I.T.O., Etawah V. Dahej Niwaran Evam Samaj Kalyan Parishad, Etawah

ITA 259/AGR/2011

• Counselvise Citation: 25920314 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-07-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 01-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Transfer pricing; Charitable institution; International transaction; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 92E; 80G; 12A; 147; 148; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NOS.259/AGR/2011, 51, 52 & 53/AGR/2012 ASSESSMENT YEARS: 2001-02, 1998-99, 1999-2000, 200 0-01 RESPECTIVELY INCOME TAX OFFICER/ VS. M/S DAHEJ NIWARAN EVAM SA MAJ INCOME TAX OFFICER-5(4), KALYAN PARISHAD, ETAWAH. 81, JATPURA, ETAWAH. (PAN: AAAAD 0284 C). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI AMIT GOYAL, ADVOCATE DATE OF HEARING : 30.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 23.08.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY THE REVENUE. ITA NO.259 /AGR/2011 IS FILED AGAINST THE ORDER DATED 10.03.2011 PASSED BY THE LD CIT(A)-II, AGRA FOR THE A.Y. 2001-02 AND ITA NOS.51 TO 53/AGR/2012 ARE FILED AGA INST THE CONSOLIDATED ORDER DATED 30.11.2011 PASSED BY THE CIT(A)-II, AGRA FOR THE A.YS. 1998-99 TO 2000- 2001 RESPECTIVELY. ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 2 2. EFFECTIVELY ONE COMMON GROUND CHALLENGING REOPEN ING PROCEEDINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) BASED ON IDENTICAL SET OF FACTS HAS BEEN RAISED BY THE REVENUE. THERE FORE, ALL THESE APPEALS ARE DECIDED BY THIS COMMON ORDER. ITA NO.259/AGR/2011 FOR A.Y. 2001-02 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CHARITABLE SOCIETY INCORPORATED ON 22.11.1985 AND REGISTERED UNDER THE SOCIETY ACT. THE ASSESSEE GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT I N 1992 AND HAS ALSO GRANTED 80G W.E.F. 01.04.1995. 80G WAS GRANTED TO THE SOCIETY AND THE SAME WAS RENEWED REGULARLY UPTO 31.03.2003. BUT RENEWAL OF 80G WAS NOT GRANTED AFTER 01.04.2003. ORIGINALLY, THE RETURN FILED BY THE ASSESSEE SOCIET Y WAS PROCESSED UNDER SECTION 143(1) ON 31.12.2002. LATER ON, IT WAS FOUND THAT THOUGH THE SOCIETY WAS REGISTERED UNDER SECTION 12A OF THE ACT BUT ITS EXE MPTION UNDER SECTION 80G OF THE ACT WAS WITHDRAWN BY THE CIT VIDE ORDER DATED 13.10 .2003 AS THE SOCIETY FAILED TO APPLY ITS INCOME FOR THE OBJECTS OF THE SOCIETY. A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AND SERVED ON 16.10.2004. THE A.O. DISALLOWED 50% OF THE EXPENDITURE AND DEBITED TO INCOME & EXPENDITURE AC COUNT ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE IN RESPECT OF EXPENDITURE CLAIMED. ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 3 THE A.O. ACCORDINGLY MADE ADDITION OF RS.44,63,755/ -. THE ASSESSEE CHALLENGED THE REOPENING BEFORE THE CIT(A). THE CIT(A) HELD T HAT THE PROCEEDINGS UNDER SECTION 147 OF THE ACT IS VOID-AB-INITIO. THEREFOR E, THE ASSESSMENT MADE BY THE A.O. HAS NO LEGS TO STAND. THE RELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS UNDER:- (PAGE NOS.17 TO 20) A PERUSAL OF REASONS SHOWS THAT RECOURSE TO PROVIS IONS OF SEC. 147 OF THE ACT HAS BEEN TAKEN BY THE AO MAINLY ON T HE REASON THAT FOR THE AYS 1998-99, 99-2000 & 2000-01, IT WAS FOUND BY THE DDI (INV.), AGRA THAT THE EXPENSES ARE NOT OF REVENUE NATURE. ANOTHER REASON CITED WAS THAT IN THESE YEARS EXPENSES CLAIMED HAD BEEN MADE IN CASH FOR WHICH NO VOUCHERS/BILLS WERE MAINTAINED. IT IS FURTHER MENTIONED IN THE REASON RECORDED THAT FOR THE AYS. 1998-99, 9 9-2000 & 2000-01 ASSESSMENTS WERE COMPLETED BY DISALLOWING 50% OF TH E EXPENSES WHICH WERE CONFIRMED BY THE CIT(A). THEREFORE, HAV ING REGARD TO THIS POSITION AS PER THE AO IT APPEARED THAT INCOME CHAR GEABLE TO TAX HAS BEEN UNDER ASSESSED AND THE AO ESTIMATED THE ESCAPE MENT OF INCOME AT RS.44,63,755/-, BEING 50% OF THE EXPENSES CLAIME D. A CLOSE SCRUTINY OF THE REASONS RECORDED BY THE AO REVEALS THAT THERE WAS NO MATERIAL IN THE POSSESSION OF THE AO TO HAVE REASON S TO BELIEVE THAT INCOME FOR THE IMPUGNED ASSESSMENT YEAR HAD ESCAPED ASSESSMENT. THE AO MENTIONS ONLY ABOUT UNVERIFIABLE NATURE OF E XPENSES PERTAINING TO YEAR 1998-99, 99-2000 & 2000-01 BUT T HERE IS NOT EVEN A WHISPER TO ANY MATERIAL/INFORMATION WHICH COULD I MPEL THE AO TO COME TO A TENTATIVE FINDING THAT INCOME CHARGEABLE TO TAX IN THE IMPUGNED ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. T HE AO HAS GIVEN ANOTHER REASON FOR ESCAPEMENT OF INCOME AND T HAT ALSO IS AGAIN WITH REGARD TO AYS 1998-99, 99-2000 & 2000-01 THAT SOME OF THE EXPENSES CLAIMED WERE NOT OF REVENUE NATURE. IT IS A SETTLED POSITION OF LAW THAT ONCE A TRUST/INSTITUTION HAS BEEN GRANT ED REGISTRATION U/S 12A OF THE ACT IT WILL CONTINUE TO BE ELIGIBLE FOR EXEMPTION U/S 11 IF MORE THAN 85% OF THE RECEIPTS ARE APPLIED FOR CHARI TABLE PURPOSES AND IT IS IMMATERIAL WHETHER THE SAME IS ON REVENUE OR CAPITAL ACCOUNT. IT IS ALSO A TRITE LAW THAT THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY TO THE INCOME-TAX PROCEEDINGS AND EVERY Y EAR IS A DISTINCT AND SEPARATE ASSESSMENT YEAR AND HAS TO BE DECIDED ON ITS FACTS AND ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 4 CIRCUMSTANCES. SIMPLY BECAUSE SOME OF THE EXPENSES HAVE NOT BEEN FOUND VERIFIABLE IN THE AYS 1998-99, 99-2000 & 2000 -01 IT CANNOT AUTOMATICALLY LEAD TO A CONCLUSION THAT THE SAME WI LL HOLD GOOD FOR AY 2001-02 ALSO. IT IS WELL SETTLED POSITION OF LAW T HAT AO CAN INITIATE REASSESSMENT PROCEEDINGS IF HE HAS REASONS TO BELIE VE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. ANOTHER FACT WHICH HAS BEEN HIGHLIGHTED BY THE AO IN THE REASONS IS THAT T HE APPELLANTS CLAIM FOR REGISTRATION U/S 80G WAS REJECTED BY THE CIT VI DE ORDER DATED 13.10.03. THIS AGAIN CANNOT BE A VALID REASON FOR INITIATION OF PROCEEDINGS U/S 147 OF THE ACT AS HAD THE CIT CANCE LLED THE REGISTRATION GRANTED U/S 12A FOR THE YEAR UNDER CON SIDERATION THEN ONLY IT WOULD HAVE ADVERSELY AFFECTED THE APPELLANT AS THE REJECTION OF CLAIM 80G AFFECTS ONLY THE CONTRIBUTORS. THE REASS ESSMENT PROCEEDINGS CANNOT BE INITIATED JUST ON THE BASIS O F SURMISES AND CONJECTURES AND ON CERTAIN FACTS NOT RELATING TO TH E YEAR UNDER CONSIDERATION, THEREFORE, I HOLD THAT THE AO HAD NO VALID REASON TO INITIATE REASSESSMENT PROCEEDINGS U/S 147 OF THE AC T. IT IS FURTHER NOTED BY ME THAT THE REASSESSMENT PRO CEEDINGS HAVE BEEN STARTED BY THE AO AT THE BEHEST OF THE HI GHER AUTHORITIES. IN THIS REGARD A LETTER DATED 15.1.2004 OF JCIT, RANGE -5, FAIROZABAD WHICH IS REPRODUCED HERE SENDS AS UNDER :- TO THE INCOME TAX OFFICER, ETAWAH. SUB- INITIATION OF PROCEEDINGS U/S 147 OF THE ACT, 1961 IN THE CASE OF M/S DAHEJ NIWARAN EVAM SAMAJIK KALYA N PARISHAD, ETAWAH (UP), AY 01-02 REG. PLEASE REFER TO THE ABOVE SUBJECT. IN THIS CONNECTION, YOU ARE DIRECTED TO INITIATE TH E PROCEEDINGS U/S 147 OF THE ACT IN THE CASE M/S DAHE J NIWARAN EVAM SAMAJIK KALYAN PARISHAD, 81, JATPURA, ETAWAH, AY 01-02 AND COMPLETE THE ASSESSMENT U/S 148/143(3) OF THE ACT, 1961 IN THE MANNER OF THE ASSESSMENT HAVE BEEN COMPLETED BY THE ADDL. CIT, ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 5 RANGE-5, FIROZABAD FOR AY 98-99 TO 2000-01 ON THE B ASIS OF COMPLAINT. CASES RECORDS IN ONE VOL. IS ENCLOSE D. IT WILL BE SEEN FROM THE LETTER WRITTEN BY JCIT THA T HE HAS DIRECTED THE AO TO INITIATE THE PROCEEDINGS U/S 147 OF THE ACT. THE TENOR OF THE LETTER OF THE JCIT SHOWS THAT IT IS MO RE OF AN ORDER AND NOT THAT HE ADVISED THE AO TO EXAMINE THE CASE FROM THE ANGLE OF INITIATION OF REASSESSMENT PROCEEDINGS OF 147 OF THE ACT. IN THIS REGARD, THE JCIT, FIROZABAD WAS NOT CONTEST WITH THE LETTER 15. 1.04 AS REPRODUCED ABOVE, HE AGAIN WROTE ANOTHER LETTER DATED 13.7.04 WHICH IS REPRODUCED AS UNDER :- TO, SHRI RAM PRAKASH INCOME TAX OFFICER, ETAWAH. SUB - ACTION U/S 148 OF THE ACT, 1961 IN THE CASE OF M/S DAHEJ NIWARAN EVAM SAMAJIK KALYAN PARISHAD, ETAWAH REG. THE RECORD OF M/S DAHEJ NIWARAN EVAM SAMAJIK KALYAN PARISHAD, 81, JATPURA, ETAWAH, HAS ALREADY B EEN TRANSFERRED TO YOU. YOU HAD BEEN REQUESTED TO TAKE NECESSARY ACTION U/S 148 IN THE AY 01-02. PLEASE INTIMATE WHETHER NECESSARY ACTION HAS BEEN TAKEN OR NOT. IN CASE NO ACTION HAS BEEN TAKEN PLEASE ISSUE NOTIC E U/S 148 ON THE BASIS OF ASSESSMENT COMPLETED IN THE EAR LIER YEAR. THUS, IT WILL BE SEEN THAT THE JCIT, FIROZABAD HAS ISSUED LETTER DATED 15.1.04 & 13.7.04 DIRECTING THE AO TO INITIAT E PROCEEDINGS U/S 147 OF THE ACT. THE REASONS AS RECORDED BY THE AO ON 18.10.04 HAVE BEEN REPRODUCED ABOVE. THUS, IT WILL BE SEEN FROM THE CHRONOLOGY OF EVENTS THAT AO HAS NOT APPLIED HIS MIND INDEPENDENT LY AND HAS ACTED AT THE BEHEST OF THE HIGHER AUTHORITIES. IN THE CA SE OF SHEO NARAIN JAISWAL VS. ITO 45 TAXMAN 213 (PAT) IT WAS HELD THA T IF THE ITO DOES NOT FORM HIS OWN BELIEF BUT MERELY ACTS AT THE BEHE ST OF ANY SUPERIOR AUTHORITY, THE REOPENING OF ASSESSMENT WAS BAD FOR NON-SATISFACTION OF CONDITIONS PRECEDENT. ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 6 FROM THE ABOVE, IT CLEARLY EMERGES THAT THE AO HAD NO MATERIAL/INFORMATION SUGGESTING ESCAPEMENT OF INCOM E AND THIS IS COUPLED WITH THE FACT THAT THE AO HAS ACTED AT THE BEHEST OF THE SUPERIOR AUTHORITIES AS DISCUSSED ABOVE WHILE ASSUM ING THE JURISDICTION U/S 148 OF THE ACT, THEREFORE, I HOLD THAT THE INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 IS BAD ON TWO COUN TS NAMELY; NO INFORMATION IN THE POSSESSION OF THE AO FOR ASSUMIN G JURISDICTION U/S 147 AND IN FACT IT WAS DONE AT THE BEHEST OF HIGHER AUTHORITIES. ON THESE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD T HAT INITIATION OF PROCEEDINGS U/S 147 IS VOID-AB-INITIO AND THE ASSES SMENT FRAMED AS A CONSEQUENCE THERE OF HAS NO LEGS TO STAND, THEREFOR E, THE SAME IS ANNULLED. GROUNDS ARE ALLOWED. 4. SINCE THE CIT(A) ANNULLED THE ASSESSMENT ON LEGA L ISSUE, THEREFORE, HE DID NOT THINK IT NECESSARY TO ADJUDICATE OTHER GROUNDS ON MERITS. 5. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF A.O. AND SUBMITTED THAT IN ADDITION TO THE ABOVE FACT, THE I MPORTANT FACTS NOTICED IN THE YEAR UNDER CONSIDERATION WAS THAT THE APPLICATION FOR RE NEWAL OF 80G WAS REJECTED BY THE CIT ON 30.10.2003. LD. DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THE A.O. HAS RIGHTLY REOPENED THE COMPLETED ASSESSMENT UNDER SECTION 147 OF THE ACT. 6. THE LD. AUTHORISED REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF CIT(A). ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 7 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE ISSUE TO BE EXAMINED IN THE CASE UNDER CONSIDER ATION IS REOPENING OF COMPLETED ASSESSMENT UNDER SECTION 147 OF THE ACT. THE SAID SECTION 147 OF THE ACT READS AS UNDER :- [ INCOME ESCAPING ASSESSMENT. 147. IF THE [ASSESSING] OFFICER [HAS REASON TO BELIEVE] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASS ESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLES S ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTIO N (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR: [PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR : ] [ PROVIDED [ALSO] THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTER S WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISIO N, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT.] ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 8 EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFF ICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, THE FOLLOWING SHA LL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INC OME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE U NDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUN T WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; [ (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE W AS SO REQUIRED UNDER SECTION 92E ; ] (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSES SED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RATE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED;] [ (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INCL UDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA. ] ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 9 [EXPLANATION 3. FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED A SSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THA T THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RE CORDED UNDER SUB- SECTION (2) OF SECTION 148 .] [ EXPLANATION 4. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED T HAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE F INANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT YEAR BE GINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. ] 8. FROM THE PHRASEOLOGY OF THE ABOVE SECTION OF THE ACT WE NOTICED THAT CONDITION PRECEDENT WHICH IS REQUIRED TO SATISFY BE FORE THE A.O. CAN ACQUIRE JURISDICTIONS TO PROCEED UNDER SECTION 147 IS THAT THE A.O. MUST HAVE REASON TO BELIEVE THAT INCOME, PROFIT OR GAINS CHARGEABLE TO TAX HAS EITHER BEEN UNDER- ASSESSED OR ESCAPED ASSESSMENT. THE WORDS OF STATU TE ARE REASON TO BELIEVE AND NOT REASON TO SUSPECT. THE BELIEF ENTERTAINED BY THE A.O. MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR, IN OTHER WOR DS, IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. THE REASON TO BEL IEVE MUST BE OF THE A.O. HIMSELF AND NOT OF ANY OTHER AUTHORITY OF THE DEPARTMENT. 9. ON A PERUSAL OF THE REASONS FOR REOPENING, WE NO TICED THAT THE A.O. REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT ON THE REASON THAT IN A.YS. 1998-99, 1999-2000 & 2000-01 IT WAS FOUND THAT THE EXPENSES CLAIMED BY THE ASSESSEE WAS ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 10 NOT REVENUE IN NATURE. ANOTHER REASON NOTED BY THE A.O. WAS THAT IN THESE YEARS THE EXPENSES CLAIMED OF WHICH PAYMENTS HAD BEEN MAD E IN CASH AND THE ASSESSEE DID NOT MAINTAIN VOUCHERS AND BILLS ETC. IN THE RE ASONS RECORDED, IT WAS NOTED BY THE A.O. THAT 50% OF THE EXPENSES CLAIMED BY THE AS SESSEE ARE DISALLOWABLE, AS SUCH, EXPENSES DISALLOWED IN A.YS. 1998-99, 1999-20 00 & 2000-01 AND THAT DISALLOWANCE HAS BEEN CONFIRMED BY THE CIT(A). THE A.O. DISALLOWED 50% OF THE EXPENDITURE IN THE YEAR UNDER CONSIDERATION I.E. A. Y. 2001-02. IT HAS ALSO BEEN NOTICED THAT THE REASSESSMENT PROCEEDINGS HAS BEEN STARTED BY THE A.O. AT THE BEHEST OF THE HIGHER AUTHORITIES. THE CIT(A) RECOR DED THE RELEVANT FACTS AT PAGE NOS.18 & 19 OF HIS ORDER. IN THE CASE UNDER CONSID ERATION, WE FIND THAT THE REASONS FOR REOPENING WERE NOT OF THE A.O. BUT THE A.O. HAS PROCEEDED WITH THE REASSESSMENT AT THE BEHEST OF THE HIGHER AUTHORITIE S. THE CIT(A) HAS RECORDED THIS FACT WITH EVIDENCE. APART FROM THE ABOVE, IT HAS A LSO BEEN NOTICED THAT THE A.O. WANT VERIFICATION OF EXPENSES ON ADHOC BASIS DISALL OWING 50% OF EXPENSES AS ESCAPED ASSESSMENT. SUCH ADHOC BASIS OR ARBITRARIN ESS ARE NOT THE REASONS AS REQUIRED BY THE STATUTE UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT. IN THE CASE UNDER CONSIDERATION, THE A.O. HAS FAILED TO CO MPLY WITH THE BASIC CONDITION FOR ACQUIRING JURISDICTION THAT HE WAS HAVING REASO N TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. UNDER TH E CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE A.O. DID NOT ACQUIRE JURIS DICTION UNDER SECTION 147 OF THE ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 11 ACT IN ACCORDANCE WITH LAW. THEREFORE, WE FIND THA T THE CIT HAS RIGHTLY QUASHED THE ASSESSMENT FRAMED BY THE A.O. IN THE LIGHT OF THE FACT, ORDER OF THE CIT(A) IS CONFIRMED. THUS, ITA NO.259/AGR/2011 FOR A.Y. 2001 -02 OF THE REVENUE IS DISMISSED. ITA NOS.51, 52 & 53/AGR/2012 FOR A.YS. 1998-99 TO 2000-01 10. THE CIT(A) HAS PASSED A CONSOLIDATED ORDER FOR ALL THE THREE YEARS I.E. A.YS. 1998-99, 1999-2000 & 2000-01. SINCE FACTS ARE IDEN TICAL, THEREFORE, ALL THESE APPEALS ARE DECIDED TOGETHER CONSIDERING THE FACTS FOR A.Y. 1998-99 AS UNDER :- 11. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIGIN AL ASSESSMENT FOR ALL THE THREE YEARS WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 148 OF THE ACT VIDE ORDERS DATED 28.03.2003. AGGRIEVED BY THE ORDERS O F THE A.O. FOR ALL THE THREE YEARS, THE ASSESSEE FILED APPEALS BEFORE THE CIT WH ICH WERE DISMISSED. THE ASSESSEE FILED APPEALS BEFORE THE I.T.A.T. THE I.T .A.T. RESTORED THE MATTER TO THE FILE OF THE A.O. FOR ALL THE THREE YEAS DIRECTING T HE A.O. TO FRAME THE ASSESSMENT DENOVO AFTER CONSIDERING THE OBJECTION OF THE ASSES SEE. IN COMPLIANCE TO THE DIRECTION OF THE I.T.A.T., THE A.O. REJECTED THE AS SESSEES OBJECTION FOR REOPENING STATING THAT THE OBJECTION OF THE ASSESSEE HAS ALRE ADY BEEN DISPOSED OF VIDE HIS ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 12 LETTER DATED 23.11.2010. THE A.O. REPEATED THE ADD ITION STATING THAT THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT AND VOUCHERS AS STATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN ASSESSMENT ORDER UNDER SE CTION 143(3) READ WITH SECTION 147 OF THE ACT DATED 23.03.2003. FURTHER, NO NEW FACTS OR EVIDENCE HAS BEEN PRODUCED BEFORE THE A.O. 12. THE CIT(A) REPRODUCED THE REASONS RECORDED BY T HE A.O. FOR ALL THE THREE YEARS IN HIS CONSOLIDATED ORDER FOR A.YS. 1998-99 T O 2000-01. HOWEVER, FOR THE PURPOSE OF READY REFERENCE THE REASONS REPRODUCED B Y THE CIT(A) ARE AS UNDER :- (PAGE NOS.2 & 3) A.Y. 2000-01: 15.03.2002: SRI HAR NARAYAN YADAV IS THE FOUNDER A ND PRESIDENT OF THE INSTITUTION. THE TRUST WAS REGISTERED U/S. 12A OF THE I.T. ACT VIDE CIT(A)S ORDER NO.CIT(S)/120(3)/91-92/12A(A)/ETAWAH DT. 14.05.1992 AND EXEMPTION CERTIFICATE U/S 80G WAS GR ANTED. THE ACCOUNTS FURNISHED BY THE ASSESSEE ALONG WITH RETU RN OF INCOME FILED ON 26.03.2001 SHOW THAT THE EXPENDITURE HAVE BEEN I NCURRED FOR THE WELFARE AND AWARENESS OF THE PUBLIC IN GENERAL, LIK E FAMILY WELFARE, FAMILY PLANNING AND STERILIZATION, NATIONAL PROGRAM ME ON POLLUTION, PULSE POLIO, MADHYA NISHEDH AND DAHEJ VICTIMIZED FE MALE. HOWEVER, ON GOING THROUGH THE PROFIT AND LOSS ACCOUNT IT IS SEEN THAT HUGE EXPENSES HAVE BEEN DEBITED IN THE PROFIT & LOSS ACC OUNT UNDER THE FOLLOWING HEADS YEAR DONATION RECEIVED 31.03.2000 60,07,252 HEAD WISE EXPENSES MADE IN CASH FOR ABOVE YEAR WISE WIDHWA VIVAH JAGRAN SHIVIR SEMINAR F. PLANNING VARIOUS EXP. HEALTH FARE EXP. TOTAL 575431 225005 259115 547515 648000 2006970 5234277 ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 13 DURING THE COURSE OF VERIFICATION OF ABOVE MENTIONE D EXPENSES, IT WAS FOUND BY THE DY. DIRECTOR OF INCOME-TAX (INV.), AGR A THAT ALL ABOVE MENTIONED EXPENSES ARE NOT OF REVENUE IN NATURE. I T WAS ALSO FOUND THAT SOME OF THE EXPENSES CLAIMED HAVE BEEN MADE IN CASH FOR WHICH NO VOUCHERS/BILLS HAVE BEEN MAINTAINED AND SAME REM AINED UNVERIFIABLE. LOOKING TO THE ABOVE POSITION, IT AP PEARS THAT INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED. I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AMOUNTING TO RS.13,08 ,569/- (BEING 25% OF EXPENSES CLAIMED) HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2000-01 BY REASON OF THE FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ITS ASSESSMENT. THE FACTS WARRANT ISSUE OF NOTICE U/S 148 OF THE I. T. ACT. ISSUE NOTICE U/S 148 OF THE I.T. ACT, 1961 REQUIRING THE ASSESSE E TO FILE RETURN OF INCOME WITHIN 30 DAYS FROM THE RECEIPT OF THE NOTIC E. 13. THE CIT(A), AFTER DETAILED DISCUSSIONS AND AFTE R CONSIDERING VARIOUS DECISIONS, QUASHED THE REASSESSMENT PROCEEDINGS AS UNDER :- (PAGE NO.22) FROM THE ABOVE, IT CLEARLY EMERGES THAT THE AO HAD NO MATERIAL/INFORMATION IN HIS POSSESSION SUGGESTING E SCAPEMENT OF INCOME. IN VIEW OF THE FOREGOING DISCUSSION AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT INITIATION O F PROCEEDINGS U/S 147 IS VOID-AB-INITIO AS THE AO HAD NO SPECIFIC AND CRE DIBLE INFORMATION IN HIS POSSESSION TO COME TO FROM A BONA FIDE BELIEF T HAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT IN ALL THR EE YEARS AND THE ASSESSMENTS FRAMED AS A CONSEQUENCE THEREOF HAS NO LEGS TO STAND, THEREFORE, THE SAME ARE ANNULLED. THEREFORE, THESE GROUNDS ARE ALLOWED. 14. THE LD. REPRESENTATIVES OF THE PARTIES SUBMITTE D THAT THEIR CONTENTIONS ARE SIMILAR TO THE A.Y. 2001-02 WHICH HAVE BEEN MADE AS ABOVE. ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 14 15. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. IN THE LIGHT OF THE DETAILS DISCUSSED WHILE DECIDING T HE ISSUE IN A.Y. 2001-02 ABOVE, WE NOTICE THAT IN THESE APPEALS UNDER CONSIDERATION ALSO THE A.O. RECORDED THE REASONS FOR VERIFYING THE EXPENSES AND WANT TO DISA LLOW 25% OF EXPENSES AS ESCAPED ASSESSMENT. THE A.O. WANT TO VERIFY WHETHE R THE EXPENSES CLAIMED WAS OF REVENUE IN NATURE OR CAPITAL IN NATURE. THE A.O. W HILE RECORDING THE REASONS ITSELF WAS OF THE VIEW THAT 25% OF EXPENSES ARE DISALLOWAB LE TREATING THE SAME AS CAPITAL IN NATURE. IT HAS ALSO BEEN NOTICED THAT THE A.O. HAS TAKEN THE PROCEEDINGS UNDER SECTION 147 OF THE ACT ON THE BASIS OF THE OBSERVAT IONS OF THE DDI (INV.), AGRA THAT ALL EXPENSES RECORDED IN PROFIT & LOSS ACCOUNT ARE NOT IN REVENUE NATURE. THUS, THIS WAS NOT THE VIEW OF THE A.O. BUT IT WAS THE VI EW OF THE DDI (INV.), AGRA. THE CIT(A) RECORDED THE FACT THAT THE DDI (INV), AGRA V IDE LETTER DATED 11.10.2011 WRITTEN TO THE A.O. THE GIST OF THE SAID LETTER RE PRODUCED BY THE CIT(A) IN HIS ORDER AT PAGE NO.17 IS REPRODUCED AS UNDER :- IN THE CASE OF THE ABOVE CAPTIONED ASSESSEE, THE A PPELLATE PROCEEDINGS ARE IN PROGRESS FOR AYS 1998-99, 99-200 0 & 2000-01 BEFORE THE UNDERSIGNED. AS PER THE GROUNDS OF APPE AL, THE APPELLANT HAS CHALLENGED THE VALIDITY OF PROCEEDINGS U/S.147 AND ISSUANCE OF NOTICE U/S.148 OF THE ACT. THE SUBMISSIONS (IN ALL THREE YEARS) MADE IN THIS REGARD ARE HEREBY FORWARDED TO YOU FOR YOUR CO MMENTS. IN ADDITION TO YOUR COMMENTS YOU ARE ALSO DIRECTED TO PRESENT YOURSELF ON 03.11.2001 AT 11:00 AM, WHICH IS THE NEXT DATE O F HEARING WITH THE ASSESSMENT RECORDS INCLUDING THE DDI (INV.) REPORT AS MENTIONED IN THE REASONS FOR REOPENING OF THE CASE AND ANY OTHER MATERIAL WHICH ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 15 WAS IN POSSESSION OF THE AO BEFORE INITIATION OF PR OCEEDINGS U/S 147 OF THE ACT. 16. THE CIT (A) RECORDED THE FACT AT PAGE NO.19 OF HIS ORDER THAT IT IS CLEAR THAT IT DOES NOT SPECIFY AS TO WHAT WAS THE SPECIFIC INQUIR Y CONDUCTED BY THE DDI (INV.) WHICH LED TO THE A.O. TO FORM THE REASONS TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. THE CIT(A) HAS ALSO NOTED THAT IT IS SETTLED POSITION OF LAW THAT ONCE A TRUST/INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT, IT WILL CONTINUE TO BE ELIGIBLE FOR EXEMP TION UNDER THAT SECTION IF MORE THAN 85% OF THE RECEIPTS ARE APPLIED FOR CHARITABLE PURPOSES AND IT IS IMMATERIAL WHETHER THE SAME IS ON REVENUE OR CAPITAL ACCOUNT. THE CIT(A) HAS ALSO CONSIDERED THE A.O.S SUBMISSION THAT THE RENEWAL UNDER SECTION 80G OF THE ACT WAS REJECTED BY THE CIT VIDE ORDER DATED 13.10.2003 . THE CIT REJECTED THE A.O.S CONTENTION THAT IT CANNOT BE A VALID REASON FOR INI TIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT AS THE CIT DID NOT CANCEL RE GISTRATION UNDER SECTION 12A OF THE ACT FOR THE YEAR UNDER CONSIDERATION. REJECTIO N OF ASSESSEES RENEWAL OF EXEMPTION UNDER SECTION 80G OF THE ACT DOES NOT EFF ECT TO THE YEAR UNDER CONSIDERATION. THE CIT(A) CLEARLY HELD THAT THE RE ASSESSMENT PROCEEDINGS CANNOT BE INITIATED JUST ON THE BASIS OF SURMISES AND CONJ ECTURES. THE CIT(A) WAS OF THE VIEW THAT THERE WAS NO DIRECT NEXUS BETWEEN THE REA SONS RECORDED AND FORMATION OF BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT. THE CIT(A) ALSO ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 16 FOUND THAT WHILE RECORDING THE REASONS OF ESCAPEMEN T OF INCOME, THE A.O. WANT TO DISALLOW 25% OF THE EXPENSES, BUT WHILE FRAMING THE ASSESSMENT, THE SAME HAS BEEN DISALLOWED AT 50% WITHOUT ASSIGNING ANY REASON . THE CIT(A) RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE O F SIGNATURE HOTELS P. LTD., 338 ITR 51 (DEL.) WHEREIN IT HAS BEEN HELD THAT NOTICE UNDER SECTION 148 CAN BE QUASHED IF THE BELIEF IS NOT BONAFIDE, OR ONE BAS ED ON VAGUE, IRRELEVANT AND NON- SPECIFIC INFORMATION. THE REVENUE HAS FAILED TO PO INT OUT ANY CONTRARY MATERIAL TO THE FINDING OF THE CIT(A). WE FIND THAT IN THESE C ASES UNDER CONSIDERATION, THE REASONS RECORDED BY THE A.O. IS NOT IN ACCORDANCE W ITH SECTION 147 OF THE ACT. THE REASONS ARE ALSO NOT OF THE A.O. BUT OF THE HIG HER OFFICES. THE A.O. JUST WANT TO VERIFY THE EXPENDITURE WHICH CANNOT BE SAID TO B E SCOPE OF SECTION 147 OF THE ACT SINCE IN THESE CASES UNDER CONSIDERATION, THE A .O. HAS FAILED TO SATISFY THE CONDITIONS LAID DOWN UNDER SECTION 147 OF THE ACT. THEREFORE, IT IS A CLEAR CUT CASE THAT THE A.O. DID NOT ACQUIRE JURISDICTION IN THE C ASE WITH SECTION 147 OF THE ACT. IN THE LIGHT OF THE FACT, WE CONFIRM THE ORDER OF T HE CIT(A) ON THE ISSUE SINCE THE CIT(A) HAS DECIDED THE LEGAL ISSUE IN FAVOUR OF THE ASSESSEE. THEREFORE, WE DO NOT THINK IT PROPER TO ADJUDICATE THE GROUNDS ON MERIT. 17. SINCE WE HAVE ALSO CONFIRMED THE ORDER OF CIT(A ) ON LEGAL ISSUE, THEREFORE, WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OF THE CASE. ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 17 18. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RELIE D UPON THE JUDGEMENT OF APEX COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD . VS. ITO & OTHERS, 236 ITR 34 (SC). WE FIND THAT THIS JUDGEMENT DOES NOT HELP THE REVENUE AS IN THE SAID JUDGEMENT THE APEX COURT HAS LAID DOWN THE LAW THAT THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED WHI LE EXAMINING THE REASONS RECORDED BY THE A.O. RATHER THE JUDGEMENT HELPS THE ASSESSEE AS IN THE SAID JUDGMENT IT WAS ALSO LAID DOWN THE LAW THAT THE ASS ESSEE MAY ALSO PROVE THAT NO NEW FACTS CAME TO THE KNOWLEDGE OF THE A.O. AFTER C OMPLETION OF THE ASSESSMENT. IN THESE CASES UNDER CONSIDERATION, THE ASSESSEE HA S SUCCESSFULLY DEMONSTRATED THAT NO NEW FACTS WERE CAME TO THE KNOWLEDGE OF THE A.O. THE ASSESSEE HAS ALSO PROVED THAT THE ASSUMPTION OF FACTS NOTED FOR REOPE NING WERE ERRONEOUS. THE COURT FURTHER HELD THAT WHAT AT THIS STAGE WE HAVE TO SEE THAT WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPAR TMENT COULD REOPEN THE CASE. IN THE CASE UNDER CONSIDERATION, WE FIND THAT THERE WAS NO PRIMA FACIE MATERIAL BASED ON WHICH THE DEPARTMENT COULD REOPEN THE CASE . IN THE LIGHT OF ABOVE DISCUSSIONS, WE CONFIRM THE ORDER OF THE CIT(A). T HUS, ITA NOS.51, 52 & 53/AGR/2012 FOR A.YS. 1998-99 TO 2000-01 OF THE REV ENUE ARE DISMISSED. ITA NOS.259/AGR/2011, 51, 52, & 53/AGR/2012 A.YS. 2001-02 & 1998-99 TO 2000-01 . 18 19. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY