ACIT, Bhubaneswar V. Vidyasagar Charitable Trust, Bhubaneswar

ITA 231/CTK/2012

• Counselvise Citation: 23122114 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K NEB
• Assessee Lawyers: B D OJHA
• Keywords: Depreciation; Search and seizure; Charitable institution; Principle of natural justice; Reason to believe
• Section: 153A; 12A; 12AA; 147; 148; 37; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI P.K.BANSAL (ACCOUNTANT MEMBER) AND SHRI D.T.GARASIA(JUDICIAL MEMBER) I.T.A NO.231/CTC /2012 ASSESSMENT YEAR:2007-08 ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), BHUBANESWAR. VS VIDYASAGAR CHARITABLE TRUST, A-7, SAHID NAGAR, BHUBANESWAR. PA NO.AAATV 4014 D APPELLANT RESPONDENT I.T.A NOS.252 & 251/CTC /2012 ASSESSMENT YEARS:2007-08 & 2004-05 VIDYASAGAR CHARITABLE TRUST, A-7, SAHID NAGAR, BHUBANESWAR. PA NO.AAATV 4014 D VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), BHUBANESWAR APPELLANT RESPONDENT ASSESSEEBY: SHRI B.D.OJHA REVENUE BY : SHRI N.K.NEB, DR DATE OF HEARING: 1.10/2013 DATE OF PRONOUNCEMENT: 04 /10/2013 O R D E R PER D.T.GARASIA, JM THE CROSS APPEALS FILED BY THE REVENUE AND ASSESSE E FOR THE ASSESSMENT YEAR 2007-08 AGAINST ORDER DATED 1.2.2012 OF LD CIT(A), IN THE MATTER OF ASSESSMENT U/S.143(3) AND APPEAL FILED BY ASSESSEE FOR ASSESSM ENT YEAR 2004-05 ARE DIRECTED 2 AGAINST THE ORDER DATED 1.2.2012 OF LD CIT (A)-II , BHUBANESWAR, IN THE MATTER OF ASSESSMENT UNDER SECTION 144/147. 2. THE ONLY GROUND TAKEN BY THE REVENUE IN I.T.A. N O.231/CTC/2012 IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.85,53,667/ - MADE BY THE AO ON ACCOUNT OF DEPRECIATION, WHEN THE TRUST DOES NOT EN JOY THE BENEFIT OF SECTION 11 & 12 OF THE I.T.ACT AND IN ABSENCE OF TH E DETAILS OF THE DEPRECIATION CLAIMED. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S RUNNING AN EDUCATIONAL INSTITUTION BY THE NAME OF KONARK INSTITUTE OF SCIENCE & TECHN OLOGY (KIST). IT CLAIMED THE SURPLUS GENERATED FROM SUCH EDUCATIONAL INSTITUTION S AS EXEMPT AS APPLIED FOR CHARITABLE PURPOSES. ASSESSEE WAS NOT GRANTED REGISTRATION UN DER SECTION 12A OF THE INCOME TAX ACT BY THE COMMISSIONER OF INCOME TAX, BHUBANESWAR. ASSESSEE WAS NOT ENTITLED FOR BENEFIT OF SECTIONS 11 & 12 OF THE ACT, THEREFORE, ASSESSEE WAS ASSESSED AS AOP. ASSESSEE HAS CLAIMED DEPRECIATION OF RS.85,53,667/- BEING DEPRECIATION IN KIST AND RS.2,222/- DEPRECIATION IN KONARK PUBLIC SCHOOL (KP S). ASSESSEE SHOWED THE SURPLUS AS THE INCOME FROM OTHER SOURCES AND CLAIMED THE BENEF IT OF SECTIONS 11 & 12 BEING A TRUST. THE ASSESSING OFFICER HELD THAT ASSESSEE IS DEEMED TO CARRY ON BUSINESS AND THE PROVISIONS OF COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION WILL APPLY. IN VIEW OF THI S, AO DID NOT GRANT DEPRECIATION. IN THE FIRST APPEAL, LD CIT(A) HAS ALLOWED THE CLAIM O F THE ASSESSEE, INTER ALIA, BY OBSERVING AS UNDER: 7.4 I HAVE CONSIDERED THE ISSUE. WHETHER DEPRECI ATION IS COMPULSORY OR OPTIONAL HAS BEEN SUBJECT MATTER OF LONG CONTROVERS Y. THE EARLIER VIEW WAS 3 DEPRECIATION WAS AN ALLOWANCE TO THE ASSESSEE, BUT NOT AN OBLIGATION UPON. IT WAS OPTIONAL AND COULD NOT BE THRUST UPON AN ASSESS EE AS ASSESSEE COULD CHOSE NOT TO CLAIM DEPRECIATION. THIS WOULD BE SO EVEN A FTER THE DELETION OF S.34 REGARDING FURNISHING OF PRESCRIBED PARTICULARS. TO NULLIFY THE EFFECT OF SEVERAL COURT DECISIONS WHICH HAVE TAKEN THIS VIEW, FROM TH E ASSESSMENT YEAR 2002-03, EXPLANATION 5 TO S.32(1) PROVIDES THAT DEPRECIATION SHALL BE ALLOWED WHETHER OR NOT CLAIMED BY THE ASSAESSEE. THE ALLOWANCE OF DEP RECIATION HAS TO BE COMPULSORILY GIVEN TO THE ASSESSEE WHETHER THE ASSE SSEE CLAIMS IT OR NOT. 7.5 EXPLANATION 5 TO SECTION 32(1) INSERTED W.E.F. 1 .4.2002 READS AS UNDER: EXPLANATION 5-FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY WHETHER OR NOT THE ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF DEPRECIATION IN COMPUTING HIS TOTAL INCOME. 7.6 THIS LEAVES NO ROOM FOR DOUBT THAT ALLOWING DE PRECIATION IS MANDATORY IN ACCORDANCE WITH THE ACT AND AO HAS NO OPTION REGARD ING THIS. ONCE THE APPELLANT FULFILS THE PRESCRIBED CONDITIONS DEPRECI ATION IS TO BE ALLOWED. SINCE THE APPELLANT HAS NOT BEEN GRANTED EXEMPTION U/S.11 OF THE ACT, THERE IS NO MERIT IN THE AOS STATEMENT THAT SINCE THE APPELLANT IS A TR UST, THEREFORE, DEPRECIATION CANNOT BE AN APPLICATION OF INCOME. DEPRECIATION W ILL BE VERY MUCH APPLICATION OF INCOME EVEN IN THE CASE OF A TRUST., IN ANY CAS E, TREATING THE APPELLANT AS BUSINESS ENTITY THE ASSESSMENT WAS FRAMED, THEREFOR E, DENIAL OF DEPRECIATION IS NOT IN ORDER. 7.7 THE AO HIMSELF HAS INVOKED SECTION 40(A)(IA) AN D SECTION 37 WHICH ARE APPLICABLE TO INCOME FROM BUSINESS OR PROFESSION. THE ADDITIONS MADE ON THAT ACCOUNT HAS ALREADY BEEN CONFIRMED BY ME HOLDING TH E APPELLANT AS A BUSINESS ENTITY. THE AO CANNOT BLOW HOT AND COLD AT THE SAM E BREATH AND DENY DEPRECIATION TO THE APPELLANT AFTER TREATING THE AP PELLANT AS A BUSINESS ENTITY. 7.8 ANOTHER REASON FOR AO TO DISALLOW DEPRECIATION IS THAT NO DEPRECIATION AS PER IT ACT IS SUBMITTED. THE PARTICULARS REQUIRED TO B E SUBMITTED U/S.34(1) WAS DELETED W.E.F. 1.4.1988. THEREFORE, WHETHER PARTIC ULARS ARE SUBMITTED OR NOT IT IS INCUMBENT ON THE PART OF THE AO TO ALLOW DEPRECIATI ON AS PER LAW. ONCE THE APPELLANT OWNS THE ASSETS AND THE ASSETS ARE USED F OR THE PURPOSE OF BUSINESS, DEPRECIATION IS MANDATORY AND CANNOT BE DENIED TO T HE APPELLANT. 7.9 THE APPELLANT HAS CLAIMED DEPRECIATION AS PER T HE I.T.ACT. AO IS FREE TO CALCULATE THE PROPER DEPRECIATION AS PER THE INCOME TAX ACT, BUT HE CANNOT DENY THE DEPRECIATION MERELY BECAUSE NO PARTICULARS WERE FILED. THE AO IS FULLY EMPOWERED TO COLLECT THE RELEVANT PARTICULARS. THE AO IS ALSO DUTY BOUND TO ALLOW DEPRECIATION AS PER LAW. THE PROVISIONS AS T O DEPRECIATION IN A TAXING LAW 4 LIKE THE INCOME TAX ACT CONTAIN ELEMENTS OF INCENTI VES AND ARE ALSO INFORMED BY CONSIDERATIONS OF POLICY OF THE TAX AND DO NOT REFL ECT PURELY ECONOMIC CRITERIA RELEVANT TO THE DETERMINATION OF THE DEPRECIATION. FOR THIS PROPOSITION OF LAW THE CASE OF HONBLE ANDHRA PRADESH STATE ELECTRICITY BOA RD VS UNION OF INDIA (1988) 64 COMP.CAS 407, 411-12(SC) CAN BE REFERRED. 7.10 PROVIDING VALID AND COGENT REASONS ARE INDISPE NSABLE COMPONENTS IN A QUASI JUDICIAL ORDER SINCE THE ORDER AFFECTS THE APPELLAN T PREJUDICIALLY. THIS IS ALSO IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE. THE REASONS IN SUPPORT OF A DECISION MUST BE COGENT, CLEAR AND SUCCINCT. AN AP OLOGY OF A REASON OR A RUBBER STAMP REASON CANNOT BE CALLED VALID REASON AND THE SAME CANNOT BE PART OF A VALID DECISION MAKING PROCESS. SINCE THE ORDER OF THE AO DISALLOWING DEPRECIATION LACKS COGENT, CLEAR AND SUCCINCT REASO NS, IT IS LIABLE TO BE QUASHED IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF KRANTI ASSOCIATES PVT LTD AND ANR VS SH MASOOD AHEMED KHAN AND ORS, (2010) 9 SCC 496. 7.11 DEPRECIATION BEING A MANDATORY ALLOWANCE CANNO T BE DENIED. ONCE THE APPELLANT ESTABLISHES THAT HE OWNS THE ASSETS AND T HE ASSETS ARE USED FOR THE PURPOSE OF BUSINESS, DEPRECIATION HAS TO BE ALLOWED . THE AO HAS NOWHERE IN THE ORDER BROUGHT OUT ANY EVIDENCE TO SUGGEST THAT THE APPELLANT IS NOT THE OWNER OF THE ASSETS OR THE ASSETS HAVE NOT BEEN USED FOR THE PURPOSES OF THE BUSINESS. THE AO HAS ASSESSED THE APPELLANT AS A BUSINESS ENT ITY THEREFORE, THERE IS NO MERIT IN STATING THAT DEPRECIATION WOULD BE AN APPL ICATION OF INCOME. DEPRECIATION HAS BEEN ALLOWED TO THE APPELLANT IN A LL THE YEARS EXCEPT THIS YEAR UNDER SIMILAR FACTS AND CIRCUMSTANCES. THE THREAD OF CONSISTENCY NEEDS TO BE FOLLOWED IN THE MATTER OF ASSESSMENT. IF FACTS ARE IDENTICAL, THE FACTS OF THE EARLIER YEARS NEED NOT BE UNSETTLED. FOR DEPARTING FROM CONSISTENCY, VALID AND COGENT REASON IS REQUIRED TO BE GIVEN. THE DENIAL OF DEPRECIATION TO THE APPELLANT IS WITHOUT ANY VALID BASIS AND THEREFORE, NO MERIT IS FOUND IN THE DISCUSSION OF THE AO FOR THE REASONS GIVEN ABOVE. 7.12 IN VIEW OF THE ABOVE, NO MERIT IS FOUND IN TH E AOS ACTION IN DENYING DEPRECIATION TO THE APPELLANT FOR THE DETAILED REAS ON GIVEN ABOVE. ACCORDINGLY, THE AO IS DIRECTED TO ALLOW DEPRECIATION TO THE APP ELLANT AS PER THE ACT AND GROUND NO.14 OF THE APPEAL IS ALLOWED. 4. LD D.R. SUBMITTED THAT THE EDUCATIONAL INSTITUTI ON RUN BY THE ASSESSEE IS COMING WITHIN THE PURVIEW OF CHARITABLE PURPOSES, THEREFOR E, ASSESSEE WAS NOT GRANTED REGISTRATION UNDER SECTION 11 & 12 AND WHEN ASSESSE E WAS NOT GRANTED REGISTRATION, 5 CONSEQUENTLY, DEPRECIATION WAS ALSO NOT GRANTED ON APPLICATION OF INCOME. HE FULLY SUPPORTED THE ORDER OF THE AO. 5. ON THE OTHER HAND, LD A.R. RELIED UPON THE ORDER OF LD CIT(A) AND HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF KRANTI ASSOCIATES PVT LTD AND ANR VS SH MASOOD AHEMED KHAN (SUPRA). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT LD COMMISSIONER OF INCOME TAX (A) HAS HELD THAT ASSESSEE HAS CLAIMED DEPRECIATION. THE EARLIER VIEW WAS THAT DE PRECIATION IS OPTIONAL AND IT COULD NOT BE THRUST UPON AN ASSESSEE, AS ASSESSEE CHOSE NOT T O CLAIM DEPRECIATION. TO NULLIFY THE EFFECT OF SEVERAL COURT DECISIONS, WHICH HAVE TAKEN THIS VIEW, FROM THE ASSESSMENT YEAR 2002-03, EXPLANATION 5 TO SECTION 32(1) PROVIDES TH AT DEPRECIATION SHALL BE ALLOWED WHETHER OR NOT CLAIMED BY THE ASSESSEE. THE ALLOWA NCE OF DEPRECIATION HAS TO BE COMPULSORY GIVEN TO THE ASSESSEE, WHETHER ASSESSEE CLAIMS IT OR NOT. WE FIND THAT LD CIT(A) HAS ALSO HELD THAT DEPRECIATION IS COMPULSOR Y. IN THIS CASE, AO HAS MERELY DISALLOWED THE DEPRECIATION ON THE GROUND THAT ASSE SSEE IS A TRUST, THEREFORE, DEPRECIATION CANNOT BE ALLOWED ON APPLICATION OF IN COME BUT DEPRECIATION WILL HAVE TO BE ALLOWED IN THE CASE OF A TRUST. LD CIT(A) HAS H ELD THAT AS PER SECTION 40(A)(IA) AND SECTION 37, WHICH ARE APPLICABLE TO THE INCOME OF B USINESS OR PROFESSION, THE ADDITION MADE ON THAT ACCOUNT HAS ALREADY BEEN CONFIRMED HOL DING THAT IT IS A BUSINESS ENTITY AND THEREFORE, WHEN ASSESSEE IS BUSINESS ENTITY, DE PRECIATION HAS TO BE ALLOWED. LD 6 CIT(A) ALSO HELD THAT DEPRECIATION IS TO BE ALLOWED AFTER GETTING THE PARTICULARS FROM THE ASSESSEE AND IT HAS TO BE ALLOWED AS PER LAW AS PER THE DECISION OF HONBLE ANDHRA PRADESH STATE ELECTRICITY BOARD VS UNION OF INDIA (S UPRA). LD CIT(A) FURTHER HELD THAT ASSESSEE HAS USED ALL ASSETS FOR BUSINESS, THEREFOR E, DEPRECIATION HAS TO BE ALLOWED. AO HIMSELF HAS HELD THAT ASSESSEE OWNS ASSETS AND I T IS MANDATORY TO GRANT THE DEPRECIATION. THEREFORE, IN OUR OPINION, LD CIT(A) IS JUSTIFIED IN GRANTING DEPRECIATION TO THE ASSESSEE. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT TO INTERFERENCE IN THE ORDER OF LD CIT(A). HENCE, WE DISMISS THE APPEAL FILED BY THE DEPARTMENT ON THIS COUNT. 7. IN THE RESULT, APPEAL FILED BY DEPARTMENT IS DIS MISSED. NOW WE TAKE UP THE APPEAL FILED BY ASSESSEE IN I.T. A. NO.252/CTK/2012: 8. IN THIS APPEAL, ASSESSEE HAS TAKEN 12 GROUNDS BU T ALL ARE RELATED TO THE ISSUE WHETHER OR NOT THE ASSESSEE IS ENTITLED FOR BENEFIT OF SECTION 11 & 12 OF THE I.T.ACT, 1961, WHICH ARE AS UNDER: 1. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY CONFIRMING THE EXAMINING THE PROVISION OF SECTION 11 & 12 OF THE A CT BY LD AO WHEN THE MATTER OF REGISTRATION U/S.12AA OF THE ACT IS PENDI NG BEFORE THE CIT. 2. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT B Y CONFIRMING THE CONCLUSION OF THE AO THAT THE APPELLANT IS NOT ENTI TLED FOR THE BENEFIT OF SECTION 11 & 12 OF THE ACT BY CITING THE CASE LAWS WHICH ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THAT MATTER BENEFIT OF SECTION 11 & 12 IS LIABLE TO BE ALLOWED. 3. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT B Y CONFIRMING THE ACT OF LD AO FOR TREATING THE EDUCATIONAL INSTITUTION RUN BY THE APPELLANT IS NOT 7 CHARITABLE BUT FOR PROFIT AND FOR THAT MATTER THE S AID CONCLUSION IS LIABLE TO BE REVERSED AND THE APPELLANTS ACTIVITY BE TREATED AS CHARITABLE PURPOSE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. 4. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT B Y CONFIRMING THE ADDITION OF RS.4,59,685/- TOWARDS AMOUNT PAID IN RESPECT OF BUS HIRE CHARGES U/S.40(A)(IA) AND SAME IS LIABLE TO BE ALLOWED. 5. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT B Y CONFIRMING THE DISALLOWANCE OF RENT EXPENSES OF RS.10,89,037/- U/S .40(A)(IA) OF THE ACT AND SAME IS LIABLE TO BE ALLOWED. 6. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT B Y CONFIRMING THE ADDITION OF RS.3,30,000/- U/S.41 OF THE ACT TOWARDS CESSATIO N OF THE LIABILITY AND SAME IS LIABLE TO BE DELETED. 7. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT B Y CONFIRMING THE ADDITION OF RS.28,565/-TOWARDS FOODING EXPENSES U/S.37 OF TH E ACT AND SAME IS LIABLE TO BE ALLOWED. 8. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT B Y CONFIRMING THE DISALLOWANCE OF EXPENSES U/S. 37 OF THE ACT OF RS.6 9,758/- TOWARDS STAFF WELFARE AND SAME IS LIABLE TO BE ALLOWED. 9.. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY CONFIRMING THE DISALLOWANCE OF RS.50,406/- AS REFRESHMENT EXPENSES IGNORING THE EVIDENCE ON RECORD U/S.37 OF THE ACT AND SAME IS L IABLE TO BE DELETED. 10. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY CONFIRMING THE DISALLOWANCE OF RS.2,50,550/- UNDER THE HEAD MISCEL LANEOUS EXPENSES AND SAME IS LIABLE TO BE DELETED. 11. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY CONFIRMING THE DISALLOWANCE OF RS.25,808/- AS INTEREST ON TDS AND SAME IS LIABLE TO BE DELETED. 12. THAT LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY CONFIRMING THE ADDITION U/S.43B OF THE ACT OF RS.1,64,244/- WHICH IS CONTRARY TO THE EVIDENCE ON RECORD AND SAME IS LIABLE TO BE DELETED . 8 9. THE EFFECTIVE GROUND TAKEN IN GROUND NO.1 OF APP EAL I.E. MATTER OF REGISTRATION U/S.12AA OF THE ACT IS PENDING BEFORE THE CIT. THE REFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, UNLESS AND UNTIL THE MATTER OF REGISTRAT ION IS NOT DECIDED BY THE COMMISSIONER OF INCOME TAX, THE WHOLE APPEAL CANNOT BE DECIDED. HENCE, WE PROCEED TO DECIDE ONLY GROUND NO.1 OF APPEAL. 10. DURING THE COURSE OF HEARING, LD AUTHORISED REP RESENTATIVE AND LD DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED BEFORE US THAT THE F IRST ISSUE WHETHER OR NOT THE ASSESSEE TRUST IS ENTITLED FOR REGISTRATION UNDER S ECTION 12AA OF THE ACT IS PENDING BEFORE THE COMMISSIONER OF INCOME TAX, BHUBANESWAR. 11. WE FIND THAT THE ASSESSING OFFICER HAS DENIED T HE EXAMINATION UNDER SECTION 11 OF THE ACT WHEN THE REGISTRATION UNDER SECTION 12A OF THE ACT IS PENDING BEFORE THE COMMISSIONER OF INCOME TAX, BHUBANESWAR. THE CONDI TIONS FOR SECTIONS 11 & 12 SHALL BE APPLIED ARE THAT THE TRUST IS REQUIRED TO BE R EGISTERED UNDER SECTION 12A AND 12AA OF THE ACT. ASSESSEE HAS FILED AN APPLICATION UNDE R SECTION 12AA OF THE ACT FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT IN THE PR ESCRIBED FORM AND PRESCRIBED MANNER BEFORE THE COMMISSIONER OF INCOME TAX, BHUBANESWAR ON 3.9.2002. IN ACCORDANCE WITH THE SECTION 12AA(1)(B) OF THE ACT, THE COMMISSIONER OF INCOME TAX, BHUBANESWAR AFTER SATISFYING HIMSELF IS REQUIRED TO PASS AN ORDER IN WRITING REGARDING THE REGISTRATION OF THE TRUST AND A COPY OF SUCH ORDER SHALL BE SENT TO THE ASSESSEE BEFORE THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLI CATION WAS RECEIVED. EVEN THOUGH 9 MORE THAN EIGHT YEARS HAVE BEEN ELAPSED OF FILING T HE APPLICATION, ASSESSEE HAS NEITHER RECEIVED ANY ORDER OF REGISTRATION NOR THE ORDER OF REFUSAL FROM THE COMMISSIONER OF INCOME TAX, BHUBANESWAR. SINCE THE ORDER FOR REFUS ING GRANT OF REGISTRATION UNDER SECTION 12AA HAS NOT BEEN PASSED WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE TRUST HAS SUBMITTED THE APPLICAT ION FOR REGISTRATION, IT CAN BE PRESUMED THAT REGISTRATION AS APPLIED FOR BY THE AS SESSEE HAS BEEN GRANTED AS DECIDED BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SOCI ETY FOR THE PROMOTION OF EDUCATION ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VS CIT & ORS, (*2008) 216 CTR (ALL) 167. THE ASSESSING OFFICER INSTEAD OF REFERRING TH E MATTER TO THE COMMISSIONER OF INCOME TAX, BHUBANESWAR FOR DISPOSING THE APPLICATI ON FILED BY THE ASSESSEE IN THIS REGARD HAS PASSED THE ASSESSMENT ORDER WITHOUT WAIT ING FOR THE SAME OR BRINGING THE MATTER TO THE KIND KNOWLEDGE OF THE COMMISSIONER OF INCOME TAX FOR GRANT OF REGISTRATION., THE ACTION OF THE AO FOR EXAMINING AND DISALLOWING THE EXAMINATION UNDER SECTION 11 WHEN THE MATTER IS PENDING BEFORE THE COMMISSIONER OF INCOME TAX, BHUBANESWAR IS WRONG AND BAD IN LAW. THEREFORE, TH E AO HAS NOT ACTED AS PER LAW. 12. WE HAVE GONE THROUGH THE ORDER OF LD CIT(A) AND LD CIT(A) HAS CONFIRMED THE ACTION OF THE AO WITHOUT REFERRING THE MATTER TO TH E COMMISSIONER OF INCOME TAX FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT TO THE ASSESSEE . THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILE OF THE COMMISSIONER OF INCOME TAX TO DECIDE THE GRANT OF REGISTRATION UNDE R SECTION 12A AS PER LAW. THE 10 COMMISSIONER IS DIRECTED TO DECIDE THE ASSESSEES A PPLICATION WITHIN TIME SO THAT THIS MATTER CAN BE DISPOSED OF ON MERITS. 13. AS WE HAVE RESTORED THE EFFECTIVE ISSUE I.E. GR ANT OF REGISTRATION UNDER SECTION 12A TO THE ASSESSEE, THE OTHER ISSUES RAISED BY THE ASSESSEE DEPEND UPON THE CONSEQUENTIAL ORDER PASSED BY THE COMMISSIONER OF I NCOME TAX, BHUBANESWAR. THEREFORE, WE DO NOT DISPOSE THE ISSUE ON MERITS AN D ACCORDINGLY, RESTORE THE ISSUE TO THE FILE OF THE AO AFTER GETTING THE ORDER PASSED B Y THE COMMISSIONER OF INCOME TAX. 14. IN THE RESULT, FILED BY THE ASSESSEE IS TREATED AS ALLOWED AS PER TERMS INDICATED ABOVE. NOW WE TAKE UP THE APPEAL FILED BY ASSESSEE IN I.T. A. NO.251/CTK/2012 FOR A.Y 2004-05: 15. GROUNDS OF APPEAL TAKEN BY ASSESSEE READ AS UND ER: 1. THAT THE ORDER OF LD AO IS ILLEGAL, ARBITRARY, UNJUST, WITHOUT JURISDICTION AND CONTRARY TO THE EVIDENCE ON RECORD AND THEREFOR E IS LIABLE TO BE QUASHED AND/OR ANNULLED. 2. BECAUSE THAT THE LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY CONFIRMING THE ACTION OF THE AO FOR INITIATION OF PROCEEDINGS U/S.147 OF THE ACT AND FOR THAT MATTER THE SAME PROCEEDING IS LIABLE TO BE QUASHED AND/OR ANNULLED. 3. BECAUSE THAT LD CIT(A) ERRED IN LAW AS WELL AS I N FACT BY CONFIRMING THE ACTION OF THE AO FOR ISSUANCE OF NOTICE U/S.148 OF THE ACT WITHOUT HAVING ANY REASON TO BELIEVE THAT THE INCOME OF THE APPELL ANT HAS ESCAPED ASSESSMENT AND FOR THAT MATTER THE NOTICE ALONG WIT H ASSESSMENT ORDER AND DEMAND NOTICE IS LIABLE TO BE QUASHED AND/OR AN NULLED. 11 4. BECAUSE THAT THE LD CIT(A) ERRED IN LAW AS WELL AS IN FACT BY CONFIRMING THE ADDITION OF RS.7,34,870/- U/S.68 OF THE ACT AND SAME IS LIABLE TO BE DELETED. 16. GROUND NO.1 IS GENERAL IN NATURE, THEREFORE, NO ADJUDICATION IS REQUIRED. 17. WITH REGARD TO GROUND NOS.2 TO 4, FACTS ARE THA T THERE WAS SEARCH AND SEIZURE OPERATION IN THE CASE OF HI-TECH GROUP ON 30.9.2005 AND IT WAS FOUND FROM THE IMPOUNDED CASH BOOK OF KONARK INSTITUTE OF SCIENCE & TECHNOLOGY (KIST), AN INSTITUTION RUN BY THE ASSESSEE THAT IT HAS RECEIVED CASH FROM RAJDHANI SYSTEM & ESTATES (P) LTD. (RSEPL) (ANOTHER COMPANY OF THE GROUP) DURING THE FI NANCIAL YEAR 2003-04. THE ASSESSING OFFICER ALSO NOTICED THAT SUCH ALLEGED CA SH RECEIPTS BY ASSESSEE WERE NOT REFLECTED IN THE CASH BOOK OF RESPL. IT WAS IN THI S BACKDROP THAT THE AO HAS REASON TO BELIEVE THAT INCOME IN RESPECT OF CASH RECEIPT CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2004-05 AND INITIATE D PROCEEDINGS UNDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 DATE D 25.3.2009 REQUESTING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR ASSESSMENT YEAR 20 04-05 WITHIN 15 DAYS OF RECEIPT OF THE NOTICE. THE NOTICE UNDER SECTION 148 WAS SERVE D ON 27.3.2009 BUT THERE WAS NO COMPLIANCE. THEREAFTER, AO HAS ISSUED A FRESH LETT ER FOR COMPLIANCE BY 11.8.2009. IN RESPONSE TO THE DEPARTMENTS LETTER DATED 3.8.2009, ASSESSEE FILED A LETTER DATED 11.8.2009, THE SUM AND SUBSTANCE OF THE LETTER WAS THAT AO HAS ISSUED NOTICE U/S.153C FOR THE IMPUGNED ASSESSMENT YEAR AGAINST WHICH ASSE SSEE HAD OBJECTED BEING TIME BARRED. SUCH PROCEEDINGS UNDER SECTION 153C FOR AS SESSMENT YEAR 2004-05 WERE DROPPED. ASSESSEE STATES THAT UNDER SECTION 153A S UPERSEDES ALL THE PENDING 12 ASSESSMENT PROCEEDINGS AND AO HAS FAILED TO MAKE AS SESSMENT UNDER SECTION 153A AND 153C. AFTER CONSIDERING THE CONTENTIONS OF THE ASS ESSEE, AO STATES THAT SECTION 153C STIPULATES NOTWITHSTANDING ANYTHING CONTAINED IN S ECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A THEN THE BOO KS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESS ING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. IN THIS CASE, AO HAS INITIATED PROCEEDINGS UNDER SECTION 14 7 AND STARTED DENOVO PROCEEDINGS ON THE BASIS OF INFORMATION IN POSSESSION AS THE AO AND ONCE PROCEEDINGS U/S.153A/153C WERE ALSO DROPPED, THEREFORE, NOTICE U/S.148 WAS ISSUED. 18. LD A.R. SUBMITTED THAT THERE WAS SEARCH AND SEI ZURE OPERATION IN THE CASE OF HI- TECH GROUP ON 30.9.2005. AO HAS ISSUED NOTICE U/.S .153C OF THE ACT TO COMPLETE THE ASSESSMENT. AO HAS ANNULLED THE NOTICE UNDER SECTI ON 153C BY TAKING APPROVAL OF ADDL. COMMISSIONER OF INCOME TAX, BHUBANESWAR. THEREFORE , WHEN 153C PROCEEDINGS HAS BEEN DROPPED, THE AO CANNOT INITIATE PROCEEDINGS UN DER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 ON 25.3.2009 FOR T HE SAME PERIOD WITHOUT HAVING ANY REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS B EEN ESCAPED ASSESSMENT. THEREFORE, APPEAL OF THE ASSESSEE BE ALLOWED. 13 19. ON THE OTHER HAND, LD D.R., RELIED UPON THE ORD ERS OF REVENUE AUTHORITIES AND SUBMITTED BEFORE US THAT THE DEPARTMENT HAS ALREADY INITIATED PROCEEDINGS UNDER SECTION 148 FOR ESCAPED ASSESSMENT. THEREFORE, THE APPEAL FILED BY THE ASSESSEE BE DISMISSED. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE RECORD. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HERE WAS SEARCH AND SEIZURE OPERATION IN HI-TECH GROUP AND IT WAS FOUND FROM TH E IMPOUNDED CASH BOOK OF KIST, AN INSTITUTION RUN BY THE ASSESSEE THAT IT HAS RECEIVE D CASH FROM RSEPL, ANOTHER GROUP OF COMPANY FOR FINANCIAL YEAR 2003-04. IT WAS FOUND B Y THE DEPARTMENT THAT THE CASH RECEIPTS WERE NOT REFLECTED IN THE CASH BOOK OF RESP L. THE ASSESSEE TRUST HAD RECEIVED THIS CASH FROM RESPL AND TRUST HAS NOT SHOWN THIS IN COME, THEREFORE, AO WANTED TO REOPEN THE ASSESSMENT OF THE ASSESSEE ON THE REASON TO BELIEVE THAT INCOME IN RESPECT OF CASH RECEIPT CHARGEABLE TO TAX HAS BEEN ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2004-05 AND INITIATE PROCEEDINGS UNDER SECTION 147 BY ISSUING NOTICE UNDER SECTION 148 DATED 25.3.2009. WE FIND THAT AO HAS INITIATED PRO CEEDINGS UNDER 153C OF THE I.T.ACT, TO COMPLETE THE ASSESSMENT BUT THEREAFTER, AO HAS A NNULLED THE NOTICE UNDER SECTION 153 BY TAKING THE APPROVAL OF ADDL. COMMISSIONER OF INCOME TAX, RANGE-2, BHUBANESWAR. THEREFORE, WHEN NOTICE U/S.153C HAS B EEN DROPPED, AO HAS ISSUED THIS NOTICE. IN OUR OPINION, AO IS JUSTIFIED IN ISSUING NOTICE U/S.148. WE FIND THAT IN THE CASE OF THE ASSESSEE, DUE TO SEARCH OPERATION, PROC EEDINGS UNDER SECTION 153C WERE 14 INITIATED. SECTION 153C STIPULATES THAT NOTWITHST ANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153. THEREFORE, AS PER THE SECTION, AO HAS ALL THE POWER TO REINITIATE PROCEEDINGS ONCE THE PROCEEDINGS UNDER SECTION 153A/153C ARE DROPPED. IN THIS CASE, AO HAS ISSUED NOTICE. THEREFORE, ASSESSEE HAS ALL THE RIGHT TO TAKE ITS DEFENSE FROM THE AO. KEEPING IN VIEW OF THIS FACT, IN OUR CONSIDERED OPINION, NOTICE ISSUED BY THE AO IS VALID IN THE EYES OF LAW. ACCORDINGLY, WE DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND. AS WE ARE OF THE VIEW THAT AO IS JUSTIFIED IN ISSUING NOTICE UNDER S ECTION 148, THERE IS NO NEED TO INTERFERE IN THE ORDER OF LD CIT(A), WHICH IS HEREB Y CONFIRMED. 21. WE ALSO FIND THAT ASSESSEE HAS NOT FILED DETAIL S REGARDING DIFFERENCE OF RS.7,34,869 WHICH WERE NOT REFLECTED IN THE CASH OF RSEPL I.E. (RS.7,77,527 (RS.42,658 REFLECTED IN THE CASH BOOK RSEPL). ASSES SEE ALSO DID NOT OFFER ANY EXPLANATION BEFORE US REGARDING THE DIFFERENCE. IN VIEW OF THIS, IN THE INTEREST OF JUSTICE, IF THE MATTER IS REOPENED, ASSESSEE WILL B E AT LIBERTY TO FILE HIS OBJECTION BEFORE THE AO FOR ITS DEFENSE. THEREFORE, WE DISMISS THIS APPEAL ON THIS GROUND ALSO. 22. IN THE RESULT, APPEAL FILED BY ASSESSEE FOR ASS ESSMENT YEAR 2004-05 IS DISMISSED. PRONOUNCED ON 4 TH OCTOBER, 2013. SD/- (P.K.BANSAL) (ACCOUNTANT MEMBER) SD/- (D.T.GARASIA) (JUDICIAL MEMBER) CUTTACK: DATED 4 TH OCTOBER, 2013 PARIDA 15 COPY TO: 1. THE ASSESSEE: VIDYASAGAR CHARITABLE TRUST, A-7, SAHID NAGAR, BHUBANESWAR 2. THE REVENUE: ASST. COMMISSIONER OF INCOME TAX,CI RCLE 2(2), BHUBANESWAR 3. COMMISSIONER OF INCOME TAX (APPEALS)- BHUBANESW AR 4. COMMISSIONER OF INCOME TAX, BHUBANESWAR 5. DEPARTMENTAL REPRESENTATIVE, ITAT, CUTTACK //TRUE COPY// BY ORDER SR.PS, ITAT, CUTTACK 16 DATE INITIALS 1. DRAFT DICTATED ON 1.10.2013 S PS 2. DRAFT PLACED BEFORE AUTHOR 3.10.2013 S PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM 5. APPROVED DRAFT COMES TO THE SR. PS S PS 6. KEPT FOR PRONOUNCEMENT ON S PS 7. FILE SENT TO THE BENCH CLERK S PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER 17