U.P Forest Corporation, Lucknow V. Income Tax Officer-1(4), Lucknow

ITA 286/LKW/2014

• Counselvise Citation: 28623714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-07-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 17-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R B SHUKLA
• Keywords: Revision of order; Charitable institution; Opportunity of being heard
• Section: 12A; 12AA; 263; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.286/LKW/2014 ASSESSMENT YEAR:1996 - 97 U.P. FOREST CORPORATION, 21/475, INDIRA NAGAR, LUCKNOW. PAN:AAATU3944K VS. INCOME TAX OFFICER - 1(4), LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI R. B. SHUKLA, ADVOCATE RESPONDENT BY SHRI SANJAY KUMAR, CIT, D.R. DATE OF HEARING 28/07/2015 DATE OF PRONOUNCEMENT 1 0 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - I, LUCKNOW DATED 17/02/2014 FOR THE ASSESSMENT YEAR 1996 - 97 PASSED BY HIM U/S 263 OF THE ACT. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX - I HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ORDER OF INCOME - TAX OFFICER, RANGE - 1, DATED 26.12.2011 FOR A.Y.1996 - 97 PASSED IN CONSEQUENCE TO THE REMAND ORDER OF THE HON'BLE INCOME - TAX APPELLATE TRIBUNAL DATED 20.09.2010 FOR COMPUTATION OF EXEMPTION UNDER SECTION 11 OF THE INCOME - TAX ACT, 'IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE.' 2. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX - I HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSING OFFICER HAS WRONGLY ALLOWED DEDUCTION OF 25% OF INCOME DERIVED FROM PROPERTY HELD IN TRUST I.E. RS.9,53,13,423/ - 2 UNDER SECTION 11(1) (A) AND FURTHER ALLOWED DEDUCTION OF RS.28,59,40,269/ - UNDER SECTION 11 (2) OF THE ACT IN CONSEQUENCE TO THE DIRECTION OF THE TRIBUNAL IN THE REMAND ORDER. 3. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX - I HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ORDER OF THE ASSESSING OFFICER IS CONTRARY TO HIS OBSERVATION IN SUB - PARA - 3 THAT 'THE ENTIRE INCOME OF THE CORPORATION WAS NOT FOUND EXEMPT', THEREFORE, ENTIRE INCOME WAS LIABLE TO TAX WHEREAS THE ASSESSING OFFICER WAS MAKING DISALLOWANCE OF FOREST DEVELOPMENT EXPENSES OF RS.1,60,98,000/ - AND PRIOR PERIOD EXPENSES OF RS.8,43,648/ - AS PER HIS NOTICE U/S 142 (1) OF THE ACT. 4. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX - I HAS ERRED IN LAW AND ON FACTS IN HOLDING AS ABOVE CONTRARY TO THE LAW 'THE REGISTRATION OF A TRUST UNDER SECTION 12A OF THE INCOME - TAX ACT, 1961, ONCE DONE IS A FAIT AC COMPLI AND THE ASSESSING OFFICER HAS NO OPTION BUT TO COMPUTE THE INCOME UNDER SECTION 11 OF THE ACT.' 5. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX - I HAS ERRED IN LAW AND ON FACTS IN IGNORING THE MAIN FINDING OF THE ASSESSING OFFICER THAT SINCE 'THE REGI STRATION U/S 12AA OF THE I.T. ACT IS GRANTED TO THE ASSESSEE, THEREFORE, THE INCOME OF THE ASSESSEE FOR THE YEAR IS CALCULATED AS PER PROVISIONS OF SECTION 11 (4) OF THE I.T. ACT.' 6. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX - I HAS ERRED IN LAW AND ON FA CTS IN NOT APPRECIATING THAT ONLY COMPUTATION OF INCOME U/S 11 OF THE ACT WAS TO BE DONE BY THE LD. A.O. IN ACCORDANCE WITH LAW AS PER DIRECTION OF THE HON'BLE TRIBUNAL DATED 20.09.2010 WHICH WAS DULY DEMONSTRATED 'BEFORE THE COMMISSIONER AND HE HAD NEITHE R FOUND ANY ERROR IN THIS REGARD NOR DEALT WITH THE OBJECTIONS/EXPLANATION OF THE APPELLANT. 7. BECAUSE THE LD. COMMISSIONER OF INCOME - TAX - I HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT AS PER INSTRUCTION NO. 7 OF 2011 DATED 24.5.2011 I SSUED BY THE CBDT, ASSESSMENTS IN CONSEQUENCE TO THE REMAND ORDERS OF THE TRIBUNAL ARE MONITORED BY THE 3 COMMISSIONER HIMSELF VIDE RELEVANT PARA - 5 ((IV) OF THE INSTRUCTION AS QUOTED BELOW: - 'APPEAL EFFECT SHOULD BE PARTICULARLY MONITORED BY THE CIT IN THE CASES IN R WHICH THE ITAT HAS DECIDED CERTAIN ISSUES IN FAVOUR OF THE ASSESSEE AND SET ASIDE/REMANDED BACK OTHER ISSUES TO THE ASSESSING OFFICER. THE SET ASIDE ISSUES MUST BE DECIDED ON PRIORITY.' 8. THE APPELLANT MOST HUMBLY PRAYS THAT THE HON'BLE TRIBUNAL MAY GRACIOUSLY BE PLEASED TO ALLOW THE APPEAL AND CANCEL THE ORDER OF THE LD. C.I.T. U/S 263 OF THE ACT SINCE THE ORDER PASSED BY A.O. IN CONSEQUENCE TO THE ORDER OF THE TRIBUNAL CANNOT BE REVISED U/S 263 OF THE ACT AS IT IS NEITHER ERRONEOUS SINC E BEING IN ACCORDANCE WITH LAW AND DIRECTION OF THE TRIBUNAL NOR PREJUDICIAL TO THE INTEREST OF REVENUE SINCE BEING REVENUE NEUTRAL DUE TO ELIGIBILITY OF THE APPELLANT TO EXEMPTION U/S 11 OF THE ACT. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE T HAT THE NOTICE ISSUED BY LEARNED CIT U/S 263 OF THE ACT ON 15/01/2014 IS AVAILABLE ON PAGE NO. 11 OF THE PAPER BOOK. HE SUBMITTED THAT THE ORDER OF LEARNED CIT U/S 263 IS NOT PROPER AND VALID. RELIANCE WAS PLACED BY LEARNED A.R. OF THE ASSESSEE ON THE FO LLOWING JUDICIAL PRONOUNCEMENTS: ( I ) CARGO HANDLING (P.) WORKERS POOL, VISAKHAPATNAM VS. DY.CIT [2012] 18 TAXMANN.COM 101 (VISAKHAPATNAM) ( II ) CIT VS. KRISHI UTPADAN MANDI SAMITI, 348 ITR 566 (SC). ( III ) CIT VS. LUCKNOW DEVELOPMENT AUTHORITY [2014] 98 DTR (ALL) 183 4. AS AGAINST THIS, LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT. HE ALSO SUBMITTED THAT IN ASSESSMENT YEAR 90 - 91 ALSO, ORDER WAS PASSED BY LEARNED CIT U/S 263 AND THE SAME WAS UPHELD BY THE TRIBUNAL. HE ALSO SUBMITTED THAT IN THE PRESENT CASE, THERE WAS NO ENQUIRY BY THE ASSESSING OFFICER AND THEREFORE, UNDER THESE FACTS, THE ORDER OF 4 LEARNED CIT U/S 263 IS PROPER AND VALID AND IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: ( I ) GEE VEE ENTERPRISES VS. ADDL. CIT [1975] 99 ITR 375 (DEL) ( II ) JAGDISH KUMAR GULATI VS. CIT [2004] 269 ITR 71 (ALL) 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE NOTICE ISSUED BY LEARNED CIT U/S 263, AVAILABLE ON PAGE NO. 11 OF THE PAPER BOOK, THIS IS THE STAND OF LEARNED CIT THAT TH ERE IS OBSERVATION BY ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED BY HIM U/S 144/254/251/143(3) OF THE ACT DATED 26/12/2011 IN SUB PARA OF PARA 3 THAT THE ENTIRE INCOME OF THE ASSESSEE CORPORATION WAS NOT FOUND EXEMPT U/S 11 OF THE ACT BUT EVEN AFTER MAKING THIS OBSERVATION IN THIS PARA , WHILE COMPUTING THE INCOME OF THE ASSESSEE CORPORATION, THE ASSESSING OFFICER HAS ALLOWED DEDUCTION U/S 11 OF THE ACT OF RS.953.13 LAC AND RS.2859.40 LAC OUT OF TOTAL INCOME NOT FOUND EXEMP T BY HIM OF RS.3977.67 LAC. THIS IS THE OBJECTION OF LEARNED CIT THAT UNDER THESE FACTS, THE DEDUCTION SO ALLOWED BY THE ASSESSING OFFICER IS IN CLEAR CONTRAVENTION OF ASSESSING OFFICERS OWN FINDING IN THE ASSESSMENT ORDER AND THEREFORE, THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN SPITE OF THIS CLEAR OBJECTION OF LEARNED CIT IN THE NOTICE ISSUED BY HIM U/S 263 OF THE ACT, THE ASSESSEE HAS NOT BEEN ABLE TO REBUT THIS OBJECTION OF LEARNED CIT AND A GENERAL STATEMENT WAS MADE BY THE ASSESSEE BEFORE LEARNED CIT AS NOTED BY HIM IN PARA 3 OF THE IMPUGNED ORDER THAT IT WAS THE SUBMISSION OF THE ASSESSEE IN REPLY THAT NO ERROR IN LAW HAS BEEN COMMITTED BY THE ASSESSING OFFICER IN CARRYING OUT THE DIRECTION OF THE TRIBUNAL. THIS GOES TO SHOW THAT THE ASSESSEE HAS NOT GIVEN ANY REPLY REGARDING THIS OBJECTION OF LEARNED CIT CLEARLY SPELT OUT IN THE NOTICE ISSUED BY HIM U/S 263 OF THE ACT. ON THE FACE OF THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER AS NOTED BY LEARNED CIT IN THE NOTICE ISSUED BY HIM U/S 263 OF THE ACT AND ALSO IN PARA 4 OF THE ORDER 5 PASSED BY HIM U/S 263 THAT EVEN AFTER MAKING THIS OBSERVATION THAT ENTIRE INCOME OF THE ASSESSEE WAS NOT E XEMPT U/S 11, HE HAS ALLOWED DEDUCTI ON OF TWO HUGE AMOUNTS OF RS.953.13 LAC AND RS.2589.40 LAC U/S 11 OF THE ACT. HENCE, THIS IS A CLEAR CASE OF NO ENQUIRY AND NO APPLICATION OF MIND AND THEREFORE, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT U/S 263 AS PER W HICH HE HAS ASKED THE ASSESSING OFFICER TO PASS DE NOVO ASSESSMENT ORDER AFTER DUE AND PROPER EXAMINATION OF THE ISSUE AND AFTER AFFORDING A FAIR AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. NOW WE EXAMINE THE APPLICABILITY OF VARIOUS JUD GMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 6.1 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS A TRIBUNAL ORDER IN THE CASE OF CARGO HANDLING (P.) WORKERS POOL (SUPRA). WE FIND THAT ALTHOUGH RELIANCE WAS PLACED BY LEARNED A.R. OF THE ASSESSEE ON THIS TRIBUNAL DECISION BUT IT WAS NOT POINTED OUT AS TO IN SUPPORT OF WHAT CONTENTION, RELIANCE IS PLACED ON THIS TRIBUNAL DECISION. WE FIND THAT IN THIS CASE, THE ISS UE IN DISPUTE BEFORE THE TRIBUNAL WAS AS TO WHETHER THE ORDER PASSED BY THE TRIBUNAL IS BINDING OR NOT ON ALL TAX AUTHORITIES AND IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT THE SAME IS BINDING. THE SECOND DISPUTE BEFORE THE TRIBUNAL IN THAT CASE WAS AS TO WHETHER ANY AFFECTED PARTY WHO IS NOT SATISFIED WITH THE TRIBUNAL ORDER CAN CARRY THE MATTER IN APPEAL TO HIGH COURT TO SEEK SUSPENSION OF OPERATION OF ORDER OF THE TRIBUNAL AND IT WAS HELD THAT IT CAN BE DONE AND IT WAS ALSO HELD THAT IN SUCH A CASE , WHERE THE HIGH COURT SUSPENDS THE ORDER OF THE TRIBUNAL , THEN TAX AUTHORITIES ARE UNDER NO OBLIGATION TO FOLLOW SUCH TRIBUNAL ORDER SO SUSPENDED TILL THE MATTER IS DECIDED BY HIGH COURT. IN THE PRESENT CASE, THE ISSUE IN DISPUTE IS REGARDING VALIDITY OF T HE ORDER PASSED BY LEARNED CIT U/S 263 AND THEREFORE, WE DO NOT FIND ANY RELEVANCE OF THIS TRIBUNAL 6 DECISION PARTICULARLY WHEN IT WAS NOT POINTED OUT BY LEARNED A.R. OF THE ASSESSEE IN COURSE OF HEARING AS TO HOW THIS TRIBUNAL DECISION IS RELEVANT IN THE P RESENT CASE. 6.2 THE SECOND JUDGMENT CITED BEFORE US IS A JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT VS. KRISHI UTPADAN MANDI SAMITI (SUPRA). IN THIS CASE, IT WAS HELD THAT ONCE THE ASSESSEE IS DECLARED CHARITABLE INSTITUTION AND ITS INC OME IS EXEMPT FROM INCOME TAX THEN THERE IS NO JUSTIFICATION TO MAKE ADDITION AND SAME ARE LIKELY TO BE DELETED. IN THE PRESENT CASE , THE ASSESSING OFFICER HIMSELF HAS OBSERVED THAT THE ENTIRE INCOME OF THE ASSESSEE IS NOT EXEMPT U/S 11 AND EVEN AFTER MAK ING THIS OBSERVATION IN THE ASSESSMENT ORDER, HE HAS ALLOWED TWO HUGE AMOUNTS U/S 11 OF THE ACT AND UNDER THESE FACTS, IT WAS HELD BY LEARNED CIT IN THE IMPUGNED ORDER PASSED BY HIM U/S 263 THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PR EJUDICIAL TO THE INTEREST OF REVENUE. WHEN THE ASSESSING OFFICER HAS HIMSELF OBSERVED IN THE ASSESSMENT ORDER THAT THE ENTIRE INCOME OF THE ASSESSEE IS NOT EXEMPT U/S 11 THEN THERE WAS NO BASIS FOR HIS ACTION TO ALLOW ANY DEDUCTION U/S 11 AND UNDER THESE FACTS, THIS JUDGMENT OF HON'BLE APEX COURT IS NOT APPLICABLE AND IT DOES NOT RENDER ANY HELP TO THE ASSESSEE. 6.3 THE NEXT JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS A JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. LUCKNOW DEVELOPMENT AUTHORITY (SUPRA). IN THIS CASE, THE ISSUE IN DISPUTE BEFORE HON'BLE HIGH COURT WAS THE MERIT OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 11 AND ALLOWED BY THE TRIBUNAL IN THAT CASE. IN THE PRESENT CASE, THE ISSUE INVOLVED IS NOT ON MERIT OF ALLOWABILITY OF EXEMPTION U/S 11 OF THE ACT. IN THE PRESENT CASE, THE ISSUE IS AS TO WHETHER THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. WE HAVE ALSO SEEN THAT THE ASSESSING OFFICER HIMSELF HAS OBSERV ED IN THE 7 ASSESSMENT ORDER THAT THE ASSESSEES ENTIRE INCOME IS NOT ELIGIBLE FOR EXEMPTION U/S 11 AND EVEN AFTER MAKING THIS OBSERVATION, HE HAS ALLOWED DEDUCTION OF TWO HUGE AMOUNTS U/S 11 OF THE ACT AND UNDER THESE FACTS, IT WAS HELD BY LEARNED CIT THAT THE ORDER OF ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. REGARDING MERIT OF ALLOWABILITY OF EXEMPTION, HE HAS NOT DECIDED THE ISSUE AND HAS ASKED THE ASSESSING OFFICER TO PASS A DE NOVO ASSESSMENT ORDER AFTER EXAMININ G ALL ASPECTS AND AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HENCE, IN OUR CONSIDERED OPINION, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. 7. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENT S CITED BY LEARNED A.R. OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASSESSEE AND WE HAVE ALSO SEEN THAT THAT THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE OF THE OBSERVATION OF THE A.O. IN THE ASSESSMENT ORDER THAT THE ENTIRE INCOME OF THE ASSESSEE IS NOT EXEMPT AND HIS ACTION OF ALLOWING DEDUCTION U/S 11 OF TWO HUGE AMOUNTS AND THEREFORE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LEARNED CIT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 0 /09/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR