M/s. Ghaziabad Development Authority, New Delhi V. CIT, Ghaziabad

ITA 2399/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1486 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L MEENA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Charitable institution; Principle of natural justice; Competent authority
• Section: 143(3); 12A; 12AA; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESID ENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 2399/DEL/2014 A.Y 2009-10 GHAZIABAD DEVELOPMENT AUTHORITY C/O RRA TAXINDIA D 28, SOUTH EXTENSION PART 1 NEW DELHI 110 049 PAN: AAALG0072C VS CIT AAYAKAR BHAVAN GHAZIABAD (APPELLANT) (RESPONDENT) APPELLANT BY DR.RAKESH GUPTA, ADV. & SH. SOMIL AGGARWAL, ADV. RESPONDENT BY SH. R.L.MEENA, CIT, D.R. ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY ASSESSEE AGAINST ORDER PAS SED U/S 263 OF THE INCOME TAX ACT, 1961 ON FOLLOWING GROUNDS. 1. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES O F THE CASE, LD. CIT HAS ERRED IN LAW AND ON FACTS IN PASSING THE IMPUGNED-O RDER U/S 263 WHICH IS BARRED BY LIMITATION, ILLEGAL, WITHOUT JURISDICTION AND CONTRARY TO LAW AND FACTS AND DESERVES TO BE QUASHED. 2. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF T HE CASE, LD. CIT HAS ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION U/S 26 3 AND HAS FURTHER ERRED IN DIRECTING THE ASSESSING OFFICER TO RE-COMPUTE THE I NCOME OF THE ASSESSEE AFTER CONSIDERING THE ACCRUED INTEREST ON THE LOAN ADVANC ED TO HPDA AND HAS FURTHER ERRED IN DIRECTING THE AO THAT ASSESSEE AUT HORITY WAS INELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT IN VIEW OF THE AMEND ED PROVISIONS OF SECTION 2(15) AND CONSIDER THE ISSUE OF EARN FORWARD OF LOS S. DATE OF HEARING 29.05. 2019 DATE OF PRONOUNCEMENT 10 .0 6 .2019 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009- -- -10 1010 10 GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT 2 3. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF T HE CASE, LD. CIT HAS ERRED IN LAW AND ON FACTS IN PASSING THE IMPUGNED ORDER U /S 263 WHICH IS BAD IN LAW IN AS MUD. AS NO ADEQUATE OPPORTUNITY OF HEARIN G WAS GRANTED AND FRAMING THE IMPUGNED ORDER WITHOUT CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE AND WITHOUT CONSIDERING THE SUBMISSION OF T HE ASSESSEE AND WITHOUT APPRECIATING THE FACT THAT THE AUTHORITY WAS AN ORG AN OF THE STATE GOVERNMENT AND WAS THEREFORE NOT LIABLE TO TAX EVEN AFTER THE AMENDMENT AND FURTHER ERRED IN HOLDING THAT ASSESSMENT WAS ERRONEOUS AM P REJUDICIAL TO THE INTEREST OF REVENUE. 4. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF T HE CASE, LD. CIT HAS ERRED IN LAW AND ON FACTS IN PASSING THE IMPUGNED ORDER U /S 263 WHICH IS NOT SUSTAINABLE ON CARIOUS LEGAL AND FACTUAL GROUNDS. 5 THAT THE APPELLANT CRAVES THE LEAVE TO ADD, AMEND , MODIFY, DELETE ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE ASSESSEE IS AN AUTHORITY CONSTITUTED UNDER THE U. P. URBAN PLANNING & DEVELOPMENT ACT, 1973 TO PROMOTE AND SECURE THE D EVELOPMENT OF THE AREA ACCORDING TO PLAN AND FOR THAT PURPOSE THE AUTHORIT Y HAS BEEN EMPOWERED TO ACQUIRE, HOLD, MANAGE AND DISPOSE OF LAND AND OTHER PROPERTIES, TO CARRY OUT BUILDING, ENGINEERING, MINING AND OTHER OPERATIONS, TO EXECUTE WORKS IN CONNECTION WITH SUPPLY OF WATER AND ELECTRICITY TO DISPOSE OF SEWAGE AND TO PROVIDE AND MAINTAIN OTHER SERVICES AND AMENITIES A ND GENERALLY TO DO ANYTHING NECESSARY OR EXPEDIENT FOR THE PURPOSE OF SUCH DEVELOPMENT. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER OBSERVED THA T THE INCOME OF THE AUTHORITY WAS EXEMPT U/S 10(20A) OF THE ACT TILL 1. 4.2003 BUT WITH EFFECT FROM 1.4.2003, THE SAID SECTION HAS BEEN OMITTED AND THE REVENUE AUTHORITIES BROUGHT THE ASSESSEE IN THE TAX LIMIT. THE ASSESSI NG OFFICER MENTIONED THAT THE ASSESEE WAS REGISTERED U/S 12AA OF THE ACT WITH EFF ECT FROM 31.3.2003 AND HAD CLAIMED EXEMPTION U/S 11 OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT DURING THE ASSESSMENT PROCEEDINGS AMENDED PROV ISIONS OF S.2(15) OF THE ACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE WHERE IN THE DEFINITION OF CHARITABLE PURPOSE HAS BEEN AMENDED TO PROVIDE WI TH ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY, SHALL NOT B E A CHARITABLE PURPOSE, IF IT ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009- -- -10 1010 10 GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT 3 INVOLVES CARRYING ON OF AN ACTIVITY IN THE NATURE O F TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHE R CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH AN ACTIVITY. AFTER CONSIDERING THE AMENDED PROVISION O F SEC. 2(15) OF THE ACT, THE ASSESSING OFFICER RECOGNIZED THE ASSESSEE AS REGIST ERED U/S 12A OF THE ACT. THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE INCOM E TAX ACT, 1961 (THE ACT) IN THIS CASE ON 30.12.2011. A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 24.3.2014 BY THE INCOME TAX OFFICER (TECHNICAL) ON BEHALF OF THE COMMISSIONER OF INCOME TAX. THE COMMISSIONER OF INCOME TAX PASS ED ORDER DATED 31.3.2014 U/S 263 OF THE INCOME TAX ACT, 1961. THE COMMISSIO NER OF INCOME TAX DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE INCOME OF THE ASSESSEE AUTHORITY AFTER CONSIDERING THE ACCRUED INTEREST DURING THE Y EAR UNDER CONSIDERATION ON THE LOAN ADVANCED BY HPBA, AND FURTHER HELD THAT TH E ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT IN VIEW OF THE AMEN DED PROVISIONS OF S.2(15) OF THE ACT. 3. THE LD. AR SUBMITTED THAT SHOW CAUSE NOTICE U/S 26 3 OF THE ACT DATED 24.3.2014 ITSELF IS DEFECTIVE AND IS NOT PROPER AS THE SAME IS ISSUED BY INCOME TAX OFFICER (TECHNICAL) ON BEHALF OF THE COMMISSION ER OF INCOME TAX. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE ALLAHABA D HIGH COURT WHICH IS A JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. RAJESH KUMAR PANDEY (2012) 25 TAXMAN.COM 242 (ALLA). THE LD. AR SUBMITTED THAT S EC. 12A DETERMINATION HAS BEEN UPHELD BY THE TRIBUNAL IN FAVOUR OF THE AS SESSEE, THUS THE COMMISSIONER OF INCOME TAX CANNOT HOLD THAT THE ASS ESSEE WAS INELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. 4. THE LD. DR SUBMITTED THAT THE SHOW CAUSE NOTICE IS JUST AND PROPER AND SEC. 263 ORDER HAS BEEN RIGHTLY PASSED BY THE COMMI SSIONER OF INCOME TAX AS THE ASSESSING OFFICER HAS NOT VERIFIED ALL THE FACT S OF THE ASSESSEES CASE DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009- -- -10 1010 10 GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT 4 5 WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF RAJESH KUMAR PANDEY (SUPRA) HAS HELD THAT THE PROVISIONS O F SEC. 299BB DEALS WITH THE PROCEDURE FOR SERVICE OF NOTICE AND IN CASE THE RE IS A DEFECTIVE SERVICE OF NOTICE IT PROVIDES THAT THE ASSESSEE HAS COOPERATED , IT WILL NOT BE OPEN FOR HIM TO RAISE THE PLEA, WHEREAS IN THE INSTANT CASE, IT IS NOT THE CASE OF SERVICE OF NOTICE, BUT THE INITIAL ISSUANCE OF NOTICE, WHICH H AS NOT BEEN SIGNED BY THE COMPETENT AUTHORITY AS THE FINDING HAS BEEN RECORDE D BY TRIBUNAL THEREIN THAT NOTICE WAS ISSUED UNDER THE SIGNATURE OF INCOME TAX OFFICER (TECHNICAL) WHEREAS IN VIEW OF PROVISIONS OF POWERS OF S.263(1) IT IS ONLY THE COMMISSIONER OF INCOME TAX TO ISSUE NOTICE. IN THE PRESENT ASSE SSEES CASE ALSO SHOW CAUSE NOTICE WAS ISSUED BY INCOME TAX OFFICER (TECHNICAL) AND SIGNED BY THE SAID OFFICER ON BEHALF OF THE COMMISSIONER OF INCOME TAX . AS PER SEC. 263, THE COMMISSIONER OF INCOME TAX CANNOT DELEGATE HIS POWE RS TO THE SUBORDINATE OFFICER OR LOWER OFFICER AND, THEREFORE, THIS DEFEC T IS NON-CURABLE DEFECT AND THE SHOW CAUSE NOTICE ITSELF IS BAD IN LAW. BESIDES TH IS, AFTER GOING THROUGH THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ALSO TA KEN COGNIZANCE OF THE MATERIAL AVAILABLE AND HAS ARRIVED AT A PROPER CONC LUSION. THERE ORDER U/S 263 IS MERELY A SECOND OPINION WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961. THEREFORE, ORDER U/S 263 OF THE ACT DOES NOT SURVIVE. HENCE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2019 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 10/06/2019 *GMV *GMV *GMV *GMV ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009 ITA NO.2399/DEL/2014 AY 2009- -- -10 1010 10 GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT GHAZIABAD DEVELOPMENT AUTHORITY VS. CIT 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE DRAFT DICTATED ON 04/06/19 DRAFT PLACED BEFORE AUTHOR 07/06/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : /06/19 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.