M/s. Improvement Trust, Bathinda V. The Asstt. Commissioner of Income-tax, Bathinda

ITA 415/ASR/2013

• Counselvise Citation: 41520914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 17-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y K SUD
• Keywords: Charitable institution; Opportunity of being heard; Rule of consistency
• Section: 40A(3); 143(3); 12A; 12AA; 10B; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR. BEFORE SHRI A.D. JAIN, J.M. AND SHRI T.R. MEENA, A. M. I.T.A. NO. 415/ASR/2013. ASSESSMENT YEAR : 2007-08. IMPROVEMENT TRUST, VS. THE ACIT, DR. MELA RAM ROAD, CIRCLE-1, BHATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.K. SUD, C.A. RESPONDENT BY : SHRI TARSEM LAL, D/R DATE OF HEARING :27.08.2015 DATE OF PRONOUNCEMENT :29.09.2015 ORDER PER SHRI T.R. MEENA, A.M. THIS IS AN APPEAL ASSESSEE EMANATING FROM THE ORDE R OF LD. CIT (A), BATHINDA DATED 19.03.2013 FOR A.Y. 2007-08. THE EFF ECTIVE GROUNDS ARE AS UNDER :- 1. THAT THE ORDER OF THE LEARNED ASSISTANT COMMISSI ONER OF INCOME TAX, CIRCLE-1, BATHINDA IS WRONG, ILLEGAL AND AGAIN ST FACTS. LIKEWISE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), B ATHINDA IS NOT JUSTIFIED WHILE CONFIRMING THE SAME. 2. THAT THE LD. ACIT HAS NOT APPRECIATED THE FACTS OF THE CASE EXPLANATION OFFERED AND PROCEEDED TO FRAME THE ASSE SSMENT ARBITRARILY. 2 ITA NO. 415/ASR/2013 AY. 2007-08 IMPROVEMENT TRUST, BATHINDA VS. ACIT. 3. THAT THE LD. ACIT HAS ERRED IN LAW AND ON FACTS WHILE FRAMING THE ASSESSMENT IN THE STATUS OF AOP WHEREAS THE APPEL LANT HAS FILED THE RETURN IN THE STATUS OF CHARITABLE TRUST. 4. THAT THE LD. ACIT HAS NOT APPRECIATED THE FACTS THAT THE APPELLANT IS CONSTITUTED UNDER THE PROVISIONS OF PUNJAB TOWN IMPROVEMENT ACT, 1922 WITH THE OBJECT TO PROVIDE PUBLIC UTILITY SERVICES BY WAY OF ROADS, SEWERAGE, WATER SUPPLY, ELECTRICITY SUPPLY S YSTEM ETC. BESIDES PROVIDING HOUSING PLOTS FOR ALL SECTION OF THE SOCIETY. HENCE THE OBSERVATION OF THE ACIT THAT THE APPELLAN T IS ENGAGED IN BUSINESS IS WRONG AND WITHOUT JUSTIFICATION. 5. THAT THE LD. ACIT HAS ERRED IN LAW AND ON FACTS WHILE MAKING AN ADDITION OF RS. 3,57,59,054/- ON ACCOUNT OF VALUATI ON OF CLOSING STOCK. THE LD. ACIT HAS NOT APPRECIATED THE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE APPELLANT AND FACTS OF TH E CASE. 6. THAT THE LD. ACIT HAS ERRED IN LAW AND ON FACTS WHILE MAKING AN ADDITION OF RS. 3,91,71,643/-. THE LD. ACIT HAS NOT APPRECIATED THE FACT THAT RECEIPTS OF RS. 9,67,38,200/- HAS BEEN WO RKED OUT ON THE BASIS OF ACCOUNTING METHOD REGULARLY EMPLOYED UPON BY THE ASSESSEE. 7. THAT LD. ACIT HAS NOT APPRECIATED THE FACT THAT NO ADDITION IS CALLED FOR IN VIEW OF PRINCIPLE OF CONSISTENCY. 8. THAT THE LD. ACIT HAS ERRED IN LAW AND ON FACTS WHILE MAKING AN ADDITION OF RS. 1,64,599/- FOR THE ALLEGED VIOLATIO N OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE LD. ACIT HAS NOT APPRECIATED THE FACTS OF THE CASE AND PROCEEDED TO MAKE THE ADDITIO N ARBITRARILY. 9. THAT THE LD. ACIT HAS NOT APPRECIATED THAT AMEND MENT IN DEFINITION OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT CAME WIT H EFFECT FROM 01.04.2009 AND AS SUCH NOT APPLICABLE TO THE YEAR U NDER ASSESSMENT. 3 ITA NO. 415/ASR/2013 AY. 2007-08 IMPROVEMENT TRUST, BATHINDA VS. ACIT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A IMPROVEMENT TRUST AND IS A SEMI GOVERNMENT ORGANIZATION. THE ASSESSEE IS IN THE BUSINESS OF ACQUIRING LAND TO DEVELOP THE RESIDENTIAL AND COMME RCIAL PLOTS AND BUILDINGS. THE AO OBSERVED THAT THE ASSESSEE HAS FI LED ITS RETURN OF INCOME FOR THE A.Y. 2007-08 ON 31.10.2007 DECLARING LOSS A T RS. 10,97,950/-. THE CASE WAS SCRUTINIZED UNDER SECTION 143(3) OF THE IT ACT. THE ASSESSEE HAD FILED AUDIT REPORT IN FORM 10B UNDER SECTION 12A(B) ALONG WITH THE RETURN WHICH IS APPLICABLE ONLY TO CHARITABLE TRUSTS. HOWE VER, THE ASSESSEE HAD WRONGLY CLAIMED THE STATUS OF CHARITABLE TRUST AS R EGISTRATION U/S 12AA WAS REFUSED BY THE CIT, BATHINDA AND THE REJECTION OF R EFUSAL WAS UPHELD BY THE ITAT AMRITSAR BENCH BY DISMISSING THE APPEAL OF THE ASSESSEE ON THIS ISSUE. HOWEVER, ON MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE, THE ITAT AMRITSAR BENCH, AMRITSAR VIDE ITS ORDER DATED 04.03.2010 HAD RESTORED BACK THE ISSUE/MATTER TO THE FILE OF THE C IT, BATHINDA. AS PER THE AO, THE STATUS OF THE ASSESSEE REMAINED AS AOP IN A BSENCE OF REGISTRATION UNDER SECTION 12AA. THE AO HAD MADE FOLLOWING ADDIT IONS :- STOCK VALUATION AT RS. 3,57,59,054/- UNDER STATEMENT OF RECEIPTS RS. 3,91,71,643/- CASH PAYMENT OF RS. 1,64,599/- THUS TOTAL ADDITION WAS MADE AT RS. 7,50,95,296/- B Y THE AO. 4 ITA NO. 415/ASR/2013 AY. 2007-08 IMPROVEMENT TRUST, BATHINDA VS. ACIT. 3. BEING AGGRIEVED BY THE ORDER OF AO, ASSESSEE HAS CARRIED THE MATTER BEFORE LD. CIT (A) WHO HAD CONFIRMED THE ADDITION U NDER ALL THE HEADS AND DISMISSED THE ASSESSEES APPEAL. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. A/R SUBMITTED THAT NOW THE LD. CIT (A) BATHINDA HAD GRANTED THE REGIST RATION UNDER SECTION 12AA TO THE APPELLANT WITH EFFECT FROM 12.6.2003 ON 16.8.2010 WHICH WAS NOT AVAILABLE WITH THE AO AT THE TIME OF MAKING ASS ESSMENT. HENCE THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE AO W ITH A DIRECTION TO FRAME THE ASSESSMENT UNDER THE PROVISIONS OF SECTION 11 & 12 KEEPING IN VIEW THE REGISTRATION GRANTED BY THE LD. CIT UNDER SECTION 1 2AA. 5. AT THE OUTSET, THE LD. D/R FAIRLY ACCEPTED THE A SSESSEES PROPOSAL. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. NOW THE ASSESSEE HAD GRANTED REGISTRATION U NDER SECTION 12AA WITH EFFECT FROM 12.6.2003 BY THE LD. CIT BATHINDA VIDE ORDER DATED 16.08.2010. THEREFORE, ASSESSEES CASE IS TO BE DEC IDED BY CONSIDERING THE PROVISIONS OF SECTION11, 12, 12A AND 13 OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER TO THE FILE OF AO FOR DENOVO ORDER AND IS DIRECTED TO PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELL ANT. THE APPELLANT IS ALSO DIRECTED TO COOPERATE WITH THE AO AND PRODUCE ALL THE RELEVANT/REQUIRED DETAILS BEFORE THE AO. 5 ITA NO. 415/ASR/2013 AY. 2007-08 IMPROVEMENT TRUST, BATHINDA VS. ACIT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.09.2015. SD/- SD/- ( A.D. JAIN ) ( T.R. MEENA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AMRITSAR, DATED 29/09/2015. D/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE : THE IMPROVEMENT TRUST, BATHINDA. 2. THE ACIT CIRCLE-1,BATHINDA. 3. THE CIT (A), BATHINDA. 4. THE CIT BATHINDA 5. THE SR. D/R, ITAT, AMRITSAR. ASSISTANT REGISTRAR. ITAT, AMRITSAR BENCH AMRITSAR.