Income-tax Officer, V. M/s. Shri Vishwakalyan Jivraksha Pratishthan, Pune

ITA 2013/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1539 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JADHAV
• Assessee Lawyers: S N DOSHI
• Keywords: Charitable institution; Retrospective amendment; Reason to believe; Reassessment proceedings
• Section: 143(3); 12A; 12AA; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 2013/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2011-12 INCOME TAX OFFICER, WARD 10(1), PUNE ....... / APPELLANT ' / V/S. M/S. SHRI VISHWAKALYAN JIVRAKSHA PRATISHTHAN, C/O SHRI PRAFULLA MEHTA, G-113, PADMAVATI NAGAR HSG. SOC. CO., OPPOSITE SAMBHAJI NAGAR, DHANAKWADI, PUNE 411043 PAN : AAKTS8989C / RESPONDENT *+& / CO NO. 18/PN/2016 %' ( ')( / ASSESSMENT YEAR : 2011-12 M/S. SHRI VISHWAKALYAN JIVRAKSHA PRATISHTHAN, C/O SHRI PRAFULLA MEHTA, G-113, PADMAVATI NAGAR HSG. SOC. CO., OPPOSITE SAMBHAJI NAGAR, DHANAKWADI, PUNE 411043 PAN : AAKTS8989C ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 10(1), PUNE / RESPONDENT ASSESSEE BY : SHRI S.N. DOSHI REVENUE BY : SHRI S.K. JADHAV / DATE OF HEARING : 25-05-2016 / DATE OF PRONOUNCEMENT : 22-07-2016 2 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 , / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, PUNE DATED 20-08- 2014 FOR THE ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS FILED CR OSS OBJECTIONS AGAINST THE AFORESAID ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A CHARITABLE TRUST. THE ASSESSEE FILED ITS RET URN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 DECLARING LOSS OF ` 5,42,718/-. THE RETURN OF THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 18-07-20 13. AT THE TIME OF FILING OF RETURN OF INCOME, THE ASSESSEE WAS NOT REGISTER ED U/S. 12A OF THE ACT. THE ASSESSEE HAD FILED AN APPLICATION FOR REGISTRA TION U/S. 12AA OF THE ACT IN THE PRESCRIBED FORM ON 16-01-2013. T HE COMMISSIONER OF INCOME TAX VIDE ORDER DATED 25-03-2014 GRANTED REGISTRATION TO THE ASSESSEE U/S. 12AA W.E.F. ASSESSMENT Y EAR 2014-15. NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 22-03-20 13. THE ASSESSEE WAS PROVIDED WITH REASONS FOR ISSUING NOTICE U/S . 148 FOR THE ASSESSMENT YEAR 2011-12 VIDE LETTER DATED 18-06-2013. THE ASSESSEE FILED OBJECTIONS AGAINST THE ISSUING OF NOTIE U/S. 148, WHICH WERE DISPOSED OFF BY THE ASSESSING OFFICER ON 23-08-2013. THE A SSESSING OFFICER, THEREAFTER, VIDE ORDER DATED 27-01-2014 PASSED OR DER U/S. 143(3) R.W.S. 147 OF THE ACT MAKING ADDITION OF ` 40,92,239/- ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 57 OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFER RED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) CHA LLENGING 3 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 THE REASSESSMENT PROCEEDINGS, AS WELL AS ADDITION/DISALLOWAN CE MADE BY THE ASSESSING OFFICER. THE FIRST APPELLATE AUTHORITY VID E IMPUGNED ORDER REJECTED THE CONTENTIONS OF THE ASSESSEE WITH RE GARD TO REASSESSMENT PROCEEDINGS. HOWEVER, ON MERITS THE COMMIS SIONER OF INCOME TAX (APPEALS) ACCEPTED THE APPEAL OF THE ASSESSEE . NOW, BOTH THE REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE REVENUE IN ITS APPEAL HAS ASSAILED THE ACTION OF COMMISSION ER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION AND THE ASSES SEE IN CROSS OBJECTIONS HAS CHALLENGED THE VALIDITY OF REASSESSMENT PROCEEDINGS . 3. SHRI S.K. JADHAV REPRESENTING THE DEPARTMENT SUBMITTE D THAT AT THE TIME OF FILING OF RETURN OF INCOME THE ASSESSEE WAS NOT REGISTERED U/S. 12AA OF THE ACT AND HENCE, WAS NOT ELIGIBLE TO CLAIM TH E BENEFIT OF SECTION 11 OF THE ACT. ALL THE DONATIONS RECEIVED BY THE ASSESSEE WERE LIABLE TO BE TAXED IN THE ABSENCE OF REGISTRATION U/S. 12A . THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF ASSESSING OFFICER IN MA KING THE DISALLOWANCE OF DEDUCTION U/S. 57 OF THE ACT. 4. ON THE OTHER HAND SHRI S.N. DOSHI APPEARING ON BEHALF O F THE ASSESSEE DEFENDED THE FINDINGS OF COMMISSIONER OF INCOME TA X (APPEALS) IN DELETING THE ADDITION ON MERITS. THE LD. AR SUBMIT TED THAT THE PROVISIONS OF SECTION 12A(2) WERE AMENDED BY FINANCE (N O. 2) ACT, 2014 W.E.F. 01-10-2014 BY INSERTING PROVISO TO SUB-SECTION (2). ALTHOUGH, THE SAID AMENDMENT WAS INSERTED W.E.F. 01-10-2014 . THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF SNDP YOGAM V S. ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTION) REPORTED AS 68 TAXMA NN.COM 152 (COCHIN-TRIB.) HAS HELD THAT INSERTION OF PROVISO TO SECTION 1 2A(2) W.E.F. 01-10-2014 IS RETROSPECTIVE IN OPERATION. THE BENEFIT OF SECTION 11 4 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 CANNOT BE DENIED TO THE TRUST IF IT HAD OBTAINED REGISTRA TION DURING PENDENCY OF APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR FURTHER REFERRED TO THE DECISION OF KOLKATA BE NCH OF THE TRIBUNAL IN THE CASE OF SREE SREE RAMKRISHNA SAMITY VS. DE PUTY COMMISSIONER OF INCOME TAX REPORTED AS 156 ITD 646 (KOLK ATA-TRIB.). THE TRIBUNAL HELD THAT AS LONG AS OBJECTS OF A SOCIETY WE RE CHARITABLE IN NATURE IN YEARS EARLIER TO YEAR IN WHICH REGISTRATION U/S. 12AA WAS GRANTED AND THERE IS NO ADVERSE FINDINGS WITH REGARD TO EXISTENCE OF ASSESSEE SOCIETY FOR CHARITABLE PURPOSES, BENEFIT OF EXEMPT ION U/S. 11 HAS TO BE GIVEN. 4.1 THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOME T AX (APPEALS) WHILE DEALING WITH THE ISSUE OF REOPENING HAS ERRED IN HOLDING THAT THE REASSESSMENT PROCEEDINGS WERE VALID. THE LD. AR POINTED OUT THAT THE REASONS RECORDED FOR REOPENING WERE FACTUALLY INCORRECT. IN THE REASONS RECORDED FOR ISSUING OF NOTICE U/S. 148 COMMUNICAT ED TO THE ASSESSEE VIDE LETTER DATED 18-06-2013, IT IS MENTIONED TH AT DURING THE YEAR THE ASSESSEE HAS RECEIVED DONATIONS OF ` 40,77,937/- AND HAS CLAIMED EXPENSES OF ` 39,21,244/-. THUS, THERE IS A SURPLUS OF ` 1,56,693/-. IN FACT, THE AMOUNT OF ` 1,56,693/- IS DEFICIT AND NOT SURPLUS. THE LD. AR REFERRED TO INCOME AND EXPENDITURE A CCOUNT FOR THE YEAR ENDING ON 31-03-2011 AT PAGE 16 OF THE PAPER BOO K. THE LD. AR POINTED THAT THE INCOME OF THE ASSESSEE FROM DONATIONS, B ANK INTEREST AND SALE OF SHENKHAT (COW DUNG) IS ` 40,77,937/-, AGAINST THE EXPENDITURE OF ` 42,34,630/-. THE ASSESSEE HAS CLAIMED INCOME FROM SALE OF SHENKHAT AS AGRICULTURAL INCOME EXEMPT FROM TAX. T HUS, THE TOTAL INCOME DECLARED BY THE ASSESSEE IN COMPUTATION WAS ` (- )5,42,898/-. THE LD. AR FURTHER POINTED OUT THAT IN THE RE ASONS RECORDED IT HAS BEEN MENTIONED THAT THE ASSESSEE HAS SHOWN INCORRECT 5 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 INCOME THERE IS ESCAPEMENT OF INCOME TO THE EXTENT OF ` 6,99,411/-. HOWEVER, IN THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON ACCOUNT OF SUCH AFORESAID ESCAP EMENT BUT MADE DISALLOWANCE OF DEDUCTION U/S. 57 TO THE TUNE OF ` 40,92,937/-. THE LD. AR ASSERTED THAT IF NO ADDITION WAS MADE IN RESPEC T OF AMOUNTS MENTIONED IN THE REASONS RECORDED FOR RE-OPENING, THERE CANNOT BE ANY OTHER ADDITION. IN SUPPORT OF HIS SUBMISSIONS RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F COMMISSIONER OF INCOME TAX VS. JET AIRWAYS (I) LTD. REPORTE D AS 331 ITR 236 (BOM). THE LD. AR FURTHER CONTENDED THAT THE OBJ ECTIONS FILED BY THE ASSESSEE AGAINST THE REASONS FOR REOPENING WER E NOT PROPERLY DISPOSED OFF BY THE ASSESSING OFFICER. THE ASSESSING OFFICER H AS NOT COMPLIED WITH THE MANDATORY PROCEDURE DECLARED BY THE H ON'BLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (IN DIA) LTD. VS. INCOME TAX OFFICER REPORTED AS 259 ITR 19 (SC). THE LD. AR PRAYED FOR DISMISSING THE APPEAL OF THE REVENUE AND REVERSING THE FIND INGS OF COMMISSIONER OF INCOME TAX (APPEALS) WITH RESPECT TO REAS SESSMENT PROCEEDINGS. 5. THE LD. DR CONTROVERTING THE SUBMISSIONS MADE ON BEHA LF OF THE ASSESSEE SUBMITTED THAT REASSESSMENT PROCEEDINGS WERE VALIDLY INITIATED AGAINST THE ASSESSEE. THE ORIGINAL ASSESSMENT WA S MADE IN THE CASE OF ASSESSEE U/S. 143(1). THE ASSESSEE HAD CLAIME D BENEFIT OF SECTION 11, WHEREAS THE ASSESSEE AT THE TIME OF FILING OF R ETURN OF INCOME WAS NOT REGISTERED U/S. 12AA OF THE ACT. THE IN COME DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME WAS INCORRECT, TH EREFORE, REASSESSMENT PROCEEDINGS WERE INITIATED. AFTER ISSUING NOT ICE U/S. 148, REASONS FOR ISSUING NOTICE WERE COMMUNICATED TO THE ASSE SSEE. THE 6 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 OBJECTIONS FILED BY THE ASSESSEE WERE DULY DISPOSED OFF BE FORE PASSING OF THE ASSESSMENT ORDER. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR OF T HE ASSESSEE HAS PLACED RELIANCE AND THE DOCUMENTS THAT WERE REFERRE D DURING THE COURSE OF MAKING SUBMISSIONS. 7. IT IS AN UNDISPUTED FACT THAT AT THE TIME OF FILING OF R ETURN OF INCOME AND PASSING OF ORDER U/S. 143(1) THE ASSESSEE WAS NOT REGISTERED U/S. 12A OF THE ACT. THE ASSESSEE MADE APP LICATION FOR REGISTRATION ON 16-01-2013. THE ASSESSEE WAS GRANTED REGISTRATION BY THE COMMISSIONER OF INCOME TAX ON 25-03-2014 W.E.F. ASSES SMENT YEAR 2014-15. THE NOTICE U/S. 148 WAS ISSUED TO THE ASSESSE E ON 22-03-2013. THE CONDITIONS FOR APPLICABILITY OF SECTION 11 AND 12 OF THE ACT ARE CONTAINED IN SECTION 12A OF THE ACT. THE PROVISIO NS OF SUB- SECTION (2) OF SECTION 12A OF THE ACT WERE AMENDED BY THE FINANCE (NO. 2) ACT, 2014. PROVISO TO SUB-SECTION (2) WERE INSERTED BY AMENDMENT WHICH READS AS UNDER : (2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL AP PLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESS MENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICAT ION IS MADE. PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TR UST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISION S OF SECTIONS 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM P ROPERTY HELD UNDER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSE SSMENT YEAR, FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE ASSESSING OFFICER AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECTS AN D ACTIVITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING A SSESSMENT YEAR: 7 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 PROVIDED FURTHER THAT NO ACTION UNDER SECTION 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUT ION FOR ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY F OR NON-REGISTRATION OF SUCH TRUST OR INSTITUTION FOR THE SAID ASSESSMENT Y EAR: PROVIDED ALSO THAT PROVISIONS CONTAINED IN THE FIRST AND SECOND PROVISO SHALL NOT APPLY IN CASE OF ANY TRUST OR INSTITUTION WHICH WAS REFUSED REGISTRATION OR THE REGISTRATION GRANTED TO IT WAS CANCELLED AT ANY TIME UNDER SECTION 12AA. THE AFORESAID AMENDMENT WAS MADE W.E.F. 01-10-2014. 8. THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF SNDP Y OGAM VS. ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTION) (SUPRA) WHILE DE ALING WITH THE ISSUE RELATING TO RETROSPECTIVE APPLICABILITY OF NEWLY IN SERTED PROVISO TO SECTION 12A(2) HAS HELD THAT THE AMENDMENT IS RETROS PECTIVE IN NATURE. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL ARE AS UNDER : 7.1 .THE FIRST PROVISO TO SECTION 12A(2) WAS B ROUGHT IN THE STATUTE ONLY AS A RETROSPECTIVE EFFECT, WITH A VIEW NOT TO AFFECT GENUINE CHARITABLE TRUSTS AND SOCIETIES CARRYING ON GENUINE CHARITABLE OBJECTS IN THE EARLIER YEARS AND SUBSTANTIVE CONDITIONS STIPUL ATED IN SECTION 11 TO 13 HAVE BEEN DULY FULFILLED BY THE SAID TRUST. THE BENEFIT OF RETROSPECTIVE APPLICATION ALONE COULD BE THE INTENTION OF THE LEG ISLATURE AND THIS POINT IS FURTHER STRENGTHENED BY THE EXPLANATORY NOTES TO FI NANCE (NO.2) ACT, 2014 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES VI DE ITS CIRCULAR NO. 01/2015 DATED 21.1.2015. APPARENTLY THE STATUTE PRO VIDES THAT REGISTRATION ONCE GRANTED IN SUBSEQUENT YEAR, THE B ENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIER ASSESSMENT YEARS FOR W HICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE LD. A.O., UNLESS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSED FOR SPECIFI C REASONS. THE STATUTE ALSO GOES ON TO PROVIDE THAT NO ACTION U/S147 COULD BE TAKEN BY THE AO MERELY FOR NON-REGISTRATION OF TRUST FOR EARLIER YE ARS. 7.2 WHEN SECTION 12A OF THE ACT WAS AMENDED BY INTR ODUCING NEW PROVISOS TO SUB-SECTION (2) OF S. 12A BY FINANCE AC T, 2014 WITH EFFECT FROM 01.10.2014, THE ASSESSMENT ORDERS PASSED BY THE ASS ESSING OFFICER IN RESPECT OF THE PRESENT ASSESSEE WERE PENDING IN APP EAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING SUCH PENDENCY, THE ASSE SSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT ON 29.07.2013 W.E. F. THE ASSESSMENT YEAR 2013-14. THOSE APPEALS WERE THE CONTINUATION O F THE ORIGINAL PROCEEDINGS AND THAT THE POWER OF THE COMMISSIONER O F INCOME-TAX WAS 8 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER [ADI T (EXEMPTION) IN THE PRESENT CASE] WERE TWO WELL ESTABLISHED PRINCIPLES OF LAW. IN VIEW OF THE ABOVE AND GOING BY THE PRINCIPLE OF PURPOSIVE INTER PRETATION OF STATUES, AN ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BEFORE THE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE ASSESSM ENT PROCEEDINGS PENDING BEFORE THE ASSESSING OFFICER WITHIN THE ME ANING OF THAT TERM AS ENVISAGED UNDER THE PROVISO. IT FOLLOWS THERE-FROM THAT THE ASSESSEE WHICH OBTAINED REGISTRATION U/S 12AA OF THE ACT DUR ING THE PENDENCY OF APPEAL WAS ENTITLED FOR EXEMPTION CLAIMED U/S 11OF THE ACT. 7.3. THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) B ILL, 2014 WHICH SOUGHT TO AMEND SECTION 12A EXPLAINS THE OBJECTS AN D REASONS FOR MAKING SUCH AMENDMENTS. THE EXPLANATION MAKES IT CL EAR THAT IT WAS IN ORDER TO PROVIDE RELIEF TO SUCH TRUSTS IN RESPECT O F WHICH, DUE TO ABSENCE OF REGISTRATION U/S 12AA TAX LIABILITY GOT ATTACHED THOUGH OTHERWISE THEY WERE ELIGIBLE FOR EXEMPTION BY FULFILLING OTHER SUB STANTIVE CONDITIONS THAT THE AMENDMENT WAS BROUGHT IN. THAT BEING SO, DENYIN G SUCH BENEFIT TO A TRUST LIKE THE ASSESSEE WHO HAD OBTAINED REGISTRATI ON U/S 12AA DURING THE PENDENCY OF THE APPEALS FILED AGAINST THE ORDER S OF THE ASSESSING AUTHORITY, BY NARROWLY INTERPRETING THE TERM, PEND ING BEFORE THE ASSESSING OFFICER SO AS TO EXCLUDE ITS PENDENCY BE FORE THE APPELLATE AUTHORITY, WILL BE DOING VIOLENCE TO THE PROVISIONS OF THE STATUTE AND, AS SUCH, LIABLE TO BE INTERFERED WITH. MOREOVER, UNDER THE SCHEME OF THE ACT, SECTIONS 11 AND 12 ARE SUBSTANTIVE PROVISIONS WHICH PROVIDE FOR EXEMPTIONS TO A RELIGIOUS OR CHARITABLE TRUST. SECT IONS 12A AND 12AA DETAIL THE PROCEDURAL REQUIREMENTS FOR MAKING AN AP PLICATION TO CLAIM EXEMPTIONS UNDER SECTIONS 11 AND 12 BY THE ASSESSEE AND THE GRANT OR REJECTION OF SUCH APPLICATION BY THE COMMISSIONER. THUS, IN OUR VIEW, SECTIONS 12A AND 12AA ARE ONLY PROCEDURAL IN NATURE . HENCE, IT IS NOT THE REGISTRATION U/S 12AA BY ITSELF THAT OFFERS IMMUNITY FROM TAXATION. A RECEIPT WHETHER IT IS REVENUE OR CAPITAL IN NATURE IS TO BE DECIDED AT THE ASSESSMENT STAGE. BEING PROCEDURAL IN NATURE, IN OU R VIEW, LIBERAL INTERPRETATION WILL GIVE EFFECT TO THE INTENTION OF THE AMENDMENT, THEREBY REMOVING THE HARDSHIP IN GENUINE CASES LIKE THE PRE SENT ASSESSEE UNDER CONSIDERATION. 9. THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF SREE SREE RAMKRISHNA SAMITY VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) WHILE DEALING WITH THE ISSUE WHERE THE BENEFITS OF EXEMPTION U/S. 11 AND 12 WERE DENIED TO THE ASSESSEE ONLY FOR THE REASO N THAT THE 9 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 ASSESSEE IS NOT REGISTERED U/S. 12A OF THE ACT HELD THAT THE LEGISLATURE HAS BROUGHT PROVISO TO SECTION 12A(2) TO PREVENT GENUINE HARDSHIP THAT IS CAUSED TO THE ASSESSEE DUE TO NON-REGISTRATION U/S 12AA AND ACCORDINGLY, THE AMENDMENT TO SECTION 12A(2) HAS TO BE C ONSTRUED AS RETROSPECTIVE IN OPERATION. 10. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE BY PLACING RELIANCE ON THE D ECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONE R OF INCOME TAX VS. PROGRAMME FOR COMMUNITY ORGANISATION REPORTED A S 248 ITR 1 (SC). THE COMMISSIONER OF INCOME TAX (APPEALS) HELD : 11. THIS LEAVES THE MATTER OF COMPUTATION OF INCOM E WHICH HAS BEEN COMPLICATED BY APPLYING THE PROVISIONS U/S. 57 OF I NCOME-TAX ACT. VOLUNTARY CONTRIBUTIONS OR DONATIONS BY THEIR INHER ENT NATURE DO NOT FALL THE CATEGORY OF 'INCOME' UNLIKE OTHER INCOME. THESE CON TRIBUTIONS HAVE BEEN DEEMED AS INCOME BY VIRTUE OF SEC. 12(1) OF INCOME- TAX ACT. VOLUNTARY CONTRIBUTIONS RECEIVED TOWARDS CORPUS OF THE TRUST ARE EXCLUDED U/S. 11(1)(A) FROM THE SCOPE OF INCOME U/S . 11(1) OF INCOME- TAX ACT. THEREFORE, EVEN IF EXEMPTION IS NOT ALLOWABLE IN VIEW OF NON REGISTRATION U/S. 12AA OF INCOME-TAX ACT, THE INCOM E OF THE TRUST IS REQUIRED TO BE COMPUTED NOT IN ACCORDANCE WITH THE PROVISIONS OF ACT BUT IN ACCORDANCE WITH THE PROVISIONS OF ACT BUT IN ACCORDANCE WITH THE NORMAL RULE OF ACCOUNTANCY, IN A COMMERCIAL SEN SE WITHOUT REFERENCE TO THE HEAD OF INCOME SPECIFIED IN SEE. 14. THIS IS A MATTER OF SETTLED LAW. THE HON'BLE SUPREME COURT IN CIT VS. P ROGRAMME FOR COMMUNITY ORGANIZATION, 248 ITR 1 (SC) HAD APPROVED KERALA HIGH COURTS DECISION IN THE SAME CASE IN 228 ITR 620 (KER) AS TO THE MANNER OF COMPUTATION STATING THAT INCOME HAS TO BE COMPUTED ON COMMERCIAL BASIS AND NOT HEADWISE OR STATUTORY BASI S WHEREIN EXPENDITURE WOULD BE CHARGE ON THE INCOME, WHILE TH E NET INCOME ALONG WITH DONATIONS OTHER THAN CORPUS DONATIONS WI LL FORM ELIGIBLE BASE OUT OF WHICH THE APPELLANT IS EXPECTED TO APPL Y 75% (NOW 85%). THEREFORE, IN MY OPINION, THE MANNER OF COMPUTATION OF INCOME WILL BE THE SAME THOUGH THE APPELLANT WILL NOT BE ENTITLED TO EXEMPTION U/S. 11 & 12 OF THE INCOME-TAX ACT BEING NOT REGISTERED U/S. 12AA OF INCOME-TAX ACT AND THE QUESTION OF TAXABILITY OF DO NATION U/S. 57 AND DEDUCTION U/S. 57(III) OF INCOME-TAX ACT DOES NOT ARISE. ACCORDINGLY, 10 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADD ITION OF ` 40,92,237/-. 11. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE WE LL REASONED FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECISIONS O F TRIBUNAL HOLDING THE AMENDMENT TO PROVISIONS OF SUB-SECTION (2) TO SECTION 12A TO BE RETROSPECTIVE IN NATURE, COUPLED WITH THE FACT THAT THE ASSESSEE WAS SUBSEQUENTLY GRANTED REGISTRATION U/S. 12 AA OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE COMMISSIONER OF I NCOME TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASS ESSING OFFICER. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. CO NO. 18/PN/2016 12. IN CROSS OBJECTION THE ASSESSEE HAS ASSAILED THE FIND INGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN UPHOLDING THE REASSE SSMENT PROCEEDINGS. THE LD. AR OF THE ASSESSEE HAS POINTED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER IN REASSESSMENT PROCEEDINGS ARE FOR DIFFERENT REASONS VIZ-A-VIZ REASONS MENTIONED IN THE REAS ONS FOR REOPENING. THE REASONS FOR REOPENING WERE COMMUNICATED TO THE ASSESSEE VIDE LETTER DATED 18-06-2013. THE SAME ARE R EPRODUCED AS UNDER : THE ASSESSEE TRUST HAS FILED RETURN OF INCOME FOR A.Y. 2011-12 DECLARING TOTAL LOSS OF RS.5,42,718/-. DURING THE YEAR THE ASSESSEE TRUST HAS RECEIVED DONATIONS OF RS.40,77,937/- AND CLAIME D EXPENSE OF RS.39,21,244/- AND SURPLUS OF RS.1,56,693/- TRANSFE RRED TO RESERVE. HOWEVER, THE ASSESSEE IN HIS RETURN OF INCOME SHOWN LOSS OF RS.5,42,718/-. THE ASSESSEE HAS SHOWN INCORRECT IN COME. THEREFORE, THERE IS AN ESCAPEMENT OF INCOME TO THE EXTENT OF R S.6,99,411/-. THE TRUST HAS NOT RECEIVED REGISTRATION U/S. 12AA OF TH E ACT. 11 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 IN VIEW OF THE ABOVE FATS, I HAVE THEREFORE, REASON S TO BELIEVE THAT THE INCOME CHARGEABLE TO THE TAX FOR A.Y. 2011-12 H AS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT, 1961 TO THE EXTENT OF RS.6,99,411/-. 13. THE LD. AR HAS FURTHER POINTED THAT IN THE REASONS RE CORDED IT HAS BEEN WRONGLY MENTIONED THAT THERE IS SURPLUS OF ` 1,56,693/-, WHEREAS, IT IS A DEFICIT. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR HAS DRAWN OUR ATTENTION TO THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED ON 31-03-2011 AT PAGE 16 OF THE PAPER BOOK. WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE. A FURTHER PERUS AL OF THE ASSESSMENT ORDER SHOWS THAT THE ADDITION HAS BEEN MAD E ON ACCOUNT OF DISALLOWANCE U/S. 57 OF THE ACT. THE TOTAL EXPENDITURE CLA IMED BY THE ASSESSEE IS ` 42,34,630/- OUT OF SAID EXPENDITURE THE AMOUNT ON ESTABLISHMENT, MISCELLANEOUS AND SAID EXPENSES ` 1,42,393/- WAS ALLOWED TO THE ASSESSEE U/S. 57(III) BY THE ASSESSING OFFICER A ND THE BALANCE AMOUNT OF ` 40,92,237/- WAS DISALLOWED. THUS, THE ADDITION MADE BY THE ASSESSING OFFICER IS INCOHERENT TO THE REASON S RECORDED FOR ISSUING NOTICE U/S. 148 OF THE ACT. 14. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISS IONER OF INCOME TAX VS. JET AIRWAYS (I) LTD. (SUPRA) HAS HELD IN UNEQ UIVOCAL WORDS THAT WHERE IF AFTER ISSUING NOTICE U/S. 148, ASSESSING OFFICER ACCEPTS THE CONTENTION OF THE ASSESSEE AND HOLDS THAT INCOME, FOR WHICH HE HAD INITIALLY FORMED A REASON TO BELIEVE THAT IT HAD E SCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESS MENT, IT IS NOT OPEN TO HIM TO INDEPENDENTLY ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE U/S. 148 WOULD BE NECESSARY. IN THE PRESENT CASE, WE OBSERVE THAT THE ADDITION HAS BEEN MADE FOR RE ASONS DIFFERENT 12 ITA NO. 2013/PN/2014 & CO NO. 18/PN/2016 FROM WHAT HAS BEEN COMMUNICATED TO THE ASSESSEE. NO ADDITION HAS BEEN MADE ON THE GROUND, THE ASSESSING OFFICER HAD REAS ONS TO BELIEVE FOR REOPENING ASSESSMENT. THEREFORE, IN LIGHT OF DECISION OF H ON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INC OME TAX VS. JET AIRWAYS (I) LTD. (SUPRA), WE HOLD THAT THE REASSESS MENT PROCEEDINGS ARE BAD IN LAW. ACCORDINGLY, WE ACCEPT THE CROSS OBJECTION FILED BY THE ASSESSEE. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED A ND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 22 ND DAY OF JULY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 22 ND JULY, 2016 RK ,-*%./#0#). / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-V, PUNE 4. ' / THE CIT-V, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE