ACIT, Muzaffarnagar V. Muzaffarnagar Development Authority, Muzaffarnagar

ITA 2059/DEL/2013

• Counselvise Citation: 205920114 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: LAKSHMISH KANT
• Keywords: Retrospective amendment
• Section: 143(3); 12A; 12AA

Judgement Text

ITA NO.2059/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 2059 /DEL/2013 A.Y. 200 7 - 0 8 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, MUZAFFARNAGAR VS. M/S MUZAFARNAGAR DEVELOPMENT AUTHORITY, 1113, SOUTH CIVIL LINES, MUZAFFARNAGAR (PAN: AAALM0437D) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. P. DAM KANUNJNA, SR. DR ASSESSEE BY : SH. LAKSHMISH KANT, CA DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 23 2323 23- -- -11 1111 11- -- -201 201 201 2015 55 5 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 0 00 04 44 4- -- -1 11 12 22 2- -- -201 201 201 2015 55 5 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M THE REVENUE HAS FILED THIS AGAINST THE ORDER DATED 17.1.2013 PASSED BY THE LD. CIT(A)-MUZAFFARNAGAR ON THE FOLLOWING GROUN DS RELEVANT FOR THE ASSESSMENT YEAR 2007-08. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3,30,07,100/- MADE BY THE AO ON ACCOUNT OF EXCESS OF INCOME OVER EXPENDITURE AND THEREBY ALLOWING THE BENEFIT OF DEEMED REGISTRATION UNDER S ECTION 12AA OF THE INCOME TAX ACT, 1961 BY IGNORING THE FACT THAT THE COMMISSIONER OF INCOME TAX, MUZAFFARNAGAR HAS WITHDRAWN THIS REG ISTRATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW IN ALLOWING THE BENEFIT OF SECTION 11 OF THE INCOME TAX ACT, 1961 BY IGNORING THE FACT THAT THE APPLICATION OF INCOME IS LESS THAN STATUTORY LIMIT OF 85% OF THE GROSS RECEIPTS A S PER CALCULATION GIVEN BY THE AO IN THE ASSESSMENT ORDER. ITA NO.2059/DEL/2013 2 3. THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF AO BE RESTORED. 2. THE FACTS NARRATED BY THE REVENUE AUTHORITIES A RE NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT BEING REPEATED HER E FOR THE SAKE OF BREVITY., 3. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTION RAISED IN THE GROUNDS OF APPEAL FILED BY THEM. 4. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE R ELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT THE SAME MAY BE UPHELD. LD. COUNSEL FOR THE ASSESSEE HAS FILED THE COPY OF THE ORDER PASSED IN ASSESSEE S OWN CASE IN ITA NO. 4231/DEL/2013 IN WHICH THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER DATED 16.5.2013 PASSED BY THE LD. COMMISSIONE R REJECTING THE REGISTRATION U/S. 12AA OF THE I.T. ACT. HE FURTHER STATED THAT THE ITAT, E-BENCH HAS RESTORED THE REGISTRATION GRANTED U/S. 12AA OF THE I.T. ACT W.E.F. 4.6.2008 AND ACCORDINGLY, THE ASSESSEE GET RELIEF. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS ESPECIALLY THE IMPUGNED ORDER. WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE ASSESSEES COUNSEL THAT THE TRIBUNAL IN ITA NO. 4231/DEL/2013 IN ASSESSEES OWN CASE VIDE ORDER DATED 12.1.2015 HAS RESTORED T HE REGISTRATION GRANTED U/S. 12AA AND GAVE THE RELIEF ACCORDINGLY. FOR THE SAK E OF CONVENIENCE, THE RELEVANT FINDING OF THE TRIBUNAL VIDE PARA NO. 20 A T PAGE NO. 11 ARE REPRODUCED AS UNDER:- 20. FOR THE REASONS SET OUT ABOVE, IN OUR CONSIDER ED VIEW, LEARNED COMMISSIONER WAS IN ERROR IN INVOKING HIS POWERS UNDER SECTION 12AA(3) TO CANCEL THE REGISTRATION GR ANTED TO THE ASSESSEE. IN EFFECT, THE CANCELLATION ORDER DA TED 4 TH JUNE, 2008, AND ALL SUBSEQUENT ORDERS, INCLUDING THE IMPU GNED ITA NO.2059/DEL/2013 3 ORDER DATED 15 TH MAY, 2013, GIVING EFFECT TO OUR DIRECTIONS STAND QUASHED, AND REGISTRATION GRANTED TO THE ASSE SSEE UNDER SECTION 12AA STANDS RESTORED. THE ASSESSEE GE TS THE RELIEF ACCORDINGLY. 5.1 WE FURTHER FIND THAT LD.CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE IN DISPUTE VIDE PARA NO. 6 AT PAGES 22 TO 24 VIDE HIS IMPUGNED ORDER DATED 17.1.2013. THE RELEVANT FINDING OF THE LD. CIT(A) A RE REPRODUCED AS UNDER:- 6. IN RESPONSE TO THE KIND DIRECTIONS OF THE HONB LE ITAT, DELHI VIDE ORDER DATED 25.1.2002, NOTICES OF HEARING U/S. 250 OF THE ACT WERE ISSUED. IN COMPLIANCE OF NOTICE U/S. 250 OF THE ACT , SHRI LAKSHMISH KANT, CA AND AR FOR THE APPELLANT APPEARED, FILED C OPIES OF THE ORDERS OF THE HONBLE ITAT, DELHI IN ITA NOS. 1334, 1335, 1336/DEL/2009 FOR AYS. 2005-06, 2006-07 AND 2006-07 DATED 19.6.2009 AND ARGUED THE CASE. THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE B Y THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED TH AT TO MAINTAIN THE CONSISTENCY, THE APPELLANT HAD EARLIER IN AN ALTERN ATIVE GROUND OFFERED RS. 37,00,693.78 AS ITS SURPLUS (TOTAL INCO ME) AS PER INCOME & EXPENDITURE ACCOUNT. HOWEVER, NOW THE MA IN ISSUE WHICH IS TO BE ADJUDICATED IS THAT IN VIEW OF THE P ROCEEDINGS TILL DATE, WHETHER THE APPELLANT SHOULD BE TREATED AS DE EMED REGISTERED U/S. 12AA OF THE ACT OR NOT AND HENCE EN TITLED FOR BENEFIT OF SECTION 11 OF THE ACT. THE HONBLE ITAT HAD SET ASIDE THE ASSESSMENT ORDERS FOR AYRS 2005-06 AND 2006-07 WIT H THE FOLLOWING DIRECTIONS/ OBSERVATIONS:- ITA NO.2059/DEL/2013 4 .4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ORDER OF COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA NO. 971/DEL/2007 DATED 19.2.2008 CLEARLY SHOWS THAT THE ASSESSEE WAS GRANTED REGISTRATION ULS 12A OF THE ACT. CONSEQUENT TO THE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL, THE LD. CIT HAD ALSO GRANTED THE ASSESSEE REGISTRATION U/S 12A ON 30-04-2008. THE CANCELLATION OF THE REGISTRATION U/S 12A HAS NOT BEEN COMPLETED BY THE LD. CIT, MUZAFFARNAGAR. EVEN OTHERWISE AS PER THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF THE SOCIETY FOR THE PROMOTION OF EDUCATION, ADVENTURE SPORTS AND CONSERVATION OF INVESTMENT REPORTED IN 216 CTR 167 AT PAGE 11 OF THE SAID ORDER CLEARLY BRINGS OUT THE ISSUE THAT EVEN IF THE CANCELLATION OF THE REGISTRATION IS DONE, IT IS ONLY PROSPECTIVE. THUS, EVEN ASSUMING THAT THE LD. CLT WISHES TO CANCEL THE REGISTRATION GRANTED U/S 12A, IT COULD HAVE AFFECT ONLY FROM 30-04-2008 BEING THE DATE OF ISSUE OF SHOW CAUSE NOTICE AND NOT BEFORE. AS IT IS NOTICED THAT THE ASSESSMENT YEARS INVOLVED IN L.T.A. NOS.1334 AND 1335 ARE THE ASSESSMENT YEARS 2005-06 AND 2006-07, WHICH FALL FOR THE PERIOD WHEN THE ASSESSEE DID HAVE THE REGISTRATION ULS 12A AND THE SAME HAS NOT BEEN ITA NO.2059/DEL/2013 5 CANCELLED BY THE LD. CLT OBVIOUSLY, THE BENEFIT OF THE EXEMPTION U/S 11 OF THE ACT CANNOT BE DENIED TO THE ASSESSEE. EVEN OTHERWISE, IT IS NOTICED THAT THE ASSESSMENT U/S 143(3) FOR THE RELEVANT ASSESSMENT YEARS HAVE BEEN COMPLETED U/S 143(3) READ WITH SECTION 254 ON 5-11-2008 AND THE ASSESSING AUTHORITY HAD AFTER EXAMINING ALL THE CONDITIONS LAID DOWN, HAS GRANTED THE ASSESSEE EXEMPTION U/S 11 OF THE ACT AND HAS ASSESSED THE SAME AS 'NIL'. THUS, IT CANNOT BE SAID THAT THE ASSESSEE HAD VIOLATED EVEN THE PROVISIONS OF SECTIONS 11, 12 & 13 OF THE ACT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ORDER OF THE LD. CLT IN UPHOLDING THE ORDER OF THE ASSESSING AUTHORITY DATED 24-09- 2007 BY HOLDING THAT THE ASSESSEE DID NOT HAVE REGISTRATION U/S 12A IS INVALID AND THE SAME IS REVERSED. IN THESE CIRCUMSTANCES, THE ASSESSING AUTHORITY IS DIRECTED TO REDO THE ASSESSMENT BY TREATING THE ASSESSEE AS BEING ENTITLED TO THE BENEFIT OF REGISTRATION U/S 12A OF THE ACT ....' CONSEQUENT TO THE ABOVE DIRECTIONS, THE AO VIDE SE PARATE ORDERS DATED 24.12.2010 FOR THE AY 2005-06 AND 2006-07 HAS TREATED THE APPELLANT AS REGISTERED U/S. 12AA OF THE ACT AN D HENCE ALLOWED EXEMPTION U/S. 11 OF THE ACT. THERE IS NO FINDING S IN RESPECT OF ITA NO.2059/DEL/2013 6 VIOLATION OF PROVISIONS OF SECTION 13 OF THE ACT AN D HENCE THE ASSESSMENT HAS BEEN COMPLETED AT NIL INCOME. THUS A SSESSMENT PROCEEDINGS ARE COMPLETE FROM DEPARTMENTAL VIEW SU BJECT TO, OF COURSE THE RESULT OF THE DECISION OF THE HONBLE HI GH COURT WHERE THE ISSUE REGARDING THE REGISTRATION U/S. 12AA OF T HE ACT IS PENDING FOR ADJUDICATION. THE HONBLE ITAT, DELHI VIDE ITS ORDER ITA NO. 4211/DEL/2011 DATED 30.11.2011 FOR AY 2007-08 HAS A LLOWED THE APPELLANTS APPEAL IN RESPECT OF FRINGE BENEFIT TAX ON THE GROUND THAT THE PROCEEDINGS FOR CANCELLATION OF REGISTRATI ON HAD STARTED ONLY ON 30.4.2008. THEREFORE, THE ORDER CANCELLING THE R EGISTRATION PASSED ON 4.6.2008 CANNOT HAVE RETROSPECTIVE EFFECT . AS THE APPELLANT IS TREATED AS DEEMED REGISTERED U /S. 12AA OF THE ACT FOR THE YEAR UNDER CONSIDERATION AND THERE IS N O FINDINGS ON RECORD THAT THE APPELLANT HAD EVER VIOLATED CONDITI ONS U/S. 13 OF THE ACT, THE APPELLANT IS DEFINITELY ENTITLED FOR THE B ENEFITS OF SECTION 11 OF THE ACT AND HENCE ENTIRE SURPLUS OF THE APPELLAN T ARE TREATED AS EXEMPT FROM TAX. THE ADDITION MADE BY THE AO AMOUNT ING TO RS. 3,30,07,100/- IS HELD NOT JUSTIFIED. HENCE THE SAME IS DIRECTED TO BE DELETED. GROUNDS OF APPEAL NOS. 1, 2 & 4 ARE ALL OWED. ITA NO.2059/DEL/2013 7 5.2 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE ITAT, COORDINATE BENCH DECISION DATED 12.1.201 5 RELIED BY THE ASSESSEE IN ASSESSEES OWN CASE, AS AFORESAID, WE DO NOT SEE AN Y INFIRMITY IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A) ON THE ISSU E IN DISPUTE, HENCE, WE UPHOLD THE SAME AND DISMISS THE APPEAL FILED BY THE REVENUE ON THE ISSUE IN DISPUTE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/12/2015. S SS SD DD D/ // /- -- - S SS SD DD D/ // /- -- - [ [[ [PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI PRASHANT MAHARISHI] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE: 04-12-2015 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES