BABA BHAG SINGH MEMORIAL GIRLS COLAGE, MOGA V. ASSISTANT COMMISSIONER OF INCOME TAX ( OSD)- EXEMPTIONS WARD, JALANDHAR

ITA 244/ASR/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5103 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-06-2024
• Assessment Year: misc
• Appeal Filed On: 28-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAKTI SINGH
• Keywords: Opportunity of being heard; Condonation of delay; Set aside
• Section: 271(1)(c); 143(3); 12AA; 250; 274; 10(23C)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 Baba Bhag Singh Memorial Girls College, Moga. [PAN:AADAS0571Q] (Appellant) Vs. ACIT, (OSD), Exemptions Jalandhar. (Respondent) Appellant by Sh. Rajinder Kumar Chopra, CA Respondent by Sh. Shakti Singh, Sr. DR Date of Hearing 11.06.2024 Date of Pronouncement 12.08.2024 ORDER Per: Udayan Das Gupta, JM This appeal is filed by the assessee against the order of the Ld. CIT (A) NFAC, dated 23/02/2024, passed u/s 250 of the Act 61, sustaining the penalty of Rs. 11,36,849/- imposed u/s 271(1) (c) of the Act, by the ACIT (OSD) Exemptions, Jalandhar vide order dated 29/03/2019. 2. Application for Condonation of delay 5 days: I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 2 The registry pointed out that the appeal filed by the assessee is belated by five days. The assessee has filed an application for condonation of delay , on the ground that the assessee was under the impression that the instant appeal falls under the jurisdiction of ITAT, Chandigarh Bench and as such the assessee office staff visited the office of the Chandigarh Tribunal , on 23 rd April, 2024 , for filing of the appeal , but was informed that the jurisdiction lay at ITAT Amritsar Bench , and as such the same has been filed vide registered speed post, and it was received by the registry at ITAT , Amritsar on the 29 th April, 2024, belated by five days, as such the Ld. AR prays for condoning the delay and admission of the appeal , on the ground that the delay was bona fide. The Ld. DR has not objected to the admission of the appeal. As such considering the explanation of the assessee the delay is condoned and the appeal is admitted to be heard on merits. 3. The grounds of appeal taken by the assessee are as below: “1. The Order of Ld. CIT(A) NFAC, Delhi is perverse, illegal, arbitrary and not based on the facts and the case law. It is prayed order may please be cancelled. 2. The Ld. C1T(A) NFAC, Delhi failed to appreciate the submissions of the Assessee that Hon'able ITAT Amritsar Bench, Amritsar vide its order dated. 11/09/2018 in Assessee appeal ITA, no. 624 (Asr). 2015 remand back the matter, to CIT(E) to decide a fresh application filed U/s 10, (23c) (vi) of the Act within three months of the date of order, the said application has I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 3 not been disposed off by the CIT(E). It is prayed order of CIT(A)NFAC may please be cancelled. 3. The Ld. CIT(A) NFAC, Delhi failed to appreciate the submissions of the Assessee that while initiating penalty proceedings under section 271 (1)(c) of the Act, the A.O. has not recorded his satisfaction that whether it is. a concealment of the income or. submission of inaccurate particulars. It is prayed order of C1T(A) NFAC may please be cancelled. 4. The Ld. CIT(A) NFAC, Delhi failed to pass speaking order on merit of the case and ground wise adjudication as required under section 250(6) of the income Tax Act, 1961. It is prayed order may please be set aside for adjudication on merit after providing an opportunity of being heard. 5. The appellant craves leave to amend any ground (s) or add any new ground (s) before the appeal is finally disposed off.” 4. The facts of the case are that the assessee is a registered society registered under the Society Registration Act 1860, and is a charitable educational institution for girls, which is under the control of Gurudwara cum religious Dera, namely Sant Baba Bhag Singh Memorial Education Society, which is funded by charitable donations and Akhand Path receipts. 4.1 Application for approval claiming exemption u/s 10(23C) (vi) on 25/09/2014, was rejected by CIT (E), against which appeal filed before ITAT, Amritsar Bench, Amritsar in ITA No 624(ASR) / 2015, has been remanded to the I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 4 files of the Ld. CIT (E) vide order dated 11/09/2018, for fresh consideration of the application, which as per information given by the Ld. AR in the court is still pending disposal. 4.2 Meanwhile the regular return filed in ITR – 7 declaring NIL income, along with audit report u/s 10(23C) of the Act 61, has been subjected to scrutiny and in absence of any registration u/s 12AA or approval u/s 10(23C), of the Act 61, the status of the assessee society, has been treated as association of persons (AOP), and the excess of income over expenditure, amounting to Rs. 36,79,123/-, as per accounts submitted, has been assessed as taxable income for the year and taxed accordingly, vide the order of AO dated 29/09/2016, passed u/s 143(3) of the Act 61. 4.3 Appeal preferred before the Ld. CIT (A) against the quantum assessment has been dismissed by the Ld. CIT (A) vide order dated 03/04/2017, due to reasons contained in such appellate order. 5. Now on disposal of the quantum appeal , the penalty proceedings initiated vide notice dated 271(1) ( c ) / 274 , dated 29 th September, 2016 , was refixed for hearing , but in absence of any compliance on the part of the assessee and in absence of any representation or submission on the part of the of the assesssee, during the penalty proceedings, the AO considered the claim of exemption u/s 10(23C) ( vi ) of the Act 61, as willful and conscious act of concealment on the I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 5 part of the assessee resulting in furnishing of inaccurate particulars of income to the extent of Rs. 36,79,123/- and imposed a penalty of 100% of the tax sought to be evaded which was determined at Rs.11,36,849/-. 6. The Ld. CIT (A) NFAC, rejected the appeal of the assessee and sustained the penalty by observing that the assessee has made wrong claim of exemption u/s 10(23C) (vi) in absence of any valid registration under the Act 61 and there is no reason to interfere with the order of the AO and the appeal is dismissed. 7. Before the Tribunal, the assessee has preferred five grounds in memorandum of appeal, but we proceed to take up ground number - 3, which is a legal ground and goes to the root of the matter: “3. The Ld. CIT(A) NFAC, Delhi failed to appreciate the submissions of the Assessee that while initiating penalty proceedings under section 271 (1)(c) of the Act, the A.O. has not recorded his satisfaction that whether it is. a concealment of the income or. submission of inaccurate particulars. It is prayed order of C1T(A) NFAC may please be cancelled.” 8. The Ld. AR of the assessee referred to the penalty notice issued by the AO dated 29 th September, 2016, u/s 271(1)(c) /274 of the Act 61, initiating the penalty proceedings, has not specified under which limb the penalty is being initiated, whether the penalty is being initiated for concealment of particulars of income or for filing of inaccurate particulars of income, because in the penalty notice nothing I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 6 has been struck off. He further argued that this failure of the AO to specify the limb in the penalty notice is an incurable defect and makes the levy of penalty invalid. 9. The Ld. DR relied on the order of the Ld. CIT (A) and prayed for sustaining the penalty. 10. We find from the records that penalty has been initiated vide notice u/s 274/ 271(1) (c) of the Act 61, dated 29/09/2016, and in the said notice it is not specified under which limb the penalty is initiated whether for concealing the particulars of income or for furnishing the inaccurate particulars of such income, and in our view the said notice suffers from incurable defect which goes to the root of the matter and the same is not legally valid. 10.1 The case of the assessee is supported by the decision of the Hon’ble Apex court in CIT vs SSA Emerald Meadows ITA No 380 of 2015 (ITA 433/BAN/2014) order dated 23/11/2015, and in the case of CIT vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565. 10.2 On this issue we also take note of the Hon’ble Bombay High Court judgment in the case of CIT Vs Samson Perinchery ITA No. 1154, order dated 5 th January, 2017, where the Hon’ble Court has observed as follows: “The impugned order relied upon the following extract of Karnataka High Court's decision in CIT v/s Manjunath Cotton and Ginning Factory 359 ITR 565 to delete the penalty: I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 7 “The Assessing Officer is empowered under the Act toinitiate penalty proceedings once he is satisfied in the course of any proceedings that there is concealment of income or furnishing of inaccurate particulars of total income under claus e (c). Concealment, furnishing inaccurate particulars of income are different. Thus, the Assessing Officer while issuing notice h as to come to the conclusion that whether is it a case of concealment of income or is it as case of furnishing of Inaccurate particulars. The apex court in the case of Ashok Pai reported in [2007] 292 ITR 11 (SC) at page 19 has held that concealment of income and furnishing inaccurate particulars of income carr y different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi High Court in the case of Virgo Marketing P. Ltd., reported in 171 Taxmn 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Office r proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard proforma without striking of the relevant clauses will lead to an inference as to non application of mind.” 10.3 For ready reference, the copy of the penalty notice dated 29.09.2016 is reproduced as below: I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 8 I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 9 11. Respectfully following the above judicial pronouncements, we hold in the instant case the penalty notice dated 29/09/2016 issued u/s 274/ 272 (1) (c) of the Act 61, is legally not valid and the penalty imposed on the basis of such notice is also legally invalid and hence deleted. 11.1 Since we have already deleted the penalty, all other grounds of appeal contained in the memorandum of appeal are academic and not adjudicated upon. 12. In the result, the appeal of the assessee bearing ITA No. 244/Asr/2024 is allowed. Order pronounced in the open court on 12.08.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order I.T.A. No.244/Asr/2024 Assessment Year: 2014-15 10