Improvement Trust, Panipat V. ACIT, Panipat

ITA 4399/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4185 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 25-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 18-11-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: MONIKA JAIN CAS
• Keywords: Opportunity of being heard
• Section: 143(3); 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH C CC C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI BEFORE SHRI C.L.SETHI, JM AND SHRI K. K.K. K.D.RANJAN D.RANJAN D.RANJAN D.RANJAN, AM , AM , AM , AM ITA NO. ITA NO. ITA NO. ITA NO.4399/DEL/2009 4399/DEL/2009 4399/DEL/2009 4399/DEL/2009 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2004 2004 2004 2004- -- -05 0505 05 IMPROVEMENT TRUST, IMPROVEMENT TRUST, IMPROVEMENT TRUST, IMPROVEMENT TRUST, TAU DEVI LAL MARKET, TAU DEVI LAL MARKET, TAU DEVI LAL MARKET, TAU DEVI LAL MARKET, RAILWAY ROAD, RAILWAY ROAD, RAILWAY ROAD, RAILWAY ROAD, PANIPAT. PANIPAT. PANIPAT. PANIPAT. PAN NO.AAALI0012L. PAN NO.AAALI0012L. PAN NO.AAALI0012L. PAN NO.AAALI0012L. VS. VS. VS. VS. CO COCO COMMISSIONER OF INCOME TAX MMISSIONER OF INCOME TAX MMISSIONER OF INCOME TAX MMISSIONER OF INCOME TAX (APPEALS), (APPEALS), (APPEALS), (APPEALS), KARNAL. KARNAL. KARNAL. KARNAL. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY AGARWAL AND MS.MONIKA JAIN, CAS. RESPONDENT BY : SMT.MONA MOHANTY, SR.DR ORDER ORDER ORDER ORDER PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI, J , J, J , JM : M : M : M : IN THIS APPEAL FILED BY THE ASSESSEE AGAINST THE O RDER DATED 4.9.2009 PASSED BY LEARNED CIT(A) IN THE MATTER OF AN ASSESSMENT MADE U/S 143(3) OF THE INCOME-TAX ACT, 1961 DATED 2 7.7.2006 BY THE AO FOR THE AY 2004-05, THE ASSESSEE HAS TAKEN THE G ROUNDS AS UNDER:- 1. THAT THE LD.CIT(A) HAS ERRED IN LAW WHILE NOT CONSIDERING THE REGISTRATION GRANTED U/S 12AA OF TH E INCOME TAX ACT, 1961 AND CONFIRMING THE ADDITION OF RS.9629580/- WITHOUT CONSIDERING THE PROVISIONS OF SECTION 11 TO 13 OF THE INCOME TAX ACT, 1961, AND THEREFORE THE ADDITION OF RS.9629580/- IS BAD IN LAW AND MAY PLEA SE BE DELETED. 2. THAT THE LD.CIT(A) HAS ERRED IN LAW, WHILE NOT FOLLOWING THE ORDERS OF HONBLE INCOME TAX APPELLAT E TRIBUNAL IN ITS TRUE SPIRIT, AS VIDE ORDER DATED 6 TH DECEMBER 2008, CIT(A) WAS DIRECTED TO DISPOSE OFF THE APPEAL OF THE ASSESSEE ONLY AFTER DECISION ON THE ISSUE RELATING TO THE ASSESSEES CLAIM OF REGISTRATION U/S 12AA IS RENDERE D BY THE TRIBUNAL, IN ORDER TO DISPOSE THE MATTER UNDER CONSIDERATION IN VIEW OF APPLICABILITY OF SECTION 1 1 TO 13 OF THE INCOME TAX ACT, 1961, WHEREAS THE LD.CIT(A) EVE N AFTER ASSESSEE BEEN GRANTED REGISTRATION U/S 12AA H AS ITA-4399/DEL/2009 2 FAILED TO DISPOSE THE MATTER IN A WAY AS DIRECTED B Y HONBLE INCOME TAX APPELLATE TRIBUNAL, AND THEREFOR E THE ORDER OF CIT(A) MAY PLEASE BE SET ASIDE TO THE ASSE SSING OFFICER, AS THE CIT(A) HAS ALSO IN ITS ORDER HAS OB SERVED THAT MATTER WAS NEVER TAKEN BEFORE ASSESSING OFFICE R IN VIEW OF SECTION 11 TO 13 OF THE INCOME TAX ACT, 196 1. 3. THAT THE LD.CIT(A) HAS FAILED TO EXERCISE THE PO WER GIVEN TO HIM UNDER SECTION 250(4) OF THE INCOME TAX ACT, 1961, WHERE UNDER HE COULD HAVE OBTAINED THE REMAND REPORT FROM THE AO ABOUT THE MATTER, AND COULD HAVE DISPOSED OFF THE MATTER AS PER THE PROVISIONS OF TH E ACT, AND THEREFORE THE ORDER OF CIT(A) MAY PLEASE BE SET ASIDE TO THE ASSESSING OFFICER, AS THE CIT(A) HAS ALSO IN ITS ORDER HAS OBSERVED THAT MATTER WAS NEVER TAKEN BEFORE ASSESSING OFFICER IN VIEW OF SECTION 11 TO 13 OF TH E INCOME TAX ACT, 1961. 2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. 3. IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF I NCOME ON 25.8.2004 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING INCOME OF `96,29,580/- AS EXEMPT U/S 10(20)(III) OF THE ACT. THE ASSESSEES CLAIM OF EXEMPTION U/S 10(20) WAS REJECTED BY THE AO WHILE MAKING THE ASSESSMENT. THE AO OBSERVED THAT THE ASSESSEE WAS NEITHER A PANCHAY AT NOR A MUNICIPALITY OR MUNICIPAL COMMITTEE, DISTRICT BOARD OR CANTONMENT BOARD AS DEFINED IN EXPLANATION TO SECTION 10(20). THE AO, THEREFORE, TOOK A VIEW THAT THE ASSESSEE WAS NOT A LOCAL AUTHO RITY ENTITLED FOR EXEMPTION U/S 10(20) AND COMPLETED THE ASSESSMENT V IDE ORDER DATED 27.7.2006 DETERMINING THE ASSESSEES TOTAL INCOME A T `96,29,550/-. 4. AGAINST THE ORDER OF AO DATED 27.7.2006, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A). 5. BEFORE THE LEARNED CIT(A), THE ASSESSEE MADE AN ALTERNATIVE CLAIM THAT ITS INCOME WAS ALSO ELIGIBLE FOR EXEMPTI ON U/S 11. THE ITA-4399/DEL/2009 3 ASSESSEE POINTED OUT BEFORE THE LEARNED CIT(A) THAT IT HAS ALREADY FILED APPLICATION FOR REGISTRATION U/S 12A OF THE ACT BEF ORE THE LEARNED CIT AND THAT APPLICATION HAS BEEN REJECTED BY THE CIT V IDE ORDER DATED 17.4.2007. AGAINST THE ORDER OF CIT REJECTING THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A, THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. IT WAS POINTED OUT BY THE ASSESSEE B EFORE THE LEARNED CIT(A) THAT THE APPEAL FILED BEFORE THE TRIBUNAL WA S PENDING DECISION. THE ASSESSEE, THEREFORE, REQUESTED THE CIT TO DISPO SE OF THE ASSESSEES APPEAL ONLY AFTER THE ASSESSEES APPLICATION FOR RE GISTRATION IS FINALLY DECIDED BY THE TRIBUNAL. HOWEVER, THE CIT DID NOT ACCEPT THIS REQUEST OF THE ASSESSEE AND PROCEEDED TO DISPOSE OF THE APP EAL DISALLOWING THE ASSESSEES CLAIM OF EXEMPTION U/S 10(20) AS WELL AS U/S 11 VIDE ORDER DATED 27.11.2007. 6. AGAINST THE ORDER OF LEARNED CIT DATED 27.11.200 7, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL WHICH WAS N UMBERED AS ITA 825/DEL/2005. AFTER HEARING BOTH THE PARTIES, THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF THE LEARNED CIT(A) WITH A DIRECTION TO DISPOSE OF THE APPEAL OF THE ASSESSEE AFRESH ONLY AFTER THE DECISION ON THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR REGISTRA TION U/S 12AA IS RENDERED BY THE TRIBUNAL, VIDE ORDER DATED 6.12.200 8. IN THIS ORDER, THE TRIBUNAL HAS OBSERVED THAT IT WAS NOT RIGHT ON THE PART OF THE LEARNED CIT(A) TO DISPOSE OF THE APPEAL OF THE ASSE SSEE INVOLVING THE ISSUE RELATING TO THE CLAIM OF THE ASSESSEE FOR EXE MPTION U/S 11 WITHOUT WAITING FOR THE DECISION OF THE TRIBUNAL SPECIALLY WHEN REQUEST TO THIS EFFECT WAS MADE ON BEHALF OF THE ASSESSEE. IT WAS FURTHER OBSERVED BY THE TRIBUNAL THAT CIT(A) SHOULD HAVE KEPT THE APPEA L OF THE ASSESSEE PENDING FOR WANT OF THE DECISION OF THE TRIBUNAL WH ICH HAD DIRECT BEARING ON THE ISSUE RELATING TO THE CLAIM OF THE A SSESSEE FOR EXEMPTION U/S 11 AND SHOULD HAVE APPROPRIATELY DISP OSED OF THE ITA-4399/DEL/2009 4 APPEAL OF THE ASSESSEE ONLY AFTER THE RENDERING OF THE DECISION OF THE TRIBUNAL. 7. THE MATTER THEN AGAIN CAME UP FOR FRESH DISPOSAL BEFORE THE LEARNED CIT(A), AND LEARNED CIT(A) VIDE IMPUGNED OR DER DATED 4.9.2009 HAS NOT ENTERTAINED THE ASSESSEES CLAIM OF EXEMPTI ON U/S 11 OF THE ACT BY OBSERVING THAT THIS CLAIM WAS NEVER MADE BEF ORE THE AO AND AO NEVER GOT THE OPPORTUNITY TO EXAMINE THE ASSESSEES CLAIM WITH REGARD TO CONDITIONS MENTIONED IN SECTION 11 TO 13 OF THE INCOME-TAX ACT. THE LEARNED CIT(A) FURTHER OBSERVED THAT IN THE CIRCUMS TANCES OF THE CASE, IT WOULD HAVE BEEN JUST AND FAIR IF THE ASSESSMENT COULD BE SET ASIDE OR THE ISSUE COULD BE SET ASIDE TO THE AO FOR EXAMINAT ION OF THE CLAIM OF THE ASSESSEE U/S 11 AFTER EXAMINING THE CONDITIONS ENUMERATED IN SECTION 11 TO 13 BUT CIT(A) HAS NO POWER TO SET ASI DE THE ASSESSMENT. THE LEARNED CIT(A), THEREFORE, DID NOT ENTERTAIN TH E ASSESSEES CLAIM FOR EXEMPTION U/S 11 AT THAT STAGE. 8. AT THIS STAGE, IT IS PERTINENT TO NOTE THE FACT THAT ORIGINAL ASSESSMENT WAS MADE ON 27.7.2006 DURING THE COURSE OF WHICH THE ASSESSEE MADE A CLAIM OF EXEMPTION U/S 10(20) OF TH E ACT. THEREAFTER, THE ASSESSEE MADE AN APPLICATION FOR REGISTRATION U /S 12A ON 11.12.2006 WHICH WAS REJECTED BY THE LEARNED CIT(A) VIDE ORDER DATED 17.4.2007. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL VIDE ITA NO.3101/DEL/2007, AND THE TRI BUNAL VIDE ORDER DATED 13.4.2009 RESTORED THE MATTER OF REGISTRATION TO THE FILE OF THE CIT FOR CONSIDERING WHETHER PROPER APPLICATION HAS BEEN MADE BEFORE HIM AND THEN DECIDE THE APPLICATION IN ACCORDANCE W ITH THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF IM PROVEMENT TRUST IN ITA NO.489 OF 2007, ORDER DATED 31.10.2008. THEREA FTER, THE CIT VIDE ORDER DATED 28.8.2009 GRANTED THE REGISTRATION TO T HE ASSESSEE TRUST W.E.F. 1.4.2002. ITA-4399/DEL/2009 5 9. THIS ORDER OF THE CIT GRANTING REGISTRATION TO T HE ASSESSEE TRUST W.E.F. 1.4.2002 WAS PLACED BEFORE THE LEARNED CIT(A ) IN THE SECOND ROUND OF APPEAL. 10. FROM THE DISCUSSIONS MADE ABOVE, IT IS CLEAR TH AT THE ASSESSEE MADE A CLAIM OF EXEMPTION U/S 11 BEFORE THE LEARNED CIT(A) IN THE FIRST ROUND OF APPEAL WHEN ASSESSEES APPLICATION FOR REG ISTRATION WAS PENDING DISPOSAL BEFORE THE TRIBUNAL. IT IS ALSO C LEAR THAT THE TRIBUNAL IN THE FIRST ROUND OF APPEAL RESTORED THE MATTER BA CK TO THE LEARNED CIT(A) FOR FRESH DISPOSAL AFTER TAKING INTO ACCOUNT THE DECISION ON THE ISSUE RELATING TO THE ASSESSEES CLAIM OF REGISTRAT ION U/S 12AA IS RENDERED BY THE TRIBUNAL. IT IS THUS CLEAR THAT AS SESSEES CLAIM OF EXEMPTION U/S 11 WAS DIRECTED TO BE ENQUIRED INTO A FTER THE DECISION IS RENDERED BY THE TRIBUNAL ON THE ASSESSEES CLAIM OF REGISTRATION U/S 12AA OF THE ACT. IT IS AN ADMITTED POSITION THAT T HE ASSESSEES CLAIM OF REGISTRATION U/S 12AA HAS ULTIMATELY BEEN ALLOWED B Y THE LEARNED CIT VIDE ORDER DATED 28.8.2009. THEREFORE, THE ASSESSE ES ALTERNATIVE CLAIM OF EXEMPTION U/S 11 WAS REQUIRED TO BE LOOKED INTO AND DECIDED UPON. HOWEVER, THE LEARNED CIT(A) IN THE IMPUGNED ORDER HAS NOT ENTERTAINED THIS CLAIM IN THE LIGHT OF THE FACT THA T THE AO NEVER GOT THE OPPORTUNITY TO EXAMINE THE ASSESSEES CLAIM OF EXEM PTION U/S 11 TO 13 OF THE ACT. THE LEARNED CIT(A) ALSO STATED THAT IT WOULD HAVE BEEN JUST AND FAIR IF THE ASSESSMENT COULD BE SET ASIDE TO TH E FILE OF THE AO FOR EXAMINATION OF THE CLAIM OF THE ASSESSEE U/S 11 TO 13 OF THE ACT BUT SINCE HE HAS NO POWER TO SET ASIDE THE ASSESSMENT, HE DID NOT RESTORE THE MATTER BACK TO THE FILE OF THE AO. IN THESE CI RCUMSTANCES, WE FIND IT JUST AND FAIR THAT MATTER SHOULD GO BACK TO THE FILE OF THE AO FOR HIS FRESH ASSESSMENT DURING THE COURSE OF WHICH, THE AO SHALL EXAMINE THE ASSESSEES CLAIM OF EXEMPTION U/S 11 TO 13 OF THE A CT IN THE LIGHT OF THE FACT THAT REGISTRATION U/S 12AA HAS ALREADY BEEN GR ANTED TO THE ITA-4399/DEL/2009 6 ASSESSEE BY THE LEARNED CIT W.E.F. 1.4.2002. WE, T HEREFORE, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE ASS ESSMENT BACK TO THE FILE OF THE AO FOR HIS FRESH DECISION AS PER LAW. THE AO SHALL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE WITH REGARD TO ITS CLAIM OF EXEMPTION U/S 11 OF THE ACT. WE ORDER ACCORDINGLY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED TO BE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 25 TH APRIL, 2011. SD/- SD/- (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN (K.D.RANJAN) )) ) (C.L.SETHI (C.L.SETHI (C.L.SETHI (C.L.SETHI) )) ) ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 25.04.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR