SLUM REHABILITATION SOCIETY, MUMBAI V. ASST DIT (E) 1(2), MUMBAI

ITA 428/MUM/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75774 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 26-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Assessee Lawyers: S S PHADKAR
• Keywords: Opportunity of being heard; Reason to believe
• Section: 12A; 12AA; 147; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./I.T.A. NO.426/M/2014 ( AY: 2004 - 2005 ) ./I.T.A. NO.427/M/2014 ( AY: 2006 - 2007 ) ./I.T.A. NO.428/M/2014 ( AY: 2007 - 2008 ) SLUM REHABILITATION SOCIETY ( FORMERLY TPS III BANDRA SLUM REHABILITATION SOCIETY) SWAPNA SAFALYA, A, WING, GR. FL.25 TH ROAD,TPS - III, BANDRA (W), MUMBAI - 400 050. / VS. ASST. DIT (E) - 1(2), 6 TH FLOOR, PIRAMAL CHAMBERS, LALBUAG, MUBAI 400 013. ./ PAN : AAATS 0866J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.S. PHADKAR & MR. VISHWAS MAHENDALE / RESPONDENT BY : SHRI S.D. SRIVASTAVA, CIT - DR / DATE OF HEARING :26.2.2014 / DATE OF PRONOUNCEMENT :26.2.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION. ALL THESE THREE APPEALS ARE FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) - 1, MUMBAI DATED 11.10.2013 FOR THE ASSESSMENT YEARS 2004 - 05, 2006 - 07 AND 2007 - 08. SINCE, THE ISSUES RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS ARE IDENTICAL, THEREFORE, F OR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS. 2. SINCE, THE GROUNDS RAISED BY THE ASSESSEE ARE IDENTICAL IN ALL THE THREE APPEALS, THEREFORE, FOR THE SAKE OF REFERENCE, THE GROUNDS RAISED BY THE ASSESSEE WITH REGARD TO THE ASSESSMENT YEAR 2006 - 07 ARE READ AS UNDER: 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT ERRED IN ACCEPTING THE VALIDITY OF THE REOPENING OF THE APPELLANTS ASSESSMENT U/S 147 OF THE ACT, MERELY ON THE BASIS OF A LETTER DATED 6.4.2009 OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS), MUMBAI ERRONEOUSLY PERCEIVING IT AS AN ORDER PASSED FOR WITHDRAWAL OF THE REGISTRATION GRANTED U/ S 12A OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN DENYING THE BENEFIT OF SECTIONS 11 AND 12 OF THE ACT MERELY ON THE BASIS OF A LETTER DATED 6.4.2009 OF THE DIT (E) ALTHOUGH THERE WAS NO ORDER IN CONFOR MITY WITH THE AMENDED PROVISIONS OF SUB SECTION (3) OF SECTION 123AA OF THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN IGNORING THE FACT THAT THE ASSESSMENT ORDER DATED 15.12.2011 HAD TOTALLY IGNORED THE OBSE RVATIONS MADE BY THE ITAT J BENCH, MUMBAI VIDE PARA 10 OF ITA NO. 3926/MUM/2009 DATED 23.12.2010 PASSED IN THE APPELLANTS OWN CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN ACCEPTING AOS PERCEPTION THAT THE COMMUNICATION DATED 6.4.2009 OF THE DIT (E) WAS AN ORDER, DISREGARDING THE OBSERVATION OF THE ITAT, J BENCH, MUMBAI VIDE PARAS 7 AND 9 OF ITA NO.3926/M/2009 DATED 23.12.2010 PASSED IN THE APPELLANTS OWN CASE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN NOT APPRECIATING THE LEGAL POSITION THAT TILL 1.6.2010 THE PROVISIONS OF SECTION 12AA (3) DID NOT PROVIDE ANY POWERS TO DIT (E) IN RESPECT OF CANCELLING THE REGISTRATION GRANTED U/S 12A OF THE ACT AND FURTHER ERRED IN HOLDING THAT SINCE REGISTRATION U/S 12A HAS BEEN GRANTED FROM 1.4.2008, THE APPELLANT IS NOT ELIGIBLE TO THE BENEFIT OF SECTION 11 OF THE ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN NOT PROPERLY CONSIDERING THE FACTUAL ASPECT OF OBJECT OF THE APPELLANT TRUST AND FURTHER ERRED IN NOT APPRECIATING THAT THERE IS NO MATERIAL CHANGE IN THE OBJECTS INASMUCH AS THE ORIGINAL OBJECTS WERE MODIFIED WITHOUT CHANGING THE BASIC NATURE / CHARACTER. 3. AT THE VERY OUTSET, S.S . PHADKAR, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT ALL THESE THREE APPEALS NEED TO BE REMANDED TO THE FILES OF THE AO FOR FRESH DECISION IN THE MATTER. GIVING REASONS FOR THE SAID PROPOSITION, LD COUNSEL MENTIONED THAT ALL THESE ASSESSM ENTS WERE COMPLETED U/S 147 OF THE ACT AND THE REASONS FOR REOPENING ARE PROVIDED IN PAGE 1 AND 2 OF THE ASSESSMENT ORDER. READING THE SAME, LD COUNSEL MENTIONED THAT THE SOLITARY REASON FOR REASSESSMENT IN ALL THESE THREE ASSESSMENTS IS THE REJECTION OF THE REGISTRATION BY THE DIT (E) U/S 12A OF THE ACT OF THE ACT. RELEVANT REASONS READ AS UNDER: IN THIS CASE THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR AY 2004 - 2005 ON 1.11.2004 DISCLOSING TAXABLE INCOME OF RS. NIL. IN THE COMPUTATION OF INCOME ENCLO SED WITH THE RETURN OF INCOME, THE ASSESS EE HAS COMPUTED THE INCOME AS PER THE PROVISIO N S OF SECTION 11 OF THE ACT AND THEREBY CLAIMED THE EXEMPTION OF INCOME U/S 11 OF THE ACT. THE ASSESSEE HAS CLAIMED THE DEDUCTION BEING DEEMED ACCUMULATION OF RS. 3,64, 786/ - FROM INCOME. IN THIS CASE, THE TRUST IS CONSTITUTED BY A TRUST DEED DATED 8.1.1973. THE TRUST HAS BEEN REGISTERED WITH THE CHARITY CIMMISSIONER ON 8.1.1973. REGISTRATION U/S 12A WAS GRANTED ON THE BASIS OF TRUST DEED DATED 30.9.1972. HOWEVER, AFTER REGISTRATION 3 U/S 12A, THE ASSESSEE HAS CHANGED THE OBJECTS OF THE TRUST. HOWEVER, THE ASSESSEE HAS NOT INFORMED ABOUT THE CHANGE IN THE OBJECTS TO THE OFFICE OF THE DIRECTOR OF INCOME TAX (EXEMPTIONS), MUMBAI. THEREFORE, DIRECTOR OF INCOME TAX (E), MUMBAI VIDE COMMUNICATION DATED 6.4.2009 HAS WITHDRAWN THE REGISTRATION GRANTED U/S 12A FROM THE DATE THE CHANGE HAS OCCURRED. THE ASSESSEE HAS FILED AN APPLICATION FOR REGISTRATION U/S 12A(A) OF IT ACT 1961 IN THE PRESCRIBED FORM ON 23.3.2009 I.E., BEYON D STIPULATED PERIOD. AS SUCH REGISTRATION U/S 12AA(1)(B)(I) OF THE ACT, IS GRANTED AS A TRUST W.E.F 1.4.2008 VIDE ORDER DATED 8.7.2009 OF DIT (E), MUMBAI. THE TRUST HAS BEEN CREATED ON 8.1.1973, BUT REGISTRATION U/S 12A OF THE ACT HAS BEEN GRANTED FROM 1. 4.2008. SINCE, THE REGISTRATION U/S 12A OF THE ACT HAS BEEN GRANTED FROM 1.4.2008, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT FOR AY 2004 - 05. HOWEVER, AS DISCUSSED ABOVE IN THE COMPUTATION OF INCOME ENCLOSED WITH THE RETURN OF INCOME, T HE ASSESSEE HAS COMPUTED THE INCOME AS PER THE PROVISIONS OF SECTION 11 OF THE ACT AND THEREBY CLAIMED THE EXEMPTION OF INCOME U/S 11 OF THE ACT. THUS, THE ASSESSEES INCOME HAS ESCAPED THE ASSESSMENT. IN VIEW OF THE FOREGOING, I HAVE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED THE ASSESSMENT FOR AY 2004 - 05. 4. FURTHER, BRINGING OUR ATTENTION TO THE ORDERS OF THE TRIBUNAL VIDE ITA NO.3296/M/2009, DATED 28.11.2013, LD COUNSEL MENTIONED THAT THE SAID REJECTION OF THE APPLICATION FOR REG ISTRATION U/S 12A OF THE ACT BY THE DIT (E) WAS THE SUBJECT MATTER OF THE APPEAL BEFORE THE TRIBUNAL IN THE SAID APPEAL AND THE MATTER WAS ALLOWED FOR STATISTICAL PURPOSES AS PER THE DISCUSSION GIVEN IN PARA 3 TO 5 OF THE ORDER OF THE TRIBUNAL DATED 28 TH N OVEMBER, 2013 AND READ OUT THE SAID PARAS WHICH READ AS UNDER: 3. WE HAVE HEARD THE LD AR AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR HAS POINTED OUT THAT THE REGISTRATION HAS BEEN CANCELLED BY THE DIT ON THE GROUND THAT THE ASSESSEE HAS CHANGED ITS OBJECTS. THE LD AR HAS CONTENDED THAT THE REGISTRATION U/S 12A CAN BE CANCELLED ONLY ON THE SATISFACTION OF THE CONDITIONS AS PROVIDED U/S 12AA(3) OF THE INCOME TAX ACT. HE HAS REFERRED THE OBJECTS OF THE ASSESSEE TRUST AND SUBMITTED THAT THE OLD OBJECTS AND THE AMENDED OBJECTS ARE SAME IN SUBSTANCE AND THE AMENDMENT IS ONLY IN THE FORM OF MORE SPECIFIC IN NATURE AND HAS N O T RESULTED ANY MATERIAL CHANGE IN THE ORIGINAL OBJECTS OF THE TRUST. HE HAS FURTHER POINTED OUT THAT A NEW CERTIFICATE U/S 12AA HAS BEEN ISSUED TO THE ASSESSEE SUBSEQUENT TO THE IMPUGNED OR D ER AND FURTHER THE ASSESSEE TRUST HAS ALSO BEEN APPROVED U/S 80G. THEREFORE, THE OBJECTS EVEN AFTER THE ALLEGED AMENDMENT ARE FOUND TO BE CHARITABLE IN NATURE. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE IMPUGNED ORDER AND SUBMITTED THAT IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN CASE OF ALLAHABAD AGRICULTURAL INSTITUTE AND ANOTHER VS. UNION OF INDIA 291 ITR 116. THE DIT (E), IS JUSTIFIED IN CANCELLING THE REGISTRATION U/S 12A OF THE ACT. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD WE NOTE THAT THE DIT HA S CANCELLED THE REGISTRATION GRANTED U/S 12A WITHOUT ANALYZING THE CONDITION AS PRESCRIBED U/S 12AA(3) STIPULATES TWINE CONDITIONS AND IF THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF TRUST / INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. HOWEVER, NO ORDER UNDER THIS SUB - SECTION SHALL BE PASSED UNLESS A REASONABLE OPPORTUNITY OF BEING HEARD GIVEN TO SUCH TRUST OR INSTITUTION. WE NOTE THAT THE REGISTRATION OF THE ASSESSEE HAS BEEN CANCELED ON A LETTER / APPLICATION FILED BY THE ASSESSEE ITSELF FOR BRINGING ON RECORD CHANGE OF NAME IN THE REGISTRATION. WE 4 FURTHER, NOTE THAT THE SUBSTANCE OF THE ORIGINAL OBJECTS AS WELL AS AMENDED OBJECTS REMAINS SAME. THE COMPARATIVE OBJECTS ARE AS UNDER: OLD OBJECTS NEW OBJECTS 1.TO REMOVE HEALTH HAZARDS AND OTHER SOCIAL EVILS THAT THREATEN HUTMENT DWELLERS AND OTHER RESIDENTS OF TPS III, BANDRA AND WHICH ARE MAINLY DUE TO THE EXISTENCE OF UNCARED FOR SLUM POCKETS. TO PROVIDE ACCOMMODATION WITH SANITARY REQUIREMENTS FOR HUTMENT SWELLERS ANDOTHER LOW INCOME GROUPS OF GREATER BOMBAY, MORE PARTICULARLY OF BANDRA (W) 2.TO BEAUTIFY THIS SUBURB AND MAKE LIVING CONDITIONS FOR ALL RESIDENTS MORE WHOLESOME. TO WORK FOR THE UPLIFTMENT OF HUTMENT DWELLERS AND OTHER LOW INCOME GROUPS OF GREATER BOMBAY, MORE PARTICULARLY OF BANDRA (W). 3.TO IMPROVE THE STANDARDS OF CLEANLINESS AND CIVIL AMENITIES FOR ALL RESIDENTS WIT H THE COOPERATION OF THE MUNICIPALITY AND OTHER GOVERNMENT AUTHORITIES. 4. IN PARTICULAR, TO PROVIDE ACCOMMODATION WITH SANITARY REQUIREMENTS FOR HUTMENT DWELLERS OF GREATER BOMBAY, MORE PARTICULARLY TO TPS III, BANDRA. 5. TO WORK FOR THE UPLIFT OF THE FAMILIES LIVING IN THE SLUMS OF GREATER BOMBAY, MORE PARTICULARLY OF TPS III, BANDRA. 5. FROM THE OLD OBJECTS AS WELL AS THE NEW OBJECTS IT APPEARS THAT T HE NEW OBJECTS ARE NOT ALTERATION OF THE OLD OBJECTS BUT THE FOCUS IS RESTRICTED ONLY TO THE MAIN OBJECTS OF THE TRUST. IN THE CASE OF ALLAHABAD AGRICULTURAL INSTITUTION AND ANOTHER VS. UNION OF INDIA (SUPRA) THE HONBLE COURT HAS OBSERVED THAT IN A SITUATION WHERE THE OBJECTS OF THE TRU ST OR INSTITUTION HAD BEEN ALTERED WHOLESALE AFTER GRANT OF REGISTRATION AND INTIMATION OF THE ALTERATION HAD NOT GIVEN TO THE COMMISSIONER, THE ORDER OF THE ASSESSING AUTHORITY ON THE ASSUMPTION THAT THE REGISTRATION WHICH WAS GRANTED ON THE BASIS OF A PA RTICULAR REPRESENTATION HELD GOOD, WOULD NOT CALL FOR INTERFERENCE. IN THE CASE IN HAD THERE IS NO ALTERATION IN THE OBJECTS BUT THE SUBSTANCE OF THE OBJECTS REMAIN SAME AND FURTHER THE ASSESSEE ITSELF BROUGHT THE CHANGE IN THE NOTICE OF THE DIT. THEREFO RE, THE DECISION IN THE CASE OF ALAHABAD AGRICULATURAL INSTITUTION AND ANOTHER VS. UNION F INDIA (SUPRA) WOULD NOT HELP OF THE CASE OF THE REVENUE. SINCE, THE DIT HAS NOT CONSIDERED THE ISSUE OF CANCELLATION IN THE LIGHT OF SECTION 12AA(3) AND FURTHER THE RE ARE DEVELOPMENTS OF GRANTING REGISTRATION BY ISSUING A NEW CERTIFICATE U/S 12AA THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE RECORD OF THE DIT / COMMISS IONER TO RECONSIDER AND DECIDE AFRESH AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. FURTHER, IT IS ALSO MENTIONED THAT THE ASSESSEES MISCELLANEOUS APPLICATION FILED EARLIER VIDE M.A. NO.561/M/2012 WAS ALLOWED VIDE ORDER DATED 8.3.2013. FURTHER, HE ALSO MENTIONED THAT MISCELLANEOUS APPLICATION FILED BY THE REVENUE VIDE M.A.NO.280/M/2013 , DATED 21.2.2014, WAS ALSO DISMISSED AS INFRUCTUOUS, IN VIEW OF THE SAID ORDER OF THE TRIBUNAL DATED 28.11.2013. CONSIDERING THE ABOVE NARRATE D DEVELOPMENTS, IT IS THE PRAYER OF THE LD COUNSEL THAT ALL THE THREE APPEALS SHOULD BE 5 READJUDICATED BY THE AO , AFTER THE DIT (E) GIVES EFFECT TO THE ORDER OF THE TRIBUNAL DATED 28.11.2013. 6. ON THE OTHER HAND, LD DR HAS CONVEYED NO OBJECTED TO THE FAI R PROPOSAL OF THE LD COUNSEL. 7. WE HAVE HEARD BOTH PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDERS OF THE TRIBUNAL AND THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES AND C ONSIDERING THE ABOVE DEVE LOPMENTS OF THE ISSUE, WE FIND MERIT IN THE PRAYER OF THE LD COUNSEL TO REMAND THE MATTER TO THE FILES OF THE AO FOR ADJUDICATING THE ISSUE AFRESH. A CCORDINGLY , WE APPROVE THE SAME AND REMAND THE MATTER TO AO FOR A FRESH ADJUDICATION AFTER GRANTING A REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THREE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY, 2014. S D / - S D / - (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 26 .2 .2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI