISTRATION WILL BE GRANTED FROM THE DATE OF APPLI CATION I.E. 18.12.2006 COVERING THE YEAR UNDER CONSIDERATION, H ENCE, THERE WAS NO ACT OF FURNISHING OF INACCURATE PARTICULARS OF I NCOME OR CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. 6. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES AND HAS VEHEMENTLY SUBMITTED THAT SINCE THE ADDITIONS MADE BY THE ASSESSING OFFICER HAVE BEEN C ONFIRMED UP TO THE LEVEL OF THE TRIBUNAL, HENCE, THE PENALTY U/S 271(1)(C) OF THE ACT HAS RIGHTLY BEEN LEVIED /CONFIRMED BY THE LOWER AUT HORITIES. ITA NOS. 157 TO 159//CHD/2015- PUNJAB HERITAGE & TOURISM PROMOTION BOARD, CHANDIG ARH 5 7. AT THIS STAGE, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE TRIBUNAL HAS NOT CONFIRMED THE ADDITION ON MERI TS, RATHER, THE APPEAL OF THE ASSESSEE HAD BEEN DISMISSED BEING BAR RED BY LIMITATION. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GON E THROUGH THE RECORDS. IN OUR VIEW, THOUGH THE ADDITIONS ON MERIT S HAVE BEEN MADE IN THIS CASE, YET, IT IS NOT A FIT CASE FOR LEVY O F PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE HAD CLAIMED EXEMPTION U/S 11 OF THE ACT VIDE HIS APPLICATION 18.12.2006, HOWEVER, THE REGIS TRATION TO THE ASSESSEE INSTITUTION AS A CHARITABLE INSTITUTION HA D BEEN GRANTED FROM ASSESSMENT YEAR 2009-10. THE FACT ON THE FILE ALSO SHOWS THAT THE ASSESSEE HAD APPLIED FOR REGISTRATION VIDE HIS APPL ICATION ON 18.12.2006 AND THE SAID APPLICATION OF THE ASSESSEE WAS NOT REJECTED BY THE LD. CIT IN CLEAR TERMS RATHER IT WAS CONVEYE D THAT THE APPLICATION OF THE ASSESSEE CAN BE CONSIDERED ON FI LING OF THE AMENDED DEED WITH DISSOLUTION CLAUSE INCORPORATED I N IT. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT ITS APPLICA TION FOR REGISTRATION WAS LIKELY TO BE ALLOWED AND IT HAD AL SO BEEN SPECIFICALLY MENTIONED IN THE RETURN IN THE RELEVANT COLUM THAT REGISTRATION IS APPLIED FOR. THE ASSESSEE HAS ALSO PLEADED ON MER ITS THAT EVEN OTHERWISE SINCE THE ASSESSEE WAS LIABLE TO REMIT TH E AMOUNT OF INTEREST TO THE GOVERNMENT AND IT WAS SHOWN AS LIAB ILITY, HENCE, THE SAME WAS NOT SHOWN AS RECEIPT IN THE INCOME AND EXP ENDITURE ACCOUNT. SIMILAR PLEA HAS ALSO BEEN TAKEN REGARDING INTEREST EXPENDITURE EARNED BY THE ASSESSEE. IN VIEW OF TH E ABOVE, IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INC OME OR CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE WARRANTING PE NALTY U/S ITA NOS. 157 TO 159//CHD/2015- PUNJAB HERITAGE & TOURISM PROMOTION BOARD, CHANDIG ARH 6 271(1)(C) OF THE ACT. THE IMPUGNED PENALTY LEVIED B Y THE LOWER AUTHORITIES IS, THEREFORE, ORDERED TO BE DELETED. ITA NOS. 158/CHD/2015 (A.Y. 2008-09) 9. SINCE THE FACTS AND ISSUE INVOLVED IN THIS APPEA L ARE IDENTICAL, HENCE, THE LEVY OF PENALTY AGITATED IN THIS APPEAL IS ORDERED TO BE DELETED. ITA NOS. 159 CHD/2015 (A.Y. 2009-10) 10. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS BEEN ALLOWED REGISTRATION U/S 12A OF THE ACT, HENCE, THE ASSESSI NG OFFICER ACCEPTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 11 OF T HE ACT. HOWEVER, THE IMPUGNED PENALTY HAS BEEN LEVIED TREATING THE I NTEREST EARNED AS INCOME OF THE ASSESSEE WHICH HAS NOT BEEN UTILIZED FOR CHARITABLE PURPOSES. 11. IN VIEW OUR DISCUSSION MADE ABOVE IN RESPECT OF THIS ISSUE WHILE ADJUDICATING THE APPEAL FOR EARLIER YEARS 2007-08 AND 2008- 09, IT IS NOT A CASE OF FURNISHING OF INACCURATE PA RTICULARS OF INCOME OR CONCEALMENT OF INCOME ON THE PART OF THE ASSESSE E WARRANTING PENALTY U/S 271(1)(C) OF THE ACT. THE IMPUGNED PENA LTY LEVIED BY THE LOWER AUTHORITIES IS, THEREFORE, ORDERED TO BE DELE TED. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSESSE E ARE HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.09.2018. SD/- SD/- (B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07.09.2018 RKK ITA NOS. 157 TO 159//CHD/2015- PUNJAB HERITAGE & TOURISM PROMOTION BOARD, CHANDIG ARH 7 COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR