Bhai Hospital Trust, New Delhi V. ITO (Exemption), New Delhi

ITA 2351/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3064 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KATARIA
• Assessee Lawyers: V P GUPTA ADV SH ANUNAV KUMAR
• Keywords: Reopening of assessment; Benefit of exemption
• Section: 271(1)(c); 12A; 12AA; 147; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, A: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI G.S. PANNU, HONBLE PRESIDENT AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NOS.2350 & 2351/DEL/2017 [ASSESSMENT YEARS: 2005-06 & 2006-07] M/S BHAI HOSPITAL TRUST, 54, JANPATH, CONNAUGHT PLACE, NEW DELHI-110001 VS. INCOME TAX OFFICER (EXEMPTION), TRUST WARD-III, NEW DELHI PAN-AAATB0492M ASSESSEE REVENUE ASSESSEE BY SH. V.P. GUPTA, ADV. SH . ANUNAV KUMAR, ADV. REVENUE BY SH. V.K. KATARI A, SR. DR DATE OF HEARING 08.09.2021 DATE OF PRONOUNCEMENT 25.10.2021 ORDER PER KUL BHARAT, JM THESE TWO APPEALS BY THE ASSESSEE AGAINST THE SEPAR ATE ORDERS OF THE LD. CIT(A)-21, NEW DELHI, DATED 16.01 .2017 PERTAINING TO ASSESSMENT YEARS 2005-06 AND 2006-07. SINCE, IDENTICAL GROUNDS HAVE BEEN RAISED IN THESE APPEALS . THEREFORE, THESE APPEALS WERE TAKEN UP FOR HEARING TOGETHER AN D ARE BEING DISPOSED OF BY WAY OF CONSOLIDATED ORDER. ITA NOS.-2350 & 2351/DEL/2017 2 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.2350/DEL/2017 PERTAINING TO ASSESSMENT YEAR 2005-06 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE CIT(A) ERRED IN PASSING THE ORDER DATE D 16 TH JANUARY, 2017 WITHOUT PROPERLY APPRECIATING THE FAC TS AND CONTENTIONS OF THE APPELLANT AND ALSO WITHOUT ADJUD ICATING EACH OF THE GROUNDS RAISED BY THE APPELLANT IN THE APPEAL. 2. THAT THE CIT(A) ERRED IN NOT APPRECIATING THAT T HE AO. HAD WRONGLY ISSUED NOTICE U/S 148 OF THE ACT WITHOU T PROPER APPLICATION OF MIND FOR REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT FOR ASSESSMENT YEAR UNDER APPEAL ON THE BASIS THAT THE REGISTRATION U/S 12A OF THE ACT WAS CANCELLED B Y DIRECTOR OF INCOME TAX (EXEMPTION) VIDE ORDER DATED 19TH JUL Y, 2011 FROM INCEPTION, WHEREAS NEITHER THE DIT(E) HAD THE POWER TO CANCEL THE REGISTRATION FROM INCEPTION NOR THIS COU LD BE A REASON FOR REOPENING THE ASSESSMENT U/S 147 OF THE ACT. 3. THAT THE CIT(A) ERRED IN NOT CONSIDERING THE CON TENTIONS OF THE APPELLANT AND THE LEGAL POSITION THAT THE AP PELLANT HAD NOT VIOLATED PROVISIONS OF ANY OF THE SECTIONS OF T HE INCOME TAX ACT AND, ACCORDINGLY, ITS INCOME WAS DULY EXEMP T U/S 10(23C)(IIIAE) OF THE INCOME TAX ACT AND THERE WAS NO ESCAPEMENT OF INCOME WARRANTING THE RE-OPENING OF T HE ASSESSMENT. 4. THAT THE CIT(A) ALSO ERRED IN NOT APPRECIATING T HAT THE APPELLANT TRUST WAS ESTABLISHED IN 1979 AND HAS BEE N CARRYING ON CHARITABLE ACTIVITIES SINCE THEN AND HA S BEEN REGULARLY FILING ITS RETURNS OF INCOME AND CLAIMING EXEMPTION ITA NOS.-2350 & 2351/DEL/2017 3 U/S 10(22A)/10(23C)(IIIAE) OF THE INCOME TAX ACT AN D THE CASE OF THE APPELLANT WAS ALSO EXAMINED BY THE AO. FROM TIME TO TIME AND NO VIOLATION WAS FOUND AND, THEREFORE, A V IEW COULD NOT BE TAKEN IN RESPECT OF ASSESSMENT YEAR 2005-06 IN RE- ASSESSMENT PROCEEDINGS THAT ITS INCOME WAS TAXABLE. 5. THAT THE CIT(A) ERRED IN UPHOLDING THE ORDER OF ASSESSMENT PASSED BY THE AO. WITHOUT APPRECIATING T HAT THE APPELLANT WAS DULY ENTITLED FOR EXEMPTION OF ITS IN COME U/S 10(23C)(IIIAE) AND/OR SECTIONS 11 AND 12 OF THE INC OME TAX ACT. 6. THAT THE CIT(A) ALSO ERRED IN NOT CONSIDERING TH E CONTENTIONS OF THE APPELLANT THAT THE AO HAS MADE C ERTAIN INCORRECT AND IRRELEVANT OBSERVATIONS IN THE ORDER OF ASSESSMENT, PARTICULARLY, TO THE EFFECT THAT THE AP PELLANT WAS NOT CARRYING ON CHARITABLE ACTIVITIES IN ACCORDANCE WITH ITS OBJECTS. 7. THAT THE ORDER PASSED BY THE CIT(A) UPHOLDING TH E ORDER OF ASSESSMENT PASSED BY THE AO IS BAD IN LAW. 8. THAT THE CIT(A) ALSO ERRED IN NOT ADJUDICATING T HE GROUND RAISED BY THE APPELLANT THAT PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE ACT WERE WRONGLY INITIATED BY THE AO. 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE FILED RETURN OF INCOME 01.02.2007 AT NIL A FTER CLAIMING THE BENEFIT OF EXEMPTION U/S 10(23C)(IIIAE) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO THE ACT). IT IS NOT ED BY THE ASSESSING OFFICER THAT REGISTRATION GRANTED U/S 12A OF THE AC T WAS CANCELLED ITA NOS.-2350 & 2351/DEL/2017 4 SINCE INCEPTION VIDE ORDER DATED 19.07.2011 PASSED BY DIT(E), DELHI, THEREFORE, THE ASSESSMENT OF THE ASSESSEE WA S REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT ON 30.03.2012. A GAINST THE REOPENING, THE ASSESSEE FILED ITS OBJECTION, HOWEVE R, OBJECTION OF THE ASSESSEE WAS REJECTED AND THE ASSESSING OFFICER PROCEEDED TO FRAME THE ASSESSMENT. THEREBY, THE ASSESSING OFFICE R ASSESSED THE INCOME AT RS.15,93,257/- AGAINST NIL INCOME AS DECLARED BY THE ASSESSEE. 4. AGGRIEVED AGAINST THIS, THE ASSESSEE FILED APPE AL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE, SUSTAINED THE ADDITION AND DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED AGAINST THIS, THE ASSESSEE IS IN APPE AL BEFORE THIS TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REASON FOR REOPENING OF THE ASSESSEE WAS STATED TO BE WITHDRAWAL OF EXEMPTION AS PROVIDED U/S 12A OF THE ACT, SINCE THE REGISTRATION OF THE TRUST U/S 12AA WAS CANCELED BY THE LD. PR. CIT. HE CONTENDED THAT THE TRIBUNAL IN ITA NO.414 7/DEL/2011 RESTORED THE REGISTRATION AS GRANTED U/S 12AA OF TH E ACT VIDE ITS ORDER DATED 18.06.2021. THEREFORE, THE BASIS FOR R EOPENING OF THE ITA NOS.-2350 & 2351/DEL/2017 5 ASSESSMENT IS NO MORE IN EXISTENCE AND HENCE HE PRA YED THAT THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) MAY BE DELETED. 7. ON THE CONTRARY, LD. SR. DR OPPOSED THE SUBMISS IONS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED BY THE REVENU E THAT THE ASSESSMENT WAS REOPENED ON SOLITARY GROUND THAT THE REGISTRATION U/S 12AA OF THE ACT AS GRANTED TO THE ASSESSEE WAS CANCELLED SINCE INCEPTION. THE ISSUE OF VALIDITY OF CANCELLAT ION OF REGISTRATION CAME UP TO THE STAGE OF THE TRIBUNAL. IT IS FOUND THAT THE TRIBUNAL IN ITA NO.4147/DEL/2011 WAS PLEASED TO SET -ASIDE THE IMPUGNED ORDER WHEREBY THE REGISTRATION OF THE ASSE SSEE TRUST U/S 12AA OF THE ACT WAS CANCELLED SINCE INCEPTION, HOWE VER, THE TRIBUNAL RESTORED THE REGISTRATION GRANTED U/S 12AA OF THE ACT. THE REVENUE COULD NOT CONTROVERT THE FACT THAT THE SOLE GROUND OF RE-OPENING OF ASSESSMENT WAS THAT THE REGISTRATION GRANTED U/S 12A OF THE ACT HAD BEEN CANCELLED SINCE INCEPTION, THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR THE BENEFIT OF SECTIO NS 11 & 12 OF THE ACT. UNDER THE UNDISPUTED FACT THAT THE BASIS OF R EOPENING OF THE ITA NOS.-2350 & 2351/DEL/2017 6 ASSESSMENT NOW NO MORE EXISTS. THEREFORE, THE ASSE SSMENT FRAMED ON THE BASIS OF SUCH GROUND CANNOT BE SUSTAI NED. WE, THEREFORE, SET-ASIDE THE ASSESSMENT ORDER AND DIREC T THE ASSESSING OFFICER TO DELETE THE ADDITION AND GRANT BENEFIT OF EXEMPTION AS PROVIDED UNDER LAW. THE GROUNDS RAISED IN THE PRESE NT APPEAL ARE ALLOWED IN TERMS INDICATED HEREINABOVE. 9. NOW, WE TAKE UP ITA NO. 2351/DEL/2017 PERTAINING TO ASSESSMENT YEAR 2006-07 OF THE ASSESSEE. 10. THE FACTS AND GROUNDS ARE IDENTICAL IN THIS YE AR AS WELL IN ITA NO.2350/DEL/2017 RELATING TO ASSESSMENT YEAR 2005-06. 11. LD. REPRESENTATIVES OF THE PARTIES HAVE ADOPTE D THE SAME ARGUMENTS AS WERE ADDRESSED IN ITA NO.2350/DEL /2017 (ASSESSMENT YEAR 2005-06) [SUPRA]. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF TH E PARTIES AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE THERE IS NO CHANGE INTO FACTS AND CIRCUMSTANCES HAS BEEN POI NTED, WE THEREFORE, TAKING THE CONSISTENT VIEW, THE GROUNDS RAISED IN THIS APPEAL ARE ALSO ALLOWED. OUR FINDING IN ITA NO.235 0/DEL/2017 FOR ASSESSMENT YEAR 2005-06 WOULD APPLY MUTATIS MUTANDI TO THE IDENTICAL GROUNDS RAISED IN THIS YEAR [I.E. ASSESSM ENT YEAR 2006- ITA NOS.-2350 & 2351/DEL/2017 7 07] AS WELL. THE GROUNDS RAISED BY THE ASSESSEE I N THIS APPEAL ARE ALLOWED. 13. IN THE RESULT, BOTH APPEALS FILED BY THE ASSES SEE ARE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2021. SD/- SD/- - [G.S. PANNU] [KUL BHARAT] PRESIDENT JUDICIA L MEMBER DELHI; DATED: 25/10/2021. F{X~{T F{X~{T F{X~{T F{X~{T BT| T BT| T BT| T BT| T COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI