Pali Water Pollution Control Treatment and Research Foundation, Pali V. ACIT, (EXemption), JOdhpur

ITA 218/JODH/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7857 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 11-06-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Search and seizure; Charitable institution; Period of limitation; Question of law; Procedural lapse; Block assessment; Capital receipt; Benefit of exemption; Revised return; Capital expenditure; Set aside
• Section: 148; 11; 143(3); 142(1); 234B; 260A; 12A; 12AA; 10B; 143(2); 264; 192; 139(1); 113; 153(2A)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 M/s Pali Water Pollution Control Treatment and Research Foundation, Mandia Road, Pali [PAN: AAATP 8964 E] (Appellant) Vs. ACIT, Exemption, Jodhpur (Respondent) Appellant by Sh. Amit Kothari (CA) Respondent by Smt. Alka Rajvanshi Jain, CIT-DR Date of Hearing 30.01.2024 Date of Pronouncement 15.04.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the National Faceless Appeal Centre, Delhi dated 02/05/2023 [here in after ‘NFAC’ ] for assessment year 2015-16 which in turn arise from the order dated 28.12.2017 passed under section 143(3) of the Income Tax Act, by ACIT, Circle-Exemption, Jodhpur. 2. In this appeal, the assessee has raised following grounds: - “1. The ld. CIT(A) has erred in sustaining the order passed by the ld. AO which is bad in law and bad on facts, and the additions made in the order are I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 2 not justified. 2. The ld. CIT(A) has erred in not accepting that Rs. 9,75,74,808/- received towards CETP Up gradation charges cannot be treated as income and was a capital receipt. The inclusion of the same in income was bad in law and bad on facts. The ld. CIT(A) has erred in sustaining the action of ld. AO in computing the income at Rs. 7,22,21,120/- as against Nil income declared. The ld. CIT(A) has erred in not considering the application of income for the capital expenditure incurred during the year. The ld. CIT(A) has erred in not accepting the alternative claim that even if the same is not treated as specific donations, the fund may be treated as being set apart for specific purposes for which application and resolution was submitted before AO. 3. The ld. CIT(A) has erred in sustaining interest charged. 4. The appellant crave liberty to add, amend, alter, modify or delete any of the ground of appeal on or before its hearing before your honour.” 3. Succinctly, the fact as culled out from the records is that the assessee trust filed its return of income for the A.Y. 2015-16 electronically on 30/09/2015, in ITR-7declaring total income Rs. Nil. The case was selected for scrutiny through CASS and notice u/s 143 (2) dated 27/07/2016 was issued which was duly served upon the assessee by the Income Tax Officer (Exemption), Jodhpur and thereafter notice u/s 142(1) dated 04/08/2016 issued. In compliance to the notice, the assessee attended time to time and furnished required information & written submission which has been placed on record. Books of accounts along-with Bills & Vouchers also produced which were checked on test I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 3 basis. The assessee trust is a charitable trust and is constituted on 17th December 1994. Thereafter, it was amended and registered by Sub- Registrar, Pali on 23rd September 2002 vide registration No. 7/2002/Pali w.e.f 23/9/2002 having an object to establish and maintain the Common Effluent Treatment Plant (CETP) for controlling water pollution, treatment of industrial waste and discharge etc. The assessee is registered u/s 12AA of the Income Tax Act, 1961 by the Commissioner of Income Tax, Jodhpur vide order No. 1687 dated 13/10/2000 w.e.f. 01/04/2000 and has claimed exemption u/s 11 of the I.T. Act and accordingly trust has got its account audited and filed return u/s 139(4A) and the audit report in form 10B within due date. As per audit report and return submitted by the assessee trust, during the year under consideration the ld. AO noted that the assessee is in receipt of Rs. 27,32,50,301/-and applied Rs. 24,29,80,225/-in order to attain its objects, leaving a surplus of Rs. deficit of Rs. 3,02,70,076/- which has been claimed to be in accordance with provisions of sec. 11(1)(a) of the I.T. Act. On perusal of the Balance for the year filed during the course of assessment proceedings, it is noticed that the assessee has shown an amount of Rs. 9,75,74,808/- as CETP Upgradation/ Construction Charges in the Balance-Sheet under the head 'Current Liabilities'. As such, during the course of assessment proceedings, vide t Order-sheet entry dated 13/12/2017, the A/R of the I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 4 assessee was required to explain the nature of receipts, purpose & also explain why the same may not be treated as Revenue receipts and taken in the Income & expenditure account and taxed accordingly. 3.1 In this regard, the A/R of the assessee in his written submission filed on 19/12/2017. On perusal of detailed copy of a/c for 'CETP Upgradation/ construction charges' filed during the course of assessment proceedings, it is noticed that the amount has been collected from around 1500 entries in the name of various Industrial units of Pali during the period 01/10/2014 to 31/03/2015. The amount has been charged / collected from these Industrial concerns on a set formula. This account is spread in 70 pages and is having around 1500 entries in name of various entities Entries in similar type has been made in the name of other entities. The plain reading of this account shows that a charge has been received on particular quantity of inflow/outflow with fixed rate in four instalments. Since the above amount has been received as a charge/cess from Industrial concerns in the name of CETP Upgradation/construction charges’ which is primary work of the assessee trust and not received in from of voluntary contribution/donation, the same are certainly receipts of normal nature of the assessee and is in form of income available for application for its I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 5 aims and objects. As such the submission filed by the assessee in this connection was not found tenable. Accordingly, the A/R of the assessee, vide order-sheet entry dated 19/12/201, stated that on one hand, it has debited amount of Rs. 8,03,77,490/- in the Income & Expenditure a/c for "Construction of CETP Unit no. 6", then why the receipts of Rs. 9,75,74,808/- for 'CETP Upgradation/ construction charges' may not be taken as receipts to be taken in I&E a/c also resulting in addition to the total income of the assessee. The A/R of the assessee on this issue filed reply on 22/12/2017. The explanation filed by the A/R of the assessee is not acceptable on the following reasons as noted by the ld. AO: a ) As regards issue mentioned in point no.1 of the submission, it is to mention here that though it is correct that the above amount of CETP Upgradation Charges were collected from the various Industrial Units for upgradation of CETP Unit-6 installed and set- up by ZLD as per Instruction of pollution Board. But it is to mention here that the accounting treatment of amount collected is not proper and not as per provisions of Income-tax Act applicable in case of Trusts/entities claiming exemption u/s 11. b) In such type of cases, there is no major difference in respect of receipts for revenue expenditure or Capital expenditure. In case of such entities, both revenue and Capital expenditure are allowed as application of income for the year. As such the amount received should be shown in receipts first then expenditure be debited for it. Here, in year under consideration case also, the assessee itself has debited Rs. 8,03,77,490/- in the Income & Expenditure account for Construction of CETP Unit-6. In such circumstances, how the charges received for such purpose be excluded from the purview of Income & Expenditure account. c) Assessee has received major part of its receipts shown in I&E a/c as Cess receipts which is received from Municipality, which is charged by Municipality from the Industrial Units working in the Industrial area of Pali. The receipts shown by the assessee from the Industrial Units as reflected in the Balance- Sheet has also been charged on rational basis as per use of particular unit during that period hence falls in the purview of Direct Income to be taken in 1&E a/c. I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 6 d) In the 2nd point of above submission, the A/R claimed the amount received of Rs. 9.75 Cr. as corpus fund fully exempted u/s 11(1)(d) of the I.T. Act. This contention is also not acceptable. The A/R himself mentioned the definition of corpus donations as made with specific direction which is missing in the present case. e) The copy of account of above receipts/ charge filed during the course of assessment proceedings (as mentioned in foregoing paras) clearly shows that the amount has been charged from the Industrial Units on a fixed formula on his production/ use of CETP facility. The receipts issued are not in form of Corpus donation. The act has given exemption u/s 11(1)(d) for corpus donations received voluntarily with specific directions for use. In case of corpus donation, it is will of donor and not the will/ adjustment of the receiver of the amount. f) The main issue is to be decided here is "Which kind of donation is to be treated as corpus donation?" The section 11(1)(d) read with section 12(1) of the Act exempts the corpus donation from the basket of income u/s 11(1). The Charge given to assessee trust by Industrial Units or rather it can be said recovered by the trust from Industrial units are neither in the nature of donation. nor voluntarily since given in lieu of services to be provided. Further. there are no specific directions since these are part of fees only. g) In view of the above the charge received from Industrial Units as CETP Upgradation Charges are not corpus donations as claimed by the A/R of the assessee during the course of assessment proceedings. The case law cited by the A/R is not relevant in the situation of present case. It is also worthwhile to mention here that the assessee has not claimed the above amount of Rs. 9.75 crore as Corpus in Return of income filed as well as Audit report in form 10B as such this claim is not acceptable. Along-with his submission dated 22/12/2017, the A/R of the assessee also filed a copy of Form no. 10 along-with resolution for setting apart an amount of Rs.9,75,56,258/- u/s 11(2) for the purpose of Upgradation of ZLD plant. The above claim of the assessee for setting apart is also not acceptable on the following reasons: I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 7 a) This was the item which was shown in the Balance Sheet under 'Current Liabilities'. By showing under this head, the assessee had shifted the income to later years and now wishes to take recourse to section 11(2) to do the same. Now the prime issue here is when the assessee can submit the Form 10 and what are the other documents related with it? b) The assessee did not file any revised return of income or revised audit report in Form 10B. Of course the last date of filing revised return for A.Y. 2015-16 was 31-03-2017. Therefore, even if it wishes the assessee cannot file any revised return now. c) Further Form 10 has to be backed up by resolution of the Governing Body. Form 10 is the format through which the resolution of the Governing Body is submitted to the department. Such copy of resolution is to be attached with the Form 10. In this instant case, an undated resolution signed by the Secretary of the Trust has been filed while such resolution has to be passed in meeting of the Governing Body. The Form 10 is also undated. Therefore the Form 10 filed is not proper. d) In the Act, it has been stated that Form 10 has to be submitted in prescribed manner. Rule 17 of the Income Tax Rules, 1962 specified that the Form 10 is to be submitted within due date s 139(1). Later the CBDT circular no. 273 dated 03-06-1980 allowed filing of Form 10 before the assessing officer, even after the expiry of the due date u/s 139(1) provided the delay is condoned by the Commissioner of Income Tax. e) Once a fund is set apart u/s 11(2) through resolution and the same is incorporated in the return of income and the audit report in Form 10B, then the technical lapse on the part of the assessee of not filing Form 10 should not lead to denial of the benefit. The importance of Form 10 is on the fact that the specific purpose(s) for which the fund is being set apart is mentioned only here. There is no scope to mention the same in the return of income or audit report in Form 10B. The validity of claim u/s 11(2) depends on the nature of specific purpose(s). Unless such validity is also ascertained. exemption u/s 11(2) cannot be allowed only on the basis of Return of Income and Audit Report in Form 10B. If filling of form 10 allowed at any time without mentioning in return of income and Audit report in form 10B, then no assessee claiming exemption u/s 11 would ever pay any tax, irrespective of the amount of undisclosed income detected during the assessment procedure. The assessee has just to carry one pre-signed blank Form 10 during the hearing and then fill up the amount of the proposed addition and submit it. The set apart has to be made at the time of finalization of accounts and through resolution of the Governing Body. The Form 10B was prepared on 30-09-2015. The return of income was also filed on 30-09-2015. As the claim is made today, there has been no mention of set apart in either the return of income or in the Form 10 В. I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 8 f) It is evident that this Form 10 is nothing but an attempt by the assessee to claim an enhanced amount as set apart u/s 11(2) to avoid Taxation and absolutely not tenable under the law. Therefore no cognizance is given to the undated Form 10 filed now. Without any prejudice to the above, it is also noted that the assessee cannot make any fresh claim which was not in the return of income other than filing a revised return of income. The Hon'ble Supreme court has been specific on this issue in the case of Goetze (India) Ltd. vs. CIT on 24 March, 2006 reported in, 284 ITR 323 SC [2006]. g) In view of all above the claim of set apart made during the proceeding of the Act is also rejected. In view of these set of observation made by the ld. AO, the amount of Rs. 9,75,74,808/- charged from the Industrial Units during the year and shown in the Balance Sheet under the Head "CETP Upgradation/ Construction Charges reflected in current liabilities is nothing but receipts of the assessee for the year available for application which the assessee failed to apply in its purpose during the year. It also failed to set-apart the above amount as is evident from the return filed. As such the above amount is treated receipts of the assessee available for application and accordingly addition of Rs. 9,75,74,808/- was made to the total income of the assessee. 4. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: On technical ground: Grounds No.1 & 2-Through these grounds of appeal the appellant has challenged the legality of assessment order framed u/s 143(3) of the IT act, I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 9 1961. I have perused the submissions put forth and documents as submitted by the appellant, considering the facts of the case and observation of the Assessing authority. The case of the appellant was selected for scrutiny under CASS and accordingly statutory notice u/s 143(2) of the IT Act, was issued on 27/7 / 2016 Further, notice u/s 142(1) of the IT Act, 1961 alongwith questionnaire was also issued to the assessee. In response to the notices, the assessee has submitted the requisite reply/documents from time to time which were perused and placed on record. Once the assessee has participated in the assessment proceedings before the AO, the appellant cannot claim that issue of notice u/s 143(2) for AY under consideration is not in order. The appellant has duly participated in the assessment proceedings and has filed written submissions from time to time and the same are duly considered by the AO. Therefore, it cannot be claimed that the assessment framed by the AO is against the principles of natural justice. The objection regarding issue of notice u/s 143(2) and legality of assessment should have been raised by the assessee during the assessment proceedings. In view of the above, the plea taken by the appellant was found not justified, has no merit and is therefore, rejected. Therefore, appeal on these grounds are Dismissed. On Merits “2.3 I have carefully considered the facts of the case, submissions of the appellant institution and findings of the Assessing Officer. To recapitulate, the findings of the Assessing Officer are that- 1. The charges received from Industrial units as CETP Upgradation Charges are not corpus donations as claimed; and 1. The claim of the appellant for setting apart amount of Rs. 9,75,56,258/- under sec. 112 filed through Form No.10 during assessment proceedings on 22/12/2017 was not acceptable as no such claim was mentioned in Form No.10B or preferred in ITR filed on 30.09.2015. 2.4. In view of the facts of the case, I do not find any reason to interfere with the findings of the Assessing Officer. It was incumbent on the part of the Assessing Officer to include the aforesaid receipts of Rs. 9,75,56,258/- in the Income & Expenditure Account instead of transferring directly to the Balance- sheet as corpus Fund. Therefore, excess amount to the tune of Rs. 9,75,56,258/- on account of 'CETP Upgradation/Construction Charges' not being covered by the definition of 'corpus fund' could not be considered as application of fund under sec. 11(2) of the Income-tax Act, 1961. The conditions precedent for setting apart the excess for future application have also not been fulfilled. In the circumstances, I am in agreement with the AO's I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 10 findings and the addition of Rs. 9,75,56,258/- made is confirmed. Accordingly, Ground Nos. 3,4 and 5 are Dismissed.” 5. Since the ld. CIT(A) has dismissed, the appeal of the assessee, the assessee has preferred the present appeal on the ground as stated hereinabove. In support of the grounds so raised ld. AR of the assessee has relied upon the submission made before the ld. CIT(A) and the same is reproduced herein below:- The appellant respectfully begs to submit following facts and details in support of grounds of appeal already submitted before your honour: 1. Re : Gr. No. 1& 2 : Legality of the assessment proceedings & No valid notice u/s 143(2) issued by AO having correct jurisdiction within limitation : 1.1. It is firstly submitted that the present proceedings initiated u/s 143(2) is bad in law and bad on facts, and deserves to be dropped. The appellant is a Charitable Trust registered u/s 12AA of the Income Tax Act, 1961 having an object to establish and maintain a Common Effluent Treatment Plant (CETP) for controlling water pollution, treatment of industrial waste and discharge etc. 1.2. The appellant had filed its return of income for AY 2015-16 on 30/09/2015 declaring total income Rs. Nil. 1.3. The case of appellant was selected for scrutiny through CASS and notice u/s 143(2) by Income Tax Officer (Exemption), Jodhpur. The subsequent notice u/s 142(1) dated 10.7.2017 was issued by ACIT, Exemption, Jodhpur who was having jurisdiction over the case. A perusal of the first page of the assessment order would also reveal that the ld. AO himself has observed that the case was transferred to his office as jurisdiction over the case vest with his office. It is therefore respectfully submitted that the earlier notice u/s 143(2) issued by the ITO, Exemption was without jurisdiction and no valid notice was issued by the AO having jurisdiction within due time, the proceedings initiated deserves to be dropped on such legal ground itself. It is submitted that if no valid notice is being issued before the period of limitation the proceedings deserves to be quashed. 1.4. In this regard your kind attention is invited towards the following judicial decisions which supports the contention of the appellant that the proceedings deserves to quashed. I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 11 a. ACIT vs. HOTEL BLUE MOON(2010) 229 CTR (SC) 219 Search and seizure-Block assessment-Notice under s. 143(2)-Clause (b) of s. 158BC enables the AO to complete the assessment by following the procedure like issue of notice under s. 142/143(2)-It does not provide for accepting the return as provided under s. 143(1)(a)-However, notice under s. 143(2) becomes necessary only where it is necessary to check the return- Where the block return conforms to the undisclosed income inferred by the authorities, there is no reason why the authorities should issue notice under s. 143(2)-If an assessment is to be completed under s. 143(3) r/w s. 158BC, notice under s. 143(2) should be issued within one year from the date of filing of block return-Omission on the part of the assessing authority to issue notice under s. 143(2) cannot be a mere procedural irregularity and the same is not curable-Further, s. 158BC(b) specifically refers to some of the provisions of the Act which are required to be followed by the AO while completing the block assessments under Chapter XIV-B-If the intention of the legislature was to exclude the provisions of Chapter XIV, it would have indicated that-Therefore, if the AO, for any reason, repudiates the return filed by the assessee in response to a notice under s. 158BC(a), he must necessarily issue notice under s. 143(2) within the time prescribed in the proviso to s. 143(2)-When s. 158BC(b) specifically refers to applicability of s. 143(2), its proviso cannot be excluded-There is no reason to restrict the scope and meaning of the expression 'so far as may be apply'-Further, s. 158BH provides for application of the other provisions of the Act which specifically includes s. 142 and sub-ss. (2) and (3) of s. 143 b. CIT vs. VISHNU & CO. (P) LTD. (2009) 319 ITR 151 (Del) : (2010) 230 CTR (Del) 62 Block assessment-Notice under s. 143(2)-Sec. 143(2) is a mandatory provision whether from the standpoint of a regular assessment or from the standpoint of an assessment under Chapter XIV-B-Notice served on the last date after office hours by affixure as no authorised person was present at assessee's premises-Is not a valid service of notice-Assessment framed in pursuance of such notice is not valid-It is immaterial that the assessee appeared in the proceedings-No substantial question of law arises c. L.N. HOTA & COMPANY vs. CIT (2008) 215 CTR (SC) 481 : (2008) 301 ITR 184 Assessee having challenged the reassessment proceedings on the ground that notice under s. 143(2) was not issued within one year, and the High Court having not recorded any finding based on law on the question of applicability of s. 143(2) to the reassessment and dismissed the appeal summarily, impugned order is set aside and the High Court is directed to entertain the appeal under s. 260A and to reappraise the matter in the light of the arguments raised by the parties. d. CIT vs. M. CHELLAPPAN(2005) 198 CTR (Mad) 490 : (2006) 281 ITR 444 (Mad) I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 12 Reassessment-Notice under s. 143(2)-Limitation-Admittedly, no notice under s. 143(2) was served on the assessee within the stipulated period of twelve months-Therefore, proceedings under s. 143 had come to an end and the matter had become final-Tribunal was right in holding that the reopening of the assessment and the completion of assessment was not valid-No substantial question of law arises-Vipan Khanna vs. CIT (2002) 175 CTR (P&H) 335 : (2002) 255 ITR 220 (P&H) relied on e. CIT vs. C. PALANIAPPAN (2006) 284 ITR 257 (Mad) Reassessment-Validity-Completion of reassessment without issue of notice under s. 143(2) within twelve months-Reassessment not valid-CIT vs. M. Chellappan (2005) 198 CTR (Mad) 490 : (2006) 281 ITR 444 (Mad) followed f. CIT vs. EQBAL SINGH SINDHANA (2007) 212 CTR (Del) 341 : (2008) 304 ITR 177 Assessment-Validity-Non-service of notice under s. 143(2)-Though notice under s. 143(2) was sent by registered post at the assessee's address, "B- 226, Vivek Vihar, Delhi", it was received back undelivered with the endorsement "No plot No. 226 exists"- Thus, admittedly, notice was not served upon the assessee-Alphabet "B" is missing in the endorsement made by the postal authorities-Thus, it stands established that the postman had not gone to plot No. B-226-Even otherwise, as per order V, r. 19A of the CPC, notice sent by registered post ought to have been sent along with acknowledgement due-Admittedly, the registered envelope was not sent along with acknowledgement due-Therefore, no notice under s. 143(2) was served upon the assessee within the prescribed period and consequently the assessment made by the AO is invalid g. ITO vs. SMT. SUKHINI P. MODI (2008) 113 TTJ (Ahd) 63 : (2008) 112 ITD 1 Reassessment-Validity-Absence of notice under s. 143(2)-Once a valid return is filed in response to notice under s. 148, it is mandatory to issue notice under s. 143(2)-Non-issue of notice under s. 143(2) within time limit prescribed statutorily will render the order passed under s. 143(3) as invalid- Proviso to s. 148 inserted retrospectively by the Finance Act, 2006, declares only those notices under s. 143(2) as valid which are in fact issued and that too before the time limit prescribed under s. 153(2) for completing the reassessment and not those which might be issued after the expiry of that period-Fresh limit of completing the assessment pursuant to direction of appellate authority is under s. 153(2A) and issue of notice within that time limit is not saved by the amendment-Contention of Revenue that notice under s. 142(1) met the requirements of s. 143(2) and assessee having participated in assessment proceedings there was acquiescence or waiver is not acceptable as the participation was to comply with the requirements of s. 142(1) notice- Further, as clarified in CBDT Circular No. 549 dt. 31st Oct., 1989, in the absence of any notice under s. 143(2), returned income of assessee becomes final and no scrutiny assessment is required h. ACIT vs. KEWALCHAND DAKALIA (2009) 121 TTJ (Jd) 273 : (2009) 19 DTR 317 I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 13 Undisputedly there was survey and the assessee has filed return in response to notice issued under s. 142(1) through the chartered accountant, namely, 'J', who filed power of attorney along with return. 'P', chartered accountant was given power of attorney to appear before AO to take time. Therefore, the later power of attorney filed by 'J' along with return is only a valid one and a later one. So any notice served either on assessee or on the power of attorney holder 'J' only will be valid. But in the present case, undisputedly, the notice issued under s. 143(2) was not served on assessee but served only by affixture and on P, chartered accountant whose power of attorney ceased soon after filing of power of attorney by 'J' in later time along with return. Therefore, service of notice under s. 143(2) on P, chartered accountant is not a valid and proper service of notice. Therefore, consequential assessment order passed by the AO basing on such service of notice is also not proper and valid under law, as there is no compliance of mandatory requirement of service of notice under s. 143(2) which resulted in not affording proper opportunity to the assessee of hearing. Therefore, the assessment passed by AO in the present case is itself unsustainable and same is hereby quashed.- CIT vs. Girdharilal (1984) 38 CTR (Raj) 348 : (1984) 147 ITR 379 (Raj) followed. i. DCIT vs. KAASHNI SAREES (P) LTD. (2010) 127 TTJ (Del)(UO) 94 It is an admitted fact that notice under s. 143(2) was not issued in the name of the assessee company. The notices were, however, issued in the name of directors of respective companies. The contention of the Departmental Representative that notice issued to the director of the company would amount to notice issued to the company cannot be accepted. No doubt, a director of a company manages and controls the affairs of the company, but a notice issued in individual capacity of director would not amount to issue of notice to the company. If a notice has been issued to the company and served on the director absolutely there should not be any problem, but however, where notice under s. 143(2) has not been issued in the name of the assessee company, the assessment proceedings could not be proceeded with. The AO did not act upon the return filed in response to the notice issued under s. 158BC(a). He had issued a notice under s. 142(1). He had proceeded to make an inquiry. This could not be done without a notice under sub-s. (2) of s. 143. The provisions of sub-s. (3) of s. 143 clearly show that the powers under this sub-section could be invoked only after service of notice under sub-s. (2). The words "so far as may be", will thus become mandatory where the AO proceeds to make an inquiry in repudiation of the return filed in response to a notice issued under s. 158BC. Similarly, application of the provisions of s. 142 and sub-ss. (2) and (3) of s. 143 will become directory where the AO does not embark upon an inquiry to determine the loss or profit reflected in the return filed. The defects crept in cannot be cured at this stage in view of the limitation provided in s. 143(2). The assessment order thus suffers from both procedural and jurisdictional error. The option left with the AO is to compute the income and levy taxes on the basis of the return filed by the assessee. The assessments framed without service of notice under s. 143(2) are bad in law. Accordingly the assessments framed in both the cases I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 14 are qushed.-Smt. Bandana Gogoi vs. CIT & Anr. (2007) 209 CTR (Gau) 31 : (2007) 289 ITR 28 (Gau), CPR Capital Services Ltd. vs. Dy. CIT (2008) 115 TTJ (Del) 528 : (2008) 6 DTR (Del) 70, Naresh Kumar Arora vs. Asstt. CIT [IT(SS)A 46/Del/2005], Tulika Mishra vs. Jt. CIT [IT(SS)A. No. 81/Del/2003] and Asstt. CIT vs. R.P. Singh (2007) 111 TTJ (Del) 880 followed. 1.5. In view of above legal objections it is submitted that the assessment so framed without issue of valid notice by the Assessing Officer having correct jurisdiction within the period of limitation is not justified, and the order so made deserves to be quashed on this ground. 2. Re : Gr. No. 3, 4 and 5 : Income not liable to be taxed & Addition on account of CETP upgradation charges of Rs. 9,75,56,258/- and computing taxable income at Rs. 7,22,21,120 against Nil Income : Receipt not falling in definition of Income : 2.1. It is respectfully submitted that the appellant is a duly registered Society u/s 12A of the Income Tax Act. The income of the appellant is not liable to tax and their was no income in the year under consideration which could have been taxed. 2.2. The Society is a Government Body wholly controlled by Government executing the delegated task of municipality in controlling Pollution and protecting environment. The collection of pollution charges from the industry is like collection of tax on behalf of the government which is not liable to tax. The collection of CPT Upgradation charges were contribution for specific purpose to be utilized in the particular manner as per the directions of the government which cannot partake the character of income. The major part of the receipt is received from Municipality which is collecting the funds and giving the same to the appellant for specific purposes which are to be utilized in the particular manner only. 2.3. Your kind attention is also invited towards the following decisions which supports the contention of the appellant that the receipt in question in the hands of the appellant is not in the nature of income and therefore cannot be taxed. CIT V/s Kerala Land Development Ltd. 232 ITR 575 “Held, that in the present case, while the assessee discharged its statutory duties, no profit was contemplated. It was not engaged in a trading activity. The subsidy was received by the Corporation to enable it to discharge its statutory duties in public interest. Therefore, the subsidy received by the assessee- Corporation would not partake of a character of a revenue receipt.” 2.4. Since their was no income liable to tax, the addition so made was not justified, and the addition made in the assessment order may kindly be deleted. I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 15 2.5. It is respectfully submitted that the ld AO has erred in law and on facts in making the addition of Rs. 9,75,56,258/- on account of the CETP upgradation charges received by it. As already submitted by the appellant, it is trust formed with the object to construct, operate and maintain the CETP. The CETP was formed under the Integrated Processing Development Scheme (IPDS) of the Ministry of Textile which aimed to set up new CETPs in the existing textile parks with appropriate technology for water treatment & effluent treatment plant including marine, riverine and Zero Liquid Discharge (ZLD). 2.6. Under this scheme Government of India provided grant upto 50% of the project cost with a ceiling of Rs. 75 Cr, State Government had a share of 25% and balance 25% had to be mobilized the Special Purpose Vehicle (SPV- which in this case is the appellant) with a minimum 15% equity and balance in form of bank loan. 2.7. As per the Para 5.2 of the guidelines to this centrally sponsored IPDS, Contribution through equity of 25% of the project cost had to be made by the beneficiary on upfront basis and be deposited in an project exclusive Trust & Retention Account (TRA). But as per Para 6.1(i)(f) if SPV is contributing only the minimum 15% as equity then it shall submit a sanction letter from banks/financial institution for balance 10%. Only after such compliance Central government will release the grant to the SPV. Corpus Fund : 2.8. Coming to the facts of the case, appellant being the SPV was required to fulfil the prerequisites to release the grant from GOI. The government sanctioned Rs. 100 Cr to be shared in the proportion as per scheme. Therefore appellant was under the contractual requirement to deposit its share upfront. For the specific purpose of setting up/upgrading the CETP it collected a sum of Rs. 9,75,74,808/- from the industries set up in the park where CETP was to be constructed/upgraded, and showed them under the Current Liabilities as the same was required to be deposited for a specific purpose and could only be utilised for that purpose. 2.9. Therefore it is clear from the facts of the case that while collecting the charges the appellant was only carrying out a specific task just to fulfil the terms of the scheme and had accepted the amount only for the fulfilment of the very purpose for which it was setup. The amount so received can therefore in no case be treated as Income of the appellant. 2.10. On an alternative ground, it is further submitted that every SPV was required to contribute minimum 15% in form of equity, which in case of appellant is clearly its Corpus for it being a trust. Therefore it was required to raise its corpus. Moreover the amount received by the trust with a specific direction towards its usage is treated as corpus. Going by the meaning of corpus, it is clear that "corpus" means the capital/ principal fund as opposed to income I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 16 earned by deploying such capital/principal fund. The appellant in the case had received the amount with a specific stipulation of setting-up/upgradation of CETP. Therefore said receipts qualify as the Corpus of the trust. Your kind attention is invited towards the provisions of Sec. 11 which provide that any sum which forms part of corpus of the trust should be excluded from the total income of the person. 2.11. In view of provisions of Sec 11(1)(d) the requirement to treat contribution as a corpus is that it is made with a specific direction to its utilisation. However it nowhere requires that the direction should be in writing only. In absence of any direction in writing the only way to find out the nature of contribution is its utilisation. The amount received by appellant is only for the purpose of CETP upgradation which is evident from the books of account also. Further ld. AO had also not disputed the fact that the amount is collected for the very purpose of CETP upgradation only. Moreover the amount collected is deposited in TRA as per the requirement of the scheme which clearly shows the intention of appellant to use the money for CETP only. Also if the intention of the donor while giving that money to a trust is its utilisation for carrying on a particular activity, it satisfies the definition of the corpus. 2.12. We would like to draw your honour’s kind attention towards following judgements which favour appellant’s contention: a. Director Of Income Tax vs. Ramakrishna Seva Ashrama, HC (Kar): (2012) 205 Taxman 26 (Kar): “The word ‘Corpus’ is used in the context of IT Act. This can be understood in the context of a capital, opposed to an expenditure, it is a capital of an assessee; a capital of an estate; capital of a trust; a capital of an institution. Therefore, if any voluntary contribution is made with a specific direction, then it shall be treated as the capital of the trust for carrying on its charitable or religious activities. Then such an income falls under s. 11(1)(d) and is not liable to tax. Therefore, s. 11(1)(d) it is not necessary that a voluntary contribution should be made with a specific direction to treat it as corpus. If the intention of the donor is to give that money to a trust, which they will keep it in trust account in deposit and the income from the same is utilised for carrying on a particular activity, it satisfies the definition part of the corpus. The assessee would be entitled to the benefit of exemptions from payment of tax levied. From whatever angle it may be seen, the deposited amount cannot be said to be income in the hands of the recipient-trust. Therefore, what ultimately reveals that,—(i) the intention of the donor and (ii) how the recipient-assessee treat the said income. If the intention of the donor is that the amount/donation given is to be treated as capital and the income from that capital has to be utilised for the charitable purposes, then the said voluntary contribution is towards the part of the corpus of the trust. Similarly, the assessee after receiving the amount, keeps the amount in deposit and only utilise the income from the deposit 10 carry out the charitable then also the said amount would be a contribution to the corpus of the trust and the nomenclature in which the amount is kept in deposit is of no relevance as long I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 17 as the contribution received are kept in deposit as capital and only the income from the said capital which is to be utilised for carrying on charitable and religious activities of the institute/corpus of the trust, for which s. 11(1)(d) is attracted and the said income is not liable for tax under the Act. Insofar as the argument that the persons who made these contributions does not specifically direct that they shall form part of the corpus of the trust is concerned, it has no substance. In view of the language employed in cl. (b) of sub-s. (a) of s. 11, the requirement is that the voluntary contributions have to be made with a specific direction. The law does not require that the said direction should be in writing. In the absence of the direction in writing the only way that one can find out whether there was a specific direction and to find out how the money so paid it is utilised. If the money so received by way of voluntary contributions, it is meant to use for the leprosy patients and is credited to a particular account and from the income from the said capital, the said activity is carried on, the requirement of cl. (d) of sub-s. (1) of s. 11 is complied with. In the instant case, on record, it is seen that those people who have paid amounts by way of donation that includes the cheque with a letter with a specific direction, which is in compliance with s. (1)(d). But, in case if the contributions are made without cheques i.e., by cash, and oral direction has been issued to the trust to utilise the said fund for the purpose of treating the leprosy patients and if such amounts are credited to the account meant for it, even then the requirement of cl. (d) of sub-s. (1) of s. 11 is complied with.” b. Sukhdeo Charity Estate vs. ITO , HC(Raj) - (1991) 192 ITR 615 (Raj): “the principles enunciated in various cases when applied to the present case, leave no room for debate that the intention of the donor-trust as well as donee-trust was to treat the money as capital to be spent for Ladnu Water Supply Scheme. It is of no consequence (sic—significance) whether the amount had since been paid to the State Government or kept in the account of the above-referred scheme by the assessee-trust. From whatever angle it may be seen, the deposited amount cannot be said to be income in the hands of the recipient-trust. Therefore, what ultimately reveals that,—(i) the intention of the donor and (ii) how the recipient-assessee treat the said income. If the intention of the donor is that the amount/donation given is to be treated as capital and the income from that capital has to be utilised for the charitable purposes, then the said voluntary contribution is towards the part of the corpus of the trust. Similarly, the assessee after receiving the amount, keeps the amount in deposit and only utilise the income from the deposit to carry out the charitable then also the said amount would be a contribution to the corpus of the trust and the nomenclature in which the amount is kept in deposit is of no relevance as long as the contribution received are kept in deposit as capital and only the income from the said capital which is to be utilised for carrying on charitable and religious activities of the institute/corpus of the trust, for which s. 11(1)(d) of the Act is attracted and the said income is not liable for tax under the Act.” I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 18 c. Mehrangarh Museum Trust vs. ACIT, ITAT, Jodhpur Bench: (2013) 156 TTJ (Jd) 425: “Charitable trust—Exemption under s. 12—Corpus donation—Corpus means the capital/principal fund as opposed to income earned by deploying such capital/principal fund—If the donation is received with the specific direction of the donor to treat the donation as towards "corpus" or "for specific use", it would be treated as ‘corpus donation’—In the instant case, donations were received by the assessee-trust for capital outlays, with a specific stipulation to spend the sum towards restoration of the fort housing the museum, hosting Sufi Fest, etc.—Agreements also provided that the unutilized amounts would be refunded to the donors and that such sum would not be used for any other purpose—Said receipts qualified as ‘corpus donations’, exempt under s. 11(1)(d)—In case the grants received by the assessee are treated as "voluntary contributions", same having been received with specific/overriding stipulations as regards restrictions as to the usage for any other purpose than that specified, refund of unutilized grant to the payer is not "income" and hence, not includible in the total income of the assessee on this ground too” d. SERA FOUNDATION vs. ITO (2012) 150 TTJ (Del) 537 Charitable trust—Exemption under s. 11—Corpus donation vis-a-vis violation of s. 11(1)(d)—Assessee-trust received 11,47,110 equity shares of M Ltd. and 2,01,500 equity shares of S Ltd. from another trust towards corpus donation— Department taxed the corpus donation as general donation by holding that assessee was adopting colourable device as it could not hold investment in the form of shares in view of s. 11(5)—Not justified—There is no restriction on accepting shares by a charitable institution—However, cl. (iia) of the proviso to s. 13(1)(d)(iii) entitles an assessee-trust to hold the shares for a maximum period of one year before which they have to be converted into the modes of investment as prescribed in s. 11(5)—Contention of the Departmental Representative that the assessee has violated the provisions of s. 11(1)(d) by selling the shares suffers from the basic fallacy in not recognizing that the assessee has merely converted one form of investment into another viz., money by selling the shares—Thus, it cannot be said that there was violation of s. 11(1)(d) particularly when the donor did not impose any condition that the shares could not be sold—Therefore, Revenue authorities were not justified in holding that the corpus donation was voluntary donation as contemplated under s. 2(24)(iia)—Conditions prescribed in the registration certificate are only directory in nature and they cannot override the provisions of the Act—Further, a trust can accumulate not more than 15 per cent of the income from property held for charitable or religious purposes and these amounts along with corpus donations form part of corpus of the trust— Income of the corpus fund can be utilized towards the objects of the trust— Conditions contemplated under s. 11(1)(d) stand satisfied when a voluntary donation is received with a specific direction that it shall form part of the corpus of the trust—No further condition is prescribed in the Act for utilization of corpus fund—Therefore, assessee was well within its rights in utilizing the corpus fund for giving donations towards corpus funds of other charitable institutions—Thus, the corpus donations received by the assessee could not I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 19 be considered as general donations merely on the ground of its utilization in the subsequent year for giving corpus donations to other charitable institutions e. GUJARAT CRICKET ASSOCIATION vs. ACIT(Exemption) (2019) 33 NYPTTJ 102 (Ahd) Charitable trust—Exemption under s. 11—Corpus donation—Assessee, a cricket association, received Rs. 1,58,00,000 from the Board of Cricket Control of India towards the TV rights—Assessee has filed specific confirmations to the effect that these amounts were corpus donations—BCCI resolution No. 5, dt. 29th Sept., 2001 specifically states that the TV subsidies should henceforth be sent to the member associations towards "corpus funds"—TV subsidy in question is sent under this resolution—Any payments made by BCCI, without a legal obligation and with a specific direction that it shall be for corpus fund, is required to be treated as corpus donation not includible in total income—Any payment which is with a specific direction that it for corpus fund is a corpus donation—In the light of the BCCI resolution under which the payment is made and in the light of the payment not being under any legal obligation, the conditions under s. 11(1)(d) are satisfied—AO is accordingly directed to delete this addition 2.13. In view of above referred facts, and further that since the appellant is registered u/s 12A of the Act, the benefit of exemption of such corpus donation in view of section 11(1)(d), deserves to be allowed to the appellant. Form 10 filed for set apart and such amount cannot be taken as Income : 2.14. During the course of assessment proceeding the appellant vide letter dated 22.12.2017 also submitted form no. 10 alongwith copy of resolution for setting apart the amount of Rs. 9,75,56,258/- u/s 11(2) for the purpose of Upgradation of ZLD Plant. 2.15. Since this amount was to be utilized for Upgradation and the amount even if treated as current income, the same having been set apart for specific purpose and Form 10 being duly filed to the AO, it was not justified in not accepting such contention of the appellant. 2.16. In view of such amount being set apart u/s 11(2), the same needs to be excluded from income of the assessee for the current year. This amount set apart can be utilized in the next five years. 2.17. Therefore in any case the said income was not liable to be included in the case of the appellant on any ground, and the assessment so made was not justified, and the said capital receipt may kindly be directed to be excluded from the income of the assessee. 3. Re : Gr.No. 6 & 7 : Addition on account of capital expenditure and depreciation. I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 20 3.1. It is submitted that the ld. AO has erred in not allowing the depreciation of Rs. 10,91,929/- claimed by appellant on the ground that both depreciation and capital expenditure cannot be claimed on the same asset by treating them as application of income. The appellant has claimed the depreciation in Income & Expenditure Account and also the assets on which depreciation claimed stand in the Balance sheet of the appellant. Furthermore there is no supportive material with regard to contention of ld. AO that capital expenditure is already treated as application of income. Therefore there is no merit in the issue raised by the ld. AO. The addition so made deserves to be deleted. It is further contended that allowing exemption on the application of income on the capital asset acquired during the relevant year and further, allowing depreciation in the subsequent years, at any stretch of imagination, could not be construed as double deduction. The contention of appellant is also supported by following judgements: a. Shrimad Vallabh Vishwa Dharma Sanstha vs. ACIT, ITAT, Ahmedabad ‘B’ Bench: (2006) 102 TTJ (Ahd) 653: “AAC could not have entertained the question of relief under s. 84 and directed Assessing Officer to allow necessary relief where no claim was made before Assessing Officer . It was found that despite the fact that no claim was made before Assessing Officer , there was also no material on record to support such claim. But the position in the case of assessee is different. As pointed out earlier that depreciation claim has been claimed in the income and expenditure account. Therefore, the claim of assessee could not be denied on the ground that the said claim was not made before Assessing Officer . Learned Departmental Representative had raised an issue that where the entire cost has been allowed as expenditure, no depreciation is eligible. However, it is not the case of Assessing Officer or the CIT(A) that entire cost of the said building was allowed as an expenditure in the case of assessee. On the other hand, in the balance sheet the value of the building stands. Therefore, there being no supportive material with regard to this contention of learned Departmental Representative, we find no merit in such contention. Now there remains a question that whether the assessee is entitled to get depreciation ? Answer to this question has also been given by the jurisdictional High Court in the aforementioned case of CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (supra) wherein it was held that assessee-trust was entitled to get depreciation. The relevant observations have already been reproduced. Respectfully following the aforementioned decision of jurisdictional High Court, we direct Assessing Officer to allow depreciation to the assessee.” b. Director Of Income Tax & Ors. Vs. Al-Ameen Charitable Fund Trust, HC (Kar): (2016) 383 ITR 517 (Kar): “Charitable trust—Exemption under s. 11—Computation of income vis-a-vis allowability of depreciation—While in the year of acquiring the capital asset, I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 21 what is allowed as exemption is the income out of which such acquisition of asset is made and when depreciation deduction is allowed in the subsequent years, it is for the losses or expenses representing the wear and tear of such capital asset incurred if, not allowed then there is no way to preserve the corpus of the trust for deriving its income—Argument advanced by the Revenue apprehending double deduction is totally misconceived—Tribunal was therefore correct in holding that depreciation is allowable under s. 11” c. CIT vs. Market Committee, Pipli - HC(P&H): (2011) 330 ITR 16 (P&H): “The Karnataka High Court in CIT vs. Society of the Sisters of St. Anne (supra) drawing support from the Madras High Court in Rao Bahadur Calavala Cunnan Chetty Charities (supra) had recorded that if depreciation is not allowed as a necessary deduction for computing the income of a charitable institution then the corpus of the trust for deriving the income cannot be preserved and that the amount of depreciation debited to the account of a charitable institution is to be deducted to arrive at the income available for application to charitable and religious purposes. This decision was followed by the Madhya Pradesh High Court in CIT vs. Raipur Pallottine Society (supra). Similar view was taken by the Gujarat High Court in CIT vs. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (supra) by relying upon the aforesaid decisions. We are in respectful agreement with the view taken by the Madras, Madhya Pradesh, Karnataka, Gujarat and Bombay High Courts referred to above. No contrary view has been brought to our notice. In all fairness to the learned counsel for the Revenue, reference is made to the judgment of the Hon'ble apex Court in Escort Ltd.’s case (supra), on which reliance has been placed by the learned counsel for the Revenue. The Hon'ble Supreme Court in that case was dealing with a case relating to two deductions both under ss. 10(2)(vi) and 10(2)(xiv) of the 1922 Act or both under ss. 32(1)(ii) and 35(1)(iv) of the Act. The assessee therein had incurred expenditure of a capital nature on scientific research relating to the business which resulted into acquisition of an asset. The assessee had sought to claim a specified percentage of the written down value of the asset as depreciation and at the same time claimed deduction, in five consecutive years of the expenditure incurred on the acquisition of the asset. The apex Court observed (headnote) : In the present case, the assessee is not claiming double deduction on account of depreciation as has been suggested by learned counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. The judgment of the hon'ble Supreme Court in Escort Ltd.’s case (supra), is distinguishable for the above reasons. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of s. 11.” I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 22 d. CIT vs. Institute Of Banking Personnel Selection, HC (Bom): (2003) 264 ITR 110 (Bom): “Depreciation—Allowability—Assessee trust enjoying exemption under s. 11—Entitled to depreciation on assets notwithstanding the fact that cost of such assets has been allowed exemption under s. 11 as application of income Depreciation—Allowability—Assets received on transfer by charitable trust enjoying exemption under s. 11—Eligible for depreciation though assessee had not incurred any cost Charitable Trust—Exemption under s. 11—Application of income for purposes of s. 11—Earlier years' excess expenditure adjusted against subsequent years' income—Constituted application of income for subsequent years” 3.2. In the view of above judgements it is clear that claim of depreciation is allowed in case of appellant. Therefore the disallowance so made deserves to be deleted. 4. Re : Gr. No. 8 : Interest u/s 234A and 234B: 4.1. It is further submitted that under the facts and circumstances of the case of the appellant interest charged u/s 234A and 234B is bad in law and bad on facts. Since the additions made for the purpose of sec. 143(2) are not justified, the resultant interest charged u/s 234A and 234B may also be deleted. In view of above facts and circumstances it is submitted that the additions so made in the case of the appellant may kindly be deleted.” 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records: S. No. Particulars Page No. 1 Submission before CIT(A) 1-21 2 Submission before AO vide letter dt. 9.12.2017 & 22.12.2017 along with copy of form 10 & Resolution 22-32 3 ITR-V, Computation of Income and Financial statements 33-49 4 Letter of in Principle approval for upgradation of 12 MLD CTP by ministry of textile EOV 50-51 5 Letter of Principle grant-in-aid to Pali Textile 52-56 I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 23 7. The ld. AR of the assessee in addition to the written submission vehemently argued that that on the technical reason the assessment order is not sustainable and he has dismissed the ground merely on the reason that the assessee has participated in the assessment proceeding. Thus, the finding of the ld.CIT(A) is perverse. Alternatively, the ld. AR of the assessee also submitted that the ld. CIT(A) has also not appreciated the fact that Form no. 10 filed by the issue and his alternative claim to use the donation in future by accumulating the same is also not considered. The revenue has not doubted the activities of the assessee which are charitable in nature as the assessee is engaged in the environment activity. 8. The ld DR is heard who has relied on the findings of the lower authorities. As regards the utilisation of fund in future the same is being after thought the claim of the assessee rightly rejected by the ld. CIT(A) and ld. AO. The ld. AR of the assessee also relied upon the para 2.4 of the order of the ld. CIT(A) where in the ld. CIT(A) has held that the assessee has not included the receipt and instead the same has been accounted for in the balance sheet and therefore, 11(2) benefit for I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 24 setting a part is not given. Thus, the ld. CIT DR heavily relied upon the findings recorded in the orders of the lower authority. 9. We have heard the rival contentions and perused the material placed on record and also gone through the judicial precedent cited to drive home to the respective contention raised by both the parties. The brief fact of the case is that the assessee is a Charitable Trust registered u/s 12AA of the Income Tax Act, 1961 having an object to establish and maintain a Common Effluent Treatment Plant (CETP) for controlling water pollution, treatment of industrial waste and discharge etc. The assessee filed the return of income on 30/09/2015 declaring total income Rs. Nil. The case of assessee was selected for scrutiny through CASS and notice u/s 143(2) by Income Tax Officer (Exemption), Jodhpur. The subsequent notice u/s 142(1) dated 10.7.2017 was issued by ACIT, Exemption, Jodhpur who was having jurisdiction over the case. On perusal of the first page of the assessment order it clear that that the ld. AO himself has observed that the case was transferred to ACIT, Circle- Exemption by ITO (Exemption) as jurisdiction over the case vest with that office. Thus, the notice u/s 143(2) issued by the ITO, Exemption was without jurisdiction and no valid notice was issued by the AO having jurisdiction within due time by the ACIT(Circle-Exemption). Thus, the I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 25 notice issued by a officer having no jurisdiction and the officer having jurisdiction has not issued any notice within the time framed allowed under the Act, and considering that aspect of the matter the ld. AR of the assessee vehemently relying on the judgement submitted that the assessment order passed without issuance of notice u/s. 143(2) the order is required to be quashed. The ld. DR did not object to the factual aspect of the matter that no notice was issued by the jurisdiction officer but simply relied upon the finding of that the assessee has participated in the assessment proceeding as held by the ld. CIT(A). Whareas in support of the contention so raised by the ld. AR on the legal ground has establish that the no notice u/s. 143(2) of the Act has been issued by the ACIT, Circle, Exemption and therefore, the order passed is not as per provision of the Act and is required to be quashed. In support of this contention, he has relied upon the various judicial precedent cited in his submission. Amongst various judgment cited he has cited the decision of L.N. HOTA & COMPANY vs. CIT (2008) 215 CTR (SC) 481 : (2008) 301 ITR 184 in this case the apex court has held that “Assessee having challenged the reassessment proceedings on the ground that notice under s. 143(2) was not issued within one year, and the High Court having not recorded any finding based on law on the question of applicability of s. 143(2) to the reassessment and dismissed the appeal I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 26 summarily, impugned order is set aside and the High Court is directed to entertain the appeal under s. 260A and to reappraise the matter in the light of the arguments raised by the parties.” Here since that ground has not been decided by the ld. CIT(A) and he simply relied that the assessee has participated in the assessment proceeding and therefore, he has not taken any cognizance of the matter. But before us the ld. AR of the assessee relying on the decision of another case ACIT vs. HOTEL BLUE MOON(2010) 229 CTR (SC) 219 wherein the apex court has categorically held that Omission on the part of the assessing authority to issue notice under s. 143(2) cannot be a mere procedural irregularity and the same is not curable. Since, the ld. DR did not controvert these decision we respectfully following judicial precedent cited before us quash the order of the assessment. 10. Since we have decided the appeal of the assessee on technical ground the other ground raised on the merits of the case is not decided as they become educative in nature. 11. In the result, the appeal of the assessee is allowed. I.T.A. No. 218/Jodh/2023 Assessment Year: 2015-16 27 Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member Ganesh Kumar, PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order