Umalok Charitable Trust, Meerut V. ACIT, Meerut

ITA 2337/DEL/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8076 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Search and seizure; Charitable institution; Principle of natural justice
• Section: 153A; 12A; 12AA; 153C; 10(23C); 132; 10

Judgement Text

1 ITA NO. 2337/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 2337/DEL /2015 (A.Y 2011-12) (THROUGH VIDEO CO NFERENCING) UMALOK CHARITABLE TRUST C-111, SAMRAT PALACE, GARH ROAD MEERUT AALCS4967Q (APPELLANT) VS ACIT CENTRAL CIRCLE MEERUT (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER DATED 16/02/2015 PASSED BY CIT(A)- MEERUT FOR ASSESSMENT YEAR 2011-1 2. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LEARNED CIT (APPEAL) WAS NOT JUSTIFIED BY D ISMISSING THE APPEAL. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS NOT TAKEN INTO ACCOUNT THE FACTS OF THE CASE THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SUPPORT THAT THE APPELLANT TRUST HAS MADE THE PAYME NT OF RS 2 CRORE. THE LEARNED CIT (APPEAL) HAS ERRED IN SUMMARILY REJ ECTING THE PLEA OF THE APPELLANT BY SH. K. SAMPATH, ADV RESPONDENT BY MRS. SUNITA SINGH, CIT(A) DR DATE OF HEARING 19.08.2020 DATE OF PRONOUNCEMENT 24 .08.2020 2 ITA NO. 2337/DEL/2015 APPELLANT TRUST FOR EXEMPTION UNDER SECTION 10(23C) (VI). 3. THE SEVERAL OBSERVATIONS AS MADE AND INFERENCES DRAWN ARE UNTENABLE, INCORRECT, UNWARRANTED. ADDITIONAL GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSMENT FRAMED U/S 153C OF THE INCOME TAX ACT, 1 961 IN AB INITIO, ILLEGAL AND VOID AND SO MUST BE QUASHED. 2. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT 1961 WAS CONDUCTED IN M/S SUBHARTI KKB CHARITABLE T RUST AND DR. ATUL KRISHAN GROUP OF CASES WHEREIN INCRIMINATING DOCUME NTS RELATING TO THE ASSESSEE WERE FOUND AND SEIZED. ACCORDINGLY ASSESSM ENT PROCEEDING UNDER SECTION 153C READ WITH SECTION 153A WAS INITIATED B Y THE ASSESSING OFFICER. THE ASSESSEE TRUST IS RUNNING TWO EDUCATIONAL INSTI TUTIONS NAMELY UMALOK PARAMEDICAL COLLEGE AND UMALOK NURSING SCHOOL. THE TRUST DOES NOT HAVE CERTIFICATE EITHER UNDER SECTION 12A OR UNDER SECTI ON 10(23C). HOWEVER, THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 10(23C) ON THE GROUND THAT IT IS ENGAGED IN RUNNING EDUCATIONAL INSTITUTIONS AND ITS TOTAL RECEIPTS ARE BELOW RS. L CRORE. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY EXEMPTIO N CLAIMED UNDER SECTION 10(23C) SHALL NOT BE DISALLOWED SINCE THE TRUST HAS NOT BEEN ESTABLISHED SOLELY FOR EDUCATIONAL PURPOSES. THE ASSESSEE STATED BEFOR E THE ASSESSING OFFICER THAT THE MAIN OBJECT OF THE TRUST IS TO RUN SOLELY FOR E DUCATIONAL PURPOSES AND NOT FOR THE PURPOSES OF PROFIT AND THE ANNUAL AGGREGATE RECEIPTS OF THE TRUST WHICH DOES NOT EXCEED RS. L CRORE IN EACH AND EVERY YEAR. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION GIVEN BY THE ASSESSEE AND CAME TO A CONCLUSION THAT THE ASSESSEE IS NOT FULFILLING THE CONDITIONS REQUIRED U/S 10 (23C) AND ACCORDINGLY MADE ADDITION. 3 ITA NO. 2337/DEL/2015 3. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 4. THE LD. AR SUBMITTED THAT GROUND NO.1 IS GENERAL , GROUND NO. 3 & 4 ARE ACADEMIC AND ADDITIONAL GROUND IS NOT PRESSED BY TH E ASSESSEE. HENCE, GROUND NOS. 1, 3, 4 AND ADDITIONAL GROUNDS ARE DISM ISSED. 5. THE LD. AR FURTHER SUBMITTED THAT THE MAIN GROUN D IS PART TWO OF GROUND NO. 2 AND THE SUBMISSION IS THAT THE ASSESS ING OFFICER WAS NOT RIGHT IN TREATING THE AMOUNT OF RS.2,95,22,244/- AS ASSES SEES INCOME THEREBY IGNORING THE FACT THAT THE ASSESSEE HAS CATEGORICAL LY BROUGHT ON RECORD, THE EVIDENCES IN SUPPORT OF THE PAYMENT OF RS.2,95,22,2 44/-. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS CATEGORICALLY M ENTIONED THAT THE INVESTOR SHRI ALOK BHATNAGAR HAS APPROACHED SETTLEMENT COMMI SSION AND THE MATTER WAS PENDING BEFORE THE SETTLEMENT COMMISSIONER AT T HAT POINT OF TIME. THE SETTLEMENT COMMISSION HAS NOW DECIDED THE MATTER. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS BEEN GRANTED EXEMPT ION U/S 12AA AND THE CONFIRMATIONS OF INVESTORS WERE NOT AT ALL TAKEN IN TO ACCOUNT BY THE ASSESSING OFFICER. THEREFORE, THE MATTER MAY BE REMANDED BAC K TO THE FILE OF THE ASSESSING OFFICER FOR PROPER VERIFICATION OF THE EV IDENCE IN CONSONANCE WITH THE ORDER PASSED BY THE SETTLEMENT COMMISSION IN CASE O F SHRI ALOK BHATNAGAR. 6. THE LD. DR RELIED UPON THE ORDER OF THE CIT(A) A ND THE ASSESSMENT ORDER. THE LD. DR FURTHER SUBMITTED THAT THE INCOME OF THE TRUST IS EXCEEDING RS. 1 CRORE THRESHOLD, THEREFORE, THE ASSESSING OFFICER W AS RIGHT IN MAKING ADDITION. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS NOT CALLED FOR CONFIRMATION AS PER THE OBSERVATION MADE BY THE ASS ESSING OFFICER IN ASSESSMENT ORDER. THEREFORE, IT WILL BE APPROPRIAT E TO VERIFY THE EVIDENCE/DOCUMENTS RELATING TO INVESTORS WHO HAPPEN TO BE THE TRUSTEE/DIRECTOR OF THE ASSESSEE TRUST. THEREFORE, WE ARE REMANDING BACK THIS MATTER TO THE FILE OF THE ASSESSING OFFICER FOR PRO PER VERIFICATION OF THE 4 ITA NO. 2337/DEL/2015 DOCUMENTS/EVIDENCE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND IN SUPPORT OF ASSESSEES CLAIM. TH E ASSESSING OFFICER ALSO SHOULD TAKE INTO ACCOUNT THE DECISION TAKEN BY THE SETTLEMENT COMMISSION IN CASE OF ONE OF THE INVESTORS SHRI ALOK BHATNAGAR. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN PROPER OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. GROUND NO. 2 IS PARTLY ALLOWED FOR STATI STICAL PURPOSE. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF AUGUST, 2020 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24/08/2020 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 2337/DEL/2015