LILAVATI KIRTILAL MEHTA MEDICAL TRUST, MUMBAI V. DCIT CENTRAL CIRCLE-2(1), MUMBAI

ITA 3377/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7249 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VERMA
• Keywords: Principle of natural justice; Cancellation of registration; Set aside
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENCH M UMBAI BEFORE SHRI G. MANJUNATHA, AM & SHRI RAM LAL NEGI, J M ITA NO.3377 & 3378/MUM/2018 ( ASSESSMENT YEARS :2013-14 & 2014-15 ) LILAVATI KIRTILAL MEHTA MEDICAL TRUST A-791, BANDRA RECLAMATION BANDRA (W),MUMBAI-400 050 VS. DCIT,CENTRAL CIRCLE-2(1) 8 TH FLOOR, ROOM NO.804, OLD CGO BUILDING PRATIKSHA BHAWAN, M.K.ROAD, MUMBAI-400020 PAN/GIR NO. AAATL1398Q APPELLANT ) .. RESPONDENT ) ASSESSEE BY VIJAY MEHTA REVENUE BY ANADI VERMA DATE OF HEARING 1 6 / 07 /201 9 DATE OF PRONOUNCEME NT 24 / 0 7 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX APPEALS48, MUMBAI, DATED 28/03/2018 FOR ASSESSMENT YEARS 2013- 14 AND 2014-15. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMO N, FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. 2. THE ASSESSEE HAS MORE OR LESS RAISED COMMON GROU NDS OF APPEAL FOR BOTH ASSESSMENT YEARS. FOR THE SAKE OF BREVITY, THE GROUNDS OF APPEAL FILED FOR AY 2013-14 ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) ['CIT(A)'] ERRED IN PASSING THE ITA NO.3377 &3378/MUM/2018 M/S.LILAVATI KIRTILAL MEHTA MEDICAL TRUST 2 ORDER DATED MARCH,28, 2018 PENDING DISPOSAL OF APPE AL FILED WITH HONBLE INCOME-TAX APPELLATE TRIBUNAL RELATING TO CANCELLAT ION OF TRUST REGISTRATION U/S 12AA(3) OF THE INCOME-TAX ACT [TH E ACT] VIOLATING THE PRINCIPLES OF NATURAL JUSTICE THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED C IT(A) BE DECLARED BAD IN LAW AND VOID AB INITIO. 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2(1) (T HE LEARNED AO) IN DENYING THE BENEFIT OF SECTION 11 OF THE ACT TO THE APPELLANT. THE APPELLANT PRAYS THAT THE LEARNED AO BE DIRECTED TO GRANT THE BENEFIT OF SECTION 11 OF THE ACT 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN LEVYING INTEREST UNDER SECT ION 234C OF THE ACT. THE APPELLANT PRAYS THAT THE LEARNED AO BE DIRECTED TO DELETE THE IMPUGNED LEVY OF INTEREST UNDER SECTION 234C OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST IS REGISTERED U/S 12A OF THE I.T.ACT, 1961 ON 22/01/1979. THE ASS ESSEE TRUST HAS FILED ITS RETURN OF INCOME FOR AY 2013-14 ON 30/09/2013 D ECLARING TOTAL INCOME AT NIL, AFTER CLAIMING EXEMPTION U/S 11 OF THE I. T.ACT, 1961. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE CIT, CENTRAL CI RCLE-1, MUMBAI, VIDE ORDER U/S 12AA(3) OF THE I.T.ACT, 1961 DATED 28/03/ 2014 CANCELLED REGISTRATION GRANTED U/S. 12A OF THE ACT, TO THE TR UST WITH EFFECT FROM AY 2001-02 FOR VARIOUS REASONS INCLUDING, VIOLATIONS R EFERRED TO IN SECTION 11 AND 13 OF THE I.T.ACT, 1961. THEREFORE, REJECTED EX EMPTION CLAIMED BY THE ASSESSEE U/S 11 OF THE I.T.ACT, 1961 AND TREATED AS SESSEE AS AN ASSOCIATION OF PERSON AND ACCORDINGLY, THE EXCESS O F INCOME OVER ITA NO.3377 &3378/MUM/2018 M/S.LILAVATI KIRTILAL MEHTA MEDICAL TRUST 3 EXPENDITURE HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE A SSESSEE SOUGHT ADJOURNMENTS ON VARIOUS OCCASIONS FOR THE REASON TH AT IT HAS CHALLENGED ORDER OF THE CIT-CENTRAL WITHDRAWING REGISTRATION U /S 12A OF THE I.T.ACT, 1961 BEFORE THE ITAT AND THE APPEAL FILED BY THE AS SESSEE IS PENDING FOR DISPOSAL. THE LD. CIT(A) DISPOSED-OFF APPEAL FILED BY THE ASSESSEE FOR BOTH AYS ON THE GROUND THAT, THE APPROVAL GRANTED U/S 12A OF THE I.T.ACT, 1961 STANDS WITHDRAWN FOR THESE AYS AND HENCE, THE RE IS NO REASON TO INTERFERE IN THE FINDINGS OF THE AO IN REJECTION OF EXEMPTION CLAIMED U/S 11 OF THE I.T.ACT, 1961. THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 4.2 THE ASSESSE HAS BEEN ASKING ADJOURNMENTS SINCE A VERY LONG TIME. VIDE LETTER DATED 17-08-2017 IT WAS STATED TH AT THE ORDER OF CANCELLATION OF CERTIFICATE U/S 12A IS PENDING BEFO RE ITAT. FURTHER ADJOURNMENTS WERE FILED VIDE LETTER DATED 19-03-201 8 AND 26-03-2018 WHEREIN ASSESSEE HAS REITERATED THE SAME MATTER THA T ORDER OF CIT(A) IS PENDING BEFORE ITAT. NOW ASSESSEE HAS STATED THAT N EXT DATE OF HEARING ON 19-06-2018. THE ASSESSEE HAS NOT SUBMITTED ANY S UBSTANTIVE DETAILS AND MERELY STATED THAT CASE IS PENDING IN ITAT. SIN CE THE ORDER OF CIT(C) WITHDRAWING REGISTRATION U/S 12A AND SEC.11 STANDS VALID AS ON TODAY AND AO HAS ASSESSED INCOME ON THE BASIS OF SUCH ORDER O F CIT(C), HENCE ON THE BASIS OF FACTS OF THE CASE AS ON TODAY, IT IS F AIR TO ADJUDICATE THAT THERE IS NO INFIRMITY IN THE ORDER OF THE AO. NEEDLESS TO SAY THAT AS AND WHEN, APPEAL OF ASSESSEE AGAINST OF CIT(C) IS ADJUDICATED BY HONBLE ITAT, THE FACT MAY CHANGE OR MAY NOT CHANGE. THUS IN VIEW OF FACTS OF THE CASE FOR BOTH THE ASSESSMENT YEARS, THERE IS NO FORCE IN THE VARIOUS GROUNDS OF APPEAL. 5. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT ALTHO UGH, THE AO HAS DENIED EXEMPTION CLAIMED U/S 11 ON THE BASIS OF ORD ER OF THE CIT-CENTRAL, BUT FACT REMAINS THAT THE ITAT HAS RESTORED REGISTR ATION GRANTED U/S 12A OF ITA NO.3377 &3378/MUM/2018 M/S.LILAVATI KIRTILAL MEHTA MEDICAL TRUST 4 THE I.T.ACT, 1961 TO THE ASSESSEE, FROM THE DATE OF APPROVAL GRANTED I.E ON 22/01/1979. THEREFORE, ASSESSMENT OF INCOME UNDER T HE HEAD INCOME FROM BUSINESS TOWARDS EXCESS OF INCOME OVER EXPENDI TURE CANNOT SURVIVE BECAUSE, THE ASSESSE IS CONTINUE TO ENJOY THE BENEF IT OF REGISTRATION WITH EFFECT FROM THE DATE OF APPROVAL. THE LD. AR FURTHE R SUBMITTED THAT IF YOU GO THROUGH ASSESSMENT ORDER PASSED BY THE AO, IT IS VERY CLEAR THAT THE AO NEVER POINTED OUT ANY VIOLATIONS REFERRED TO IN SECTION 11 OR 13, BUT EXEMPTION HAS BEEN DENIED SOLELY ON THE BASIS OF OR DER OF THE CIT- CENTRAL, THEREFORE ONCE ORDER OF THE CIT, CENTRAL H AS BEEN SET ASIDE BY THE ITAT, THERE IS NO REASON FOR THE AO TO DENY BEN EFIT OF EXEMPTION CLAIMED U/S 11 A OF THE I.T.ACT, 1961 6. THE LD. DR, ON THE OTHER HAND SUBMITTED THAT NO DOUBT, THE ITAT HAS RESTORED CANCELLATION OF REGISTRATION FROM THE DATE OF APPROVAL, BUT FACT REMAINS THAT THE LD. CIT(A) HAS NOT DISCUSSED THE I SSUE ON MERITS THEREFORE, THE MATER MAY BE SET ASIDE TO THE FILE O F THE LD.CIT(A) TO CONSIDER THE ISSUE OF EXEMPTION IN LIGHT OF FACTS B ROUGHT OUT BY THE CIT- CENTRAL IN ITS ORDER IN RESPECT OF VIOLATION REFER RED TO IN SECTION 11 AND 13 OF THE I.T.ACT, 1961 BECAUSE, THE ELIGIBILITY FOR EXEMPTION U/S 11 OF THE ACT, SHALL BE EXAMINED FOR EACH ASSESSMENT YEAR IRR ESPECTIVE OF THE FACT THAT THE TRUST IS REGISTERED U/S 12A OF THE I.T.AC T,1961. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL FILED BY THE AS SESSEE, ON THE SOLE ITA NO.3377 &3378/MUM/2018 M/S.LILAVATI KIRTILAL MEHTA MEDICAL TRUST 5 BASIS OF CANCELLATION OF REGISTRATION GRANTED U/S 12A OF THE I.T.ACT, 1961 BY THE CIT-CENTRAL VIDE ITS ORDER DATED 28/03/2014. WE FURTHER NOTED THAT THE ITAT, MUMBAI A BENCH IN ITA NO. 2827/MUM/2014 HAS RESTORED REGISTRATION CANCELLED U/S 12AA(3) OF THE I.T.ACT, 1961 BY THE CIT-CENTRAL WITH EFFECT FROM AY 2001-02. NO DOUBT, ONCE THE ASS ESSEE IS REGISTERED U/S 12A OF THE ACT, 1961, THEN IT IS ENTITLED FOR E XEMPTION U/S 11 OF THE I.T.ACT, 1961, BUT ENTITLEMENT OF EXEMPTION U/S 11 SHOULD BE EXAMINED FOR EACH ASSESSMENT YEAR IN LIGHT OF ACTIVITIES OF THE ASSESSEE AND PROVISIONS OF SECTION 11 AND 13 OF THE ACT, 1961, IRRESPECTIVE OF THE FACT THAT THE TRUST IS REGISTERED U/S 12A OF THE I.T.ACT, 1961. IN THIS CASE, THE MAIN REASON FOR CANCELLATION OF REGISTRATION U/S 12A OF THE I.T.ACT , 1961 AS PER CIT-CENTRAL IS VIOLATIONS OF PROVISIONS OF SECTION 11 AND 13 OF I.T.ACT, 1961. IN OUR CONSIDER VIEW, ENTITLEMENT OF EXEMPTION SHOULD BE C ONSIDERED IN LIGHT OF VIOLATION REFERRED TO UNDDER SECTION 11 AND 13 OF T HE I.T.ACT, 1961. ALTHOUGH, THE LD. AR FOR THE ASSESSEE POINTED OUT T HAT THERE IS NO SPECIFIC INSTANCES OF VIOLATIONS REFERRED TO U/S 11 AND 13 W AS BROUGHT OUT BY THE LOWER AUTHORITIES IN THEIR ORDERS, BUT KEEPING IN V IEW OF THE FACT THAT REASONS FOR CANCELLATION OF REGISTRATION U/S 12A WA S SOLELY ON THE BASIS OF VIOLATIONS REFERRED TO U/S 11 AND 13, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE NEEDS TO BE RE-EXAMINED BY THE LD. CIT(A), IN LIGHT OF ORDER OF THE ITAT IN ITA NO.2827/MUM2014 DATED 12/06/2019 AND PR OVISION OF SECTION 11 AND 13 OF I.T.ACT, 1961. HENCE, WE SET ASIDE BOT H APPEALS TO THE FILE OF THE LD. CIT(A) AND DIRECT HIM TO RECONSIDER THE IS SUE IN LIGHT OF OBJECTS OF ITA NO.3377 &3378/MUM/2018 M/S.LILAVATI KIRTILAL MEHTA MEDICAL TRUST 6 THE ASSESSEE AND ACTIVITIES CARRIED OUT DURING THE YEAR TO DECIDE THE ELIGIBILITY OF EXEMPTION U/S 11 OF THE I.T.ACT, 196 1 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR BOTH ASSESSMENT YEARS ARE TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 /07/2 019 SD/- ( RAM LAL NEGI ) SD/- ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24/07/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//