IMAAN FOUNDATION, MUMBAI V. CIT (E), MUMBAI

ITA 3168/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9522 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: F B ANDHYARUJINA
• Keywords: Charitable institution
• Section: 143(3); 142(1); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI P.K. BANSAL, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3168/MUM/2017 (ASSESSMENT YEAR- 2012-13) M/S IMAAN FOUNDATION S A KANJI (CA) 206, REWA CHAMBERS, NEW MARINE LINES, MUMBAI-400020 PAN: AAATI0711L VS. CIT(E) 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI-400012. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI F. B. ANDHYARUJINA (AR) REVENUE BY : SHRI RAKESH RANJAN (DR) DATE OF HEARING : 06.09.2017 DATE OF PRONOUNCEMENT : 15.09.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE I NCOME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT(E) DATED 2 4.03.2017 FOR ASSESSMENT YEAR (AY) 2012-13. THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: (1) ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LEARN ED CIT(E) GROSSLY ERRED IN INVOKING JURISDICTION UNDER S 263 OF THE I NCOME TAX ACT, 1961 WHEN THE ORDER PASSED BY THE ASSESSING OFFICER IS N EITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. (2) ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LEARN ED CIT(E) MISINTERPRETED THE BASIC FACT THAT THE ASSESSEE IS A PURELY RELIGIOUS TRUST AND WAS ENTITLED TO EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 AND THAT THE PROVISIONS OF SECTION 13(1)(B) OF THE INCO ME TAX ACT, 1961 ARE NOT APPLICABLE AT ALL. ITA NO. 3168/M/2017- M/S IMAAN FOUNDATION 2 (3) ON THE FACTS AND CIRCUMSTANCES AND IN LAW THE LEARN ED CIT(E) MISINTERPRETED THE DECISION OF THE SUPREME COURT IN CIT VS. DAWOODI BOHRA JAMAT (2014) 364 ITR 31/222 TAXMAN 228 (MAG)/ 43. THUS OVERLOOKING THE FACT THAT THIS IS A DEBATABLE ISSUE IN WHICH SECTION 263 OF THE INCOME TAX ACT, 1961 CANNOT BE INVOKED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AO P/TRUST CLAIMS TO BE A CHARITABLE ORGANIZATION AND ENGAGED IN ESTABLISHING , RUNNING AND CONDUCTING DEENI MADRESSES IN MUMBAI OR IN INDIA FOR ADVANCEME NT OF KNOWLEDGE OF SHIAJEFERY THEOLOGY OF ISLAM. THE ASSESSEE IS A REG ISTERED CHARITABLE ORGANIZATION REGISTERED WITH CHARITY COMMISSIONER B OMBAY AND WAS HAVING REGISTRATION U/S 12A DATED 16.09.1998. THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 27.09.2012 DECLARING TOTAL INCOM E OF RS. 1,40,444/-. ASSESSMENT WAS COMPLETED ON 20.02.2015 U/S 143(3) O F THE ACT, ACCEPTING THE RETURN OF INCOME FILED BY THE ASSESSEE. SUBSEQU ENTLY, THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 20.02.2015 WAS REVISE D BY LD. CIT(E) UNDER SECTION 263 OF THE ACT DATED 24.03.2017. THE LD. CI T(A) SET-ASIDE THE ASSESSMENT ORDER HOLDING THAT THE ORDER PASSED BY AO IS ERRONEOUS AND SO FAR PREJUDICIAL TO THE INTEREST OF REVENUE. THE AO ALLOWED EXEMPTION U/S 11, THOUGH THE ASSESSEE-TRUST WAS HIT BY THE PROVISION OF SECTION 13(1)(B) OF THE ACT. THE LD CIT (E) DIRECTED THE AO TO MAKE THE AS SESSMENT AFRESH AFTER GIVING OPPORTUNITY TO THE ASSESSEE. AGGRIEVED BY TH E ORDER OF LD. CIT (E), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE TH E TRIBUNAL. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE ITA NO. 3168/M/2017- M/S IMAAN FOUNDATION 3 MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE ARGUED THAT AO WHILE FRAMING ASSESSMENT ORDER MADE FULL-FLEDGED EN QUIRY. THE AO ISSUED NOTICE DATED 28.07.2014 U/S 143(2) AND 142(1) OF TH E ACT REQUIRING THE DETAILS OF OBJECT OF THE TRUST/INSTITUTION, NATURE OF ACTIVITIES CARRIED DURING THE YEAR ALONG WITH COPY OF TRUST-DEED, REGISTRATIO N CERTIFICATE, CERTIFICATE U/S 80G, CERTIFICATE OF CHARITY COMMISSIONER, INCOM E AND EXPENDITURE ACCOUNT. THE ASSESSEE FURNISHED ALL THE DETAILS REQ UIRED BY AO. THE AO AFTER FULLY SATISFYING PASSED THE ORDER OF ASSESSME NT. THE AO RAISED THE NECESSARY QUERIES AFTER SATISFYING HIMSELF PASSED T HE ORDER UNDER SECTION 143(3). THE ORDER IS NEITHER ERRONEOUS NOR PREJUDIC IAL TO THE INTEREST OF REVENUE. THE ASSESSING OFFICER PASSED THE ORDER WH ICH IS BASED ON ONE OF THE POSSIBLE VIEW. IT WAS ARGUED THAT ASSESSMENT O RDER FOR AY 2007-08 WAS PASSED UNDER SECTION 143(3) ON 09.04.2009 AND THE A SSESSEE WAS GRANTED EXEMPTION. AGAIN FOR AY 2008-09 ASSESSMENT ORDERS WAS PASSED UNDER SECTION 143(3) ON 12.05.210 AND THE ASSESSEE WAS GR ANTED SIMILAR RELIEF. FURTHER AGAIN FOR AY 2014-15 THE SIMILAR EXEMPTION WAS GRANTED TO THE ASSESSEE IN THE ASSESSMENT ORDER PASSED UNDER SECTI ON 143(3) ON 29.07.2016. THE LD AR FOR THE ASSESSEE PLACED THE COPY OF THE R EPLY FILED BEFORE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND THE ORDER DATED 12.05.2010 PASSED UNDER SECTION 143(3) OF THE ACT. SIMILAR QUERIES WERE RAISED DURING THE ASSESSMENT FOR AY 1990-91, AFTER PROPER EVALUATION OF FACT ITA NO. 3168/M/2017- M/S IMAAN FOUNDATION 4 AND THE REPLY FURNISHED BY ASSESSEE. THE ASSESSEE W AS TREATED AS CHARITABLE ORGANIZATION. 4. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT ASSE SSEE IS A RELIGIOUS CHARITABLE INSTITUTION AND NOT HIT BY THE PROVISION OF SECTION 13(1)(B) OF THE ACT. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF TH E ASSESSEE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. DLF LTD. [2013] 350 ITR 555 (DEL) AND ONGC VS. DCIT (104 TTJ 900). THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(E) HAS GONE ON WRONG PRE MISES HOLDING THAT ASSESSEE IS A CHARITABLE TRUST. HOWEVER, THE ASSESS EE IS A RELIGIOUS CHARITABLE TRUST. 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STRON GLY SUPPORTED THE ORDER OF LD. CIT(E). THE LD. DR FOR THE REVENUE SUBMITTED THAT ACTIVITY OF THE ASSESSEE IS MAINLY FOR THE BENEFIT OF THE PARTICULA R COMMUNITY AND THUS THE PROVISIONS OF SECTION 13(1)(B) ARE ATTRACTED, THUS, THE EXEMPTION UNDER SECTION 11&12 ARE NOT AVAILABLE TO THE ASSESSEE. MO REOVER, THE ORDER OF LD CIT(E) RELIED UPON THE DECISION OF HONBLE APEX COU RT IN CIT VS. DAWOODI BOHARA JAMAT [2014] 43 TAXMANN.COM 243 (SC). THE LD . DR FOR THE REVENUE ARGUED THAT THE DECISION OF HONBLE SUPREME COURT IS SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE. IN THE REJOINDER ARGUMENT, THE LD. AR OF THE ASSESSEE ARGUED THAT THE DECISION RELIED BY LD. CIT(E) AND LD. DR IS RATHER FAVORS THE ASSESSEE. THE REVENUE MUST FOL LOW THE PRINCIPAL OF ITA NO. 3168/M/2017- M/S IMAAN FOUNDATION 5 CONSISTENCY AND SHOULD NOT TREAT THE ASSESSEE INDIF FERENTLY FOR DIFFERENT ASSESSMENT YEAR. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT ASSESSEE IS A REGISTERED ORGANIZATION REGISTERED WITH THE CHARITY COMMISSIONER BOMBAY. THE ASSESSEE IS ALSO HAVING REGISTRATION U/S 12A OF THE ACT WHICH IS STILL VALID. THE REGISTRATION OF ASSESSEE HAS NOT WITHDRA WN/CANCELLED. THE ASSESSEE WAS GRANTED BENEFIT OF SECTION 11 & 12 IN THE ASSESSMENT ORDER PASSED U/S 143(3) FOR AY 1990-91, DATED 09.04.2009 , AY 2007-08 UNDER SECTION 143(3), FOR AY 2008-09 UNDER SECTION 143(3) DATED 12.05.2010 AND AGAIN FOR AY 2014-15 PASSED UNDER SECTION 143(3) ON 29.07.2016. THERE IS NO CHANGE IN THE CONSTITUTION OF THE ASSESSEE/ORGAN IZATION. THE HONBLE APEX COURT IN CASE OF CIT VS. DAWOODI BHORA JAMAT ( 2014) 43 TAXMANN.COM 243 HELD THAT WHERE THE TRUST FORMED WI TH BOTH THE RELIGIOUS AND CHARITABLE OBJECT IN TERM OF SECTION 13(1)(B) , ITS CLAIM FOR REGISTRATION U/S 12AA CAN BE DENIED ONLY IN CASE WHEN OBJECT ARE CARRIED OUT FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CAST E. THE ASSESSEE IS CLAIMING TO BE THE PURELY RELIGIOUS TRUST AND ARGUE D BY LD. AR OF THE ASSESSEE. THE ACTIVITY OF THE ASSESSEE IS NOT DISP UTED. THE ASSESSEE IN ITS REPLY DATED 08.08.2016 FOR SHOW-CAUSE NOTICE ISSUED U/S 263 CONTENDED THAT ASSESSEE IS A PURELY RELIGIOUS TRUST. THE AO WHILE PASSING ASSESSMENT ORDER ITA NO. 3168/M/2017- M/S IMAAN FOUNDATION 6 FOR AY 1990-91 CONCLUDED THAT CLOSE SCRUTINY, IT W AS FOUND THAT ENTIRE SUM 42,95,589/- HAS BEEN SPENT ON THE RELIGIOUS PURPOSE INCONFORMITY WITH RELIGIOUS OBJECT OF THE TRUST. THESE EXPENSES ARE F ULLY SUPPORTED BY BILLS/VOUCHERS AND THEY ARE DULY AUDITED BY THE AUD ITORS. 7. WE HAVE PERUSED THE TRUST-DEED DATED 23 RD OCTOBER 1981, THE TRUST WAS CREATED FOR CHARITABLE AND RELIGIOUS PURPOSE OF THI S SHIA COMMUNITY OF INDIA. THE HONBLE APEX COURT IN DAWOODI BHORA JAMAT (SUPR A) HELD THAT THE TRUST WHICH IS REGISTERED WITH COMPOSITE OBJECT I.E . CHARITABLE AND RELIGIOUS WOULD NOT BE EXPELLED OUT OF THE PURVIEW OF SECTION 13(1)(B) PER SE THE SECTION REQUIRES IT IS TO BE ESTABLISHED THAT SUCH CHARITABLE PURPOSE IS NOT FOR THE BENEFIT OF PARTICULAR RELIGIOUS COMMUNITY OR CA STE. THAT IS TO SAY, IT NEEDS TO BE EXAMINED WHETHER SUCH RELIGIOUS CHARITABLE AC TIVITIES CARRIED BY THE TRUST, ONLY BENEFITS CERTAIN PARTICULAR RELIGIOUS C OMMUNITY OR CLASS OR SERVE ACROSS THE COMMUNITIES AND FOR SOCIETY AT LARGE. 8. WE HAVE SEEN THAT DURING THE ASSESSMENT PROCEEDING FOR AY 2012-13, THE AO VIDE NOTICE U/S 143(2) DATED 28.07.2014 REQUIRED THE ASSESSEE TO FURNISH THE COPY OF TRUST-DEED, INCOME & EXPENDITURE ACCOUN T, BALANCE-SHEET OF TRUSTEES, DETAILS CORPUS AND NON-CORPUS DONATION RE CEIPT, DETAILS OF ADMINISTRATIVE EXPENSES AND DETAILED OF EXPENSES IN CURRED ON OBJECT OF THE TRUST WITH SPECIFICATION IN CASH OR NON-CASH AND OT HER DETAILS RELATED WITH UTILIZATION OF INCOME EXERCISED IN EARLIER YEARS AN D DURING THE YEAR. THE AO ITA NO. 3168/M/2017- M/S IMAAN FOUNDATION 7 PASSED THE ASSESSMENT ORDER ON 20.02.2015. THE AO P ASSED THE ASSESSMENT ORDER ONLY AFTER SEEKING REPLY FROM THE ASSESSEE. T HOUGH, THE AO HAS NOT EXPLAINED THE NATURE OF QUERIES AND HIS DECISION/OB SERVATION/FINDING ON SUCH QUERIES. WE HAVE FURTHER NOTED THAT THE ASSESSEE WA S GRANTED EXEMPTION U/S 11 OR 12 FOR AYS 1990-91, 2007-08, AY 2008-09 AND F URTHER IN AY 2014-15 IN ALL ASSESSMENT ORDER PASSED U/S 143(3) OF THE AC T. WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE MUST FOLLOW THE PR INCIPLE OF CONSISTENCY WHEN THERE IS NO VARIANCE OF FACT. ADMITTEDLY THERE IS NO CHANGE IN THE CONSTITUTION OF THE ORGANIZATION/TRUST. THUS, IN OU R VIEW, THE ORDER PASSED BY AO IS NOT ERRONEOUS. THUS THE TWIN CONDITIONS EN UNCIATED UNDER SECTION 263 IS NOT FULFILLED WHILE REVISING THE ORDER. IT I S SETTLED LAW THAT TWIN CONDITION MUST BE SATISFIED WHILE EXERCISING THE OR DER U/S 263. THUS, IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE ASSESSEE IS NOT HIT BY THE PROVISION OF SECTION 13(1)(B) OF THE ACT. WITH THE ABOVE OBSE RVATION, THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED, THE ORDER PA SSED BY LD CIT(E) IS SET- ASIDE. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH DAY OF SEPTEMBER 2017 . SD/- SD/- /- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 15/09/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT ITA NO. 3168/M/2017- M/S IMAAN FOUNDATION 8 BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/