ACIT, Rohtak V. M/s Jat Education Society, Rohtak

ITA 2126/DEL/2011

• Counselvise Citation: 212620114 RSA 2011
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-08-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI AL R EPRESENTATIVE
• Keywords: Reopening of assessment; Difference of opinion; Benefit of exemption; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D NEW DELHI BEFORE SHRI RP TOLANI, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO: 2126/DEL/2011 ASSESSMENT YEAR : - 2002-03 THE ACIT, ROHTAK CIRCLE VS. M/S JAT EDUCATION SOCI ETY ROHTAK DELHI ROAD, ROHTAK PAN: AAAJJO176A (APPELLANT) (RESPONDENT) APPELLANT BY : MS.VEENA JOSHI, DEPARTMENTAL R EPRESENTATIVE RESPONDENT BY : SHRI GAUTAM JAIN, CHARTERED ACCOUNTANT O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DT.17.2.2011 PERTAINING TO THE ASSESSMENT YEAR 2002-03 ON THE FOLLOWING GROUND. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS, ANN ULLING THE REOPENING PROCEEDINGS IN THIS CASE. THE ASSESSING OFFICER HAS RIGHTLY ISSUED NOTICE UNDER SECTION 148 AFTER OBTAI NING PRIOR APPROVAL OF THE CIT, ROHTAK. 2. THE ASSESSEE IS A SOCIETY, WHICH RUNS SEVERAL EDUCA TIONAL INSTITUTIONS IN ROHTAK. IT FILED ITS RETURN OF INC OME FOR THE ASSESSMENT YEAR 2002-03 ON 31.10./2002 DISCLOSING TOTAL INCOME OF NIL AFTER CLAIMING EXEMPTION UNDER SECTION 10(23C)(III AB) OF THE INCOME TAX ACT, 1961. THE RETURN WAS PROCESSED UNDER SECTION 143(1 ) OF THE INCOME TAX ITA 2126/DEL/2011 PAGE 2 OF 7 ASSESSMENT YEAR 2002-03 M/S JAT EDUCATION SOCIETY, ROHTAK ACT, 1961. ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 15.2.2005. THEREAFTER NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 WAS GIVEN REOPENING ASSESSMENT UNDER SECTION 1 47 OF THE INCOME TAX ACT, 1961. THE REASONS RECORDED FOR THE REOPEN ING ARE AS FOLLOWS. REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASS ESSMENT: THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 10(23 C)(III AB) OF THE INCOME TAX ACT, 1961 WHICH IS ADMISSIBLE TO EDUCATIONAL INSTITUTIONS WHOLLY AND SUBSTANTIALLY FINANCED BY T HE GOVERNMENT. HOWEVER, IN THIS CASE, IT IS NOTICED THAT SOME UNIT S OR INSTITUTIONS OF THE SOCIETY WERE BEING SUBSTANTIALLY FINANCED BY TH E GOVERNMENT AND OTHERS INCOME WAS TAXABLE. IT IS OBSERVED THA T GROSS RECEIPTS OF SOME UNITS/INSTITUTIONS EXCEEDED RS.1 CRORE AND FOR CLAIMING EXEMPTION, APPROVAL OF THE CHIEF COMMISSIONER OF IN COME TAX WAS REQUIRED UNDER SECTION 10(23C)(VI) OF THE INCOME TA X ACT, 1961 BUT THE ASSESSEE SOCIETY HAS NOT OBTAINED MANDATORY APP ROVAL FROM THE CHIEF COMMISSIONER OF INCOME TAX. THE ASSESSEE SOCIETY HAS NOT FURNISHED THE BALANCE SHEET OF ANY UNITS OR INS TITUIONS RUN BY IT AND NOT GOT THE ACCOUNTS AUDITED AS REQUIRED UNDER SECTION 44AB OF THE INCOME TAX ACT, 1961. THESE ADDITIONS WERE MADE IN ASSESSMENT YEAR 2003-04 & 2004-05, WHICH HAVE BEEN CONFIRMED BY THE LD.CIT(A), ROHTAK. I HAVE, THEREFORE, REASON TO BELIEVE THAT THE TAXA BLE INCOME EXCEEDING RS.1 LAKH HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2002-03 AND THE ASSESSEE HAS WRONGLY CLAIMED A ND ALLOWED THE BENEFIT OF EXEMPTION UNDER SECTION 11 OR 12 OF THE INCOME TAX ACT, 1961. SD/-: DT. 9.11.2008 3. ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) RE AD WITH S.148 ON 31.12.2009 COMPUTED THE INCOME AT RS. 10,87,6 82/-. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY. THE FIRST APPELLATE AUTHORITY HELD THAT THE REOPENING I S BAD IN LAW AS IT IS BASED ON A CHANGE IN OPINION. AGGRIEVED THE REVENU E IS IN APPEAL BEFORE THE TRIBUNAL. ITA 2126/DEL/2011 PAGE 3 OF 7 ASSESSMENT YEAR 2002-03 M/S JAT EDUCATION SOCIETY, ROHTAK 4. WE HAVE HEARD MS. VEENA JOSHI, DR ON BEHALF OF T HE REVENUE AND SHRI GAUTAM JAIN, C.A. ON BEHALF OF THE ASSESSE. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS:- 6. A PERUSAL OF THE REASONS OF REOPENING DOES NOT INDICATE THAT THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSES SEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSESSMENT. THERE IS NO INDICATION THAT THE ORIGINAL ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ON 15.2.2005. THUS FOR THIS REASON WE UPHOLD THE F OLLOWING FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS). 5. I HAVE CAREFULLY CONSIDERED THE ISSUE AND THE S UBMISSIONS MADE BY THE A.R. PROVISO TO S.147 STIPULATES THAT NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOU R YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WHERE AN ASSESS MENT WAS MADE UNDER SECTION 143(3) UNLESS, ANY INCOME CHARGE ABLE TO TAX HAS ESCAPED THE ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR AFTER THE AMENDMENT TO S.147 W.E.F. 1.4.1989, THE LEGISLATURE HAS RESTRICT ED THE SCOPE OF REOPENING AFTER FOUR YEARS FROM THE END OF THE ASSE SSMENT YEAR IN SUCH CASES CAN BE RESORTED TO ONLY WHEN THE ASSESSE E HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT OR FRESH INFORMATION CAME INTO THE POSSE SSION OF THE DEPARTMENT AFTER THE COMPLETION OF THE ASSESSMENT. 5.1. IN THE PRESENT CASE, ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 15.2.2005. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS RELEVANT FOR THE ASSESSMENT. THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF CHANGE OF OPINION OSTENSIB LY DUE TO THE ITA 2126/DEL/2011 PAGE 4 OF 7 ASSESSMENT YEAR 2002-03 M/S JAT EDUCATION SOCIETY, ROHTAK CONFIRMATION OF ADDITIONS BY COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05. REOPE NING OF ASSESSMENT ON THE ABOVE GROUNDS AFTER THE END OF FO UR YEARS FROM THE ASSESSMENT YEAR IS NOT LEGALLY TENABLE AS THE A SSESSMENT WAS EARLIER COMPELTED UNDER SECTION 143(3). IN VIEW OF THE ABOVE, IT IS HELD THAT THE REASSESSMENT PROCEEDINGS INITIATED AR E NOT AS PER LAW AND THEREFORE THE GROUND OF APPEAL IS ALLOWED. SINCE THE REOPENING OF ASSESSMENT IS HELD AS NOT LEGALLY TENA BLE, THE GROUNDS OF APPEAL ON MERIT ARE NOT ADJUDICATED. 7. EVEN OTHERWISE ON THE MERITS OF THE ISSUE, THE D ELHI DBENCH OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2003-04 AND 2004-05 IN ITA 3769 AND 3770/DEL/2008 ORDER DT. 11.2.2011 REITERATED IN 2011 58 DTR (DEL)(TRIB)(188) HAS DECI DED AS FOLLOWS:- 20. REGARDING PRESCRIBED AMOUNT OF ANNUAL RECEIPT, WE FIND THAT AS PER R. 2BC SUCH PRESCRIBED LIMIT IS RS. 1 CRORE. NOW, WE FIND THAT THE AO HAS CONSIDERED THE TOTAL RECEIPTS OF THREE EDUCATIONAL INSTITUTION S BEING RUN BY THE ASSESSEE SOCIETY WHEREAS THE CLAIM OF THE ASSESSEE IS THAT T HE SAME SHOULD BE CONSIDERED SEPARATELY AND IF IT IS DONE THEN THE IN COME OF THESE INSTITUTIONS IS FULLY EXEMPT UNDER S. 10(23C)(IIIAD). HERE, WE ARE IN AGREEMENT WITH LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT WE H AVE TO CONSIDER THE CLAIM OF THE ASSESSEE ON THE BASIS OF EACH EDUCATIONAL IN STITUTION SEPARATELY. HENCE, FOR THE PURPOSE OF S. 10(23C)(IIIAD), THE ANNUAL GR OSS RECEIPTS OF THREE EDUCATIONAL INSTITUTIONS BEING RUN SEPARATELY BY TH E ASSESSEE SOCIETY CANNOT BE CLUBBED TOGETHER FOR EXAMINING THE FULFILLMENT OF T HE CONDITIONS OF RECEIPT BEING LESS THAN THE PRESCRIBED LIMIT OF ANNUAL GROS S RECEIPTS. IF THE ANNUAL GROSS RECEIPTS OF THESE THREE EDUCATIONAL INSTITUTI ONS ARE CONSIDERED SEPARATELY, THE SAME IS BELOW RS. 1 CRORE IN EACH Y EAR FOR EACH OF THESE EDUCATIONAL INSTITUTIONS. THE SAME IS AS UNDER : SL.NO. NAME GROSS RECEIPT 2003-04 GROSS RECEIPT 2004-05 1. JAT EDUCATION SOCIETY, ROHTAK 8,09,399 10,56,800 2. JAT IMAS SENIOR SECONDARY SCHOOL, ROHTAK 59,25,873 54,04,275 3. CRM PUBLIC SCHOOL, ROHTAK 50,80,287 4. JAT HSAS HIGH SCHOOL, ROHTAK GRANT FROM THE GOVERNMENT TOTAL: 1,18,15,559 33,41,210 (16,27,100) 94,29,385 ITA 2126/DEL/2011 PAGE 5 OF 7 ASSESSMENT YEAR 2002-03 M/S JAT EDUCATION SOCIETY, ROHTAK 21. REGARDING JAT HSAS HIGH SCHOOL, ROHTAK FOR ASS T. YR. 2004-05, THE AO HAS HELD THAT NOT WHOLLY AND SUBSTANTIALLY FINAN CED BY THE GOVERNMENT AS THE GRANT IS JUST 1/3RD OFTHE TOTAL EXPENDITURE APPROXIMATELY. REGARDING THE OTHER THREE INSTITUTIONS, THERE IS NO GRANT FRO M THE GOVERNMENT AND FOR EACH OF THE YEARS, THE AO HAS CONSIDERED THE AGGREG ATE GROSS RECEIPTS OF THESE THREE INSTITUTIONS IN EACH YEAR AND SINCE THE SAME WAS MORE THAN RS. 1 CRORE IN EACH YEAR TAKEN THREE INSTITUTIONS TOGET HER, IT WAS HELD BY THE AO THAT EXEMPTION IS NOT AVAILABLE TO THE ASSESSEE WITH REGARD TO THESE THREE INSTITUTIONS BECAUSE THE ASSESSEE HAS NOT OBT AINED THE STATUTORY APPROVAL OF CHIEF CIT AS REQUIRED UNDER S. 10(23C)( VI) OF THE ACT. NOW, THE QUESTION IS AS TO WHETHER THESE INSTITUTIONS AR E COVERED BY SUB-CL. (IIIAD) OF CL. (23C) OFS. 10. AS PER THE SAME, ANY INCOME RECEIVED BY ANY PERSON ON BEHALF OF ANY UNIVERSITY OR OTHER EDUCATI ONAL INSTITUTION EXISTING WHOLLY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSE S OF PROFIT IF THE AGGREGATE ANNUAL RECEIPT OF SUCH UNIVERSITY OR EDUC ATIONAL INSTITUTION DOES NOT EXCEED THE AMOUNT OF ANNUAL RECEIPT AS MAY BE P RESCRIBED IS EXEMPT. THE AMOUNT OF RS. 1 CRORE HAS BEEN PRESCRIBED AS PE R R. 2BC. AS PER THE PROVISIONS OF THIS SUB-CL. (IIIAD) OF CL. (23C) OF S. 10, WE ARE OF THE CONSIDERED OPINION THAT THE TERM 'AGGREGATE ANNUAL RECEIPTS' OF EACH EDUCATIONAL INSTITUTION IS RELEVANT AND IF ANY ASSE SSEE IS HAVING MORE THAN ONE EDUCATIONAL INSTITUTION THEN THE AGGREGATE ANNU AL RECEIPT OF EACH OF SUCH EDUCATIONAL INSTITUTIONS HAS TO BE CONSIDERED SEPARATELY BECAUSE THIS SUB-CL. (IIIAD) OF CL. (23C) OF S. 10 DOES NOT SAY THAT IF AN ASSESSEE IS HAVING MORE THAN ONE EDUCATIONAL INSTITUTION THEN T HE GROSS ANNUAL RECEIPT OF ALL OF THEM SHOULD BE CONSIDERED TOGETHER. THE T ERM 'AGGREGATE ANNUAL RECEIPTS' IN THIS SUB-CLAUSE, IN OUR OPINION, DOES NOT SAY THAT AGGREGATE OF ALL EDUCATIONAL INSTITUTIONS SHOULD BE CONSIDERED T OGETHER. IN OUR OPINION, THIS TERM IS USED HERE TO AGGREGATE ANNUAL RECEIPTS OF EACH EDUCATIONAL INSTITUTION FROM ALL SOURCES AND ON ALL ACCOUNTS AN D HENCE, WE FEEL THAT THE AGGREGATE GROSS RECEIPT OF EACH EDUCATIONAL INSTITU TION HAS TO BE CONSIDERED SEPARATELY AND IF THAT IS DONE, EACH OF THEM IS HAVING ANNUAL GROSS RECEIPTS OF LESS THAN RS. 1 CRORE, IN EACH OF THE YEARS, WHICH ARE UNDER CONSIDERATION BEFORE US. WE ALSO FIND THAT TH E APPLICABILITY OF SUB- CL. (IIIAD) OF CL. (23C) OF S. 10 WAS NOT EXAMINED BY THE AO OR BY THE LEARNED CIT(A). IN FACT, THE ASSESSEE HAS CLAIMED E XEMPTION UNDER SUB-CL. (IIIAB) OF CL. (23C) OF S. 10 AND THE ASSESSEE ALSO DID NOT CLAIM EXEMPTION UNDER SUB-CL. (IIIAD) OF CL. (23C) OF S.10. THE AO AND LEARNED CIT(A) HAVE CONSIDERED THE APPLICABILITY OF CL. (VI) OF CL. (23 C) OF S. 10 BUT THEY HAVE ALSO NOT DISCUSSED REGARDING APPLICABILITY OF SUB-C L. (IIIAD) OF CL. (23C) OF S. 10 ALTHOUGH THE AO HAS WORKED OUT THE GROSS RECE IPTS OF THESE THREE INSTITUTIONS TAKEN TOGETHER AT ABOVE RS. 1 CRORE AN D HAS HELD THAT THEREFORE, THE ASSESSEE WAS REQUIRED TO OBTAIN THE APPROVAL OF CHIEF CIT UNDER SUB-CL. (VI) OF CL. (23C) OF S. 10 WHICH MEAN S THAT HE IS IMPLIEDLY RULING OUTTHE APPLICABILITY OF SUB-CL. (IIIAD) OF C L. (23C) OF S. 10 OF THE ACT. WE HAVE SEEN THAT REGARDING THIS REQUIREMENT OF THI S SUB-CLAUSE THAT THE AGGREGATE ANNUAL RECEIPT BELOW RS. 1 CRORE HAS TO B E SEEN FOR EACH ITA 2126/DEL/2011 PAGE 6 OF 7 ASSESSMENT YEAR 2002-03 M/S JAT EDUCATION SOCIETY, ROHTAK EDUCATIONAL INSTITUTION SEPARATELY AND FOR THAT PUR POSE, THE ANNUAL GROSS RECEIPTS OF ALL THE THREE EDUCATIONAL INSTITUTIONS CANNOT BE CONSIDERED COLLECTIVELY TO BE ELIGIBLE FOR EXEMPTION UNDER SUB -CL. (IIIAD) OF CL. (23C) OF S. 10. THE AO HAS NOT RAISED ANY OBJECTION ABOUT AN Y OTHER REQUIREMENT I.E., THE EDUCATIONAL INSTITUTION SHOULD BE EXISTIN G SOLELY FOR EDUCATIONAL PURPOSES AND NOT FOR PURPOSES OF PROFIT. HENCE, IN OUR CONSIDERED OPINION, THE INCOME OF THESE THREE INSTITUTIONS IS ALSO EXEM PT UNDER SUB-CL. (IIIAD) OF CL. (23C) OF S. 10 BECAUSE AGGREGATE INCOME OF EACH OF THESE INSTITUTIONS IN EACH OF THESE TWO YEARS IS BELOW RS. 1 CRORE. THE R EQUIREMENT OF APPROVAL OF CHIEF CIT UNDER SUB-CL. (VI) OF CL. (23C) OF S. 10 IS FOR THOSE WHO ARE NOT COVERED BY SUB-CLS. (IIIAB) OR (IIIAD) OF CL. (23C) OF S. 10. SINCE THESE THREE INSTITUTIONS ARE COVERED BY SUB-CL. (IIIAD), SUB-CL . (VI) IS NOT APPLICABLE. WE, THEREFORE, HOLD THAT INCOME OF THESE THREE INST ITUTIONS IS ALSO EXEMPT. 8. THUS THE ISSUE IS COVERED IN FAVOUR OF THE ASSES SEE. ACCORDINGLY, THE ORDER OF THE FIRST APPELLATE AUTHORITY IS UPHEL D AND THE APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH NOVEMBER, 2012. SD/- SD/- (R.P.TOLANI) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 12 TH NOVEMBER, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR ITA 2126/DEL/2011 PAGE 7 OF 7 ASSESSMENT YEAR 2002-03 M/S JAT EDUCATION SOCIETY, ROHTAK 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :