SriJaigurudev Trust, Calicut V. DCIT, Calicut

ITA 288/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69068 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 11-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2013
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: K R SUDHAKARAN PILLAI
• Keywords: Revision of order; Charitable institution; Principle of natural justice
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 288/COCH/2013 ASSESSMENT YEAR : 2008-09 SRI JAI GURUDEV TRUST, KAMMATH LANE, KOZHIKODE-673 001. [PAN: AABTS 1903R] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2(1), KOZHIKODE. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI K.R. SUDHAKARAN PILLAI, ADV. REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 11/09/2013 DATE OF PRONOUNCEMENT 13/11/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE REVISION ORDER DATED 20- 03-2013 PASSED BY THE LD. CIT, KOZHIKODE U/S. 263 O F THE ACT AND IT RELATES TO THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IS QUESTIONING THE VALIDITY OF THE REVISION ORDER PASSED BY LD. CIT. 3. THE FACTS RELATING TO THE ISSUE ARE DISCUSSED IN BRIEF. THE ASSESSEE-TRUST WAS CREATED BY A TRUST DEED, WHICH WAS REGISTERED ON 07 -01-1988. IT WAS GRANTED REGISTRATION U/S. 12AA OF THE ACT ON 16/03/1988. F OR ASSESSMENT YEAR 2008-09, I.E., THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED IT S RETURN OF INCOME DECLARING NIL INCOME ON 24/07/2008. SUBSEQUENTLY, THE ASSESSING OFFICER RE-OPENED THE ASSESSMENT BY ISSUING NOTICE U/S. 148 OF THE ACT ON 05-04-2010 . IN RESPONSE THERETO ALSO, THE I.T.A. NO. 288/COCH/2013 2 ASSESSEE FILED NIL RETURN ON 10-05-2010. THE ASSES SING OFFICER ALSO COMPLETED THE ASSESSMENT U/S. 143 R.W.S. 147 OF THE ACT ON 16-08- 2011 ACCEPTING THE NIL RETURN. 3.1 SUBSEQUENTLY, ON EXAMINATION OF RECORD, THE LD CIT NOTICED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.2,38,884/- AS RECEIPTS FRO M A BUILDING WHICH WAS LET OUT TO THE SON OF THE MANAGING TRUSTEE AND OTHER ASSOCIATED PE RSONS. THE ASSESSEE HAS CLAIMED EXPENDITURES OF RS.2,04,454/- WHICH CONSISTED OF EL ECTRICITY CHARGES, LAND TAX, BUILDING TAX AND MUNICIPAL CORPORATION TAX. THUS, THE LD CI T NOTICED THAT THE ASSESSEE DID NOT INCUR ANY EXPENDITURE TOWARDS CHARITY. 3.2 THE LD CIT NOTICED THAT THE ASSESSEE PLACED RE LIANCE ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. JA NAKI AMMAL AYYA NADAR TRUST, 153 ITR 159 BEFORE THE ASSESSING OFFICER, WHEREIN IT HA S BEEN HELD THAT THE PAYMENT OF INCOME TAX IS TO BE CONSIDERED AS APPLICATION OF IN COME FOR CHARITABLE PURPOSES. THE ASSESSING OFFICER ACCEPTED THE SAID CLAIM AND ACCOR DINGLY, COMPLETED THE ASSESSMENT. 3.3 THE LD. CIT VERIFIED THE DETAILS OF EXPENDI TURE CLAIMED BY THE ASSESSEE IN PAST YEARS AND ALSO IN THE SUBSEQUENT YEAR AND NOTICED T HAT THE ASSESSEE DID NOT INCUR ANY EXPENDITURE TOWARDS CHARITY. ACCORDINGLY, THE LD. CIT TOOK THE VIEW THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND OR CONDUCT ANY PROPE R ENQUIRY/VERIFICATION DURING THE COURSE OF SCRUTINY ASSESSMENT. ACCORDINGLY, HE RE- OPENED THE ASSESSMENT BY ISSUING NOTICE U/S. 263 OF THE ACT. 4. BEFORE THE LD. CIT, THE ASSESSEE CONTENDED T HAT IT WAS NOT LEFT WITH ANY MONEY AFTER INCURRING ROUTINE EXPENDITURE AND HENCE IT DI D NOT CARRY ON ANY ACTIVITY. IT WAS FURTHER SUBMITTED THAT THE MONEY, IF ANY, LEFT WITH , WAS USED FOR RE-PAYING THE LOAN OBTAINED FROM TRUSTEES FOR CONSTRUCTION OF THE BUIL DING. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS DONE SOME CHARITABLE WORK IN THE SUBSE QUENT YEARS. HOWEVER, THE LD. CIT NOTICED THAT THE CHARITABLE WORKS CARRIED OUT B Y IT IN THE SUBSEQUENT YEARS, WORKED OUT TO 8.4% AND 3.2% OF THE INCOME FOR THE YEAR END ING 31-03-2011 AND 31-03-2012 RESPECTIVELY. THE LD. CIT ALSO FELT THAT THE DECIS ION RENDERED BY THE HONBLE MADRAS I.T.A. NO. 288/COCH/2013 3 HIGH COURT IN THE CASE OF CIT VS. JANAKI AMMAL AYYA NADAR TRUST, REFERRED SUPRA CANNOT BE APPLIED TO THE FACTS OF THE INSTANT CASE SINCE I N THAT CASE, THE HONBLE HIGH COURT HAS GIVEN A SPECIFIC FINDING THAT THE ASSESSEE THEREIN HAS INCURRED SUBSTANTIAL AMOUNT TOWARDS CHARITABLE PURPOSES IN THE SUBSEQUENT YEAR. ACCORDINGLY, THE LD. CIT CAME TO THE CONCLUSION THAT THE ASSESSING OFFICER HAS PASSE D THE IMPUGNED ASSESSMENT ORDER WITHOUT APPLICATION OF MIND AND HENCE, IT IS ERRONE OUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, HE SET ASIDE THE ASSESSM ENT ORDER AND DIRECTED THE ASSESSING OFFICER NOT TO ALLOW EXEMPTION U/S. 12A O THE INCOME TAX ACT. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5. THE LD. AR CONTENDED THAT THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER AFTER VERIFICATION OF ALL DETAILS AND ALSO BY DULY CONSIDERING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. JA NAKI AMMAL AYYA NADAR TRUST, REFERRED SUPRA. HENCE, THE VIEW TAKEN BY THE ASSESS ING OFFICER IS ONE OF THE POSSIBLE VIEWS AND HENCE, THE LD. CIT WAS NOT JUSTIFIED IN I NVOKING THE REVISION PROCEEDINGS. 6. ON THE OTHER HAND, THE LD. DR CONTENDED THAT THE ASSESSING OFFICER DID NOT APPLY HIS MIND AND DID NOT EXAMINE WHETHER THE ASSE SSEE HAS CARRIED OUT ANY CHARITABLE WORK OR NOT. HENCE, THE IMPUGNED ASSESS MENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND ACC ORDINGLY, THE LD. CIT WAS JUSTIFIED IN PASSING THE REVISION ORDER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WE NOTICE FROM THE ASSESSMENT ORDER THAT THE AO DID NOT DISCUSS ANYTHI NG ABOUT THE NATURE OF EXPENSES. ADMITTEDLY, THE AO DID NOT EXAMINE ABOUT THE CHARIT ABLE ACTIVITIES OF THE ASSESSEE. IT IS WELL SETTLED PROPOSITION OF LAW THAT THE ASSESSMENT ORDER WOULD BE RENDERED ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF THERE IS LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICER ON ANY OF THE ISSUES HAVING T AX IMPACT. FOR THIS PROPOSITION, A GAINFUL REFERENCE MAY BE MADE TO THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. VS. CIT (243 ITR 83). WE FE EL IT PERTINENT TO REFER TO THE DECISION RENDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES I.T.A. NO. 288/COCH/2013 4 LTD. V CIT (321 ITR 92), WHEREIN THE COURT HAS DISC USSED ABOUT THE SCOPE OF PROVISIONS OF SECTION 263 AS UNDER: SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASS ESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER A N ENQUIRY AS IS NECESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KE Y WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERE D BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83, THE SUPREME COURT HELD THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ON LY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. THE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APP LICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR W ITHOUT APPLICATION OF MIND, WOULD BE AN ORDER FALLING IN THAT CATEGORY . THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE SUPREME COURT HELD, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. W HAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMEN T OF THE SUPREME COURT (HEAD NOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE A SSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS O F THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE O F THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF T HE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE I N LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAI NED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA L TD. [2007] 295 ITR 282. THERE MAY NOT BE ANY DISPUTE THAT THE REVISION PROC EEDING SHALL NOT LIE ON THE ISSUES ON WHICH THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE V IEW AFTER EXAMINING AND APPLYING HIS I.T.A. NO. 288/COCH/2013 5 MIND ON IT. IF THE AO DID NOT MAKE ANY ENQUIRY ON ANY OF THE PERTINENT ISSUE, IT WILL RESULT IN LACK OF APPLICATION OF MIND. 8. THE HONBLE DELHI HIGH COURT, IN THE CASE OF TOYOTO MOTOR CORPORATION (306 ITR 49), HAS HELD THAT THE PROCEEDINGS BEFORE THE AO AR E QUASI JUDICIAL PROCEEDINGS AND A DECISION TAKEN BY THE AO IN THIS REGARD MUST BE SUP PORTED BY REASONS. IN THE CASE BEFORE THE DELHI HIGH COURT, THE ASSESSING OFFICER PASSED A CRYPTIC ORDER DROPPING THE PENALTY PROCEEDINGS WITHOUT GIVING ANY REASON AND H ENCE THE SAID ORDER WAS REVISED BY THE LD CIT U/S 263 OF THE ACT. THE ASSESSEE CHALLE NGED THE REVISION ORDER BEFORE THE TRIBUNAL AND COULD SUCCEED. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HONBLE DELHI HIGH COURT, WHICH UPHELD THE REVISION ORDER PASSED BY LD CIT U/S 263 OF THE ACT FOR THE REASONS STATED ABOVE. THE SAID ORD ER OF THE DELHI HIGH COURT HAS BEEN APPROVED BY THE HONBLE SUPREME COURT IN THE CASE O F TOYOTO MOTOR CORPORATION (306 ITR 52) WITH THE OBSERVATION THAT THE ASSESSING OFF ICER SHOULD PASS A REASONED ORDER. THESE DECISIONS CLEARLY BRING OUT THAT THE ASSESSME NT ORDER SHOULD BE PASSED WITH OR CONTAIN PROPER REASONS ON VARIOUS ISSUES. 9. THE VARIOUS ISSUES POINTED OUT BY LD CIT WOULD HAVE IMPLICATION ON THE TAX COMPUTATION IF THEY ARE DECIDED AGAINST THE ASSESSE E, IN WHICH CASE THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WO ULD BECOME PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, IN OU R VIEW, THE REVISION ORDER PASSED BY LD CIT IS SUSTAINABLE AS THE SAME IS IN ACCORDANCE WIT H THE LAW. HOWEVER, WE NOTICE THAT THE LD CIT HAS DIRECTED THE ASSESSING OFFICER TO WI THDRAW EXEMPTION GRANTED TO THE ASSESSEE U/S 11(1)(A) OF THE ACT. IN OUR VIEW, IT IS IMPERATIVE FOR THE ASSESSING OFFICER TO APPLY HIS MIND AND TAKE HIS OWN DECISION. ACCOR DINGLY, WHILE UPHOLDING THE IMPUGNED REVISION ORDER PASSED BY LD CIT, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE MATTERS INDEPENDENTLY WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATION MADE BY THE LD CIT IN THE REVISION ORDER. I.T.A. NO. 288/COCH/2013 6 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 13-11-2 013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 13TH NOVEMBER, 2013 GJ COPY TO: 1. SRI JAI GURUDEV TRUST, KAMMATH LANE, KOZHIKODE-6 73 001. 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2( 1), KOZHIKODE. 3.THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN