Andhara School of Preaching, Rajahmundry V. The CIT(A)-2, Guntur

ITA 36/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6806 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V APPALA RAJU
• Keywords: Assessment record
• Section: 143(3); 11A; 12AA; 90; 2; 11

Judgement Text

ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.36/VIZAG/2017 ( / ASSESSMENT YEAR: 2013-14) ANDHRA SCHOOL OF PREACHING RAJAHMUNDRY CIT(A) - 2, GUNTUR [PAN NO. AAATA3930D ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SHRI V. APPALA RAJU, DR / DATE OF HEARING : 31.07.2017 / DATE OF PRONOUNCEMENT : 09.08.2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS-2), {CIT(A)-2}, GUNTUR VIDE NO.153/2015-16 DATED 27.12.2016 FOR THE ASSESSMENT YEAR 2013-14. 2. THE ASSESSEE FILED RETURN OF INCOME DECLARING TO TAL INCOME OF ` NIL ON 15.9.2013 CLAIMING STATUS AS AOP (TRUSTS). THE RETURN WAS ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 2 PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (H EREINAFTER CALLED AS 'THE ACT') MAKING THE ADJUSTMENT OF ` 1,12,67,382/- AND RAISING THE DEMAND OF ` 40,64,638/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT BY CPC, BANGALORE (AO). AGGRIEVED BY THE INTIM ATION U/S 143(1) OF THE ACT ISSUED BY THE CPC, BANGALORE, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, T HE LD. A.R. OF THE ASSESSEE ARGUED THAT THE ASSESSEE IS A REGISTERED S OCIETY GRANTED REGISTRATION U/S 12AA OF THE ACT AND FILING THE RET URN OF INCOME REGULARLY FROM THE ASSESSMENT YEAR 1990-91 ONWARDS CLAIMING T HE EXEMPTION U/S 11 OF THE ACT. THE SOCIETY WAS REGISTERED UNDER TH E SOCIETIES ACT ON 14.3.1986. THE DEPARTMENT HAS ALLOWED THE EXEMPTIO N U/S 11 CLAIMED BY THE ASSESSEE RIGHT FROM THE ASSESSMENT YEAR 1990 -91. SINCE THE SOCIETY IS REGISTERED U/S 12AA OF THE ACT, THE INCO ME OF THE ASSESSEE IS EXEMPT AND THE REVENUE CANNOT WITHDRAW THE EXEMPTIO N CLAIMED IN THE INTIMATION U/S 143(1) UNILATERALLY. THE LD. A.R. S UBMITTED THE COPIES OF THE RETURNS OF INCOME FILED FOR THE EARLIER YEARS I .E. 1988-89 WHEREIN THE STATUS WAS DECLARED AS AOP AND THE INCOME WAS ALLOW ED AS EXEMPT. FOR THE ASSESSMENT YEARS 1990-91, 1991-92, 1993-94 & 1994-95, THE ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 3 ASSESSEE PLACED THE ACKNOWLEDGEMENTS, WHEREIN THE A SSESSEE CLAIMED THE STATUS AS AOP (TRUST), WHICH WAS PROCESSED U/S 143(1) OF THE ACT AND THE EXEMPTION CLAIMED WAS ALLOWED. THE ASSESSE E ALSO PLACED THE SCRUTINY ASSESSMENT ORDERS PASSED BY THE A.O. FOR T HE ASSESSMENT YEAR 1996-97, WHEREIN THE A.O. ACKNOWLEDGED THAT THE ASS ESSEE HAD FILED THE APPLICATION FOR THE REGISTRATION BEFORE ITO WARD-2, KAKINADA ON 2.4.1991 AND FURNISHED THE EVIDENCES BEFORE THE A.O. THE AS SESSMENT WAS COMPLETED U/S 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 1996-97 BY AN ORDER DATED 29.12.1998 AND ALLOWED THE EXEMPTION CL AIMED U/S 11 OF THE ACT. IN THIS CASE, THERE WAS AN EVIDENCE FILED BY THE ASSESSEE BEFORE THE A.O. EVIDENCING APPLICATION FOR THE REG ISTRATION U/S 12AA OF THE ACT AND ALSO THE DEPARTMENT HAS ALLOWED EXEMPTI ON U/S 11 OF THE ACT AND ASSESSED THE STATUS OF THE ASSESSEE AS AOP (TRUST). THE ASSESSEE ALSO FILED APPLICATION FOR REGISTRATION U/ S 12AA OF THE ACT ON 26.2.2016, WHICH WAS GRANTED BY THE CIT W.E.F. 26.2 .2016. THE LD. A.R. ARGUED THAT THE ASSESSEE HAS FILED APPLICATION FOR REGISTRATION WAY BACK IN 1991 AND FILED INCOME TAX RETURN CLAIMING T HE EXEMPTION U/S 11 OF THE ACT, WHICH WAS ALLOWED BY THE A.O. RIGHT FRO M 1991. EVEN IN THE SCRUTINY ASSESSMENTS, THE ASSESSING OFFICER HAS ALL OWED THE EXEMPTION. THEREFORE, THE SOCIETY HAS BEEN GRANTED REGISTRATIO N OR DEEMED TO HAVE BEEN GRANTED U/S 12AA OF THE ACT IN RESPONSE TO THE ORIGINAL APPLICATION ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 4 DATED 2.4.1991 BUT MISPLACED THE REGISTRATION CERTI FICATE; HENCE HE COULD NOT QUOTE THE REGISTRATION NUMBER IN THE INCOME TAX RETURN. THE DEPARTMENT CANNOT UNILATERALLY WITHDRAW THE EXEMPTI ON CLAIMED BY THE ASSESSEE U/S 11 OF THE ACT AND MAKE THE ADDITIONS T O THE RETURNED INCOME. FURTHER, THE LD. A.R. ARGUED THAT SUCH ADJ USTMENTS ARE NOT PERMISSIBLE U/S 143(1) OF THE ACT. 4. ON THE OTHER HAND, THE LD. D.R. VEHEMENTLY ARGUE D THAT THE ASSESSEE DID NOT QUOTE THE REGISTRATION CERTIFICATE NUMBER IN THE RETURN OF INCOME, THEREFORE, THE A.O. HAS RIGHTLY WITHDRAW N THE EXEMPTION U/S 11 OF THE ACT AND BROUGHT THE ENTIRE RECEIPTS TO TA X. IT IS THE DUTY OF THE ASSESSEE TO FURNISH THE REGISTRATION NUMBER AND MER ELY BECAUSE THE EARLIER YEAR THE ASSESSEE WAS GRANTED THE REGISTRAT ION OR ALLOWED EXEMPTION U/S 11 OF THE ACT, IT CANNOT IPSO FACTO MAKES THE ASSESSEE ENTITLED FOR EXEMPTION U/S 11 OF THE ACT. THEREFOR E, THE LD. DR ARGUED THAT THERE IS NO ERROR IN THE INTIMATION MADE U/S 1 43(1) OF THE ACT AND THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE A .O., HENCE THE ORDER OF THE CIT(A) IS REQUIRED TO BE UPHELD. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIE S ACT. THE SOCIETY HAS ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 5 APPLIED FOR REGISTRATION U/S 12AA OF THE ACT, WHICH WAS EVIDENT FROM THE SCRUTINY ASSESSMENT ORDER PASSED BY THE A.O., FOR T HE ASSESSMENT YEAR 1996-97 VIDE ORDER DATED 29.12.1998. THE A.O. HAS ALLOWED THE EXEMPTION U/S 11A OF THE ACT. FURTHER, THE ASSESSE E PLACED EVIDENCES OF HAVING FILED THE RETURNS OF INCOME FOR EARLIER YEARS AND THE INTIMATIONS WERE ISSUED BY THE INCOME TAX DEPARTMEN T U/S 143(1) AND THE EXEMPTION U/S 11 OF THE ACT, WAS ALLOWED BY THE REVENUE. THOUGH ASSESSEE HAS NOT MENTIONED THE REGISTRATION NUMBER, EQUAL RESPONSIBILITY CASTS UP ON THE REVENUE TO MAINTAIN PROPER RECORDS AND TO TRACE THE REGISTRATION NUMBER AND TO DETERMINE THE CORRECT STATUS OF THE ASSESSEE BEFORE MAKING ANY SUCH ADJUSTMENT. IN THI S CASE, THERE WAS AN EVIDENCE HAVING FILED APPLICATION FOR REGISTRATI ON BUT THERE WAS NO EVIDENCE WITH THE INCOME TAX DEPARTMENT TO SHOW WHE THER THE REVENUE HAS REJECTED THE ASSESSEES APPLICATION FOR REGISTR ATION OR NOT BUT ALLOWED THE EXEMPTION CLAIMED BY THE ASSESSEE. THE REFORE, IT IS EVIDENT THAT THE SOCIETY HAS BEEN GRANTED THE REGISTRATION OR DEEMED TO HAVE BEEN GRANTED THE REGISTRATION AND THE DEPARTMENT HA S NOT CANCELLED THE REGISTRATION SUBSEQUENTLY. THE RETURN OF INCOME WA S PROCESSED U/S 143(1) OF THE ACT AND THE ADJUSTMENT MADE BY THE IN COME TAX DEPARTMENT WITHDRAWING THE EXEMPTION CLAIMED U/S 11 OF THE ACT UNILATERALLY WITHOUT PUTTING THE ASSESSEE ON NOTICE . THE ACT PERMITS THE ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 6 ADJUSTMENTS U/S 143(1) OF THE ACT, WHICH ARE APPARE NT FROM RECORD. FOR READY REFERENCE, WE EXTRACT RELEVANT PART OF SECTIO N 143(1) OF THE ACT: WHERE A RETURN HAS BEEN MADE UNDER SECTION 139, OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142, SUCH RETURN S HALL BE PROCESSED IN THE FOLLOWING MANNER, NAMELY:- (A) THE TOTAL INCOME OR LOSS SHALL BE COMPUTED AFTER MA KING THE FOLLOWING ADJUSTMENTS, NAMELY:- I. ANY ARITHMETICAL ERROR IN THE RETURN; [OR] II. AN INCORRECT CLAIM, IF SUCH INCORRECT CLAIM IS APPA RENT FROM ANY INFORMATION IN THE RETURN; (B) THE TAX AND INTEREST, IF ANY, SHALL BE COMPUTE D ON THE BASIS OF THE TOTAL INCOME COMPUTED UNDER CLAUSE (A); (C) THE SUM PAYABLE BY, OR THE AMOUNT OF REFUND DUE TO, THE ASSESSEE SHALL BE DETERMINED AFTER ADJUSTMENT OF THE TAX AND INTEREST, IF ANY, COMPUTED UNDER CLAUSE (B) BY ANY TAX DEDUCTED AT SOURCE, ANY TAX COLLECTED AT SOURCE, ANY ADVANCE TAX PAID, ANY RELIEF ALLOWABLE UNDER AN AGREEMENT UNDER SECTION 90 OR SECTION 90A, OR ANY RELIEF ALLOWABLE UNDER SE CTION 91, ANY REBATE ALLOWABLE UNDER PART A OF CHAPTER VIII, ANY TAX PAID ON SELF-ASSESSMENT AND ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST ; (D) AN INTIMATION SHALL BE PREPARED OR GENERATED A ND SENT TO THE ASSESSEE SPECIFYING THE SUM DETERMINED TO BE PAYABLE BY, OR THE AMOUNT OF REFUND DUE TO, THE ASSESSEE UNDER CLAUSE (C); AND (E) THE AMOUNT OF REFUND DUE TO THE ASSESSEE IN PUR SUANCE OF THE DETERMINATION UNDER CLAUSE (C) SHALL BE GRANTED TO THE ASSESSEE; PROVIDED THAT AN INTIMATION SHALL ALSO BE SENT TO THE ASSESS EE IN A CASE WHERE THE LOSS DECLARED IN THE RETURN BY THE A SSESSEE IS ADJUSTED BUT NO TAX OR INTEREST IS PAYABLE BY, OR N O REFUND IS DUE TO, HIM: PROVIDED FURTHER THAT NO INTIMATION UNDER THIS SUB-SECTION SHALL BE SENT AFTER THE EXPIRY OF ONE YEAR FROM THE END OF T HE FINANCIAL YEAR IN WHICH THE RETURN IS MADE. EXPLANATIONFOR THE PURPOSE OF THIS SUB-SECTION,-- (A) AN INCORRECT CLAIM APPARENT FROM ANY INFORMATION I N THE RETURN SHALL MEAN A CLAIM, ON THE BASIS OF AN ENTRY, IN TH E RETURN,-- ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 7 (I) OF AN ITEM, WHICH IS INCONSISTENT WITH ANOTHER ENTRY OF THE SAME OR SOME OTHER ITEM IN SUCH RETURN; (II) IN RESPECT OF WHICH THE INFORMATION REQUIRED TO BE FURNISHED UNDER THIS ACT TO SUBSTANTIATE SUCH ENTRY HAS NOT BEEN SO FURNISHED; OR (III) IN RESPECT OF A DEDUCTION, WHERE SUCH DEDUCTION EXCEEDS SPECIFIED STATUTORY LIMIT WHICH MAY HAVE BEEN EXPRESSED AS MONETARY AMOUNT OR PERCENTAGE OR RATIO OR FRACTION; (B) THE ACKNOWLEDGEMENT OF THE RETURN SHALL BE DEEM ED TO BE THE INTIMATION IN A CASE WHERE NO SUCH IS PAYABLE BY, O R REFUNDABLE TO, THE ASSESSEE UNDER CLAUSE (C), AND WHERE NO ADJUSTM ENT HAS BEEN MADE UNDER CLAUSE (A). 6. SINCE THE ADJUSTMENT MADE BY THE AO IS DEBATABLE , WHICH REQUIRES VERIFICATION FROM THE ASSESSMENT RECORDS AND THERE WAS NO EVIDENCE TO SHOW THAT THE REGISTRATION APPLIED FOR WAS REJECTED OR CANCELLED, WE HOLD THAT THE ADJUSTMENT MADE BY THE REVENUE IN THE INTI MATION U/S 143(1) IS BEYOND THE SCOPE OF SECTION 143(1) OF THE ACT AND A CCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELET E THE ADDITION MADE BY THE A.O. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 09 TH AUG17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 9 TH AUG17. ITA NO.36/VIZAG/2017 ANDHRA SCHOOL OF PREACHING, RAJAHMUNDRY 8 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ANDHRA SCHOOL OF PREACHING, D.NO.30-16-21, CHURCHPET, RAJAHMUNDRY. 2. / THE RESPONDENT THE ITO (EXEMPTIONS), RAJAHMUND RY 3. + / THE CIT (EXEMPTIONS), HYDERABAD 4. + ( ) / THE CIT (A)-2, GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM