Karnatkaa Labour Education Trust, Bidar V. ITO, Bidar

ITA 1688/BANG/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73389 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-01-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIJU M K
• Assessee Lawyers: ASHOK KUMAR DODDI
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Reasonable cause; Condonation of delay
• Section: 12A; 12AA; 148; 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NOS.1688 TO 1691/BANG/2012 (ASSESSMENT YEARS : 2005-06 TO 2008-09) M/S. KARNATAKA LABOUR EDUCATION TRUST , H.NO.19-3-30, PRATAP NAGAR, BIDAR-585 403 . APPELLANT. VS. THE INCOME TAX OFFICER , WARD 1, UDGIR ROAD, BIDAR. .. RESPONDENT. APPELLANT BY : SHRI ASHOK KUMAR DODDI. RESPONDENT BY : SHRI BIJU M.K. DATE OF HEARING : 23.01.2014. DATE OF PRONOUNCEMENT : 30.01.2014. O R D E R PER BENCH : THESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AG AINST THE ORDERS OF THE CIT (APPEALS), HUBLI DT.31.3.2012 FOR ASSESSMENT YEARS 2005-06 TO 2008-09. BEING HEARD TOGETHER,THESE APPEALS ARE DISPOSED OFF BY WAY OF T HIS COMMON ORDER. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE, AS PER THE DETAILS ON RECORD, IS RUNNING VARIOUS EDUCATIONAL INSTITUTIONS AT BIDAR, KARNATAKA. RETURNS OF INCOME FOR ASSESSMENT YEARS 2005-06 TO 2008-09 WAS FILED ON 23.12.2008 IN THE STATUS OF AOP DECLARING NIL TAXAB LE INCOME AFTER CLAIMING THE SURPLUS OF 2 ITA NOS.1688 TO 1691/BANG/2012 RECEIPTS OVER EXPENDITURE /PROFITS AS FULLY EXEMPT U/S.11 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS 'THE ACT'). THE YEAR-WISE DET AILS ARE AS UNDER : IN RESPECT OF ASSESSMENT YEAR 2005-06 , THE ASSESSING OFFICER ON THE BASIS OF THE RETURN OF INCOME FILED AND THE MATERIAL ON RECORD N OTICED THAT THE ASSESSEE HAD SHOWN A SURPLUS OF RS.36,91,500 WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 11 OF THE ACT IN SPITE OF THE ASSESSEE NOT HAVING REGISTRATION UNDER SECTION 12AA OF THE ACT. IN VIEW OF THIS, THE ASSESSING OFFICER INITIATED PROCEEDINGS U/S.147 OF THE ACT AND ISSUED NOTICE UNDER SECTION 148 OF THE ACT ON 17.3.2009 WHICH WAS SERVED ON 24.3.20 09. THE ASSESSMENT WAS COMPLETED BY AN ORDER UNDER SECTION 144 R.W.S. 147 OF THE ACT DT.21 .12.2009 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.1,41,39,765. IN DOIN G SO, THE ASSESSING OFFICER DISALLOWED THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT AMOUNTING TO RS.36,91,500 AND ALSO ADDED BACK AN AMOUNT OF RS.1,04,48,265 TOWARDS UNPR OVED HAND LOANS. FOR ASSESSMENT YEAR 2006-07 , THE ASSESSEE FILED ITS RETURN OF INCOME ON 23.12. 2008 DECLARING NIL INCOME AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT IN RESPECT OF SURPLUS AMOUNT OF RS.14,76,590 IN SPITE OF NOT HAVI NG REGISTRATION UNDER SECTION 12AA OF THE ACT. IN VIEW OF THIS, THE ASSESSING OFFICER INITIA TED PROCEEDINGS UNDER SECTION 147 OF THE ACT AND ISSUED NOTICES UNDER SECTION 148 OF THE ACT TO THE ASSESSEE ON 17.3.2009 WHICH WAS SERVED ON THE ASSESSEE ON 24.3.2009. THE ASSESSMENT WAS C OMPLETED EX-PARTE BY AN ORDER UNDER SECTION 144 R.W.S. 147 OF THE ACT DT.21.12.2009 WHE REIN THE INCOME OF THE AS WAS DETERMINED AT RS.39,13,675. IN DOING SO, THE ASSESSING OFFICE R DISALLOWED THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT AMOUNTING TO RS.29,31,450 AND ALSO ADDED BACK AN AMOUNT OF RS.9,82,225 TOWARDS UNPROVED HAND LOANS. 3 ITA NOS.1688 TO 1691/BANG/2012 FOR ASSESSMENT YEAR 2007-08 , THE ASSESSEE FILED ITS RETURN OF INCOME ON 23.12. 2008 DECLARING NIL INCOME AFTER CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT IN RESPECT OF SURPLUS AMOUNT OF RS.6,14,870 IN SPITE OF NOT HAVIN G REGISTRATION UNDER SECTION 12AA OF THE ACT. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE AS SESSMENT WAS COMPLETED EX-PARTE BY AN ORDER UNDER SECTION 144 OF THE ACT DT.21.12.2009 WH EREIN THE INCOME OF THE AS WAS DETERMINED AT RS.22,08,560 IN VIEW OF THE ASSESSING OFFICER DI SALLOWING THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 11 OF THE ACT AND IN RESPEC T OF DONATIONS. FOR ASSESSMENT YEAR 2008-09 , THE ASSESSEE FILED ITS RETURN OF INCOME ON 23.12. 2008 IN THE STATUS OF AOP DECLARING NIL INCOME AFTER CLAIMI NG EXEMPTION UNDER SECTION 11 OF THE ACT IN RESPECT OF SURPLUS/PROFITS OF RS.11,97,730 IN SP ITE OF NOT HAVING REGISTRATION UNDER SECTION 12AA OF THE ACT. THE CASE WAS TAKEN UP FOR SCRUTIN Y AND THE ASSESSMENT WAS COMPLETED EX- PARTE BY AN ORDER UNDER SECTION 144 OF THE ACT DT.2 1.12.2009 WHEREIN THE INCOME OF THE AS WAS DETERMINED AT RS.27,96,180 IN VIEW OF THE A.O. DISA LLOWING THE EXEMPTION CLAIMED BY THE ASSESSEE UNDER SECTION 11 OF THE ACT AND IN RESPEC T OF DONATIONS. 2.2 AGGRIEVED BY THE ORDERS OF ASSESSMENT FOR ASSE SSMENT YEARS 2005-06 TO 2008-09 ALL DT.21.12.2009, THE ASSESSEE PREFERRED APPEALS BEFOR E THE CIT (APPEALS), HUBLI WHO DISMISSED ALL THE AFORESAID APPEALS BY SEPARATE ORDERS DT.31. 3.2012. 3. AGGRIEVED BY THE ORDERS OF THE CIT (APPEALS), HU BLI DT.31.3.2012 FOR ASSESSMENT YEARS 2005-06 TO 2008-09, THE ASSESSEE IS NOW BEFORE THIS TRIBUNAL FOR ALL THE AFORESAID FOUR YEARS. 4. ORDER ON THE PETITION FOR CONDONATION OF DELAY IN F ILING THE APPEALS FOR ASSESSMENT YEARS 2005-06 TO 20 08-09. 4 ITA NOS.1688 TO 1691/BANG/2012 4.1 ADMITTEDLY THE ORDERS OF THE CIT (APPEALS), HU BLI FOR ASSESSMENT YEARS 2005-06 TO 2008-09 EACH DT.31.3.2012 WERE SERVED ON THE PETITI ONER ON 7.6.2012. IN THIS VIEW OF THE MATTER, THE PETITIONER OUGHT TO HAVE FILED THE APPE ALS FOR THESE FOUR ASSESSMENT YEARS ON OR BEFORE 6.8.2012, BUT THEY WERE FILED ONLY ON 31.12 .2012 THEREBY LEADING TO A DELAY OF 148 DAYS IN FILING THE AFORESAID APPEALS. 4.2.1 BEFORE US, SMT. MOUJABAI KALWADI, PRESIDENT OF THE PETITIONER AOP, HAS FILED AN AFFIDAVIT IN WHICH IT IS SUBMITTED THAT SHE AND HER HUSBAND WAS LOOKING AFTER INCOME TAX MATTERS OF THE ORGANIZATION. HOWEVER, DUE TO HIS UN TIMELY DEMISE ON 14.7.2012, SHE WAS NOT ABLE TO CONCENTRATE ON AND ATTEND TO INCOME TAX MAT TERS OF THE ORGANIZATION AND THEREFORE THERE WAS A DELAY IN FILING THE APPEALS BEFORE THIS TRIBUNAL. IT IS SUBMITTED THAT SOON AFTER THE APPEAL PAPERS WERE PREPARED AT BIDAR AND SIGNE D ON 17.12.2012, THE APPEALS WERE FILED AT THE ITAT, BANGALORE ON 31.12.2012. THE LEARNED AUT HORISED REPRESENTATIVE OF THE PETITIONER SUBMITTED THAT, IN VIEW OF THE ABOVE REASONS, THE D ELAY OF 148 DAYS IN FILING THE AFORESAID APPEALS FOR ASSESSMENT YEARS 2005-06 TO 2008-09 BE CONDONED AND APPEALS ADMITTED FOR HEARING SINCE THERE WAS SUFFICIENT AND REASONABLE CAUSE FOR FILING THE APPEALS BELATEDLY DUE TO TRAGIC PERSONAL FAMILY BEREAVEMENT. 4.2.2 IN ADDITION TO THE ABOVE, THE LEARNED AUTHORI SED REPRESENTATIVE SUBMITTED THAT THERE WAS NO MALA FIDE INTENTION OF THE PETITIONER TO FIL E THESE FOUR APPEALS BELATEDLY, AS NO ONE WOULD JEOPARDIZE ITS OWN INTEREST, ESPECIALLY WHERE IN THE CASE ON HAND THE DEMANDS RAISED BY THE ASSESSING OFFICER IN THE ORDERS OF ASSESSMENT F OR ASSESSMENT YEARS 2005-06 TO 2008-09 ARE IN EXCESS OF RS.1,40,00,000. THE LEARNED AUTHO RISED REPRESENTATIVE SUBMITTED THAT THE YEAR-WISE DEMAND RAISED IN THE PETITIONERS CASE IS AS UNDER : 5 ITA NOS.1688 TO 1691/BANG/2012 S.NO. ASSESSMENT YEAR DEMAND RAISED (RS.) 1. 2005 - 06 97,91,300 2. 2006 - 07 2 3,38,600 3. 2007 - 08 9,48,500 4. 2008 - 09 11,13,800 TOTAL : 1,41,92,200 4.2.3 THE LEARNED AUTHORISED REPRESENTATIVE FURTHE R SUBMITTED THAT AS CAN BE SEEN FROM THE FACTS ON RECORD AND THE DEMAND RAISED, IF THE ASSESSEE'S APPLICATION FOR CONDONATION OF DELAY OF 148 DAYS IN FILING THE APPEALS FOR ASSE SSMENT YEARS 2005-06 TO 2008-09 IS REJECTED, THE ASSESSEE WOULD BE PUT TO GREAT HARDSH IP AND IRREPARABLE INJURY, WHEREAS ON THE OTHER HAND, REVENUE WOULD NOT BE PUT TO ANY HARDSHI P IF THE DELAY IS CONDONED AND THE APPEALS ARE ADJUDICATED ON MERITS AND DUE TAXES ARE COLLECT ED. IN SUPPORT OF THE ASSESSEE'S PLEA FOR CONDONATION OF THE DELAY OF 148 DAYS IN FILING THE APPEALS, THE LEARNED AUTHORISED REPRESENTATIVE HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS OF VARIOUS COURTS AND TRIBUNALS : I. COLLECTOR, LAND ACQUISITION V MST KATIJI (167 ITR 471) (SC) II. CIT V WEST BENGAL INFRASTRUCTURE DEVELOPMENT FINANC E CORPORATION LTD (334 ITR 269) (SC) III. CIT V SANMAC MOTOR FINANCES LTD. (322 ITR 309) (MAD RAS) IV. CIT V ISRO SATELLITE CENTRE (ITA NO.532/2008 DT.28. 12.2011) OF THE KARNATAKA HIGH COURT. V. RAGHAVENDRA CONSTRUCTIONS V ITO (ITA NO.425/BANG/20 12 DT.14.12.2012 OF ITAT, BANGALORE). THE LEARNED AUTHORISED REPRESENTATIVE PRAYS THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AS FACTUALLY LAID OUT ABOVE, THE DELAY OF 148 DAYS IN FILING THE APPEALS FOR ASSESSMENT YEARS 2005-06 TO 2008-09 BE CONDONED AND THE MATTER BE RE STORED TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTIONS TO DISPOSE OFF THE MATTER D E NOVO ON MERITS AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS. 6 ITA NOS.1688 TO 1691/BANG/2012 4.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTA TIVE OPPOSED THE ASSESSEE'S PLEA FOR CONDONATION OF DELAY OF 148 DAYS IN FILING THE APPE ALS FOR ASSESSMENT YEARS 2005-06 TO 2008- 09. 4.4 WE HAVE HEARD BOTH PARTIES AT LENGTH ON THE ISS UE OF CONDONATION OF DELAY OF 148 DAYS IN FILING THE APPEALS BEFORE THE CIT(APPEALS) AND C AREFULLY PERUSED AND CONSIDERED THE MATERIAL ON RECORD IN THIS REGARD. THE HON'BLE APE X COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION V MST KATIJI & OTHERS (SUPRA) HAS LAID DOWN THE PRINCIPLES TO BE TAKEN INTO ACCOUNT WHICH CONSIDERING THE APPLICATION FOR CONDONATION O F DELAY. THE HON'BLE APEX COURT HAS STATED THAT SUBSTANTIAL JUSTICE SHOULD PREVAIL OVER TECHNI CAL CONSIDERATIONS. THE HON'BLE APEX COURT HAS ALSO EXPLAINED THAT EVERY DAYS DELAY MUST BE EXPLAINED DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE TAKEN; THE DOCTRINE MUST BE APPL IED IN A NATURAL, COMMON SENSE AND PRAGMATIC MANNER. IN THE CASE ON HAND, THE AFFIDAV IT AND THE ACCOMPANYING EXPLANATION REVEAL THAT DURING THE PERIOD OF DELAY IN FILING THE APPE ALS I.E. FROM AUG., 2012 TO DEC., 2012, THE PRESENT PRESIDENT WAS IN A STATE OF SHOCK AND NOT I N A POSITION TO ATTEND TO THE WORK OF THE ASSESSEE ORGANIZATION DUE TO THE EXPIRY OF HER HUSB AND THE ERSTWHILE PRESIDENT OF THE ASSESSEE AOP ON 14.7.2012. WE ALSO AGREE WITH THE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THE DELAY IN FILING THE APPEALS FOR THE SAID FOUR YEARS WAS NOT DELIBERATE AS THE ASSESSEE CERTAINLY WOULD NOT JEOPARDIZE ITS OWN CASE WHEN THE ASSESSING OFFICER HAS RAISED DEMANDS OF RS.1,41,92,200 FOR ASSESSMENT YEA RS 2005-06 TO 2008-09, AS PER THE DETAILED YEAR-WISE BREAK UP GIVEN IN PARA 4.2.2 OF THIS ORDER. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE ON HAND IN THE LIGHT OF T HE PRINCIPLES LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF M.S.T. KATIJI & OTHERS (SUPRA) , WE ARE OF THE CONSIDERED OPINION THAT 7 ITA NOS.1688 TO 1691/BANG/2012 THERE HAS BEEN NO WILLFUL NEGLECT ON THE PART OF TH E ASSESSEE IN FILING THE APPEALS FOR ASSESSMENT YEARS 2005-06 TO 2008-09 BELATEDLY. WE ARE OF THE VIEW THAT, DUE TO THE DEATH OF THE ASSESSEE AOPS PRESIDENT ON 14.7.2012, HIS W IFE, THE SUBSEQUENT PRESIDENT HAD SUFFICIENT AND REASONABLE CAUSE FOR FILING THE SAID APPEALS BELATEDLY BY 148 DAYS. FURTHER, WE ARE OF THE OPINION THAT IF THE DELAY OF 148 DAYS IN FILING THE SAID FOUR APPEALS IS CONDONED AND THE APPEALS ARE ADMITTED FOR ADJUDICATION ON MERITS OF THE CASE, THERE SHALL BE NO LOSS TO REVENUE AS LEGITIMATE TAXES PAYABLE IN ACCORDANCE W ITH LAW ALONE WILL BE COLLECTED. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THA T THIS IS A FIT CASE FOR CONDONATION OF THE DELAY OF 148 DAYS IN FILING THE APPEALS FOR ASSESSM ENT YEARS 2005-06 TO 2008-09 BEFORE THIS TRIBUNAL AND DO SO. THESE FOUR APPEALS FOR ASSESS MENT YEARS 2005-06 TO 2008-09 ARE ACCORDINGLY ADMITTED FOR HEARING AND ADJUDICATION. IT IS ORDERED ACCORDINGLY. APPELLATE ORDER 5. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALMOST SIMILAR FOR ALL THE FOUR ASSESSMENT YEARS 2005-06 TO 2008-09; AND ARE REPROD UCED HEREUNDER : FOR ASSESSMENT YEARS 2005-06 & 2006-07 ASSESSMENT YEAR : 2005-06 1. THE ORDER OF THE ASSESSMENT IS OPPOSED TO LAW , FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER IS PASSED IN HASTE, WITHOUT PROVIDING SUFFICIENT AND REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ORDER IS PASSED MUCH AGAINST TO THE PRINC IPLE OF NATURAL JUSTICE AND THUS LIABLE TO BE QUASHED. 4. THE ASSESSING OFFICER HAD NO REASON TO BELIEV E THAT THE INCOME HAS ESCAPED THE ASSESSMENT. ISSUE OF NOTICE UNDER SECTION 148 IS UNWARRANTED. 5. LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIAT ED THAT THE APPELLANT WAS NOT REQUIRED TO FILE INCOME TAX RETURN AS THE APPELLANT WAS ENTITLED TO EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. 8 ITA NOS.1688 TO 1691/BANG/2012 6. THE CIT (APPEALS) ERRED IN CONFIRMING THE ADD ITION MADE BY THE A.O. ON THE GROUND THAT THE APPELLANT HAS NOT APPLIED FOR REGIS TRATION UNDER SECTION 12A FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 7. LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E ADDITION OF DONATIONS OF RS.36,91,500. 8. THE LEARNED CIT (APPEALS) ERRED IN TAXING OUT STANDING HAND LOANS TO THE EXTENT OF RS.1,04,48,265. FURTHER LEARNED CIT (APPEALS) E RRED IN NOT CONSIDERING ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE DURIN G THE COURSE OF APPELLATE PROCEEDINGS. ASSESSMENT YEAR : 2006-07 1. THE ORDER OF THE ASSESSMENT IS OPPOSED TO LAW , FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER IS PASSED IN HASTE, WITHOUT PROVIDING SUFFICIENT AND REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ORDER IS PASSED MUCH AGAINST TO THE PRINC IPLE OF NATURAL JUSTICE AND THUS LIABLE TO BE QUASHED. 4. THE ASSESSING OFFICER HAD NO REASON TO BELIEV E THAT THE INCOME HAS ESCAPED THE ASSESSMENT. ISSUE OF NOTICE UNDER SECTION 148 IS UNWARRANTED. 5. LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIAT ED THAT THE APPELLANT WAS NOT REQUIRED TO FILE INCOME TAX RETURN AS THE APPELLANT WAS ENTITLED TO EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. 6. THE CIT (APPEALS) ERRED IN CONFIRMING THE ADD ITION MADE BY THE A.O. ON THE GROUND THAT THE APPELLANT HAS NOT APPLIED FOR REGIS TRATION UNDER SECTION 12A FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 7. LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E ADDITION OF DONATIONS OF RS.26,04,705 AND FEE RECEIPTS OF RS.3,63,050. 8. THE A.O. ERRED IN RESTRICTING THE EXPENSES T O 10% OF THE TOTAL RECEIPTS ON WHIMSICAL GROUNDS. 9. THE LEARNED CIT (APPEALS) ERRED IN TAXING OUT STANDING HAND LOANS TO THE EXTENT OF RS.9,82,225. FURTHER LEARNED CIT (APPEALS) ERRE D IN NOT CONSIDERING ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE DURING THE COURS E OF APPELLATE PROCEEDINGS. ASSESSMENT YEAR : 2007-08 1. THE ORDER OF THE ASSESSMENT IS OPPOSED TO LAW , FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER IS PASSED IN HASTE, WITHOUT PROVIDING SUFFICIENT AND REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ORDER IS PASSED MUCH AGAINST TO THE PRINC IPLE OF NATURAL JUSTICE AND THUS LIABLE TO BE QUASHED. 9 ITA NOS.1688 TO 1691/BANG/2012 4. LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIAT ED THAT THE APPELLANT WAS NOT REQUIRED TO FILE INCOME TAX RETURN AS THE APPELLANT WAS ENTITLED TO EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. 5. THE CIT (APPEALS) ERRED IN CONFIRMING THE ADD ITION MADE BY THE A.O. ON THE GROUND THAT THE APPELLANT HAS NOT APPLIED FOR REGIS TRATION UNDER SECTION 12A FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 6. LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E ADDITION OF DONATIONS OF RS.17,46,186 AND FEE RECEIPTS OF RS.5,13,750. 7. THE A.O. ERRED IN RESTRICTING THE EXPENSES TO 10% OF THE TOTAL RECEIPTS ON WHIMSICAL GROUNDS. ASSESSMENT YEAR : 2008-09 1. THE ORDER OF THE ASSESSMENT IS OPPOSED TO LAW , FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER IS PASSED IN HASTE, WITHOUT PROVIDING SUFFICIENT AND REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ORDER IS PASSED MUCH AGAINST TO THE PRINC IPLE OF NATURAL JUSTICE AND THUS LIABLE TO BE QUASHED. 4. LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIAT ED THAT THE APPELLANT WAS NOT REQUIRED TO FILE INCOME TAX RETURN AS THE APPELLANT WAS ENTITLED TO EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT. 5. THE CIT (APPEALS) ERRED IN CONFIRMING THE ADD ITION MADE BY THE A.O. ON THE GROUND THAT THE APPELLANT HAS NOT APPLIED FOR REGIS TRATION UNDER SECTION 12A FOR EXEMPTION UNDER SECTION 11 OF THE ACT. 6. LEARNED CIT (APPEALS) ERRED IN CONFIRMING TH E ADDITION OF DONATIONS OF RS.22,69,544 AND FEE RECEIPTS OF RS.5,85,150.. 7. THE A.O. ERRED IN RESTRICTING THE EXPENSES TO 10% OF THE TOTAL RECEIPTS ON WHIMSICAL GROUNDS. 6. THE GROUNDS RAISED AT S.NOS.1 TO 3 ARE GENERAL IN NATURE AND NOT BEING URGED BEFORE U S, NO ADJUDICATION IS CALLED FOR THEREON. 7. IN THE COURSE OF APPELLATE PROCEEDINGS, THE LEAR NED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS NOT PRESSING THE GRO UNDS RAISED AT S.NO.4 CHALLENGING THE INITIATION OF PROCEEDINGS UNDER SECTION 147 AND 148 OF THE ACT AND GROUND NO.6 CHALLENGING CONFIRMATION BY THE LEARNED CIT (APPEALS) OF THE DI SALLOWANCE OF EXEMPTION CLAIMED UNDER 10 ITA NOS.1688 TO 1691/BANG/2012 SECTION 11 OF THE ACT. THESE ARE THEREFORE RENDERE D INFRUCTUOUS AND DISPOSED OFF AS NOT PRESSED. FOR ASSESSMENT YEARS 2007-08 & 2008-09 8. THE GROUNDS AT S.NOS.1 TO 3 ARE GENERAL IN NATURE AND NOT BEING URGED BEFORE U S, NO ADJUDICATION IS CALLED FOR THEREON. 9. IN THE COURSE OF APPELLATE PROCEEDINGS, THE LEAR NED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE AS IS NOT PRESSING THE GROUND RA ISED AT S.NO.5 CHALLENGING THE CONFIRMATION BY THE LEARNED CIT (APPEALS) OF THE DISALLOWANCE OF THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THESE GROUNDS ARE, THEREFOR E, RENDERED AS INFRUCTUOUS AND ARE DISMISSED AS NOT PRESSED. 10.1.1 THE LEARNED AUTHORISED REPRESENTATIVE W AS HEARD AT LENGTH. THE MAIN THRUST OF THE LEARNED AUTHORISED REPRESENTATIVES ARGUMENTS ON BE HALF OF THE ASSESSEE WAS THAT THE ASSESSMENTS FOR ASSESSMENT YEARS 2005-06 TO 2008-09 , HAVE BEEN COMPLETED EX-PARTE UNDER SECTION 144 OF THE ACT AND THEREFORE A FAIR AND PRO PER ASSESSMENT OF THE ASSESSEE'S CASE HAS NOT BEEN MADE BY THE A.O. AND COULD NOT HAVE BEEN M ADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AS IT WAS AT THAT POINT IN TIME. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE FILED ITS RETURNS OF INCOME FOR ASSESS MENT YEARS 2005-06 TO 2008-09 SUO MOTO ON 23.12.2008 DECLARING NIL INCOME. SURPLUS OF RS.3 6,91,500, RS.14,76,590, RS.6,14,870 AND RS.11,97,330 FOR THE AFORESAID FOUR YEARS WAS REPOR TED AND EXEMPTION WAS CLAIMED THEREOF UNDER SECTION 11 OF THE ACT. IT IS SUBMITTED THAT THOUGH A NUMBER OF OPPORTUNITIES WERE AFFORDED TO THE ASSESSEE TO PRESENT ITS CASE. THE LATE PRESIDENT OF THE SOCIETY WAS UNABLE TO ATTEND THE HEARINGS BEFORE THE ASSESSING OFFICER AS HE WAS UNDER TREATMENT FOR ILL-HEALTH FOR 11 ITA NOS.1688 TO 1691/BANG/2012 A LONG PERIOD OF TIME, ULTIMATELY LEADING TO HIS DE MISE ON 14.7.2012. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE LATE PRESIDENT DE ATH WAS ALSO THE CAUSE FOR THE ASSESSEE'S APPEALS BEING FILED BELATEDLY BEFORE THIS TRIBUNAL FOR THE IMPUGNED ASSESSMENT YEARS. THESE WERE THE PRIMARY REASONS FOR THE ASSESSEE'S INABILI TY TO REPRESENT ITS CASE PROPERLY BEFORE THE ASSESSING OFFICER AND THIS RESULTED IN THE ASSE SSMENTS BEING COMPLETED EX-PARTE UNDER SECTION 144 OF THE ACT THE DISALLOWANCE OF EXEMPTIO N CLAIMED UNDER SECTION 11 OF THE ACT AND OTHER DISALLOWANCES OF HAND LOANS, DONATIONS, EXPEN DITURE ON AN ADHOC BASIS, ETC. WAS MADE. THIS RESULTED IN THE RAISING OF HUGE TAX DEMANDS OF APPROXIMATELY RS.1.42 CRORES BEING FASTENED ON THE ASSESSEE FOR THE IMPUGNED ASSESSMEN T YEARS 2005-06 TO 2008-09. 10.1.2 ON APPEAL BEFORE THE CIT(APPEALS), HUBLI TH E LEARNED AUTHORISED REPRESENTATIVE SUBMITS THAT THE ASSESSEE INTER ALIA RAISED SPECIF IC GROUNDS FOR ALL THE IMPUGNED ASSESSMENT YEARS SEEKING EXEMPTION TO BE GRANTED TO IT, FOR R UNNING ITS EDUCATIONAL INSTITUTIONS, UNDER SECTION 10(23C)(IIIAD) OF THE ACT IN VIEW OF THE FA CT THAT ITS GROSS RECEIPTS WERE LESS THAN RS.1 CRORE FOR EACH OF THE FOUR IMPUGNED ASSESSMENT YEA RS 2005-06 TO 2008-09. IT WAS ALSO ADMITTED THEREIN THAT THE CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT IN ITS RETURN OF INCOME WAS NOT IN ORDER AND WAS MADE DUE TO LACK OF PROPER KNOWLEDGE ON THE APPLICABILITY OF THE SECTION AT THE TIME OF FILING OF THE RETURNS OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS 2005-06 TO 2008-09. THE LEARNED AUTHORISED REPRESE NTATIVE FURTHER SUBMITTED THAT THOUGH THE LEARNED CIT (APPEALS) HAS RECORDED THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE; INCLUDING THOSE IN RESPECT OF THE EXEMPTION CLAIMED UNDER SEC TION 10(23C)(IIIAD) OF THE ACT, THE LEARNED CIT (APPEALS) IN HIS ORDERS HAS NEITHER CONSIDERED NOR ADJUDICATED ON THIS ISSUE RAISED BEFORE HIM. THE LEARNED AUTHORISED REPRESENTATIVE DREW T HE ATTENTION OF THE BENCH TO THE IDENTICAL 12 ITA NOS.1688 TO 1691/BANG/2012 GROUNDS OF APPEAL AT S.NOS.4 & 5 OF THE GROUNDS RAI SED BY ASSESSEE BEFORE THE LEARNED CIT (APPEALS) FOR ALL THE FOUR IMPUGNED ASSESSMENT YEAR S CLAIMING THAT IT BE ALLOWED DEDUCTION UNDER SECTION 10 (23C) (IIIAD) OF THE ACT. SINCE T HE GROSS RECEIPTS OF THE ASSESSEE WAS LESS THAN RS.1 CRORE FOR EACH OF THE AFORESAID YEARS AND IF ALLOWED EXEMPTION UNDER SECTION 10 (23C) (IIIAD) OF THE ACT, THERE WOULD BE NO TAXES P AYABLE AS ITS INCOME WOULD BE NIL. THE LEARNED AUTHORISED REPRESENTATIVE ALSO DREW OUR AT TENTION TO THE IMPUGNED ORDERS OF THE LEARNED CIT (APPEALS) TO DEMONSTRATE THAT THIS ISSU E WAS NEITHER CONSIDERED NOR ADJUDICATED UPON AS WAS WARRANTED. THE LEARNED AUTHORISED REPR ESENTATIVE STRONGLY ARGUED THAT THIS ACT OF INACTION ON THE PART OF THE LEARNED CIT (APPEALS ) HAS CAUSED GREAT INJUSTICE AND GRAVE FINANCIAL HARDSHIP TO THE ASSESSEE, AS HUGE UNSUSTA INABLE TAX DEMANDS HAD BEEN RAISED AND SUSTAINED IN GROSS VIOLATIONS OF THE PRINCIPLES OF NATURAL JUSTICE AND IN NON-ADJUDICATION BY THE LEARNED CIT (APPEALS), ON THE ASSESSEE'S CLAIM FOR EXEMPTION UNDER SECTION 10 (23C) (IIIAD) OF THE ACT. IT WAS CONTENDED THAT THE PRESENT POSITIO N OF THE ASSESSEE'S CASE DOES NOT REFLECT A TRUE AND CORRECT PICTURE OF THE ASSESSEE'S CASE AS IT OUGHT TO BE, ESPECIALLY CONSIDERING THE FACT THAT THE ASSESSMENTS FOR ALL THE IMPUGNED ASSE SSMENT YEARS 2005-06 TO 2008-09 WERE COMPLETED EX-PARTE UNDER SECTION 144 OF THE ACT AND THAT THE LEARNED CIT (APPEALS), IN SPITE OF NOTING THE GROUNDS RAISED BY THE ASSESSEE CLAIMI NG EXEMPTION UNDER SECTION 10 (23C) (IIIAD) OF THE ACT HAD FAILED TO CONSIDER AND ADJUDICATE TH EREON. 10.1.3 THE LEARNED AUTHORISED REPRESENTATIVE ALSO SUBMITTED THE OTHER DISALLOWANCES / ADDITIONS ON ACCOUNT OF DONATIONS, OUTSTANDING HAND LOANS, THE ADHOC RESTRICTION OF THE EXPENSES CLAIMED BY THE ASSESSEE TO 10% OF TOTAL RE CEIPTS ARE BASELESS, UNFOUNDED AND NOT SUSTAINABLE IF A PROPER VERIFICATION THEREOF IS CAR RIED OUT. IT IS FURTHER BROUGHT TO THE NOTICE 13 ITA NOS.1688 TO 1691/BANG/2012 OF THE BENCH THAT THE LEARNED CIT (APPEALS) HAD NEI THER ADDRESSED NOR ADJUDICATED ON THE AFORESAID DISALLOWANCES MADE IN SPITE OF THESE ISSU ES BEING RAISED BY THE ASSESSEE IN GROUNDS OF APPEAL BEFORE HIM, OFFERING VERIFICATION OF THE OUTSTANDING AMOUNTS IN ITS BALANCE SHEETS, ETC. IT IS SUBMITTED THAT EACH OF THESE DISALLOWAN CES HAVE BEEN RAISED IN GROUNDS BEFORE THIS TRIBUNAL FOR ITS CONSIDERATION AND ORDERS THEREON. 10.1.4 IN THESE CIRCUMSTANCES, THE LEA RNED AUTHORISED REPRESENTATIVE PLEADED THAT IT WOULD ONLY BE JUST AND FAIR, THAT THE ORDERS OF TH E AUTHORITIES BELOW I.E. BOTH THOSE OF CIT(APPEALS), HUBLI AND THE A.O. FOR ALL THE FOUR A SSESSMENT YEARS BE CANCELLED AND SET ASIDE AND THE ASSESSMENT PROCEEDINGS BE DIRECTED TO BE MA DE DE NOVO AND ORDERS OF ASSESSMENT TO BE PASSED AFTER PROPER EXAMINATION OF THE ISSUES IN VOLVED, THE ASSESSEE'S CLAIMS FOR EXEMPTION UNDER SECTION 10 (23C) (IIIAD) OF THE ACT, AFTER AF FORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 10.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESE NTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10.3.1 WE HAVE HEARD BOTH PARTIES AT LENGTH AND PE RUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. AS PER THE FACTS ON RECORD, TH E ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEARS 2005-06 TO 2008-09 SUO MOTO 23.12. 2008 AND THE CASE WAS TAKEN UP FOR SCRUTINY BY INITIATING PROCEEDINGS UNDER SECTION 14 7 OF THE ACT FOR ASSESSMENT YEARS 2005-06 TO 2008-09 AND 2006-07 AND REGULAR SCRUTINY PROCEE DINGS FOR ASSESSMENT YEARS 2007-08 AND 2008-09. THE ASSESSING OFFICER COMPLETED THE ASSES SMENTS EX-PARTE UNDER SECTION 144 OF THE ACT DISALLOWING THE ASSESSEE'S CLAIM FOR EXEMPT ION UNDER SECTION 11 OF THE ACT, SINCE THE ASSESSEE HAD NO REGISTRATION UNDER SECTION 12A OF T HE ACT. IN ADDITION THERETO, CERTAIN OTHER 14 ITA NOS.1688 TO 1691/BANG/2012 DISALLOWANCES / ADDITIONS WERE MADE, DUE TO THE NON -ATTENDANCE OF HEARINGS FIXED AND NON- FILING OF DETAILS BY THE ASSESSEE, IN RESPECT OF OU TSTANDING HAND LOANS IN THE BALANCE SHEET FOR THE IMPUGNED ASSESSMENT YEARS; DONATIONS DUE TO NON -FURNISHING OF DETAILS OF DONORS, AND BY ADHOC RESTRICTION OF EXPENSES CLAIMED TO 10% OF GRO SS RECEIPTS. BY THESE EX-PARTE ASSESSMENTS, TAX LIABILITY OF APPROX.. RS.1.42 CROR ES WAS FASTENED ON THE ASSESSEE. 10.3.2 ON APPEAL BEFORE THE LEARNED CIT (APPEALS), WE FIND FROM A PERUSAL OF THE GROUNDS FILED THAT INTER ALIA, THE ASSESSEE PREFERR ED THE FRESH CLAIM THAT SINCE ITS GROSS RECEIPTS FROM THE RUNNING OF EDUCATIONAL INSTITUTIO NS IN THE PERIOD RELEVANT TO ASSESSMENT YEARS 2005-06 TO 2008-09 WAS LESS THAN RS.1 CRORE, IT WAS ELIGIBLE TO CLAIM AND BE ALLOWED EXEMPTION UNDER SECTION 10 (23C) (IIIAD) OF THE AC T. WHILE MAKING THIS CLAIM, THE ASSESSEE IN THE GROUNDS RAISED IN THIS REGARD HAS ALSO ADMITTED THAT ITS CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT, IN THE ABSENCE OF REGISTRATION UNDER SECTION 12A OF THE ACT, WAS ERRONEOUSLY MADE DUE TO LACK OF KNOWLEDGE OF THE APPLICABILITY OF THIS SECTION AT THE TIME OF FILING THE RETURNS OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS 2005-06 TO 2008-09. THE FACT IS BUTTRESSED BY THE IDENTICAL GROUNDS AT S.NO.4 AND 5 RAISED BY THE ASSESSEE IN RESPECT OF ITS CLAIM FOR EXEMPTION UNDER SECTION 10(23C)(IIIAD) OF THE ACT BEFORE THE LEARNED CIT (APPEALS) FOR THE AFORESAID FOUR IMPUGNED ASSESSMENT YEARS, W HICH ARE EXTRACTED HEREUNDER : 4. THOUGH THE ASSESSEE BEING RUNNING EDUCATIONAL INSTITUTIONS IS ENTITLED TO EXEMPTION U/S.10(23C) (IIIAD) OF THE INCOME TAX ACT IN VIEW OF GROSS RECEIPTS BEING LESS THAN RS.1 CRORE, BUT HAS CLAIMED THE SAME AS E XEMPTED U/S.11 IN VIEW OF NO PROPER KNOWLEDGE ON THE APPLICABILITY OF THE SECTIO N AT THE TIME OF FILING THE RETURN OF INCOME. THE LEARNED ASSESSING OFFICER WI THOUT LOOKING INTO THE GROUND REALITIES OF THE CASE AND NATURE OF THE CASE, WENT ON TO MAKE HUGE ADDITIONS RUNNING INTO LAKHS OF RUPEES WHICH NEEDED TO BE DELETED IN TOTO. 15 ITA NOS.1688 TO 1691/BANG/2012 5. IT IS THEREFORE TO REQUEST THE HON'BLE CIT (APP EALS) TO DELETE THE ADDITIONS MADE BY WAY OF DISALLOWANCE OF EXEMPTION U/S.11. I T IS ALSO REQUESTED TO DISALLOW THE ADDITIONS MADE TOWARDS OUTSTANDING AMOUNT PAYAB LE AS SHOWN IN BALANCE SHEET. IT IS FURTHER REQUESTED TO DIRECT THE ASSESSING OFF ICER TO GIVE EXEMPTION U/S.10(23C)(IIIAD) WHICH IS THE RELEVANT SECTION AP PLICABLE FOR THE ASSESSEE. ON PERUSAL OF THESE GROUNDS RAISED (SUPRA) AND THE IMPUGNED ORDERS OF THE LEARNED CIT (APPEALS), WE FIND THAT, AS SUBMITTED BY THE LEARNE D AUTHORISED REPRESENTATIVE, THE LEARNED CIT (APPEALS) HAS MERELY RECORDED THE AFORESAID GR OUNDS RAISED BY THE ASSESSEE IN THE BODY OF HIS ORDER BUT HAS ABSOLUTELY FAILED TO CONSIDER AND ADJUDICATE ON THE ALLOWABILITY OF OTHERWISE OF THE ASSESSEE'S CLAIM FOR EXEMPTION UND ER SECTION 10(23) (IIIAD) OF THE ACT. FURTHER, WE ALSO FIND THAT THE LEARNED CIT (APPEALS ) HAS NOT CONSIDERED OR ADDRESSED THE OTHER ISSUES ON WHICH DISALLOWANCES / ADDITIONS WER E MADE IN SPITE OF THE ASSESSEE'S GROUNDS RAISED TO THE EFFECT OF OFFERING VERIFICATION OF IT S OUTSTANDING BALANCES IN ITS FINAL ACCOUNTS FOR THE RELEVANT PERIODS. IN THIS VIEW OF THE MATT ER, WE FIND MERIT IN THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE / ASSESSEE THAT T HE EX-PARTE ORDERS OF THE ASSESSING OFFICER AND THOSE OF THE LEARNED CIT (APPEALS), FOR ASSESSMENT YEARS 2005-06 TO 2008-09 PASSED WITHOUT CONSIDERING THE GROUNDS RAISED BY TH E ASSESSEE ARE IN CLEAR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE VIZ. AUDI ALTERAM PARTEM AND HAVE CONSEQUENTLY CAUSED GRAVE INJUSTICE AND HARDSHIP TO THE ASSESSEE. IN THIS VI EW OF THE MATTER, WE FIND THAT THE ORDERS OF BOTH THE AUTHORITIES BELOW I.E. OF THE ASSESSING OF FICER AND THE LEARNED CIT (APPEALS) ARE CLEARLY FACTUALLY AND LEGALLY UNSUSTAINABLE AT THIS STAGE, IN THEIR PRESENT FORM. WE, THEREFORE, IN THE INTEREST OF EQUITY AND JUSTICE SET ASIDE THE ORDERS OF THE BOTH THE ASSESSING OFFICER AND THE LEARNED CIT (APPEALS) FOR THE IMPUGNED ASSE SSMENT YEARS 2005-06 TO 2008-09 AND 16 ITA NOS.1688 TO 1691/BANG/2012 RESTORE THE ASSESSMENTS TO THE FILE OF THE ASSESSIN G OFFICER WITH THE DIRECTION TO RE-DO THE ASSESSMENTS DE NOVO AND TO PASS ORDERS THEREON AFTE R DUE CONSIDERATION OF THE ASSESSEES CLAIMS INCLUDING THAT FOR EXEMPTION UNDER SECTION 1 0 (23C) (IIIAD) OF THE ACT AND TO PASS FRESH ORDERS OF ASSESSMENT BY WAY OF SPEAKING ORDER THERE ON AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS IN S UPPORT OF ITS CLAIMS AND AS REQUIRED. IT IS ORDERED ACCORDINGLY. 11. IN THE RESULT, THE ASSESSEE'S APPEALS FOR ASSES SMENT YEARS 2005-06 TO 2008-09 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JAN., 2014. SD/- SD/- (GEORGE GEORGE K) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBE R *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. (TRUE COPY ) BY ORDER SR. PVT. SECRETARY, ITAT, BANGALORE