Trinity Charitable Trust, Pathanamthitta V. The ITO, Thiruvalla

ITA 243/COCH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7208 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2014
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR; K K JOHN
• Assessee Lawyers: SAMUEL THOMAS
• Keywords: Charitable institution
• Section: 143(3); 12AA; 54; 263; 63; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO. 243/COCH/2014 ASSESSMENT YEAR : 2010-11 TRINITY CHARITABLE TRUST, KUZHIMURIYIL, PANNIYALI, OMALLOOR P.O., PATHANAMTHITTA-689 647. [PAN: AABTT 5443R] VS. THE INCOME TAX OFFICER, WARD-1,THIRUVALLA. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI SAMUEL THOMAS, ADV. REVENUE BY SHRI K.K.JOHN, SR. DR & SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 15/09/2014 DATE OF PRONOUNCEMENT 19/09/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER U/S. 263 OF THE I.T. ACT DATED 01-04-2014 PASSED BY THE CIT, KOTTAYAM FOR THE ASSESSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 WAS FILED BY THE ASSESSEE O N 31-01-2011 DECLARING TOTAL INCOME AT RS. NIL. THE RETURN WAS PROCESSED U/S. 143(1) OF THE I.T. ACT AND REFUND OF RS.2,58,570/- WAS ISSUED TO THE ASSESSEE. I.T.A. NO.243/COCH/2014 2 SUBSEQUENTLY, SCRUTINY ASSESSMENT WAS COMPLETED VID E ORDER U/S. 143(3) DATED 19.11.2012 ACCEPTING THE RETURNED INCOME AS N IL. THEREAFTER, IT WAS NOTICED THAT THE ASSESSEE HAD RECEIVED INTEREST ON FIXED DEPOSITS AMOUNTING TO RS. 38,54,595/- UNDER THE HEAD RECEIPTS AND PAYM ENTS ACCOUNT. SINCE THE ASSESSING OFFICER DENIED THE EXEMPTION U/S. 11 OF THE I.T. ACT AND THE TRUST WAS NOT REGISTERED U/S. 12AA OF THE I.T. ACT, THE INTEREST INCOME FROM FIXED DEPOSITS RECEIVED BY THE ASSESSEE SHOULD HAVE BEEN BROUGHT TO TAX AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER R ECTIFIED THE ASSESSMENT ORDER U/S. 143(3) OF THE I.T. ACT VIDE ORDER U/S. 1 54 DATED 23-01-2014, ASSESSING THE INTEREST RECEIVED ON FIXED DEPOSITS A T RS.38,54,595/-. HOWEVER, ON AN EXAMINATION OF RECORDS, IT WAS NOTIC ED BY THE ASSESSING OFFICER THAT THE OMISSION TO ASSESS THE AMOUNT OF R S.38,54,595/- BEING INTEREST ON FIXED DEPOSITS AS INCOME FROM OTHER SOU RCES, WAS NOT A MISTAKE APPARENT ON RECORD TO BE RECTIFIED BY INVOKING THE PROVISIONS OF SEC. 154 OF THE I.T. ACT. BEING SO, THE ORDER U/S. 154 PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AND THE OMISSION TO ASSESS THE ABOVE AMOUNT OF RS.38,54,595/- UNDER INCOME FROM OTHER SOURCES WAS PREJUDICIAL TO THE INTERESTS OF REVENUE. ACCORDINGLY, THE CIT INVOKED THE PROVISIONS OF SEC. 263 OF THE I.T. ACT AND HE CANCELLED THE ORDER OF THE A SSESSING OFFICER PASSED U/S. 154 OF THE I.T. ACT DATED 23-01-2014 AND DIREC TED THE ASSESSING OFFICER TO PASS A FRESH ORDER BY BRINGING TO TAX THE INTERE ST RECEIVED ON FIXED I.T.A. NO.243/COCH/2014 3 DEPOSITS AMOUNTING TO RS.38,54,595/- UNDER THE HEAD INCOME FROM OTHER SOURCES. AGAINST THIS THE ASSESSEE IS IN APPEAL BEF ORE US. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. ADMITTEDLY, THE ASSESSING OFFICER CORRECTED THE ERROR COMMITTED IN THE ORDER PASSED BY HIM U/S. 143(3) OF THE I.T. ACT DATED 19-11-2012 VI DE RECTIFICATION PROCEEDINGS U/S. 154 OF THE I.T. ACT DATED 23-01-20 14 AND ASSESSED THE INTEREST RECEIVED ON FIXED DEPOSITS AMOUNTING TO RS .38,54,595/- UNDER THE HEAD INCOME FROM OTHER SOURCES. SUBSEQUENTLY, THE C IT(A) VIDE PROCEEDINGS U/S. 263 OF THE I.T. ACT, BROUGHT THE A BOVE AMOUNT INTO TAXATION BY CANCELING THE ORDER PASSED BY THE ASSES SING OFFICER U/S. 154 OF THE I.T. ACT. THE EFFECT OF THE PROCEEDINGS U/S. 2 63 BY THE CIT IS NOTHING MORE THAN RECTIFICATION DONE THROUGH THE PROCEEDING S UNDER SECTION 154 OF THE I.T. ACT BY THE ASSESSING OFFICER. A BARE READ ING OF SEC. 263 MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JUR ISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER O F THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED WITH TWIN COND ITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ON E OF THEM IS ABSENT IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE OR IF IT IS NOT ERRONEOUS B UT IS PREJUDICIAL TO THE I.T.A. NO.243/COCH/2014 4 INTERESTS OF THE REVENUE RECOURSE CANNOT BE TAKEN TO SEC. 263(1) OF THE I.T. ACT. THE PROVISION CANNOT BE INVOKED TO CORRE CT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER , IT IS ONLY WHEN THE ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACT ED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE S AME CATEGORY, FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NA TURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN T HE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CO NFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACC ORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, THE REVE NUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE PREJUDICIAL TO THE INT ERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORD ER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSE QUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADO PTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN L OSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER H AS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN I.T.A. NO.243/COCH/2014 5 ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. 4. BEING SO, IN THE PRESENT CASE, THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 154 OF THE I.T. ACT CANNOT BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE.. HENCE, WE CANNOT UPHOLD THE ORDER PASSED BY THE CIT U/S. 263 OF THE I.T. ACT. AT THE TIME OF H EARING, IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR THAT THE ORDER PASSED BY T HE ASSESSING OFFICER U/S. 154 OF THE ACT IS PENDING BEFORE THE CIT(A) FOR ADJ UDICATION. HENCE, WE MAKE IT CLEAR THAT OUR FINDINGS HEREIN CANNOT BE IN FLUENCED BY THE CIT(A) ORDER WHILE DECIDING THE APPEAL AGAINST THE ORDER P ASSED U/S. 154 OF THE I.T. ACT AND HE IS REQUIRED TO DECIDE THE ISSUE ON MERITS. WITH THIS OBSERVATION, WE ALLOW THE APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 19-09-2014 SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 19TH SEPTEMBER 2014 GJ COPY TO: 1. TRINITY CHARITABLE TRUST, KUZHIMURIYIL, PANNIYAL I, OMALLOOR P.O., PATHANAMTHITTA-689 647. 2. THE INCOME TAX OFFICER, WARD-1, THIRUVALLA. I.T.A. NO.243/COCH/2014 6 3. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN BENCH