Board of Directors, Allahabad V. CIT, Allahabad

ITA 360/ALLD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80591 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-08-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 02-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K LACHHIRAMKA
• Assessee Lawyers: S D SINGH
• Keywords: Reopening of assessment; Gift; Depreciation; Charitable institution; Opportunity of being heard; Principle of natural justice; Period of limitation; Retrospective amendment; Question of law; Difference of opinion; Right to appeal; Cancellation of registration; Change of opinion; Reassessment proceedings; Capital expenditure
• Section: 148; 56; 263; 63; 12; 11; 15; 143(3); 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 360 TO 364/ALLD./2014 ASSTT. YEAR : 2001-02 TO 2005-06 BOARD OF DIRECTORS, VS. COMMISSIONER OF ALLAHABAD AGRICULTURAL INSTITUTE, INCOME-TAX, AL LAHABAD. REWA ROAD, NAINI, ALLAHABAD. (PAN : AAATI 1488 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.D. SINGH, SR. ADVOCATE RESPONDENT BY : SHRI R.K. LACHHIRAMKA, CIT/DR DATE OF HEARING : 13.08.2014 DATE OF PRONOUNCEMENT : 29.08.2014 ORDER PER BHAVNESH SAINI, J.M.: ALL THE ABOVE APPEALS BY THE ASSESSEE ARE DIRECT ED AGAINST THE COMMON ORDER OF LD.CIT, ALLAHABAD DATED 25.03.2014 FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06 U/S. 263 OF THE IT ACT. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES. BOTH THE PARTIES ARGUED IN ITA NO. 362/ALLD./2014 FOR THE ASSESSMENT YEAR 2003-04 AND SUBMITTED THAT THE ISSUE IS SIMILAR IN ALL THE APPEALS. THERE FORE, FOR THE PURPOSE OF DISPOSAL OF ALL THE APPEALS, THE MATERIAL POINTED OUT FROM THE PAPER BOOK OF ASSESSMENT YEAR ITA NO. 360 TO 364/ALLD./2014 2 2003-04 ARE TAKEN INTO CONSIDERATION AND ITA NO. 36 2/ALLD./2014 WOULD BE A LEAD CASE. 3. BRIEFLY, THE FACTS AS NOTED IN THE IMPUGNED ORDE R ARE THAT THE LD. CIT, ALLAHABAD ISSUED A NOTICE U/S. 263 OF THE IT ACT DA TED 21.11.2013 IN ALL THE ABOVE ASSESSMENT YEARS WHICH READS AS UNDER : NOTICE U/S 263 FOR AY 01-02, 02-03, 03-04, 04-05 AN D 05.06 ON PERUSAL OF THE CASE RECORDS OF THE AFORESAID YEA RS, THE FOLLOWING FACTS EMERGE: I. THAT THE ASSESSMENT ORDERS COMPLETED/PASSED BY T HE ASSESSING OFFICER FOR ALL THE AFORESAID YEARS HAD BEEN SET ASIDE BY T HE HONBLE ITAT (VIDE THEIR ORDER DATED 24 TH APRIL, 2009) DIRECTING THE AO TO DECIDE THE MATTER AFRESH. II. THAT THE LD COMMISSIONER OF INCOME TAX, ALLAHAB AD CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A VIDE H IS ORDER DATED 08.03.2010. III. THAT IN VIEW OF THE ORDER OF THE LD COMMISSION ER OF INCOME TAX, ALLAHABAD (CANCELLING THE REGISTRATION GRANTED TO THE ASSESSE E), THE ASSESSING OFFICER PASSED ORDERS FOR ALL THESE ASSESSMENT YEARS WHEREI N HE OUT RIGHTLY REJECTED THE CLAIM OF THE ASSESSEE U/S 11 OF THE I.T. ACT, S INCE THERE WAS NO REGISTRATION EXISTING U/S 12A WHICH IS PREREQUISITE FOR ENTERTAINING ANY CLAIM U/S 11 OF THE INCOME TAX ACT, AND THE INCOME OF THE ASSESSEE FOR ALL THE AFORESAID YEARS WAS ASSESSED AS PER THE NORMAL PROV ISIONS OF THE INCOME TAX ACT. IV. THAT THE HONBLE ITAT (VIDE ITS ORDER DATED 21. 06.2011) QUASHED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (DATED 08.03.2010) AND RESTORED THE REGISTRATION U/S 12A OF THE I.T. ACT I N FAVOUR OF THE ASSESSEE. ITA NO. 360 TO 364/ALLD./2014 3 V IN VIEW OF THE AFORESAID ORDER OF THE HON'BLE ITA T, (RESTORING THE REGISTRATION U/S 12A OF THE IT ACT), THE A.O. REVIS ED THE ORDERS PASSED EARLIER (AT ITEM NO.III). VI. THAT THE ASSESSING OFFICER REVISED THE DEMAND BY ISSUING A REVISED ITNS 150 WHEREIN THE INCOME WAS MADE NIL IN ALL THE ASSESSMENT YEARS EXCEPT IN A.Y. 2003-04 WHERE IT WAS REDUCED FROM RS .5,15,81,970 TO RS.39,98,300/- AND NO PEAKING ORDERS WERE PASSED . VII. THAT IT IS A TRITE LAW THAT THE MERE REGISTRA TION U/S 12A DOES NOT PRECLUDE THE AD FROM EXAMINING THE ALLOWABILITY OF EXEMPTION U/S 11 OF THE I.T. ACT. THE A.O, WHILE REVISING THE DEMANDS AS AF ORESAID (AT ITEM NO.V/VI) DID NOT MAKE ANY EFFORT/ENQUIRIES TO FIND OUT AS TO WHETHER THE ASSESSEE HAD COMPLIED WITH THE PROVISIONS OF SECTION 11 AND 13 O F THE IT ACT. THIS NON APPLICATION OF MIND BY THE AO HAS RENDERED SUCH ORD ERS ERRONEOUS IN SO FAR AS THEY ARE PREJUDICIAL TO THE INTEREST OF REVENUE . IN THIS VIEW OF THE MATTER, I HEREBY PROVIDE YOU AN OPPORTUNITY TO EXPLAIN/CLARIFY AS TO WHY THE AFORESAID ORDERS OF T HE A.O. (AT ITEM NO.V/VI} BE NOT REVISED U/S 263 OF THE IT ACT. THE DATE AND TIME FOR COMPLIANCE IS 3 RD DECEMBER, 2013 AT 11.00 AM. (RAJ KUMAR LACHHIRAMKA) COMMISSIONER OF INCOME TAX, ALLAHABAD 4. THE ASSESSEE FILED REPLY BEFORE THE LD. CIT, WHI CH READS AS UNDER : 2. ON 09.12.2013, SRI SANJAY KHANDUJA, FCA/A.R. ATTENDED. AND FILED A REPLY WHICH READS AS UNDER: THE HON'BLE COMMISSIONER OF INCOME-TAX, ALLAHABAD. SUB: THE BOARD OF DIRECTORS OF THE ALLAHABAD AGRIC ULTURAL INSTITUTE, ALLAHABAD - NOTICE US 263 - ASSESSMENT YEARS 2001-0 2, 2002- 03, 2003-04, 2004-05, AND 200506 - REPLY YOUR HONOR, ITA NO. 360 TO 364/ALLD./2014 4 KINDLY REFER TO THE NOTICE NO.F.NO. CIT/ ALLD/263/2 013-14/1224 DATED 21.11.2013 ISSUED BY YOUR GOOD-SELF U/S 263 FOR ASS ESSMENT YEARS 2001-02, 2002-03, 2003-04, 2004-05 AND 2005-06 ISSUED TO THE BOARD OF DIRECTOR: THE ALLAHABAD AGRICULTURAL INSTITUTE, ALLAHABAD TO SHOW CAUSE WHY ORDERS OF THE THESE IMPUGNED YEARS BE NOT REVISED AS THEY ARE ERRONEOUS IN SO FAR AS THEY ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE . YOUR HONOR, IT IS IMPORTANT TO GO THROUGH THE FACT S OF THE CASE (1) FACTS (1-1) THE ORIGINAL ASSESSMENT WAS FRAMED S UNDER :- S.N A.Y. ASSTT. SECTION DATE OF ASSTT. ASSESSING OFFICER 1 2001 - 2002 147/143(3) 31.12.2007 ACIT - SMT.BELU SINHA 2 2002 - 2003 147/143(3) 31.12.2007 ACIT - SMT.BELU SINHA 3 2003 - 2004 147/143(3) 31.12.2007 ACIT - SMT.BELU SINHA 4 2004 - 2005 143(3) 26.12.2006 ITO - SHRI VIPUL SINHA 5. 2005 - 2006 143(3) 31.12.2007 ACIT - SMT.BELU SINHA (1-2) AGAINST THE FIRST APPEALS FOR ALL THESE YEAR S, THE HON'BLE ITAT PASSED A CONSOLIDATED ORDER DATED 24/04/2009 IN ITA NO. 28 (ALLD)/2009 OF ASSESSMENT YEAR 2001-02; I.T.A. NO.29 (ALLD)/12009 OF ASSESSMENT YEAR 2002-2003; I.T.A. NO.30 (ALLD)/2009 OF ASSESSMENT Y EAR 2003-2004; I.T.A. NO.31 (ALLD)/2009 OF ASSESSMENT YEAR 2005-2006; I.T .A. NO.73 (A!LD)/2008 OF ASSESSMENT YEAR 2004-2005; AND I.T.A. NO.280(ALL D)/2008 HOLDING THAT THE 'ASSESSING OFFICER CANNOT REOPEN THE QUESTION OF TH E REGISTRATION OF THE INSTITUTION FROM YEAR TO YEAR AS IT SOLELY FALL S WITHIN THE JURISDICTION OF THE LEARNED COMMISSIONER OF INCOME TAX.' (1-3) THEREAFTER, THE ASSESSMENTS WERE MADE AFRESH IN TERMS OF THE DIRECTIONS OF THE HON'BLE ITAT AS UNDER- S.NO. A.Y. ASSTT.SECTIO DATE OF ASSESSING OFFICER 1 2001 - 2002 143(3) 28.12.2010 ACIT - SHRI S.ANBUSELVAM 2 2002 - 2003 143(3) 28.12.2010 ACIT - SHRI S.ANBUSELVAU 3 2003 - 2004 143(3) 28.12.2010 ACFT - SHRI S.ANBUSELVAM 4 2004 - 2005 143(3) 28.12.2010 ACIT - SHRI S.ANBUSELVAM 5 2005 - 2006 143(3) 28.12.2010 ACIT - SHRI S.ANBUSELVAM (1-4) WHILE PASSING THESE ASSESSMENT ORDERS, DESPIT E THE DIRECTIONS OF THE HON'BLE ITAT AS REPRODUCED IN PARA (1-2) (SUPRA), T HE A.O. DID NOT ALLOW ITA NO. 360 TO 364/ALLD./2014 5 THE CLAIM U/S 12A AND IMPOSED TAXES WITHOUT ALLOWIN G THE CLAIM U/S 12A FOLLOWING THE ORDER OF CANCELLATION OF REGISTRATION OF THE HON'BLE CIT DATED 08/03/2010 .. (1-5) DURING THE ASSESSMENT PROCEEDINGS FOR ALL THE SE YEARS, IT WAS VEHEMENTLY ARGUED, INTERALIA, WITH REGARD TO THE RE GISTRATION CANCELLATION AS UNDER- (A) THE REGISTRATION GRANTED U/S 12A CANNOT BE WITH DRAWN U/S 12AA(3) BEFORE 01.06.201(1 SINCE SUCH POWER FOR CANCELLATION WAS E XTENDED ONLY FROM ~HIS DATE; ARID (B) THE CANCELLATION PROCEEDINGS AFFECT THE SUBSTANTIVE RIGHTS AND THEREFORE ONLY APPLY PROSPECTIVELY AND NOT RETROSPE CTIVELY. FOR THESE TWO ARGUMENTS, MANY DECISIONS WERE RELIED UPON SOME OF WHICH ARE - OXFORD ACADEMY FOR CAREER DEVELOPMENT V . CHIEF CLT [2009] 315 ITR 382 (ALL.); SOCIETY FOR THE PROMOTION OF EDUCATION, AD VENTURE SPORT & CONSERVATION OF ENVIRONMENT V. COMMISSIONER OF IN COME-TAX, CENTRAL, KANPUR {200B} 171 TAXMAN 113 (ALL) AND WELHAM BOYS' SCHOOL SOCIETY V. CBDT [2006] 285 ITR 74 (UTTARANCHAL). ALSO THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT HAD ALREADY BEEN PRONOUNCED ON 24 TH FEBRUARY 2010 IN THE CASE OF COMMISSIONER OF INCOME-TAX V. MANAV VIKAS AVAM SEWA SANSTHAN. THUS, THE REASSESSMENT PROCEEDINGS WERE PREJUDICIAL TO THE INTEREST OF THE ASSESSEE AND IN FAVOUR OF THE REVENUE. (1-6) THE APPEAL AGAINST THE ORDER OF CANCELLATION OF THE REGISTRATION PASSED U/S 12AA(3) WAS ALLOWED BY THE HON'BLE ITAT VIDE OR DER DATED 21.06.2011 WHEREIN THE REGISTRATION GRANTED ORIGINALLY U/S 12A ON 16-08-1975 WITHDRAWN BY THE HON'BLE OT VIDE ORDER DATED 08-03- 2010 WAS RESTORED. SUBMISSIONS : (2-1) THE HON'BLE CIT PASSED AN ORDER U/S 254 I 12 AA(3) OF THE INCOME TAX ACT, 1961 ON 27-12-7.011 (COPY ENCLOSED AS ANNEXURE 1HOLDING AS UNDER RESPECTFULLY, FOLLOWING THE ITATS ORDER IN ITA NO.1 13/(ALLD)/2010 DATED 21-06-2011 IN THE CASE, REGISTRATION UNDER SE CTION 12A IS GRANTED TO THE SOCIETY WITH RETROSPECTIVE EFFECT. REGISTRATION WAS DENIED IN THE ASSESSMENT/REASSESSM ENT OF THESE IMPUGNED YEARS UNDER ASSESSMENT AND TAXES WORKED OUT. THE HO N'BLE CLT PASSED THIS ORDER TO DIRECT THE AO TO GRANT REGISTRATION WITH R ETROSPECTIVE EFFECT. THIS ITA NO. 360 TO 364/ALLD./2014 6 ORDER DID NOT ASK THE ASSESSING OFFICER TO EXAMINE THE ALLOWABILITY OF EXEMPTION U/S 11 AS THE INCOME WAS TO BE DETERMINED ON THE BASIS OF THE INCOME TAX RETURN AND THE ACCOMPANYING ANNEXURE. TH IS WAS BASICALLY DONE TO PUT AN END TO THE LONG DRAWN BATTLE OF SEVEN YEA RS (FIVE AT THAT TIME) BETWEEN THE DEPARTMENT AND THE ASSESSEE. ACCORDINGL Y, THE REGISTRATIONS WERE GRANTED AND THE INCOME RECOMPUTED. THERE WAS N OTHING WRONG WITH THIS PROCEDURE. THE DIRECTION, DID NOT ENVISAGE PAS SING OF A SPEAKING ORDER TO GIVE EFFECT AS ENVISAGED BY THE CAPTIONED NOTICE . THE NOTICE DATED 11.12.2013 ONLY IS A CHANGE IN OPINION OF THE DIREC TIONS GIVEN BY THE HON'BLE C1T DATED 27.12.2011. IT IS A SETTLED PRINCIPLE THAT A CHANGE IN OPINION IS NOT TENABLE IN LAW. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS MAY KINDLY BE DROPPED. (3-1) WITHOUT PREJUDICE TO THE ABOVE, IN ASSESSMENT YEAR 2007-2008, REGISTRATION WAS GRANTED IN THE ASSESSMENT. THE HO NBLE CIT INITIATED PROCEEDINGS IN U/S 263 FOR THE GRANT OF REGISTRATION IN THE ASSESSMENT. THESE PROCEEDINGS ERE DROPPED IN TERMS OF ORDER 27/007/20 11 (COPY ENCLOSED AS ANNEXURE '2') ON THE GROUND THAT SINCE THE REGISTRA TION WAS RESTORED BY THE HON'BLE IN ITAT IN APPEAL NO.113/(ALLD)/2010 VIDE O RDER DATED 27/07/2011, THE PROCEEDINGS BECAME INFRUCTUOUS. IN THE IMPUGNED YEARS, THE SITUATION IS COMPLETELY THE OPPOSITE. IN 2007-08, THE 263 PROCEEDINGS WERE DROPPED ON THE REGISTRATIO N BEING RESTORED. IN THESE YEARS, THE 263 PROCEEDINGS ARE INITIATED ON R EGISTRATION BEING RESTORED ON THE DEMANDS BEING REVISED BY ALLOWING REGISTRATI ON U/S 12A. THUS, THERE IS A CHANGE OF OPINION. IT IS A SETTLED PRINCIPLE T HAT A CHANGE IN OPINION IS NOT TENABLE IN LAW. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS MAY KINDLY BE DROPPED. (4-1) PARA VII. OF THE CAPTIONED NOTICE READS AS UN DER - IT HAS BEEN STATED IN THE NOTICE THAT IT IS A TRI TE LAW THAT THE MERE REGISTRATION U/S 12A DOES NOT PRECLUDE THE A.O. FRO M EXAMINING THE ALLOWABILITY OF EXEMPTION U/S 11 OF THE I.T. ACT. (EMPHASIS SUPPLIED) THE A.O. WHILE REVISING THE DEMANDS AS AFORESAID (AT IT EM NO.V/VI) DID NOT MAKE ANY EFFORTS/INQUIRIES TO FIND OUT AS TO WHETHER THE ASSESSEE HAD COMPLIED WITH THE PROVISIONS OF SECTION 11 AND 13 OF THE IT ACT. THIS NON APPLICATION OF MIND BY THE A.O HAS RENDERED SUCH ORDERS ERRONEOUS IN SO FAR AS THEY ARE PREJUDICIAL TO THE INTEREST OF REVENUE . ITA NO. 360 TO 364/ALLD./2014 7 (4-2) WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSIN G OFFICER HAS GIVEN APPEAL EFFECT OF THE ORDER OF. THE ITAT IN ITNS 150 TO RES TORE THE REGISTRATION, ORIGINALLY GRANTED ON 16-08-1975 FOR THE SOCIETY RE GISTERED W.E.F. 25/09/1950 I.E. BEFORE THE INCOME TAX ACT OF1961, A PRECONDITION TO ALLOW CLAIM U/S 11. THE RETURN OF EACH YEAR IS ACCOMPANIE D WITH THE COMPUTATION OF INCOME U/ S 11 AND 12 AS ANNEXED WITH THE INCOME TAX RETURN FOR EACH YEAR ACCOMPANIED BY THE AUDIT REPORT IN FORM 108. I N THE CIRCUMSTANCES, 'ALLOWABILITY OF EXEMPTION U/S 11 OF THE I.T. ACT CAN VERY EASILY BE DETERMINED FROM THE RECORD OF ANY OF THESE YEARS TH E INCOME CAN VERY EASILY BE DETERMINED TO SEE WHETHER 85% HAS BEEN APPLIED O N THE OBJECTS AND WHETHER THE ACCUMULATION IS WITHIN THE 15% AS LAID DOWN UNDER THE ACT. ALSO, WHETHER THE ACCUMULATION U/S 11(2) (WHICH IS NOT THERE IN. ANY YEAR) 'IS DULY SUPPORTED BY FORM 10 DULY FURNISHED BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. IT CANNOT BE SAID THAT THE AO HAS NOT APPLIED HER MIND IN GIVING THE APPEAL EFFECT AS THE RECORD ITSE LF IS SUFFICIENT FOR DETERMINATION OF INCOME U./S 11. THUS, THE REASONS FOR WHICH THE REVISION OF THESE APPEAL EFFECTS ARE SOUGHT ARE SELF-EXPLANATOR Y AS PER THE RECORD OF ALL THESE YEARS. THE DEMAND. REVISIONS ARE THUS NOT ERR ONEOUS AND THEREFORE NOT PREJUDICIAL TO THE INTEREST OF THE. REVENUE. IT IS THUS PRAYED THAT THE PROCEEDINGS SOUGHT TO BE INITIATED U/S 263 MAY KIND LY BE DROPPED. (5-1) PROVISIONS OF SECTION 263 ERE REPRODUCED BEL OW - 263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONEOUS IN SO FAR A S IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIR CUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR R.10C!IFYI NG THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. (5-2) IT MUST BE SEEN THAT THE ORDERS ARE BOTH ERR ONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT HAS BEEN HELD BY TH E HON'BLE ALLD HIGH COURT IN THE CASE OR J.P. SRIVASTAVA & SONS (KANPUR) LTD. V. COMMISSIONER OF INCOME-TAX [1978] 111 ITR 326 THAT - IT MUST FURTHER BE SHOWN THAT THE ORDER WAS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE. ITA NO. 360 TO 364/ALLD./2014 8 THE ASSESSEE HAS OVER-APPLIED THE INCOME FOR EACH O F THESE YEARS AFTER TAKING DEPRECIATION INTO CONSIDERATION. THE ONLY YE AR WHEN THIS IS NOT SO IS A. Y.2003-04. IN VIEW OF THE OVER APPLICATION OF IN COME, HOW CAN IT BE SAID THAT THE DEMAND REVISIONS PASSED ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE. ALSO, IN TRUSTS, THE OVER-APPLICATION OF I NCOME OF ONE YEAR IS JUDICIALLY ALLOWED TO BE SET OFF AGAINST THE SUBSEQ UENT YEARS' UNDER- APPLICATION OF INCOME. THUS, IT CANNOT BE SAID THAT THE IMPUGNED DEMAND REVISIONS ARE PREJUDICIAL TO THE INTEREST OF THE RE VENUE. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS SOUGHT TO BE INITIATED U/S 263 MAY KINDLY BE DROPPED. (6-1) WITHOUT PREJUDICE TO THE ABOVE, THE ORDERS RE VISED AS PER PARA V. OF THE NOTICE HAVE NOT BEEN SERVED AND COMMUNICATED ON / T O THE ASSESSEE. IT HAS BEEN HELD THAT IF THE ORDERS UNDER REVISION ARE NOT COMMUNICATED TO THE ASSESSEE TILL THE DATE OF INITIATION OF THE PROCEED INGS OF REVISION, THEN THESE ORDERS CANNOT, BE SUBJECT MATTER OF REVISION BY THE HON'BLE CIT. IT HAS BEEN HELD IN THE CASE OF SMT. JIJEEBAI SHINDE V. COMMISS IONER OF GIFT-TAX [1986]157 ITR 122 (MP) (COPY ENCLOSED AS ANNEXURE 3) AS UNDER- THUS, THE PRINCIPLE, WHICH COULD BE DEDUCED FROM TH ESE AUTHORITIES IS THE ESSENTIAL REQUIREMENT OF COMMUNICATION OF AN OR DER PASSED BY THE ASSESSING AUTHORITY TO THE ASSESSEE CONCERNED. IT I S NOT IN DISPUTE THAT THE ASSESSMENT ORDER DATED MARCH 3D, 1979, WAS NOT SERVED ON THE ASSESSEE AT LEAST TILL THE TIME THE COMMISSIONER OF GIFT-TAX INITIATED PROCEEDINGS UNDER SECTION 24(2) OF THE ACT. IT IS THUS CLEAR THAT THERE WAS NO VALID ASSESSMENT ORDER COMMUNICATED TO THE ASSESSEE IN EXISTENCE TO ENTITL E THE COMMISSIONER TO INVOKE THE JURISDICTION UNDER SECTION 24(2) OF T HE ACT AND EXERCISE POWERS OF SUO MOTU REVISION THEREIN. . LEARNED COUNSEL FOR THE REVENUE CONTENDS THAT ON A PLAIN READING OF SECTION 15 OF THE ACT, IT DOES NOT PROVIDE FOR COMM UNICATION OF THE ASSESSMENT ORDER TO THE ASSESSEE. HIS FURTHER CONTE NTION IS THAT AT ANY RATE THE ASSESSEE HAD IN FACT, ACQUIRED KNOWLEDGE O F THE ASSESSMENT ORDER AT LEAST WHEN PROCEEDINGS UNDER SECTION 24(2) OF THE ACT HAD BEEN INITIATED. THEREFORE, THE ACTION UNDER SEC 24( 2) OF THE ACT CANNOT BE ASSAILED BY THE ASSESSEE. IF THIS CONTENTION OF THE LEARNED COUNSEL WERE TO BE ACCEPTED, IT WOULD RESULT IN DEPRIVATION OF A VALUABLE RIGHT OF APPEAL BY THE ASSESSEE. IT WAS SUGGESTED BY THE LEARNED COUNSEL FOR THE REVENUE THAT THE NET EFFECT OF THE ORDER PASSED BY THE ITA NO. 360 TO 364/ALLD./2014 9 COMMISSIONER OF GIFT-TAX IS NOTHING BUT REASSESSMEN T. THIS PRESCRIBED BY SUBSECTION (2) OF SECTION 16A OF THE ACT. IN VIEW OF THE FOREGOING DISCUSSION, OUT ANSWER TO THE QUESTION REFERRED IS IN THE NEGATIVE, IN FAVOUR (IF THE ASSE SSEE AND AGAINST THE DEPARTMENT. THERE SHALL BE NO ORDER AS TO COSTS. SINCE THE IMPUGNED 'ORDERS' ARE NOT SERVED ON THE A SSESSEE, THESE CANNOT BE SUBJECT MATTER OF REVISION U/S 263. IT IS THEREFORE PRAYED THAT ON THIS GROUND ALSO, THE PROCEEDINGS MAY KINDL Y BE DROPPED. (7-1) IT HAS BEEN STATED IN THE CAPTIONED NOTICE IN PARA VI- THAT THE REVISED DEMAND WAS BY ISSUING A REVISED I TNS 150 WHEREIN THE INCOME WAS MADE BNIL IN ALL THE ASSESSMENT YEAR S EXCEPT IN A.Y. 2003-04 WHEREIN IT WAS REDUCED FROM RS.5,15,81,970/ - TO RS.39,83,300/- AND NO SPEAKING ORDER WAS PASSED. WITHOUT PREJUDICE TO THE ABOVE , ITNS 150 IS ONLY A SHEET OF CALCULATION OF INCOME TAX AND MAY NOT BE EQUATED TO AN ORDER AS SUCH. IN ANY CASE, IT HAS BEEN STATED THAT NO SPEA KING, ORDER WAS PASSED. IN FACT NO PROCEEDING TOOK PLACE, IN WHICH THE ASSESSEE WAS PRESENT, FOR PASSING ANY ORDER IN THESE IMPUGNED YE ARS WIT REGARD TO THE REVISION OF DEMAND POST THE ORDER OF THE HON'BL E ITAT RESTORING REGISTRATION IN JUNE, 2011. THUS, NO ORDER WAS PASS ED IN THE KNOWLEDGE OF THE ASSESSEE WHICH WAS IN THE NATURE O F AN ORDER LET ALONE A SPEAKING ORDER. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS MAY KIN DLY BE DROPPED AS THE ASSESSEE DOES NOT KNOW WHICH ORDER IS DEEMED TO BE REVISED U/S 263. (8-1) WITHOUT PREJUDICE TO THE ABOVE , THE DEMANDS REVISED ON THE BASIS OF THE ORDER OF THE HON'BLE ITAT RESTORING RE GISTRATION PERTAIN TO THE ONES PASSED U/S 143(3) FOR THESE YEARS ON 28 .12.2010. THESE ORDERS ARE BARRED BY LIMITATION FOR THE PURPOSES OF THEIR REVISION U/S 263. IT HAS BEEN HELD IN THE CASE OF COMMISSIONER OF INCOME-TAX, DELHI - V. BHARTI AIRTEL LTD. {2013} 37 TAXMAN.COM 218 (DELHI) THAT LIMITATION FOR PASSING REVISIONARY ORDER IS TO BEGI N FROM DATE OF ORIGINAL ORDER INSTEAD OF REASSESSMENT ORDER, WHERE SUBJECT MATTER OF ADDITIONS MADE IN REVISION ARE NOT DEALT WITH IN RE ASSESSMENT. THUS, ITA NO. 360 TO 364/ALLD./2014 10 THE 'ORDER' SOUGHT TO BE REVISED ARE TIME BARRED. IT IS THEREFORE PRAYED THAT THESE PROCEEDINGS U/S 263 MAY KINDLY BE DROPPED. (9-1) FOR THE PROCEEDINGS OF SECTION 263 TO LIE, AL L OF THE FOLLOWING CONDITIONS MUST BE FULFILLED - (A) THERE MUST BE AN 'ORDER'. (B) IT MUST BE COMMUNICATED TO THE ASSESSEE BEFORE THE INITIATION OF THE REVISION PROCEEDINGS. (C) THE ORDER MUST B~ BOTH ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE. (D) THE PROCEEDINGS MUST NOT BE BARRED BY LIMITATIO N. IN THE INSTANT CASE, IT IS CLEAR THAT THE ESSENTIAL FOR INITIATION OF PROCEEDINGS U/S 263 ARE NOT BEING FULFIL1ED. IT IS THEREFORE PRAYED THAT THESE PROCEEDINGS INITI ATED U/S 263 MAY VERY KINDLY BE DROPPED. THANK YOU, YOURS FAITHFULLY, 03/12/2013 SD/- 09.12.2013 SANJAY KHANDUJA (AR) 5. THE LD. CIT IN VIEW OF THE ABOVE SUBMISSIONS OF THE ASSESSEE THAT NO ORDERS(WHICH ARE SOUGHT TO BE REVISED) HAD BEEN SER VED UPON THE ASSESSEE, DROPPED THE PROCEEDINGS U/S. 263 OF THE IT ACT. THEREAFTER FRESH NOTICE WAS ISSUED U/S. 263 OF THE IT ACT DATED 11.12.2013, WHICH READS AS UNDE R : ITA NO. 360 TO 364/ALLD./2014 11 NOTICE U/S 263 FOR AY 01-02, 02-03, 03-04, 04-05 AN D 05-06 VIDE LETTER DT. 21-11-2013 THE ASSESSEE WAS REQUEST ED TO SHOW CAUSE AS TO WHY THE ORDER FOR A.Y. 2001-02 TO 2005-06 AS PASSED BY THE A.O. ON 01-12-2011 (GIVING EFFECT TO THE HONBLE I.T.A.T.S ORDER DATED 21-06-.2011) SHOULD NOT BE REVISED U/S 263 OF THE I.T. ACT 1961. IN RESPONSE, THE ASSESSEE'S LD. A/R SRI SANJAY KHANDUJA FCA ATTENDED & FILED A WRITTEN SUBMISSION. ONE OF THE SUBMISSION MADE WAS THAT THE ORDERS SOUG HT TO BE REVISED HAD NOT BEEN SERVED ON THE ASSESSEE AND, THEREFORE, THE RE COULD BE NO OCCASION TO REVISE SUCH ORDERS. THIS FACT OF NON SERVICE WAS VE RIFIED FROM THE RANGE OFFICE & AFTER VERIFICATION, THE PROCEEDINGS U/S 26 3 WERE DROPPED VIDE ORDER SHEET ENTRY DATED 09-12-2013. ON 11-12-2013, THE OF FICE OF THE ACIT CIRCLE- II HAS INFORMED THE UNDERSIGNED THAT SUCH ORDERS FO R ALL THE AFORESAID YEARS HAD BEEN DULY SERVED ON THE ASSESSEE ON 10-12-2013 & COPIES OF RECEIPTS WERE ALSO SUBMITTED FOR THE RECORDS. SINCE ORDERS H AVE NOW BEEN SERVED ON THE ASSESSEE, THE PRELIMINARY OBJECTION OF THE ASSE SSEE HAS BEEN MET OUT & ACCORDINGLY A FRESH NOTICE U/S 263 IS BEING ISSUED. ON PERUSAL OF THE CASE RECORDS OF THE AFORESAID YEA RS, THE FOLLOWING FACTS EMERGE:- II. THAT THE ASSESSMENT ORDERS COMPLETED/ PASSED B Y THE ASSESSING OFFICER FOR ALL THE AFORESAID YEARS HAD BEEN SET AS IDE BY THE HON'BLE ITAT (VIDE THEIR ORDER DATED 24 TH APRIL, 2009) DIRECTING THE AD TO DECIDE THE MATTER AFRESH. III. THAT THE LD. COMMISSIONER OF INCOME TAX, ALLA HABAD CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A VIDE H IS ORDER DATED. 08.03.2010. IV THAT IN VIEW OF THE ORDER OF THE LD COMMISSIONE R OF INCOME TAX, ALLAHABAD (CANCELLING THE REGISTRATION GRANTED TO T HE ASSESSEE), THE ASSESSING OFFICER PASSED ORDERS FOR ALL THESE ASSES SMENT YEARS WHEREIN HE OUTRIGHTLY REJECTED THE CLAIM OF THE ASSESSEE U/S 1 1 OF THE I.T. ACT, SINCE THERE WAS NO REGISTRATION EXISTING U/S 12A WHICH IS PRERE QUISITE FOR ENTERTAINING ANY CLAIM U/S 11 OF THE INCOME TAX ACT, AND THE INC OME OF THE ASSESSEE FOR ALL THE AFORESAID YEARS WAS ASSESSED AS PER THE NOR MAL PROVISIONS OF THE INCOME TAX ACT. ITA NO. 360 TO 364/ALLD./2014 12 V THAT THE HONBLE ITAT (VIDE ITS ORDER DATED 21.0 6.2011) QUASHED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (DATED 08.03.2010) AND RESTORED THE REGISTRATION U/S 12A OF THE I.T. ACT I N FAVOUR OF THE ASSESSEE. VI IN VIEW OF THE AFORESAID ORDER OF THE HON'BLE I TA T, (RESTORING THE REGISTRATION U/S 12A OF THE IT ACT), THE A.O REVISE D. THE ORDERS PASSED EARLIER (AT ITEM NO. III). VII THAT THE ASSESSING OFFICER REVISED THE DEMAND BY ISSUING A REVISED ITNS 150 WHEREIN THE INCOME WAS MADE NIL IN ALL THE ASSESSMENT YEARS EXCEPT IN A. Y 2003-04 WHERE IT WAS REDUCED FROM RS .5,15,81,970 TO RS.39,98,300/- AND NO SPEAKING ORDERS WERE PASSED. VIII THAT IT IS A TRITE LAW THAT THE MERE REGISTRA TION U/S 12A DOES NOT PRECLUDE THE A.O FROM EXAMINING THE ALLOWABILITY OF EXEMPTION U/S 11 OF TILE I. T. ACT. THE A.O, WHILE REVISING THE DEMANDS AS A FORESAID (AT ITEM NO.V/VI)) ,DID NOT MAKE ANY EFFORT/ENQUIRIES TO FIN D OUT AS TO WHETHER THE ASSESSEE HAD COMPLIED WITH THE PROVISIONS OF SECTIO N 11 AND 13 OF THE I.T. ACT. THIS NON APPLICATION OF MIND BY THE A.O HAS R ENDERED SUCH ORDERS ERRONEOUS IN SO FAR AS THEY ARE PREJUDICIAL TO THE INTEREST OF REVENUE IN THIS VIEW OF THE MATTER, I HEREBY PROVIDE YOU AN . OPPORTUNITY TO EXPLAIN/CLARIFY AS TO WHY THE AFORESAID ORDERS OF T HE A.O. (AT ITEM NO. V/VI) BE NOT REVISED U/.5 263 OF THE IT ACT. THE DATE AND TIME FOR COMPLIANCE IS 20 TH DECEMBER, 2013 AT 11.00 AM. (RAJ KUMAR LACHHIRAMKA) COMMISSIONER OF INCOME TAX, ALLAHABAD 6. THE ASSESSEE CHALLENGED THE NOTICE U/S. 263 OF T HE IT ACT BEFORE THE LD.CIT AND FILED THE REPLY BEFORE HIM WHICH READS AS UNDER : THE HON'BLE COMMISSIONER OF INCOME-TAX, ALLAHABAD. ITA NO. 360 TO 364/ALLD./2014 13 SUB: THE BOARD OF DIRECTORS OF THE ALLAHABAD AGRIC ULTURAL INSTITUTE, ALLAHABAD - NOTICE US 263 - ASSESSMENT YEARS 2001-02, 2002-03, 2003-04, 2004-05 AND 2005-06 - REPLY YOUR HONOR, KINDLY REFER TO THE NOTICE NO. F. NO. CIT! AND 1263 I 20 13 -14 DATED 11.12.2013 ISSUED BY YOUR GOOD-SELF U/S 263 F OR ASSESSMENT YEARS 2001-02, 2002-03, 2003-04, 2004-05 AND 2005-0 6 ISSUED TO THE BOARD OF DIRECTORS OF THE ALLAHABAD AGRICULTURAL IN STITUTE, ALLAHABAD TO SHOW CAUSE WHY THE ORDERS OF THE THESE IMPUGNED YEARS BE NOT REVISED AS THEY ARE 'ERRONEOUS IN SO FAR AS THEY AR E PREJUDICIAL TO THE INTEREST OF THE REVENUE. YOUR HONOR, IT IS IMPORTANT TO GO THROUGH THE FACTS OF THE CASE (1) FACTS (1-1) THE ORIGINAL ASSESSMENT WAS FRAMED AS UNDER : - S. NO. A. Y. ASSTT. SECTION DATE OF ASSTT. ASSESSING OFFKER 1 2001 - 2002 147/143(3) 31.12.2007 ACIT - SMT.BELU SINHA 2 2002 - 2003 147/143(3) 31.12.2007 ACIT - SMT.BELU SINHA 3 2003 - 2004 147/143(3) 31.12.2007 ACIT - SMT.BELU SIR.HA 4 2004 - 2005 143(3) 26.12.2006 ITO - SHRI VIPUL SINHA 5 2005 - 2006 143(3) 31.12.2007 ACIT - SMT.BELU SINHA (1-2) AGAINST THE FIRST APPEALS FOR ALL THESE YEARS , THE HON'BLE ITAT PASSED A CONSOLIDATED ORDER DATED 24/04/2009 IN ITA NO.28(ALLD)12009 OF ASSESSMENT YEAR 2001-2002; I.T. A. NO. 29 (ALLD) 12009 OF ASSESSMENT YEAR 2002-2003; I. T.A. NO. 30 (ALLD) 12009 OF ASSESSMENT YEAR 2003-2004; I. T.A. NO. 31 (ALLD) 12 009 OF ASSESSMENT YEAR 2005-2006; I. T.A. NO. 73 (ALLD) 12 00B OF ASSESSMENT YEAR 2004-2005; AND I.T.A. NO. 280(ALLD) 12008 HOLDING THAT THE 'ASSESSING OFFICER CANNOT REOPEN THE QUEST ION OF THE REGISTRATION OF THE INSTITUTION FROM YEAR TO YEAR A S IT SOLELY FALLS WITHIN THE JURISDICTION OF THE LEARNED COMMISSIONER OF INC OME TAX.' ITA NO. 360 TO 364/ALLD./2014 14 (1-3) THEREAFTER, THE ASSESSMENTS WERE MADE AFRESH IN TERMS OF THE DIRECTIONS OF THE HON'BLE ITAT AS UNDER - S. NO. A. Y. ASSTT. SECTION DATE OF ASSTT. ASSESSING OFFICER 1 2001 - 2002 143(3) 28.12.2007 ACIT - SHRI S. ANBUSELVAM 2 2002 - 2003 143(3) 28.12.2007 ACIT - SHRI S. ANBUSELVAM 3 2003 - 2004 143(3) 28.12.2007 ACIT - SHRI S. ANBUSELVAM 4 2004 - 2005 143(3) 28.12.2006 ACIT - SHRI S. ANBUSELVAM 5 2005 - 2006 143(3) 28.12.2007 ACIT - SHRI S. ANBUSELVAM (1-4) WHILE PASSING THESE ASSESSMENT ORDERS, DESPIT E THE DIRECTIONS OF TILE HONBLE ITAT AS REPRODUCED IN PARA (1-2) (SUPR A), THE AO DID NOT ALLOW THE CLAIM U/S 12A AND IMPOSED TAXES WITHOUT A LLOWING THE CLAIM U/S 12A FOLLOWING THE ORDER OF CANCELLATION OF REGI STRATION OF THE HONBLE CLT DATED 08/03/2010. (1-5) DURING THE ASSESSMENT PROCEEDINGS FOR ALL THE SE YEARS, IT WAS VEHEMENTLY ARGUED, INTERALIA, WITH REGARD TO THE RE GISTRATION CANCELLATION AS UNDER- (A) THE REGISTRATION GRANTED U/S 12A CANNOT BE WITH DRAWN U/S 12AA(3) BEFORE 01.06.2010 SINCE SUCH POWER FOR CANCELLATION WAS EXTENDED ONLY FROM THIS DATE; AND (B) THE CANCELLATION PROCEEDINGS AFFECT THE SUBSTAN TIVE RIGHTS AND THEREFORE ONLY APPLY PROSPECTIVELY AND NOT RETROSPE CTIVELY. FOR THESE TWO ARGUMENTS, MANY DECISIONS WERE RELIED UPON SOME OF WHICH ARE - OXFORD ACADEMY FOR CAREER DEVELOPMENT V . CHIEF C1T [2009] 315 ITR 382 (ALL.); SOCIETY FOR THE PROMOTION OF EDUCATION, ADVENTURE SPORT & CONSERVATOR OF ENVIRONMENT V. COM MISSIONER OF INCOME-TAX, CENTRAL, KANPUR (2008] 171 TAXMAN 113 ( ALL) AND WELHAM BOYS' SCHOOL SOCIETY V. CBDT [2006] 285 ITR 74 (UTTARANCHAL). ALSO THE DECISION OF THE HON'BLE ALL AHABAD HIGH COURT HAD ALREADY BEEN PRONOUNCED ON 24 TH FEBRUARY 2010 IN THE CASE OF COMMISSIONER OF INCOME-TAX V. MANAV VIKAS AVAM SEWA SANSTHAN. ITA NO. 360 TO 364/ALLD./2014 15 THUS, THE REASSESSMENT PROCEEDINGS WERE PREJUDICIAL TO THE INTEREST OF THE ASSESSEE AND IN FAVOUR OF THE REVENUE. . (1-6) THE APPEAL AGAINST THE ORDER OF CANCELLATION OF THE REGISTRATION PASSED U/S 12AA(3) WAS ALLOWED BY THE HON'BLE ITAT VIDE ORDER DATED 21.06.2011 WHEREIN THE REGISTRATION GRANTED ORIGINA LLY U/S 12A ON 16- 08-1975 WITHDRAWN BY THE HON'BLE CIT VIDE ORDER DAT ED 08-03-2010 WAS RESTORED. SUBMISSIONS (2-1) THE HON'BLE CIT PASSED AN ORDER U/S 254 / 12A A(3) OF THE INCOME TAX ACT, 1961 ON 27-12-2011 (COPY ENCLOSED A S ANNEXURE 1) HOLDING AS UNDER RESPECTFULLY, FOLLOWING THE ITATS ORDER IN ITA NO.113/(ALLD)/2010 DATED 21-06-2011 IN THE CASE, RE GISTRATION UNDER SECTION 12A IS GRANTED TO THE .SOCIETY WITH R ETROSPECTIVE EFFECT. REGISTRATION WAS DENIED IN THE ASSESSMENT / REASSES SMENT OF THESE IMPUGNED YEARS UNDER ASSESSMENT AND TAXES WORKED OU T. THE HON'BLE CLT PASSED THIS ORDER TO DIRECT THE AO TO GRANT REG ISTRATION WITH RETROSPECTIVE EFFECT. THIS ORDER DID NOT ASK THE AS SESSING OFFICER TO EXAMINE THE ALLOWABILITY OF EXEMPTION U/S 11 AS THE INCOME WAS TO BE DETERMINED ON THE BASIS OF THE INCOME TAX RETURN AN D THE ACCOMPANYING ANNEXURES. THIS WAS BASICALLY DONE TO PUT AN END TO THE LONG DRAWN BATTLE OF SEVEN YEARS (FIVE AT THAT TIME ) BETWEEN THE DEPARTMENT AND THE ASSESSEE. ACCORDINGLY, THE REGIS TRATIONS WERE GRANTED AND THE INCOME RECOMPUTED. THERE WAS NOTHIN G WRONG WITH THIS PROCEDURE. THE DIRECTION, DID NOT ENVISAGE PAS SING OF A SPEAKING ORDER TO GIVE EFFECT AS ENVISAGED BY THE CAPTIONED NOTICE. THE NOTICE DATED 11.12.2013 ONLY IS A CHANGE IN OPINION OF THE DIRECTIONS GIVEN BY THE HONBLE CLT DATED 27.12.2011. IT IS A SETTLED PRINCIPLE THAT A CHANGE IN OPINION IS NOT TENABLE IN LAW. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS MAY KIN DLY BE DROPPED. (3-1) WITHOUT PREJUDICE TO THE ABOVE , IN ASSESSMENT YEAR 2007-2008, REGISTRATION WAS .GRANTED IN THE ASSESSMENT. THE HO N'BLE CLT INITIATED PROCEEDINGS IN U/S 263 FOR THE GRANT OF REGISTRATION IN THE ASSESSMENT. ITA NO. 360 TO 364/ALLD./2014 16 THESE PROCEEDINGS WERE DROPPED IN TERMS OF ORDER 27/07/20 11 (COPY ENCLOSED AS ANNEXURE '2') ON THE GROUND THAT SINCE THE REGISTRATION WAS RESTORED BY THE HON'BLE IN ITAT IN APPEAL NO.11 3/(ALLD)/2010 VIDE ORDER DATED 27/07/2011, THE PROCEEDINGS BECAME IRFRUCTUOUS. IN THE IMPUGNED YEARS, THE SITUATION IS COMPLETELY THE OPPOSITE. IN 2007-08, THE 263 PROCEEDINGS WERE DROPPED ON THE RE GISTRATION BEING RESTORED. IN THESE YEARS, THE 263 PROCEEDINGS ARE I NITIATED ON REGISTRATION BEING RESTORED ON THE DEMANDS BEING RE VISED BY ALLOWING REGISTRATION U/S 12A. THUS, THERE IS A CHANGE OF OP INION. IT IS A SETTLED PRINCIPLE THAT A CHANGE IN OPINION IS NOT TENABLE I N LAW. IT IS THEREFORE PRAYED THAT THE PROCEEDINGS MAY KINDLY BE DROPPED. (4-1) PARA VII. OF THE CAPTIONED NOTICE READS AS UN DNER 'THAT IT IS A TRITE LAW THAT THE MERE REGISTRATION U/S 12A DOES NOT PRECLUDE THE A.O. FROM EXAMINING THE ALLOWABILITY O F EXEMPTION U/S 11 OF THE I.T. ACT . (EMPHASIS SUPPLIED). THE A.O. WHILE REVISING THE DEMANDS AS AFORESAID (AT ITEM NO.V/VI) DID NOT MAKE ANY EFFORTS/INQUIRIES TO FIND OUT AS TO WHETHE R THE ASSESSEE HAD COMPLIED' WITH THE PROVISIONS OF SECTION 11 AND 13 OF THE IT ACT. THIS NON-APPLICATION OF MIND BY THE A.O HAS RE NDERED SUCH ORDERS ERRONEOUS IN SO FAR AS THEY AT E PREJUDICIAL TO THE INTEREST OF REVENUE.' (4-2) WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSING OFFICER HAS GIVEN APPEAL EFFECT OF THE ORDER OF THE ITAT IN ITNS 150 TO RESTORE THE REGISTRATION, ORIGINALLY GRANTED ON 16-08-1975 FOR THE SOCIETY REGISTERED W.E.F. 25.09.1950 I.E. BEFORE THE INCOME TAX ACT OF 1961, A PRECONDITION TO ALLOW CLAIM U/S 11.. THE RETURN OF EACH YEAR IS ACCOMPANIED WITH THE COMPUTATION OF INCOME U/S 11 A ND 12 AS ANNEXED WITH THE INCOME TAX RETURN FOR EACH YEAR AC COMPANIED BY THE AUDIT REPORT IN FORM 10B. IN THE CIRCUMSTANCES, AL LOWABILITY OF EXEMPTION U/S. 11 OF THE I.T. ACT CAN VERY EASILY BE DETERMINED FROM THE RECORD OF ANY OF LESE YEARS THE INCOME CAN VERY EASILY BE DETERMINED TO SEE WHETHER 85% HAS BEEN APPLIED ON T HE OBJECTS AND WHETHER THE ACCUMULATION IS WITHIN THE 15% AS LAID DOWN UNDER THE ACT. ALSO, WHETHER THE ACCUMULATION U/S 11(2) (WHIC H IS NOT THERE IN ANY YEAR) IS. DULY SUPPORTED BY FORM 10 DULY FURNIS HED BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. IT CANNOT BE SAID THAT THE AO HAS NOT APPLIED HER MIND IN GIVING THE APPEAL EF FECT AS THE RECORD ITA NO. 360 TO 364/ALLD./2014 17 ITSELF IS SUFFICIENT FOR DETERMINATION OF INCOME U/ S 11. THUS, THE REASONS FOR WHICH THE REVISION OF THESE APPEAL EFFE CTS ORE SOUGHT ARE SELF-EXPLANATORY AS PER THE RECORD OF ALL THESE YEA RS. THE DEMAND REVISIONS ARE THUS NOT ERRONEOUS AND THEREFORE NOT PREJUDICIAL , THE INTEREST OF THE REVENUE. IT IS THUS PRAYED THAT TH E PROCEEDINGS SOUGHT TO BE INITIATED U/S 263 MAY KINDLY BE DROPPED. (5-1) PROVISIONS OF SECTION 263 ARE REPRODUCED BELO W - 263(1) THE COMMISSIONER MAY CALL FOR AND EXAMINE TH E RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OF FICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN OPPOR TUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY; INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT (5-2) IT MUST BE SEEN THAT THE ORDERS ARE BOTH ERRO NEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT HAS BEEN HELD BY THE HON'BLE ALLD HIGH COURT IN THE CASE OF J.P. SRIVAST AVA & SONS (KANPUR) LTD. V. COMMISSIONER OF INCOME-TAX [1978] 111 ITR 326 THAT - IT MUST FURTHER BE SHOWN THAT THE ORDER WAS PREJUDI CIAL TO THE INTERESTS OF THE REVENUE. THE ASSESSEE HAS OVER-APPLIED THE INCOME FOR EACH O F THESE YEARS AFTER TAKING DEPRECIATION INTO CONSIDERATION. THE ONLY Y EAR WHEN THIS IS NOT SO IS A.Y. 2003-04. IN VIEW OF THE OVER APPLICATIO N OF INCOME, HOW CAN IT BE SAID THAT THE DEMAND REVISIONS PASSED ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE. ALSO, IN TRUSTS, THE OVER- APPLICATION OF INCOME OF ONE YEAR IS JUDICIALLY ALLOWED TO BE SET OFF AGA INST THE SUBSEQUENT YEARS' UNDER-APPLICATION OF INCOME. THUS, IT CANNOT BE SAID THAT, IMPUGNED DEMAND REVISIONS ARE PREJUDICIAL TO THE IN TEREST OF THE REVENUE. ITA NO. 360 TO 364/ALLD./2014 18 IT IS THEREFORE PRAYED THAT THE PROCEEDINGS SOUGHT TO BE INITIATED U/S 263 MAY KINDLY BE DROPPED. (6-1) WITHOUT PREJUDICE TO THE ABOVE, THE DEMANDS R EVISED ON THE BASIS OF THE ORDER OF THE HON'BLE ITAT RESTORING REGISTRATION PERTAIN TO THE ONES PASSED U/S 143(3) FOR THESE YEARS ON 28.12.2010. THESE ORDERS ARE BARRED BY LIMITATION FOR THE PURPOSES OF THEIR REVISION U/S 263. IT HAS BEEN HELD IN THE CASE OF COMMISSIONER OF' INCOME- TUX, DELHI - I V. BHARTI AIRTEL LTD. [2013] 37 TAXM ANN.COM 218 (DELHI) THAT LIMITATION FOR PASSING REVISIONARY ORDER IS TO BEGI N FROM DATE OF ORIGINAL ORDER INSTEAD OF REASSESSMENT ORDER, WHERE SUBJECT MATTER OF ADDITIONS MADE IN REVISION ARE NOT DEALT WITH IN REASSESSMENT. THUS, THE 'ORDE R' SOUGHT TO BE REVISED ARE TIME BARRED. IT IS THEREFORE PRAYED THAT THESE PROCEEDIN GS U/S 263 MAY KINC1LY BE DROPPED. (7-1) FOR THE PROCEEDINGS OF SECTION 261 TO LIE, AL L OF THE FOLLOWING CONDITIONS MUST BE FULFILLED - (A) THERE MUST BE AN ORDER. (B) IT MUST BE COMMUNICATED TO THE ASSESSEE BEFORE THE INITIATION OF THE REVISION PROCEEDINGS. (C) THE ORDER MUST BE BOTH ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE. (D) THE PROCEEDINGS MUST NUT BE BARRED BY LIMITATIO N. IN THE INSTANT CASE, IT IS CLEAR THAT THE ALL THE F OUR LEGS ESSENTIALS FOR INITIATION OF PROCEEDINGS U/S 263 ARE NOT BEING FULFILLED. IT IS PRAYED THAT THE ASSESSEE SEEKS TO PLACE MORE PAPERS AND WRITTEN SUBMISSIONS IN THESE PROCEEDINGS. IT IS THEREFORE PRAYED THAT T HREE WEEKS MAY VERY KINDLY BE PROVIDED TO FURNISH THE SAME. YOURS FAITHFULLY, SD/- SAN JAY KHANDUJA (AR) 5. THEREAFTER, SRI SANJAY KHANDUJA, FCA ATTENDED O N 30.01.2014 AND FILED A FURTHER REPLY WHICH READS AS UNDER: TO ITA NO. 360 TO 364/ALLD./2014 19 THE HON'BLE COMMISSIONER OF INCOME-TAX, ALLAHABAD. SUB: THE BOARD, OF DIRECTORS OF THE ALLAHABAD AGRI CULTURAL INSTITUTE, ALLAHABAD - NOTICE US 263 - ASSESSMENT YEARS 2001-0 2, 2002-03, 2003-04, 2004-05 AND 2005-06 - REPLY YOUR HONOR, KINDLY REFER TO THE NOTICE NO.F.NO.C1T/ALLD/263/201 3-14 DATED 11.12.2013 ISSUED BY YOUR GOOD-SELF U/S 263 FOR ASSESSMENT YEARS 2001 -02, 2002-03, 2003-04, 2004- 05 AND 2005-06 TO THE BOARD OF DIRECTORS OF THE ALL AHABAD AGRICULTURAL INSTITUTE, ALLAHABAD TO SHOW CAUSE WHY THE ORDERS OF THE THESE IMPUGNED YEARS BE NOT REVISED AS THEY ARE 'ERRONEOUS IN SO FAR AS THEY AR E PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN CONTINUATION OF THE EARLIER REPLY, FOLLOWING SUB MISSIONS ARE MADE AS UNDER - (8-1) THE ASSESSEE HAD FILED FIRST APPEALS AGAINST THE ASSESSMENT ORDERS OF THE IMPUGNED YEARS ON 30-01-2011, INTER-ALIA, ON THE FO LLOWING GROUND - BECAUSE THE LD. ASSISTANT COMMISSIONER OF INCOME TA X, RANGE-II, ALLAHABAD (ACIT) ERRED ON FACTS AND IN LAW IN DENYING THE EXE MPTION U/S 11 AND 12 OF THE INCOME TAX ACT, 1961. THESE APPEALS WERE PENDING WHEN THE ORDER OF THE HO N'BLE ITAT WAS PASSED VIDE ORDER DATED 21.06.2011. THE AO REVISED THE DEMANDS OF THESE YEARS IN '. ITNS 150 ON 01.12.2011 BY STATING THAT THE REGISTRATION CERT IFICATE GRANTED ON 16.08.1975 HAS BEEN HELD TO BE VALID AND EFFECTIVE BY THE ITAT . IN VIEW' OF THE PENDING FIRST APPEALS, PASSING A SPEAKING ORDER AS ENVISAGED IN T HE NOTICE U/S 263 WOULD HAVE TANTAMOUNTED TO ABROGATING THE AUTHORITY OF THE HON 'BLE CIT(A) WITH REFERENCE TO THE PENDING APPEALS. HENCE, THE AD COULD NOT HAVE P ASSED ANY SPEAKING ORDER WHILE REVISING THE DEMAND ON THE BASIS OF THE ORDER OF THE HON'BLE ITAT. (8-2) THE ACTION OF THE DEMAND REVISION BY AO IN TH E IMPUGNED YEARS STOOD FURTHER FORTIFIED BY THE ORDER OF THE HON'BLE CIT PASSED ON 27-12 - 2011 U / S 254 I 12AA(3) (COPY ENCLOSED AS ANNEXURE '1') IN WHICH HE STATED IN THE LAST LINE THAT THE REGISTRATION U/S 12A IS GRANTED TO THE SOCIETY WITH RETROSPECTIVE EFFECT. (8-3) HENCE IN THESE CIRCUMSTANCES, THE 'ORDER'. P ASSED BY THE ACIT CANNOT BE SAID TO BE ERRONEOUS. ITA NO. 360 TO 364/ALLD./2014 20 (8-4) YOUR HONOR, WITHOUT PREJUDICE TO THE ABOVE, I N VIEW OF THE ORDER OF THE HON'BLE CIT DATED 27-12-2011, NOW TO HOLD THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS IS A MERE CHANGE OF OPINION WHICH IS NOT TENABLE IN LAW. (9-1) THE TAXABLE INCOME OF THE RETURNS FILED FOR T HE YEARS UNDER QUESTION WAS NIL. (9-2) THE ASSESSMENTS WERE FRAMED AS UNDER ON 28.12 .2010 U/S 143(3)/254 AFTER DENYING BENEFIT OF REGISTRATION U/S 12A FOR THE IMP UGNED YEARS - ' PARTICULARS AY 2001-02 AY 2002-03 AY 2003-04 AY 2004-05 AY 2005-06 AMOUNT (RS) AMOUNT (RS) AMOUNT (RS) AMOUNT (RS) AMOUNT (RS) INCOME AS DISCLOSED NIL NIL NIL NIL NIL GROSS RECEIPTS 5,52,52,919 8,37,41,099 19,41,49,106 32,72,61,085 48,10,52,399 LESS: EXPENSES FOR PURPOSE OF THE OBJECTS 4,66,29,625 6,67,77,119 14,69,75,740 25,10,55,354 36,79,12,648 ADD: EXPENSES DISALLOWED 29,62,933 35,56,761 44,08,599 77,34,092 74,64,819 TOTAL INCOME 1,15,86,230 2,05,20,740 5,15,81,970 8,39,39,820 12,06,04,570 DEMAND RAISED 12,49,941 1,35,47,688 3,76,85,344 4,37,21,360 6,93,66,047 (9-3) THE ASSESSED INCOME WAS REVISED VIDE ITNS 15 0 DATED 01.12.2011 AS UNDER AFTER GRANTING RELIEF WITH RESPECT TO THE ACCUMULAT ION ALLOWABLE U/S 11 AND CAPITAL EXPENDITURE (WHICH WAS DENIED IN THE. ASSESSMENT FR AMED ON 2812~2010) PARTICULARS AY 2001-02 AY 2002-03 AY 2003-04 AY 2004-05 AY 2005-06 ASSESSED INCOME 1,15,86,230 2,05,20,740 5,15,81,970 8,39,39,820 12,06,04,570 TOTAL RELIEF ALLOWED ON THE BASIS OF 1,15,86,230 2,05,20,740 4,75,83,670 8,39,39,820 12,06,04,570 ITA NO. 360 TO 364/ALLD./2014 21 EXTENSION OF BENEFITS OF REGISTRATION U/S 12A NET TAXABLE INCOME NIL NIL 39,98,300 NIL NIL (9-4) THE ABOVE REVISIONS IN THESE YEARS WAS NOT P REJUDICIAL TO THE INTEREST OF THE REVENUE. THE RELIEF WAS RESTRICTED TO THE ACCUMULAT ION AND CAPITAL EXPENDITURE BOTH OF WHICH ARE ALLOWABLE WHEN BENEFIT OF REGISTRATION U/S 12A IS TO BE EXTENDED IN THE ASSESSMENT PROCEEDINGS. THE TOTAL OF BOTH WAS MORE THAN THE ASSESSED INCOME IN FOUR OF THE FIVE YEARS. (9-5) THE 'ORDER' PASSED WAS THUS, NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE.. (10-1) MORE SUBSTANTIALLY THE ORIGINAL ASSESSMENT O RDERS FOR ASSESSMENT YEARS 2001-02, 2.002-03, 2003-04, 2004-05 AND 2005-06 WER E APPEALED BY THE ASSESSEE WHEREIN THE ISSUE OF APPLICABILITY OF SECTIONS 11 - 13 OF THE ASSESSMENT ORDER WERE DIRECTLY IN ISSUE. (10-2) THE FIRST APPEAL ORDERS WERE PASSED AS FOLLO WS - ASSESSMENT YEAR APPEAL NO. DATE OF ORDER 2001-200'2 162/ACIT/R-II/ALLD/10-11 21.11.2013 2002-2003 161/ACIT/R-II/ALLD/10-11 21.11.2013 2003-2004 160/ACIT/R-II/ALLD/10-11 21.11.2013 2004-2005 159/ACIT/R-II/ALLD/10-11 21.11.2013 2005-2006 158/ACIT/R-II/ALLD/10-11 21.11.2013 COPIES OF THESE ORDERS ARE ENCLOSED. (10-3) SPEAKING ORDERS HAVE BEEN PASSED BY THE LD. CIT(A) FOR ALL THE IMPUGNED YEARS. (10~4) IT IS JUDICIALLY HELD THAT THE POWERS OF A C IT(A) ARE CO-TERMINUS AND CO- EXTENSIVE WITH THAT OF THE AG. (10-5) THE LD. CIT(A) HAS DECIDED THESE APPEALS ON THE BASIS OF THE PROVISIONS OF SECTION 11 - 13 OF THE INCOME TAX ACT, 1961. ITA NO. 360 TO 364/ALLD./2014 22 (10-6) THE LD. CIT(A) HAS EXAMINED THE CLAIMS FROM THE POINT OF GENUINENESS. HE HAS ALSO CONSIDERED THE EXPENSES FROM THE POINT OF VIEW WHETHER THESE CAN BE TREATED AS APPLICATION OF INCOME. (10-7) ACCORDING TO THE THEORY OF MERGER, THE ORDER S OF ASSESSMENT MERGE WITH APPELLATE ORDERS. AS SUCH TILE ASSESSMENT ORDERS AN D THE ORDERS OF 01/12/2011 SOUGHT TO BE REVISED DO NOT SURVIVE AS ON DATE. THE NOTICE DATED 11.12.2013 ISSUED BY YOUR GOOD SELF HAS BECOME INFRUCTUOUS IN VIEW OF THE APPELLATE ORDERS DATED 21 ST NOVEMBER, 2013. AS SUCH, THE SAME MAY KINDLY BE DRO PPED. . (10-8) THE MAIN BASIS OF THE REVISION OF THE ORDERS U/S 263 THAT NO SPEAKING, ORDERS HAVE BEEN PASSED THEREFORE DOES NOT SURVIVE. (10-9) IT IS PERTINENT TO MENTION THAT IN THE APPE LLATE PROCEEDINGS, THE EXPENSES DISALLOWED ARE REDUCED AS FOLLOWS -. PARTICULARS AY 2001-02 AY 2002-03 AY 2003-04 AY 200 4-05 AY 2005-06 AMOUNT (RS) AMOUNT (RS) AMOUNT (RS) AMOUNT (RS) AMOUNT (RS) INCOME AFTER REVISION (1- 12-11) NIL NIL 39,98,300/- NIL NIL EXPENSES DISALLOWED IN ASSTT. 29,62,932/- 35,56,761/- 44,08,599/- 77,34,092/- 74, 64,819/- RELIEF 16,28,854/- 25,41,196/- 22,22,036/- 71,95,44 7/-- 60,53,670/- INCOME AFTER RELIEF OF (CIT(A) ORDER) NIL NIL 17,76,264/- NIL NIL (10-10) WITH ALL THE DISALLOWED EXPENSES AS SUCH, T HE DEMANDS IN FOUR OF THE FIVE YEARS WERE NIL. AFTER CONSIDERING THE REDUCTION IN THE EXPENSES DISALLOWED IN TERMS OF THE FIRST APPELLATE ORDERS, THE TAXES DUE STILL REMAIN NIL FOR FOUR OF THE FIVE ASSESSMENT YEAR AND WOULD STAND REDUCED FOR THE ASS ESSMENT YEAR 2003-04. (10-11) ITNS 150 HAS TO BE DRAWN UP AFRESH POST TH E FIRST APPEAL ORDER AND THE ITNS 150 DATED 01.12.2011 THEREFORE DOES NOT SURVIV E. THUS, IT CANNOT BE SAID THAT THE ORDERS (POST MERGE R) ARE PREJUDICIAL TO THE INTEREST OF THE REVENUE. . (11-1) IN THE FACT'S AND CIRCUMSTANCES OF THE INSTA NT CASE, THE ORDERS SOUGHT TO BE REVISED ARE NOT NEITHER ERRONEOUS NOR PREJUDI CIAL TO THE INTEREST OF. THE ITA NO. 360 TO 364/ALLD./2014 23 REVENUE. IN VIEW OF THE MERGER OF THE APPELLATE ORD ERS, IT ALSO CANNOT BE SAID THAT HO SPEAKING ORDERS WERE PASSED. (11-2) IT IS THEREFORE PRAYED THAT THESE PROCEEDING S U/S 263 FOR THE ASSESSMENT YEARS 2001-02 TO 2005-06 MAY VERY KINDLY BE DROPPED. THANK YOU, YOURS FAITHFULLY, SD/- 30/01/2014 SANJAY KHANDUJA (AR) 7. THE LD. CIT CONSIDERING THE SUBMISSIONS OF THE A SSESSEE SET ASIDE THE IMPUGNED ORDER (ITNS 150) DATED 01.12.2011 IN ALL T HE ABOVE ASSESSMENT YEARS UNDER CONSIDERATION AND DIRECTED THE AO TO EXAMINE THE WHOLE ISSUE AFRESH IN THE LIGHT OF THE PROVISIONS OF SECTION 11 TO 13 OF THE IT ACT. FINDINGS OF LD.CIT IN THE IMPUGNED ORDER IN PARA 6, 7 & 7,1 ARE REPRODUCED AS UNDER : 6. THE LD. A.R. (THROUGH HIS WRITTEN SUBMISSIONS) HAS RAISED CERTAIN OBJECTIONS IN THIS REGARD. I DISCUSS THEM ONE BY ONE AS UNDER: I) ONE OF THE OBJECTIONS WAS THAT THE ORDERS (MODIF YING THE DEMANDS) OF THE A.O. WHICH WERE SOUGHT TO BE REVISED U/S 263 WERE N EVER SERVED ON THE ASSESSEE. ON VERIFICATION OF RECORDS, IF COULD NOT BE ASCERTAINED IF SUCH ORDERS HAD INDEED BEEN SERVED ON THE ASSESSEE. THER EFORE, THE REVISIONAL PROCEEDINGS WERE DROPPED ON THIS TECHNICAL GROUND A LONE AND ONCE THE ORDERS WERE DULY SERVED ON THE ASSESSEE, FRESH REVI SIONAL PROCEEDINGS HAVE BEEN INITIATED. ACCORDINGLY, THIS OBJECTION OF THE ASSESSEE IS DULY ADDRESSED TO. II) ANOTHER OBJECTION OF THE ASSESSEE IS THAT THE NOTICE U/S 263 OF THE I.T. ACT WAS ONLY A CHANGE OF OPINION, WHICH WAS NOT TENABLE IN LAW. IN THIS REGARD, IT IS TO BE STATED THAT AS DISCUSSED IN EARLIER PAR AS, WHILE PASSING THE IMPUGNED ORDERS (MODIFYING THE DEMANDS), THE A.O. H AD NOT APPLIED HIS MIND AT ALL TO THE PROVISIONS OF SEC. 11 TO 13 OF T HE ACT. IN ABSENCE OF ANY ITA NO. 360 TO 364/ALLD./2014 24 SUCH APPLICATION OF MIND BY THE A.O., THERE IS NO Q UESTION OF FORMATION OF AN OPINION BY THE A.O. ACCORDINGLY, THIS OBJECTION OF THE ASSESSEE HAS NO MERIT. III) THE. THIRD OBJECTION IS THAT THE ALLOWABILITY OF THE EXEMPTION U/S 11 OF THE ACT COULD BE CLEARLY DETERMINED FROM THE RECORDS OF ANY OF THE ASSTT. YEAR. IN THIS REGARD, IT IS TO BE STATED THAT BEING 'CLEARLY DETE RMINED FROM THE RECORDS' AND 'HAVING BEEN VERIFIED BY THE A.O. ARE TWO SEPA RATE THINGS. I AM NOT, EVEN FOR A MOMENT, PREJUDGING THE ISSUE. I AM ONLY STATING THAT THE FACT OF NON APPLICATION OF MIND BY THE A.O. TO THE IMPUGNED ISSUE HAS RENDERED HIS ORDERS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND HE IS BEING DIRECTED TO APPLY HIS CONSCIOUS MIND TO THE R EQUIREMENT OF PROVISIONS OF SEC. 11 TO 13 BEFORE ALLOWING THE BENEFITS U/S 1 1 OF THE ACT. IV} THE NEXT OBJECTION IS THAT ITNS 159 IS ONLY A SHEET OF CALCULATION AND MAY NOT BE EQUATED TO AN 'ORDER', THIS OBJECTION ALSO H AS NO MERITS SINCE THERE IS NO STATUTORY PRESCRIBED PROFORMA FOR PASSING ORDERS OR GIVING APPEAL EFFECTS. IN THESE ITNS L50, THE A.O. HAS EFFECTIVEL Y GIVEN THE APPEAL EFFECT BY CLEARLY WRITING AS FOLLOWS: 'RELIEF ALLOWED BY ITAT ALLD. ORDER NO.113 / (ALLD) /2010 DT 21.06.2011. REGISTRATION CERTIFICATE DATED 16.08.1975 AS HAD BE EN ISSUED BY THE LD. CIT, LUCKNOW THE NAME OF ALLAHABAD AGRICULTURE INSTITUT E IS MAINTAINED AND HELD TO BE VALID AND EFFECTIVE. THUS, THESE ITNS 150 CONSTITUTE 'ORDERS' PASSED BY THE A.O., WHICH CAN BE REVISED BY THE CIT. IT IS A TRITE LAW THAT ORDER GI VING EFFECT TO THE APPELLATE ORDERS IS ALSO AN 'ORDER' WHICH CAN BE REVISED BY T HE CI.T. U/S 263 OF THE ACT. V) THE NEXT OBJECTION IS THAT THE ASSTT. ORDERS PAS SED BY THE A.O. DATED ----- HAD BEEN SUBJECTED TO APPEAL & THE LD. CI.T. (APPEA L) HAD PASSED ORDERS IN THOSE CASES VIDE HIS ORDERS DATED 21.11.2013 AND TH EREFORE, THE 'DOCTRINE OF MERGER' SHALL APPLY. THIS OBJECTION OF THE ASSESSEE ALSO IS DEVOID OF ANY MERIT SINCE THE SUBJECT 'ORDERS' FOR THESE REVISION AL PROCEEDINGS ARE NOT THE ASSESSMENT ORDERS BUT THE 'ORDERS' GIVING EFFECT TO APPELLATE ORDERS. THUS THERE IS NO QUESTION OF ANY MERGER OF THESE 'ORDERS ' WITH THE ORDERS OF THE LD. CIT (A). ACCORDINGLY ALL THE OBJECTIONS OF THE ASSESSEES LD. AR ARE DISPOSED OFF. ITA NO. 360 TO 364/ALLD./2014 25 7. ON CAREFUL PERUSAL OF THE CASE RECORDS (INCLUDIN G THE ORDER OF THE HONBLE ITAT AS MENTIONED IN THE SHOW CAUSE NOTICE) & ALSO THE SUBMISSIONS MADE BY THE LD. A.R. OF THE ASSESSEE, FOLLOWING FACTS EMERGE: (I) THAT THE HONBLE ITAT VIDE ITS ORDER DT. 24-04- 2009 IN ITA NO. 28/29/30/31(ALLD}/2009 & ITA NO 73(ALLD}/2008 HAD S ET ASIDE THE ORDERS OF THE A.O. (FOR ALL THE ASSESSMENT YEARS UNDER REFERE NCE) & REMANDED THE SAME TO THE FILE OF THE A.O. FOR DECIDING THE MATTE R AFRESH IN THE LIGHT OF DISCUSSION IN THE SAID ORDER. (II) THAT THE A.O. WHILE PASSING ORDERS {FOR ALL T HE ASSESSMENT YEARS UNDER REFERENCE} IN PURSUANCE TO THE HONBLE ITAT'S ORDE R DATED 24.04.2009 DID NOT GIVE BENEFIT OF THE PREVISIONS OF SEE. 11 OF TH E I. T. ACT SINCE BY THAT TIME THE REGISTRATION OF THE TRUST WAS CANCELLED BY THE LD. CIT, ALLAHABAD VIDE HIS ORDER DATED 08.03.2010. III} IN VIEW OF CANCELLATION OF THE REGISTRATION BY THE LD. CIT ALLAHABAD, WHILE PASSING THE SAID ORDERS, THE A.O. DID NOT EXAMINE I F THE ASSESSEE HAD COMPLIED WITH THE SPECIFIC PROVISIONS OF SEC 11 TO 13 OF THE I.T. ACT, AS IT WAS NOT AT ALL REQUIRED. SUBSEQUENTLY, WHEN THE ORDER O F 'THE LD. CIT, ALLAHABAD (CANCELLING THE REGISTRATION U/S 11/12 OF THE I.T. ACT 1961) WAS SET ASIDE BY THE HONBLE ITAT (VIDE ITS ORDER DATED 21.06.2011), THE A.O. PASSED ORDERS MODIFYING THE DEMANDS (RAISED THROUGH EARLIER ORDER S) BY SIMPLY ALLOWING THE DEDUCTION U/S 11 OF THE I.T. ACT. WHILE PASSING SUCH ORDER (BY GIVING BENEFITS UNDER SECTION 11 THE I.T. ACT), THE A.O. D ID NOT AT ALL EXAMINE IF THE ASSESSEE HAD COMPLIED WITH ALL THE LEGAL REQUIREMEN TS OF SEC 11 TO 13 OF THE IT ACT. THE HON'BLE ITAT HAD SIMPLY RESTORED THE RE GISTRATION U/S 12A BUT THAT ORDER NEVER DIRECTED THE A.O. TO ACCEPT THE CL AIM OF THE ASSESSEE AS SUCH WITHOUT MAKING ANY ENQUIRIES IN THAT REGARD. IT IS SETTLED LAW THAT EVEN IF THE ASSESSEE IS REGISTERED U/S 12A, IT WAS THE BOUNDEN DUTY OF THE A.O. TO EXAMINE THE CLAIM AT THE ALTAR OF THE SPECIFIC PROV ISIONS OF SEC. 11 TO 13 OF THE ACT, WHICH WAS NOT DONE BY THE AO. THIS INACTIO N ON THE PART OF THE A.O. RENDERED SUCH ORDERS ERRONEOUS . FURTHER, THESE ERRONEOUS ORDERS ARE PREJUDICIAL. TO THE INTEREST OF THE REVENUE SINCE T HE A.O. ALLOWED BENEFIT U/S 11 WITHOUT EXAMINING IF THE ASSESSEE HAD COMPLIED W ITH ALL THE STATUTORY PREVISIONS OF SEC 11 TO 13 OF THE I.T. ACT. SUCH NO N-APPLICATION OF MIND AND FAILURE TO MAKE DUE ENQUIRIES HAS RENDERED SUCH ORD ERS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THIS REG ARD REFERENCE IS MADE TO THE FOLLOWING DECISIONS: I) CIT V/S. BHAGAWAN DAS 272 ITR 367 (ALLD.) ITA NO. 360 TO 364/ALLD./2014 26 WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT HAD HELD THAT AN ORDER WHICH HAS BEEN PASSED WITHOUT APPLICATION OF MIND WILL AL SO FALL UNDER THE EXPRESSION ERRONEOUS & PREJUDICIAL TO THE INTEREST OF REVENUE. (II) MALABAR INDUSTRIES 243 ITR 83 (SC) WHEREIN IT WAS HELD BY THE HON'BLE SUPREME COURT TH AT IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLE O F NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. III) RAMPYARI DEVI SAROGI VS CIT (1968) 67 ITR 84 (SC) IV) SRNT. TARA DEVI AGGRAWAL V/S. CIT (1973) 88 I TR 323 (SC) THE AFORESAID TWO CASES WERE ANALYSED BY THE HON'BL E DELHI HIGH COURT IN ITS DECISION: CIT V/S DLF POWER LTD. (345 ITR 446) WHEREIN IT HAS OBSERVED: THESE TWO DECISIONS SHOW THAT IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE FURTHER ENQUIRIES BEFORE CANCE LLING THE ASSESSMENT ORDER OF THE INCOME-TAX OFFICER. THE COM MISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME-TAX OFFICER SHOULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSE E IN HIS RETURN. V) (THE HON'BLE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE CASE OF JAGDISH KUMAR GULATI V/S CIT (2004) 269 ITR 71 (ALL ), AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS PASSED EARLIER, HELD THAT THE ABSENCE OF PROPER ENQUIRY IN A MATER RENDERS AN ORDER ERRONEOUS AS WELL AS PREJUDICE TO THE INTEREST OF REVENUE. VI) GEE VEE INTERPRISES 99 ITR 375 (DEL) VII) K. A. RAMASWAMY CHETTIAR 220 ITR 657 (MAD) VIII} CLT V/S JAWAHAR BHATTACHARJEE 341 ITR 434 (G AUH) (FB) 7.1 IN THIS VIEW OF THE MATTER, I HEREBY ANNUL THE IMPUGNED ORDERS (MODIFYING THE EARLIER DEMANDS) DATED 01.12.2011 OF THE A.O. F OR ALL THE FORESAID YEARS & DIRECT THE A.O. TO EXAMINE THE WHOLE ISSUE AFRESH O N THE ALTAR OF THE PROVISIONS OF SEC.11 TO 13 OF THE I.T. ACT. ITA NO. 360 TO 364/ALLD./2014 27 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE FILED A CHART OF CHRONOLOGICAL EVENTS FOR BETTER UNDERSTANDING OF THE FACTS AND ISSUE. THE SA ME IS REPRODUCED AS UNDER : SL DATES EVENTS 1 16.8.1975 APPELLANT SOCIETY WAS GRANTED REGISTRAT ION UNDER SECTION 12-A OF THE INCOME TAX ACT, 1961, HEREINAFTER REFERRED TO AS TH E ACT. 2 AYS 2001- 02 AND 2002-03 UPON REGULAR ASSESSMENTS, IN VIEW OF ITS REGISTRATI ON AS A CHARITABLE TRUST UNDER SECTION 12-A OF THE ACT, APPELLANTS IN COME WAS HELD TO BE EXEMPT FROM TAX. 3 27.3.2006 THE APPELLANT WAS ASSESSED TO TAX FOR A Y 2003-04 UNDER SECTION 143(3) OF THE ACT. AGAIN, APPELLANTS CLAIM FOR EX EMPTION WAS ALLOWED. (A.Y. 2003-04 PG 1-11 OF P. BK). 4 26.12.2006 APPELLANT WAS ASSESSED FRO AY 2004-05 UNDER SECTION 143(3) OF THE ACT. IN THAT ASSESSMENT PROCEEDING, THE ASSESSING OFFICER CHOSE TO DISALLOW THE CLAIM OF EXEMPTION OF THE APPELLANT ON THE GROUND OF VIEW OF CHANGE OF ITS OBJECTS OF FORMATION. 5 31.12.2007 ADOPTING THE REASONING CONTAINED IN THE ASSESSMENT ORDER FOR AY 2004-05, THE APPELLANTS ASSESSING AUTHORITY RE-ASS ESSED THE APPELLANT FOR AYS 2001-02, 2002-03 AND 2003-04 AND SIMILARLY CHARGED IT TO TAX. (A.Y. 2003-04 PG 12023 OF P.BK) 6 31.12.2007 ALSO, APPELLANTS REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT FOR AY 2005-06 WAS COMPLETED AND THE APPELLANT WAS SIMILARLY ASSESSED TO TAX BY DEPRIVING IT OF THE BENEFIT OF E XEMPTION AS A CHARITABLE TRUST UNDER SECTION 12-A OF THE ACT READ WITH SECTION 11 TO 13 OF THE ACT. 7 THE APPELLANT CARRIED THE ASSESSMENT ORDERS IN A PPEAL TO THIS HONBLE TRIBUNAL BY MEANS OF FIVE SEPARATE APPEALS BEING AP PEAL NOS.28, 29, 30 AND 31 OF 2009 FOR AYS 2001-02 TO 2003-04 AND AY 20 05-06 RESPECTIVELY AND APPEAL NO.73 OF 2008 FOR AY 2004-0 5. 8 24.04.2009 THIS HONBLE TRIBUNAL ALLOWED ALL THE ABOVE APPEALS BY THE APPELLANT FOR AYS 2001-02 TO 2005-06. AMONGST OTHERS, IT SPE CIFICALLY HELD (I) THE ASSESSING OFFICER CANNOT OPEN THE QUESTION OF R EGISTRATION ON YEAR TO YEAR BASIS (II) JURISDICTION OF THE ASSESSING OFFIC ER IS CONFINED TO EXEMPTION WHETHER INCOME HAD BEEN APPLIED TOWARDS T HE OBJECTS IN RESPECT OF WHICH REGISTRATION HAD BEEN GRANTED (III ) ASSESSMENT/RE- ASSESSMENT ORDERS AGAINST THE APPELLANT FOR ALL THE ASSESSMENT ORDERS WERE SET ASIDE (IV) A DIRECTION WAS ISSUED TO THE A SSESSING AUTHORITY TO MAKE DE-NOVO ASSESSMENTS. (A.Y. 2003-04 PG 24-44 O F P.BK)> 9 8.3.2010 WHILE THE ASSESSMENT PROCEEDINGS WERE TH US PENDING, IN REMAND, THE CIT, ALLAHABAD, PASSED AN ORDER UNDER SECTION 12-AA (3) OF THE ACT AND CANC4ELLD THE REGISTRATION GRANTED TO THE APPEL LANT UNDER SECTION ITA NO. 360 TO 364/ALLD./2014 28 12-A OF THE ACT. THE APPELLANT CHALLENGED THE SAME BEFORE THIS HONBLE TRIBUNAL IN ITA NO.113 OF 2010. (A.Y. 2003-04 PG 45 -49 OF P.BK) 10 28.12.2010 THEREAFTER, VIDE ASSESSMENT/RE-ASSESSMENT ORDERS FO R AYS 2001-02 TO 2005-06 THE APPELLANTS ASSESSING AUTHORITY (ACTING UPON REMAND MADE BY THIS HONBLE TRIBUNAL), AGAIN DISALLOWED THE CLA IM OF EXEMPTION UNDER SECTION 12-A OF THE ACT READ WITH SECTION 11 AND 12 OF THE ACT,A SOLELY IN VIEW OF THE ORDER PASSED BY THE CIT, ALLA HABAD DATED 8.3.2010 SECTIN 12-AA(3) OF THE ACT. THEREAFTER, HE PROCEEDED TO ASSESS THE APPELLANT IN THE STATUS OF ASSOCIATION OF PERSON AS A BUSINESS ENTITY AND VERI FIED THE NATURE OF QUANTUM OF EXPENSES IN RELATION TO THE ACTIVITY OF THE APPELLANT, NAMELY, IMPARTING EDUCATION. HE DISALLOWED CERTAIN EXPENSES FOR VARIOUS REASONS SUCH AS EXPENSES BEING NOT MET FOR BUSINESS PURPOSE OR LACKING IN DO CUMENTARY EVIDENCE OR EXPLANATIONS JUSTIFYING PARTICULAR EXPENDITURE O R BEING CAPITAL IN NATURE. (A.Y. 2003-04 PG 50-74 OF P. BK) 11 21.6.2011 THE TRIBUNAL ALLOWED APPELLANTS ITA NO.1 13/2010 AND SET ASIDE THE ORDER DATED 8.3.2010 PASSED BY THE CIT, ALLAHABAD U NDER SECTION 12- AA(3) OF THE ACT. THE TRIBUNAL, THUS RESTORED THE APPELLANTS REGISTRATION GRANTED UNDER SECTION 12-A OF THE ACT DATED 16.8.1975. (A.Y. 2003-04 PAG 76-153 OF P. BK) 12 1.12.2011 THE ASSESSING AUTHORITY OF THE APPELLANT GAVE APPEAL EFFECT IN PURSUANCE OF THE ORDER DATED 21.6.2011 PASSED BY TH IS HONBLE TRIBUNAL. THE DEMANDS THAT HAD BEEN CREATED UNDER THE ASSESSMENT ORDER DATED 28.12.2010 WERE MODIFIED IN VIEW OF THE ENTITLE ENT OF EXEMPTION ARISING IN FAVOUR OF THE APPELLANT UPON T HE ORDER DATED 21.6.2011. (A.Y. 2003-04 PG 154 OF P. BK) 13 21.11.2013 ALSO, SUBSEQUENTLY, CIT(A) ALLAHABAD HAS PARTLY ALL OWED THE APPELLANTS APPEALS FOR AYS 2001-02 TO 2005-06 AGAI NST ASSESSMENT/RE- ASSESSMENT ORDERS DATE 28.12.2010. THUS, HE PARTLY ALLOWED THE EXPENDITURE CLAIMED BY THE APPELLANT THAT HAD BEEN DISALLOWED BY THE SASSING AUTHORITY, VIDE HIS ORDERS DATED 28.12.2010 . (A.Y. 2003-04 PG 155-210 OF P.BK) 14 NOW APPEAL EFFECT IS TO BE GIVEN TO THE ORDER DATE D 21.11.2013 BY THE ASSESSING AUTHORITY AND BENEFIT OF EXP4NDITURE AS H AS BEEN ACCEPTED BY THE CIT(A) IN HIS ORDER DATED 31.12.2013 HAS TO BE PROVIDED AND CONSEQUENTLY THE DEMAND OF TAX HAS TO BE REDUCED. 15 11.12.2013 THE CIT, ALLAHABAD ISSUED NOTICE UNDER SECTION 263 OF THE ACT PROPOSING TO REVISE ITNS 150 DATED 1.12.2011 FOR AY S 2001-02 TO AY 2005-06 ON THE REASONS THAT SECTIONS 11 TO 13 OF TH E ACT HAVE NOT BEEN EXAMINED WHILE GIVING APPEAL EFFECT. 16 3.12.2013 & 30.1.2014 THE APPELLANT REPLIED TO THE ABOVE NOTICE AND OBJEC TED TO NOTICE ON GROUNDS OF LIMITATION, JURISDICTION AND ILLEGALITIE S. 17 25.3.2014 CIT, ALLAHABAD HAS ANNULLED THE ITNS 150 (DESCRIBED BY HIM AS ITA NO. 360 TO 364/ALLD./2014 29 ORDERS), ALL DATED 1.12.2011, FOR THE AYS. 2001-02 TO 2005-06 AND HAS DIRECTED THE ASSESSING OFFICER TO EXAMINE THE WHOLE ISSUE A FRESH ON THE ALTAR OF THE PROVISION OF SECTION 11 TO 13 OF THE A CT. HENCE THE PRESENT APPEALS. 9. IT IS CONTENDED ON BEHALF OF THE ASSESSEE THAT I TNS 150 IN REFERENCE DATED 01.12.2011 IS NOT AN ORDER TO BE REVISED U/S. 263 O F THE IT ACT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NOTICE OF DEMAND U/S. 1 56 IS NOT AN ORDER TO BE REVISED U/S. 263 OF THE IT ACT. HE HAS RELIED UPON THE DECI SION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. SURESH GOKUL DAS 229 ITR 721 AND DE CISION OF ALLAHABAD HIGH COURT IN THE CASE OF CST VS. M/S. DWARIKA DAS & CO. , 1980 (VOL. 1) UPTC 123. THE LD. DR, HOWEVER, SUBMITTED THAT ANY ORDER COULD BE REVISED U/S. 263 OF THE IT ACT AND NO SPECIFIC RULE OR PROVISION IS PROVIDED I N THE ACT IN THIS REGARD. ITNS 150 IS AN ORDER. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KALYANKUMAR RAY VS. CIT, 191 ITR 634, IN WH ICH IT WAS HELD I.T.N.S. 150 IS ALSO A FORM OF DETERMINATION OF TAX PAYABLE AND WHEN IT IS SIGNED OR INITIALED BY THE INCOME-TAX OF FICER, IT IS CERTAINLY AN ORDER IN WRITING BY THE INCOME-TAX OFFICER DETER MINING THE TAX PAYABLE WITHIN THE MEANING OF SECTION 143(3). IT MA Y BE ONLY A TAX CALCULATION FORM FOR DEPARTMENTAL PURPOSES AS IT AL SO CONTAINS COLUMNS AND CODE NUMBERS TO FACILITATE COMPUTERIZAT ION OF THE PARTICULARS CONTAINED THEREIN FOR STATISTICAL PURPO SES, BUT THIS DOES NOT DETRACT FROM ITS BEING CONSIDERED AS AN ORDER IN WR ITING DETERMINING THE TAX PAYABLE BY THE ASSESSEE. THERE IS NO REASON WHY THIS DOCUMENTS, WHICH IS ALSO IN WRITING AND WHICH HAS R ECEIVED THE IMPRIMATUR OF THE INCOME-TAX OFFICER, SHOULD NOT BE TREATED AS PART OF THE ASSESSMENT ORDER IN THE WIDER SENSE IN WHICH TH E EXPRESSION HAS TO BE UNDERSTOOD IN THE CONTEXT OF SECTION 143(3).ALL THAT IS NEEDED IS THAT THERE MUST BE SOME WRITING INITIALED OR SIGNED BY THE INCOME-TAX OFFICER BEFORE THE PERIOD OF LIMITATION PRESCRIBED FOR COMPLETION OF THE ITA NO. 360 TO 364/ALLD./2014 30 ASSESSMENT HAS EXPIRED IN WHICH THE TAX PAYABLE IS DETERMINED. THE FORM USUALLY STYLED AS THE ASSESSMENT FORM NEED N OT ITSELF CONTAIN THE COMPUTATION OF TAX AS WELL. 10. HE HAS ALSO RELIED UPON THE ORDER OF ITAT MUMBA I BENCH IN THE CASE OF BOARD OF CONTROL FOR CRICKET IN INDIA VS. DIT (EXEM PTION), 278 ITR (AT) 83, IN WHICH IT WAS HELD THAT THE TERM ORDER IN THE CONTEXT OF ANY PROCEEDING U NDER SECTION 263 COVERS EACH AND EVERY ORDER PASSED IN A NY PROCEEDING UNDER THE ACT. THUS, THE REVISIONAL JURISDICTION OF THE COMMISSIONER EXTENDS TO REVISING ANY ORDER WHICH HE CONSIDERS TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THEREF ORE, THE CONTENTION OF THE ASSESSEE THAT THE AUTHORIZATION ISSUED BY TH E ASSESSING OFFICER WAS NOT AN ORDER WITHIN THE MEANING OF SECTION 263 AND IT WAS NOT AMENABLE TO REVISIONAL JURISDICTION UNDER SECTION 2 63 COULD NOT BE ACCEPTED. 11. CONSIDERING THE SUBMISSIONS OF THE PARTIES, WE ARE OF THE VIEW THAT THE CONTENTION RAISED BY THE ASSESSEE THAT ITNS 150 IS NOT AN ORDER TO BE REVISED CANNOT BE ACCEPTED. THE LD.CIT U/S. 263(1) MAY CALL FOR AN D EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO T HE INTERESTS OF REVENUE, MAY AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD AND A FTER MAKING ENQUIRIES, PASS ORDER IN ACCORDANCE WITH LAW. THE SIGNIFICANT WORDS USED IN THIS PROVISION ARE ANY PROCEEDING UNDER THIS ACT AND ANY ORDER . HONBLE SUPREME COURT IN THE CASE OF KALYANKUMAR RAY (SUPRA) HELD THAT ITNS 150 IS FO RM OF DETERMINING THE TAX PAYABLE IS CERTAINLY AN ORDER IN WRITING WITHIN THE MEANING OF SECTION 143(3). ITA NO. 360 TO 364/ALLD./2014 31 THEREFORE, ITNS 150 BEING PART OF THE ASSESSMENT OR DER SHALL HAVE TO BE CONSIDERED THE ORDER PASSED UNDER ANY PROCEEDING UNDER THE IT ACT AND AS SUCH COULD BE SUBJECT TO REVISION AND IF CONDITIONS OF SECTION 26 3 ARE SATISFIED THEN IT COULD BE REVISED BY THE LD. CIT. THIS CONTENTION OF THE ASSE SSEE IS, THEREFORE, REJECTED. 12. IT IS FURTHER CONTENDED ON BEHALF OF THE ASSESS EE THAT ITNS 150 DATED 01.12.2011 IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE BECAUSE THE AO HAS EXAMINED THIS ISSUE IN THE ORIGINAL ASSESSME NT ORDER DATED 27.03.2006 U/S. 143(3) (PB-1) IN WHICH APPLICABILITY OF THE PROVISI ONS OF SECTION 11 TO 13 HAVE BEEN EXAMINED BY THE AO. THE LD. COUNSEL FOR THE AS SESSEE REFERRED TO THE CHART OF THE EVENTS REPRODUCED ABOVE, AND SUBMITTED THAT THE TRIBUNAL VIDE ORDER DATED 24.04.2009 ALLOWED ALL THE APPEALS OF THE ASSESSEE HOLDING THAT THE AO CANNOT OPEN THE QUESTION OF REGISTRATION ON YEAR TO YEAR BASIS AND AFTER APPEAL OF THE ASSESSEE WAS ALLOWED RESTORING THE REGISTRATION U/S. 12AA VI DE ORDER DATED 21.06.2011 BY THE TRIBUNAL, THE ASSESSEE WOULD BE ENTITLED FOR DE DUCTION U/S. 11 TO 13 OF THE IT ACT. THE ORDER DATED 28.12.2010 HAS THUS MERGED WIT H THE APPELLATE ORDER OF THE CIT(A) DATED 21.11.2013. THEREFORE, THERE IS NO NEE D TO EXAMINE THE APPLICABILITY OF SECTION 11 TO 13 AGAIN AS PER DIRECTIONS GIVEN U /S. 263 OF THE IT ACT. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE AO DID NOT EXAMINE THE CONDITIONS OF SECTION 11 TO 13 OF THE IT ACT WHILE PASSING THE OR DER IN ITNS 150. DEMAND WAS REDUCED TO NIL IN ITNS 150. THE AO HAS TO GIVE APPE AL EFFECT TO THE ORDER OF ITAT ITA NO. 360 TO 364/ALLD./2014 32 BUT NO SEPARATE ORDER HAS BEEN PASSED. THE LD. DR R ELIED UPON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF M. VISVESVARAYA IN DUSTRIAL RESEARCH AND DEVELOPMENT CENTRE VS. ITAT, 251 ITR852, IN WHICH I T WAS HELD THAT REGISTRATION DOES NOT PRECLUDE ENQUIRY WHETHER INCOME OF THE TRU ST HAD BEEN APPLIED FOR A CHARITABLE PURPOSE IN A PARTICULAR YEAR. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS ADMITTED FACT THAT THE REGISTRATION U/S. 12AA VALIDLY EXISTS IN FAVOUR OF THE ASSESSEE, THROUGH WHICH THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S. 11 TO 13 OF THE IT ACT. THERE IS NO DISPUTE THAT EVEN IF REGISTRATION U/S. 12AA HAVE BEEN GRANT ED, THE AO COULD EXAMINE THE APPLICABILITY OF SECTION 11 TO 13 OF THE ACT IN ASS ESSMENT ORDER WHILE COMPLETING THE ASSESSMENT PROCEEDINGS. IT IS, THEREFORE, TO BE SEEN IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHETHER THE AO HAS EXAMIN ED THE ISSUE OF APPLICABILITY OF SECTION 11 TO 13 IN THE CASE OF ASSESSEE. THE AS SESSEE IN THE PAPER BOOK FILED COPY OF THE ASSESSMENT ORDER IN THE CASE OF ASSESSE E FOR THE ASSESSMENT YEAR 2003- 04 U/S. 143(3) DATED 27.03.2006 IN WHICH THE AO EXA MINED THE CASE OF THE ASSESSEE IN THE LIGHT OF REGISTRATION GRANTED U/S. 12A OF TH E ACT AND AFTER ELABORATE DISCUSSION, INCOME OF THE ASSESSEE WAS COMPUTED. CE RTAIN DEDUCTIONS WERE MADE WHICH WERE NOT TREATED AS APPLICATION OF INCOME AND IN THE COMPUTATION OF INCOME, THE AO HAS GRANTED DEDUCTION TO THE ASSESSEE OF THE CAPITAL EXPENDITURE INCURRED DURING THE YEAR UNDER CONSIDERATION IN A SUM OF RS. 1,84,61,304/- AND REDUCED THE ITA NO. 360 TO 364/ALLD./2014 33 INCOME BY PERMISSIBLE ACCUMULATION AT THE RATE OF 1 5% IN A SUM OF RS.2,91,22,365/-.THUS, THE AO EXAMINED THE APPLICAB ILITY OF PROVISIONS OF SECTION 11 TO 13 IN THE ORIGINAL ASSESSMENT ORDER AND GRANT ED RELIEF TO THE ASSESSEE BECAUSE THE ASSESSEE WAS GRANTED REGISTRATION U/S. 12A OF T HE IT ACT. THEREAFTER, THE HISTORY OF THE ASSESSEE, AS NOTED ABOVE, SHOWS THAT IN THE SAME ASSESSMENT YEAR 2003-04, THE AO PASSED ANOTHER ORDER U/S. 143(3)/148 DATED 3 1.12.2007 (PB-12). CONSIDERING THAT SINCE THERE IS CHANGE IN THE OBJEC TS OF THE ASSESSEE, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR BENEFIT U/S. 11 & 12 O F THE IT ACT AND AFTER CERTAIN DISALLOWANCES MADE, INCOME WAS COMPUTED ACCORDINGLY . THE ISSUE ULTIMATELY TRAVELLED TO THE TRIBUNAL IN ITA NO. 28/ALLD./2009 ETC. AND THE TRIBUNAL VIDE ORDER DATED 24.04.2009 (PB-24) ALLOWED THE APPEALS OF THE ASSESSEE FOR STATISTICAL PURPOSES WITH DIRECTION TO FRAME THE ASSESSMENTS DE NOVO. IN THE SAID ORDER, IT WAS HELD THAT THE AO CANNOT OPEN THE QUESTION OF REGIST RATION ON YEAR TO YEAR BASIS AND THE JURISDICTION OF THE AO IS CONFINED TO EXEMPTION WHETHER INCOME HAD BEEN APPLIED TOWARDS THE OBJECTS IN RESPECT OF WHICH REG ISTRATION HAD BEEN GRANTED. BEFORE RE-ASSESSMENT PROCEEDINGS COULD BE TAKEN AS PER DIRECTION OF THE TRIBUNAL, THE LD. CIT CANCELLED THE REGISTRATION U/S. 12AA(3) OF THE IT ACT ON DATED 08.03.2010 (PB-45). WHEN THE RE-ASSESSMENT PROCEEDI NGS WERE TAKEN UP BY THE AO U/S. 143(3)/254 OF THE IT ACT, THE AO PASSED THE ORDER ON DATED 28.12.2010 AND DISALLOWED THE CLAIM OF EXEMPTION U/S. 11 & 12 OF THE IT ACT BECAUSE THE REGISTRATION WAS ALREADY CANCELLED TO THE ASSESSEE U/S. 12AA(3) OF THE IT ACT DATED ITA NO. 360 TO 364/ALLD./2014 34 08.03.2010 AND AFTER DISALLOWING CERTAIN EXPENDITUR E, ASSESSMENT WAS FRAMED (PB- 50). IN THE MEANTIME, THE ASSESSEES APPEAL AGAINST THE CANCELLATION OF REGISTRATION WERE DECIDED BY THE TRIBUNAL IN ITA NO. 113/2010 DA TED 21.06.2011 (PB-76) AND THE REGISTRATION GRANTED TO THE ASSESSEE WAS RESTOR ED BY SETTING ASIDE THE ORDER OF CANCELLATION DATED 08.03.2010. THUS, THE ASSESSEE H OLDS A VALID REGISTRATION U/S. 12AA OF THE IT ACT. THE AO, THEREAFTER PASSED THE I TNS 150 ON 01.12.2011, IN APPEAL EFFECT REFERENCE TO ORDER DATED 28.12.2010, IN WHICH HE HAS GRANTED RELIEF TO THE ASSESSEE BY REDUCING THE AMOUNT OF RS.2,91,22,3 66/- ON ACCOUNT OF PERMISSIBLE ACCUMULATION AT THE RATE OF 15% AND ALSO REDUCED TH E CAPITAL EXPENDITURE INCURRED DURING THE YEAR IN A SUM OF RS.1,84,61,306/- AND RE DUCED THE DEMAND IN THE CASE OF ASSESSEE. IT MAY BE NOTED HERE THAT RELIEF ALLOWED BY THE AO IN ITNS 150 NOTED ABOVE, IS THE SAME WHICH WAS ALLOWED BY THE AO WHIL E PASSING THE ORIGINAL ASSESSMENT ORDER DATED 27.03.2006 (PB-1). THUS, THE AO HAD ALREADY EXAMINED THE APPLICABILITY OF PROVISIONS OF SECTION 11 TO 13 OF THE IT ACT BECAUSE REGISTRATION WAS EFFECTIVE IN FAVOUR OF THE ASSESSEE AT THE ORIG INAL ASSESSMENT STAGE. THEREFORE, IF THE SAME RELIEF IS GRANTED TO THE ASSESSEE ON AC COUNT OF REGISTRATION RESTORED BY ITAT IN FAVOUR OF THE ASSESSEE, THERE IS NOTHING WR ONG IN ITNS 150 ORDER DATED 01.12.2011. THE REOPENING OF ASSESSMENT U/S. 148 AN D RESULTANT ORDER DATED 31.12.2007 THUS WOULD NOT BE RELEVANT ON ACCOUNT OF TRIBUNAL ORDER PASSED ON 24.04.2009 BECAUSE IT WAS HELD THAT THE AO CANNOT O PEN THE QUESTION OF REGISTRATION ON YEAR TO YEAR BASIS AND JURISDICTION OF AO IS CONFINED TO EXAMINE ITA NO. 360 TO 364/ALLD./2014 35 WHETHER INCOME HAD BEEN APPLIED TOWARDS THE OBJECTS IN RESPECT OF WHICH REGISTRATION HAD BEEN GRANTED. THE REOPENING OF ASS ESSMENT THUS WOULD NOT BE ADVERSE IN NATURE AGAINST THE ASSESSEE. IT MAY ALSO BE NOTED HERE THAT THE AO ALSO PASSED ORDER ON 28.12.2010 (PB-50) AFTER DIRECTION OF THE TRIBUNAL AND BENEFIT U/S. 11 & 12 WERE DENIED BECAUSE THE REGISTRATION GRANTE D TO THE ASSESSEE WAS CANCELLED. THE SAID ORDER REMAINED UNDER CHALLENGE BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 21.11.2013 FOR THE ASSESSMENT YEAR 2003 -04 ALLOWED CERTAIN RELIEF TO THE ASSESSEE BECAUSE THE REGISTRATION U/S. 12AA HAV E BEEN RESTORED IN FAVOUR OF THE ASSESSEE AND DISALLOWANCE OF EXPENSES WERE EXAMINED IN THE LIGHT OF PROVISIONS OF SECTION 11 OF THE IT ACT. CERTIFICATE OF THE AUDITO R WAS ALSO CONSIDERED AND AT PB- 177 & 179 (INTERNAL PAGES OF THE ORDER 23 TO 25), T HE LD. CIT(A) EXAMINED THE ISSUE IN THE LIGHT OF REGISTRATION RESTORED TO THE ASSESS EE U/S. 12A AND EXAMINED THE EXPENSES WITH APPLICATION OF INCOME U/S. 11 OF THE IT ACT. THE LD. CIT(A) ALSO CONSIDERED THOSE EXPENSES WHICH STAND THE TEST OF G ENUINENESS AND APPLICATION OF FUNDS FOR CHARITABLE AND RELIGIOUS PURPOSE IN INDIA . EACH DISALLOWANCE WAS SEPARATELY CONSIDERED AND THE APPEAL OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2003- 04 WAS PARTLY ALLOWED (COPY OF ORDER PLACED IN PB-1 53). THUS ON THE DATE OF PASSING OF THE IMPUGNED ORDER U/S. 263 ON DATED 25. 03.2014, THE ISSUE OF APPLICABILITY OF PROVISIONS OF SECTION 11 TO 13 ON ACCOUNT OF REGISTRATION GRANTED U/S. 12AA HAVE NOT ONLY BEEN EXAMINED BY THE AO BUT ALSO BY THE LD. CIT(A) AND ITA NO. 360 TO 364/ALLD./2014 36 APPROPRIATE RELIEF HAS BEEN GRANTED TO THE ASSESSEE . HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 IT R 83 HELD AS UNDER : EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME TAX OFFICE R ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFF ICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE , IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE IN TERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFF ICER IS UNSUSTAINABLE IN LAW. SAME VIEW IS TAKEN BY HONBLE SUPREME COURT IN SUBS EQUENT DECISION IN THE CASE OF CIT VS. MAX INDIA LTD., 295 ITR 282. HONBLE GUJ RAT HIGH COURT IN THE CASE OF CIT VS. AMIT CORPORATION, 21 TAXMAN.COM 64 HELD THA T WHERE THE AO AFTER DETAILED VERIFICATION OF RECORDS AND MAKING ENQUIRY HAD FRAMED ASSESSMENT, THE COMMISSIONER COULD NOT REVISE THE ORDER OF AO. CONS IDERING THE ABOVE DISCUSSION, IT IS CLEAR THAT THE AO AS WELL AS THE LD. CIT(A) H AVE EXAMINED THAT THE ASSESSEE HAS FULFILLED THE REQUIREMENT OF SECTION 11 TO 13 OF TH E IT ACT, THEREFORE, WHILE GIVING APPEAL EFFECT, IF THE AO HAS GRANTED RELIEF TO THE ASSESSEE IN ITNS 150, THE APPEAL EFFECT ORDER DATED 01.12.2011 IN ITNS 150 WOULD NOT BE TREATED AS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENU E. 14. IT IS FURTHER CONTENDED ON BEHALF OF THE ASSESS EE THAT THE ORIGINAL ORDERS INCLUDING ORDER DATED 28.12.2010 STOOD MERGED IN TH E ORDER OF LD. CIT(A) DATED ITA NO. 360 TO 364/ALLD./2014 37 21.11.2013 SPECIFICALLY ON THE ISSUE OF EXEMPTION U /S. 11 TO 13 OF THE IT ACT. THEREFORE, THE ORDER U/S. 263 ON THE SAME ISSUE IS VOID AB INITIO . THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE SU PREME COURT IN THE CASE OF CIT VS. SHRI ARBUDA MILLS LTD., 231 ITR 50, IN WHICH ON THE HEAD NOTES, IT WAS HELD POWERS OF COMMISSIONER OF INCOME-TAX SHALL EXTEND A ND SHALL BE DEEMED TO HAVE EXTENDED TO MATTERS NOT CONSIDERE D AND DECIDED IN APPEAL FILED BY ASSESSEE TO CIT(APPEALS). THE LD. DR, HOWEVER, ARGUED THAT THE LD. CIT HAS NO T CANCELLED THE ORDER OF THE AO. 14.1 SECTION 263(1)(C) OF THE IT ACT PROVIDES THAT WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE AO HAD BEEN THE SUBJECT MATTER OF ANY APPEAL, THE POWERS OF CIT UNDER THIS SUB-SECTION SHALL EXTE ND TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. SINCE T HE ISSUE OF REGISTRATION U/S. 12AA HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND A VALID REGISTRATION U/S. 12A EXISTS IN FAVOUR OF ASSESSEE, THEREFORE, THE ASSESS EE WOULD BE ENTITLED FOR DEDUCTION OF EXEMPTION U/S. 11 AND 12 OF THE IT ACT. THE AO O RIGINALLY PASSED THE ORDER ON 27.03.2006 GRANTING RELIEF U/S. 11 TO 13 OF THE IT ACT AND AFTER CANCELLATION OF REGISTRATION, THE AO AGAIN PASSED THE ORDER ON 28.1 2.2010 DENYING BENEFIT OF SECTION 11 & 12 TO THE ASSESSEE ON CANCELLATION OF REGISTRATION. THE SAID ORDER REMAINED IN APPEAL BEFORE THE LD. CIT(A) WHO VIDE O RDER DATED 21.11.2013 GRANTED ITA NO. 360 TO 364/ALLD./2014 38 RELIEF TO THE ASSESSEE U/S. 11 TO 13 OF THE IT ACT WHEN REGISTRATION U/S. 12A WAS EFFECTIVE IN FAVOUR OF THE ASSESSEE. THEREFORE, THE ASSESSMENT ORDER DATED 28.12.2010 STOOD MERGED WITH THE APPELLATE ORDER DA TED 21.11.2013 AND AS SUCH THE SAME ISSUE OF BENEFIT U/S. 11 TO 13 IN APPEAL BEFOR E THE LD.CIT(A) COULD NOT BE SUBJECT MATTER OF PROCEEDINGS U/S. 263 OF THE ACT. THUS, THE ASSESSEE SUCCEEDS ON THIS POINT AS WELL BECAUSE ITNS-150 DT. 01.12.2011 GIVING APPEAL EFFECT IS RELATED TO ITNS 150 DATED 28.12.2010 PASSED AS PER ASSESSM ENT ORDER DATED 28.12.2010. 15. IT IS FURTHER CONTENDED ON BEHALF OF THE ASSESS EE THAT THE AO HAD ONLY GIVEN APPEAL EFFECT ON PASSING THE ORDER DATED 21.06.2011 BY THE TRIBUNAL RESTORING THE REGISTRATION U/S. 12AA IN FAVOUR OF THE ASSESSEE. H ENCE, ITNS 150 DID NOT SUFFER FROM ANY ERROR WHICH COULD BE RECTIFIED U/S. 263 OF THE IT ACT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF HONBLE AL LAHABAD HIGH COURT IN THE CASE OF K.N. AGRAWAL VS. CIT, 189 ITR 769, IN WHICH IT W AS HELD THE ORDERS OF THE TRIBUNAL AND THE HIGH COURT ARE BINDING UPON THE ASSESSING OFFICER AND SINCE HE ACTS IN A Q UASI-JUDICIAL CAPACITY, THE DISCIPLINE OF SUCH FUNCTIONING DEMAND S THAT HE SHOULD FOLLOW THE DECISION OF THE TRIBUNAL OR THE HIGH COU RT, AS THE CASE MAY BE. HE CANNOT IGNORE IT MERELY ON THE GROUND THAT T HE TRIBUNALS ORDER IS THE SUBJECT MATTER OF A REFERENCE IN THE H IGH COURT OR THAT THE HIGH COURTS ORDER IS UNDER APPEAL BEFORE THE SUPRE ME COURT. HENCE, WHERE THE ASSESSING OFFICER FOLLOWS THE DECISION OF AN APPELLATE AUTHORITY, IT CANNOT BE SAID THAT HIS DECISION IS E RRONEOUS. SUCH A DECISION CANNOT BE REVISED BY THE COMMISSIONER OF I NCOME-TAX UNDER SECTION 263. ITA NO. 360 TO 364/ALLD./2014 39 15.1 HONBLE BOMBAY HIGH COURT IN THE CASE OF PRUDE NTIAL ASSURANCE COMPANY LTD. VS. DIT AND ANOTHER, 324 ITR 381 HELD HELD, ALLOWING THE PETITION, THAT THE INVOCATION OF THE JURISDICTION UNDER SECTION 263 WAS IMPROPER. THE CO MMISSIONER HAD EX FACIE MADE A DETERMINATION CONTRARY TO THE PLAIN LANGUAGE OF SECTION 245S WHEN HE HELD THAT THE RULING OF THE AA R IN THE CASE OF FIDELITY NORTHSTAR FUND WOULD APPLY TO THE CASE OF THE ASSESSEE. UNLESS THE BINDING RULING IN THE CASE OF THE ASSESS EE WAS DISPLACED BY PURSUING REQUISITE PROCEDURES UNDER THE LAW, THAT R ULING MUST CONTINUE TO OPERATE AND BE BINDING BETWEEN THE ASSE SSEE AND THE REVENUE. IN ANY EVENT, THE COMMISSIONER COULD NOT H AVE POSSIBLY COME TO THE CONCLUSION THAT THE VIEW OF THE ASSESSI NG OFFICER WAS ERRONEOUS OR THAT IT WAS PREJUDICIAL TO THE INTERES TS OF THE REVENUE WHEN THE ASSESSING OFFICER HAD FOLLOWED A BINDING R ULING OF THE AAR. THE ASSESSMENT ORDER WHICH GAVE EFFECT TO A BINDING PRECEDENT, IN THIS CASE OF THE AAR, COULD NOT BE REGARDED AS BEING ERR ONEOUS OR AS BEING PREJUDICIAL TO THE INTERESTS OF THE REVENUE. SINCE THE INVOCATION OF THE JURISDICTION WAS NOT PROPER, THE ASSESSEE SH OULD NOT BE RELEGATED TO PURSUE THE PROCEEDINGS INITIATED UNDER SECTION 263.THE NOTICE DATED MARCH 18, 2010 WAS TO BE QUASHED AND T O BE SET ASIDE. 15.2 HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. PA LGHAT SHADI MAHAL TRUST, 212 ITR 287, HELD AS UNDER : HELD, DISMISSING THE APPLICATION, THAT WHAT THE INCOME-TA X OFFICER DID WAS TO COMPLY WITH THE ORDER OF THE APP ELLATE ASSISTANT COMMISSIONER AND TO GRANT EXEMPTION TO THE ASSESSEE . IN THAT EVENT, THE COMMISSIONER COULD NOT INVOKE REVISIONAL JURISD ICTION UNDER SECTION 263.THE TRIBUNAL WAS CORRECT IN SETTING ASI DE THE ORDER OF THE COMMISSIONER OF INCOME-TAX. NO QUESTION OF LAW AROS E. 16 . ON THE OTHER HAND, THE LD. DR RELIED UPON THE IMPUG NED ORDER. ITA NO. 360 TO 364/ALLD./2014 40 17. ON CONSIDERATION OF THE SUBMISSIONS OF THE PART IES, WE ARE OF THE VIEW THAT THERE IS NO ERROR IN THE ITNS 150 DATED 01.12.2011 IN APPEAL IN GIVING APPEAL EFFECT TO THE ORDER OF THE TRIBUNAL. APART FROM THE JUDGME NTS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH SQUARELY APPLY TO TH E FACTS OF THE CASE, WE MAY RELY UPON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF TSAI TEA ENTERPRISES (P) LTD. VS. CIT, 273 ITR 119, IN WHICH IT WAS HELD AS UNDER : FOR THE ASSESSMENT YEAR 1982-83 THE ASSESSEE FILED A RETURN SHOWING LOSS. THE ASSESSMENT WAS MADE BY AN ORDER D ATED MARCH 20, 1985. IN THE SAID ORDER, THE LOSS WAS COMPUTED AND THE ASSESSING OFFICER HELD THAT AS THE RETURN WAS NOT FILED IN TI ME, THE LOSS WAS NOT ALLOWED TO BE CARRIED FORWARD TO THE NEXT YEAR. ON APPEAL, THE COMMISSIONER (APPEALS) GRANTED CERTAIN RELIES TO TH E ASSESSEE BUT DISMISSED THE ASSESSEES APPEAL WITH REGARD TO THE CARRY FORWARD OF LOSS BY HOLDING THAT SUCH GROUND OF APPEAL WAS NOT COMPETENT. THE ASSESSING OFFICER PASSED AN ORDER GIVING EFFECT TO THE ORDER OF THE COMMISSIONER (APPEALS) AND ONCE AGAIN HELD THAT THE BUSINESS LOSS WOULD NOT BE ALLOWED TO BE CARRIED FORWARD AS PER T HE ORIGINAL ASSESSMENT ORDER AND ALSO AS PER THE DIRECTION OF T HE COMMISSIONER (APPEALS). AGGRIEVED THEREBY, THE ASSESSEE ONCE AGA IN FILED AN APPEAL BEFORE THE COMMISSIONER (APPEALS). THE COMMISSIONER (APPEALS) IN HIS ORDER DATED MARCH 8, 1991, HELD THAT THERE COUL D NOT BE ANY INTERFERENCE IN THE ASSESSING OFFICERS ORDER DATED DECEMBER 8, 1989 WHICH MERELY GAVE EFFECT TO THE APPELLATE ORDER SIN CE THE APPEAL ON THAT GROUND WITH REGARD TO CARRY FORWARD OF LOSS WA S DISMISSED BY THE ORDER DATED MARCH 7, 1988 . HOWEVER, RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN CIT VS. KULU VALLEY TRANSPORT CO. P. LTD. [1970] 77 ITR 518 AND THAT OF THE CALCUTTA HIGH COU RT IN THE CASE OF PRESIDENCY MEDICAL CENTRE (P) LTD. VS. CIT [1977] 1 08 ITR 838, THE COMMISSIONER (APPEALS) OPINED THAT THE REFUSAL TO C ARRY FORWARD LOSS WAS CONTRARY TO THE AFORESAID DECISIONS AND HELD TH AT THE APPEAL ORDER DATED MARCH 7, 1988, WAS TO BE RECTIFIED AND ACCORD INGLY RECTIFIED THE SAME. THE TRIBUNAL HELD THAT THE APPEAL BY THE ASS ESSEE AGAINST THE ORDER OF THE ASSESSING OFFICER GIVING EFFECT TO THE ORDER OF THE ITA NO. 360 TO 364/ALLD./2014 41 COMMISSIONER ( (APPEALS) WAS NOT MAINTAINABLE AS TH AT WOULD BE NOTHING BUT A REITERATION OF THE DECISION EARLIER T AKEN BY THE COMMISSIONER (APPEALS). THE INCOME-TAX APPELLATE TR IBUNAL HELD THAT THE COMMISSIONER (APPEALS) ERRED IN RECTIFYING HIS EARLIER ORDER. ON A REFERENCE: HELD, (I) THAT THE JUDGMENTS IN KULU VALLEY TRANSPO RT CO. (P). LTD.[1970] 77 ITR 518 (SC) AND PRESIDENCY MEDICAL C ENTRE [1977] 108 ITR 838 (CAL) WERE AVAILABLE WHEN THE ORDER DAT ED MARCH 7, 1988, WAS PASSED. THE ASSESSEE CHOSE NOT TO FILE AN APPEAL AGAINST THE ORDER OF THE COMMISSIONER (APPEALS). THE ASSESSING OFFICER GAVE EFFECT TO THE ORDER OF THE COMMISSIONER (APPEALS) D ATED MARCH 7, 1988. THE APPEAL FILED AGAINST THE ORDER OF THE ASSESSIN G OFFICER DATED DECEMBER 8, 1989, WAS NOT COMPETENT AS THE OR DER OF THE ASSESSING OFFICER WAS MADE PURSUANT TO THE APPEAL O RDER DATED MARCH 7, 1988, PASSED BY THE COMMISSIONER (APPEALS) . (II) THAT THE ASSESSING OFFICER DETERMINED THE LOSS FOR THE ASSESSMENT YEAR IN QUESTION, VIZ., 1982-83. THE QUESTION WHETH ER OR NOT IT COULD BE ALLOWED TO BE CARRIED FORWARD IN THE SUBSEQUENT YEARS WAS DEPENDENT UPON THE FULFILLMENT OF THE CONDITIONS PR ESCRIBED IN SECTION 72 OF THE INCOME TAX ACT. IT WAS THEREFORE A DEBATA BLE QUESTION. THE SET OFF OF THE CARRIED FORWARD LOSS DETERMINED FOR THE ASSESSMENT YEAR 1982-83 WOULD TAKE PLACE IN SOME FUTURE ASSESSMENT YEARS. THE DIRECTION THAT LOSS COULD NOT BE ALLOWED TO BE CARR IED FORWARD FORWARD HAD NOT IN ANY MANNER AFFECTED THE DETERMINATION OF LOSS AND THEREFORE, THE ASSESSEE COULD NOT BE SAID TO BE AGG RIEVED. IT WAS NOT, THEREFORE, A MATTER WHICH COULD BE REGARDED AS A MI STAKE APPARENT FROM THE RECORD WARRANTING RECTIFICATION UNDER SECT ION 154. 18. CONSIDERING THE ABOVE DECISIONS AND THE FACTS O F THE CASE, IT IS CLEAR THAT THE AO GRANTED RELIEF U/S. 11 TO 13 OF THE ACT TO THE A SSESSEE IN ITNS 150 BECAUSE REGISTRATION U/S. 12AA WAS RESTORED IN FAVOUR OF TH E ASSESSEE BY THE TRIBUNAL AND THE CAPITAL EXPENDITURE AND BENEFIT U/S. 11 WERE AL LOWED TO THE ASSESSEE. THESE DEDUCTIONS ARE ALLOWABLE WHEN THE REGISTRATION IS E FFECTIVE IN FAVOUR OF THE ASSESSEE ITA NO. 360 TO 364/ALLD./2014 42 AND HAVE ALSO BEEN GRANTED ORIGINALLY IN FAVOUR OF THE ASSESSEE. THEREFORE, THE AO IS BOUND TO FOLLOW THE DECISION OF SUPERIOR AUTHORI TIES. MERELY BECAUSE THE AO HAS FOLLOWED THE ORDER OF SUPERIOR AUTHORITIES, WOULD N OT GIVE RISE TO OCCASION TO TREAT ITNS 150 AS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF REVENUE. THE ORDER U/S. 263 THUS COULD NOT BE SUSTAINED. THE LD. COUNSEL FO R THE ASSESSEE ALSO RELIED UPON THE DECISION OF THE SUPREME COURT IN THE CASE OF S. RM.M.CT.M TIRUPPANI TRUST VS. CIT, 230 ITR 636, IN WHICH IT WAS HELD THAT CAP ITAL EXPENSES TO BE ALLOWED AS DEDUCTION. 19. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCU MSTANCES AND DISCUSSION ABOVE, WE ARE OF THE VIEW THAT THE AO HAS CORRECTLY GAVE A PPEAL EFFECT IN FAVOUR OF THE ASSESSEE U/S. 11 TO 13 BECAUSE THE ASSESSEE GOT REG ISTRATION U/S. 12AA OF THE IT ACT AS PER DIRECTIONS OF THE TRIBUNAL. THEREFORE, THERE IS NO ERROR IN ITNS 150 TO BE REVISED U/S. 263 OF THE IT ACT. THUS, THE LD.CIT HA S ACTED WITHOUT JURISDICTION IN THE MATTER. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER U/S. 263 DATED 25.03.2014 FOR ALL THE ASSESSMENT YEARS UNDER APPEALS AND QUASH TH E SAME. 20. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.C. MEENA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH AUGUST, 2014 ITA NO. 360 TO 364/ALLD./2014 43 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT BY ORDER 2. RESPONDENT 3. CIT(A), CONCERNED ASSTT. REGISTRAR 4. CIT, CONCERNED 5. DR, ITAT, ALLAHABAD 6. GUARD FILE TRUE COPY