Baba Kartar Singh Dukki Educational Trust, Ludhiana V. ITO, Ludhiana

ITA 446/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90168 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-05-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 28-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Depreciation; Charitable institution; Opportunity of being heard; Assessment record; Condonation of delay
• Section: 142(1); 12A; 12AA; 10B; 147; 148; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NOS. 444 TO 446/CHD/2014 ASSESSMENT YEARS: 2001-02 TO 2003-04 BABA KARTAR SINGH DUKKI VS. THE ITO, WARD II (1), EDUCATIONAL TRUST, LUDHIANA DISTT. LUDHIANA PAN NO. AAATB7340L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 15.05.2015 DATE OF PRONOUNCEMENT : 29.05.2015 O R D E R PER H.L.KARWA, VP THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE CONSOLIDATED ORDER OF CIT(A)II, LUDHIANA DATED 31.01.2014 RELATING TO ASSESSMENT YEARS 2001-02 TO 2003-04. IN ALL MATERIAL ASPECTS, THE FACTS ARE SIMILAR. TH ESE APPEALS, THEREFORE, HAVE BEEN HEARD TOGETHER AND ARE BEING D ISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE COMMON GROUNDS OF APPEALS ARE AS UNDER:- 1. THAT THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-II HAS GROSSLY ERRED IN LAW IN HOLDING THAT PROCEEDINGS UNDER SECTION 148 HAD BEEN VALIDLY INITIATED. 2. THAT WHILE UPHOLDING INITIATION OF PROCEEDINGS U/S 148 THE LD. CIT(A) DID NOT APPRECIATE THAT NO INCOME COULD BE SAID TO HAVE ESCAPED ASSESSMENT BY 2 REJECTION OF CLAIM OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT 1961. 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN HOLDING NOTIC E AS ISSUED U/S 148 TO BE VALID WITHOUT APPRECIATING THAT IT WAS MANDATED TO BE ISSUED IN THE STATUS OF AOP AND NOT TRUST. 4. THAT THE LD. CIT(A) HAS FURTHER ERRED IN ALLOWING ELIGIBILITY OF CLAIM UNDER SECTION 10 (23C) (IIIAD) WHEN THE APPELLANT TRUST WAS CONCEIVED AND FORMED FOR THE SOLE PURPOSE OF DISSEMINATION OF EDUCATION. 3. IT IS OBSERVED THAT THESE APPEALS WERE FILED LAT E BY 27 DAYS. THE ASSESSEE SUBMITTED THREE SEPARATE APPLICA TIONS FOR CONDONATION OF DELAY OF 27 DAYS IN FILING THE APPEA LS. IN SUPPORT OF THE REASONS FOR LATE FILING OF THE APPEA LS, THE ASSESSEE SUBMITTED THREE SEPARATE AFFIDAVITS OF SHR I NACHHATAR SINGH WHO IS MANAGING THE AFFAIRS OF BABA KARTAR SINGH DUKKI EDUCATIONAL TRUST SINCE ITS FORMATION A S SECRETARY OF THE TRUST. IT IS STATED THAT AT THE RE LEVANT TIME HE WAS 76 YEARS OLD AND ON ACCOUNT OF VARIOUS HEALT H ISSUES AS ARE USUALLY ASSOCIATED WITH THE GROWING AGE WAS EXPERIENCING REGULAR KNEE AND BACK PROBLEMS. THE CONSOLIDATED ORDER PASSED BY CIT(A)-II, LUDHIANA W AS RECEIVED WELL WITHIN TIME BUT THE SAME COULD NOT BE HANDED OVER TO THE COUNSEL AT LUDHIANA FOR THE ABOVE STATE D REASONS. FURTHER, THE ASSESSEE HAS LITTLE KNOWLEDGE THAT THE ORDER AS RECEIVED BY HIM WAS REQUIRED TO BE FURTHER CHALLENG ED BEFORE THE TRIBUNAL BY WAY OF FILING THREE SEPARATE APPEAL S. IT IS ALSO STATED THAT DELAY IN FILING THE APPEALS BEFORE THE TRIBUNAL WAS NOT DELIBERATE OR ON ACCOUNT OF MALAFI DES. THE ASSESSEE HAS NOT DERIVED ANY BENEFIT BY RESORTING T O DELAY. HOWEVER, THE DELAY IN FILING THE APPEALS HAS OCCURR ED DUE TO THE ABOVE STATED REASONS WHICH WERE BEYOND THE CONT ROL OF 3 THE ASSESSEE. THERE IS NO MATERIAL ON RECORD TO CON TROVERT THE ABOVE STATED SUBMISSIONS OF THE ASSESSEE. I AM FUL LY SATISFIED WITH THE EXPLANATION TENDERED FOR THE DEL AY AS REASONABLE AND ACCEPTABLE. AT THE SAME TIME I MAY OBSERVE HERE THAT IT IS ALSO WELL SETTLED LAW THAT THE JURI SDICTION TO CONDONE THE DELAY SHOULD BE EXERCISED LIBERALLY. TH E MATTER RELATING TO CONDONATION OF DELAY SHOULD BE JUDGED B ROADLY AND NOT IN A PEDANTIC MANNER. CONSIDERING THE REASO NS SUBMITTED BY THE ASSESSEE FOR THE DELAY IN FILING T HE APPEALS AND ALSO THE SETTLED LEGAL POSITION, I HOLD THAT DE LAY OF 27 DAYS IN FILING THREE APPEALS DESERVES TO BE CONDONE D, AND HENCE THE DELAY IS CONDONED. 4. VIDE COMMON GROUND NOS. 1 & 2 OF THE APPEALS, TH E ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING O F THE ASSESSMENTS U/S 147/148 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). BRIEFLY THE FACTS OF THE CASE AR E THAT THE ASSESSEE TRUST WAS FOUNDED BY LATE SHRI JAGPAL SING H S/O SHRI KARTAR SINGH DUKKI A GREAT PATRIOT, FREEDOM FI GHTER AND EDUCATIONIST TO THE CORE TO PERPETUATE AND CARRY FO RWARD AND FULFILL HIS IDEALS OF ERADICATING ILLITERACY. TO AC HIEVE THIS LAUDABLE OBJECTIVE AND DISSEMINATION OF EDUCATION A GOVERNMENT SENIOR SECONDARY SCHOOL AT VILLAGE LATAL A (WHEARE LATE SHRI KARTAR SINGH DUKKI WAS BORN AND B ROUGHT UP ) WAS GOT NAMED AFTER BABA KARTAR SINGH DUKKI WI TH SIMULTANEOUS FORMATION OF THE ASSESSEE TRUST ON 4.2 .2000 BY SHRI JAGPAL SINGH BY DONATING RS. 15 LAKHS VIDE CHE QUE DRAWN ON HIS SAVING BANK ACCOUNT NO. 012406 WITH UN ION BANK OF INDIA, LATALA AS CORPUS WHICH WAS CONVERTED INTO 4 FIXED DEPOTS FOR 10 YEARS WITH THE STIPULATION THAT QUARTERLY INTEREST AS ACCRUED THEREON WOULD BE CREDITED TO TH E AFORESAID BANK ACCOUNT NO. 11060 AS PER RESOLUTION DATED 17.3.2000 TO BE UTILIZED TO ACHIEVE THE OBJECTS AS PER CLAUSE (5) OF THE TRUST DEED AND TO BE AN AID TO THE AFORE SAID SCHOOL FOR GIVING STIPENDS, SCHOLARSHIPS, DISTRIBUTIONS OF UNIFORMS, PROVIDING OTHER FACILITIES LIKE GENERATOR, COOLERS, GYM AND FOR IMPROVING LITERACY. TO AUGMENT THE INCOME OF THE T RUST, SETTLER OF THE TRUST SHRI JAGPAL SINGH DUKKI DONATE D ANOTHER SUM OF RS. 10 LAKHS TO THE CORPUS OF THE TRUST ON 2 6.12.2003 BY ISSUE OF A CHEQUE DRAWN OF HIS SAVING BANK ACCOU NT WITH UNION BANK OF INDIA BEARING NO. 302 WHICH WAS AGAIN GOT CONVERTED INTO FIXED DEPOSIT FOR FIVE YEARS WITH TH E SAME STIPULATION OF QUARTERLY INTEREST TO BE CREDITED TO THE CURRENT ACCOUNT OF THE TRUST TO BE UTILIZED AS ABOVE AND WA S SO UTILIZED. THE ACCOUNTS OF THE TRUST WERE BEING REG ULARLY AUDITED FROM INCEPTION OF ITS FORMATION ON 4.2.200 0 AND RETURNS OF INCOME ALONGWITH AUDIT REPORT AS PRESCRI BED AS PER RULE 17B IN FORM NO. 10B FROM THE ASSESSMENT YEAR 2 000-01 WERE BEING FILED DECLARING INCOME AT NIL BY CLAIM ING EXEMPTION U/S 10(23C)(IIAB) / 10(23C)(IIIAD) OF TH E ACT BEING AN EDUCATIONAL INSTITUTION. THE ASSESSEE FILED AN APPLICATION U/S 12A /12AA OF THE ACT FOR REGISTRATION AS A CHAR ITABLE TRUST WHICH WAS NOT FOLLOWED UP WITH THE ISSUE OF R EGISTRATION REMAINING IN A STATE OF FLUX. FINALLY, ANOTHER APPL ICATION DATED 31.5.2007 U/S 12AA FOR GRANT OF REGISTRATION WAS FILED BEFORE THE COMMISSIONER OF INCOME TAX, WHO VIDE HIS ORDER DATED 30.11.2007 REJECTED THE APPLICATION OF THE AS SESSEE. 5 THE ASSESSEE PREFERRED AN APPEAL AGAINST THE AFORES AID ORDER OF LD. COMMISSIONER OF INCOME TAX BEFORE THE ITAT, CHANDIGARH BENCHES, CHANDIGARH ON 01.06.2011 IN ITA NO. 609/CHD/2011, AND THE TRIBUNAL VIDE ITS ORDER DATED 20.09.2011 OBSERVED THAT THE IMPUGNED ORDER WAS PAS SED IN HASTY MANNER WITHOUT AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ALSO THAT NO REPORT O F THE ASSESSING OFFICER AND THE JOINT COMMISSIONER OF INC OME TAX, RANGE-II, LUDHIANA IS CONFRONTED. THEREFORE, THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX WAS SET ASIDE BY THE TRIBUNAL AND MATTER WAS REMANDED TO HIM WITH THE DI RECTION TO DECIDE THE SAME AFRESH. IN COMPLIANCE TO THE OR DER OF THE TRIBUNAL PASSED IN ITA 509/CHD/2011, THE LD. COMMISSIONER OF INCOME TAX-I LUDHIANA PASSED AFRESH ORDER ON 27.12.2011 UNDER SECTION 12AA OF THE ACT. THE L D. COMMISSIONER OF INCOME TAX WAS NOT SATISFIED WITH T HE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE AS SESSEE TRUST. HE, THEREFORE, REFUSED TO GRANT THE REGISTR ATION TO THE ASSESSEE TRUST WITHIN THE MEANING OF SECTION 12AA O F THE ACT. THE ASSESSEE CHALLENGED THE ORDER DATED 27.12. 2011 PASSED BY LD. COMMISSIONER OF INCOME TAX-I LUDHIANA BEFORE THE TRIBUNAL, CHANDIGARH BENCHES A CHANDIGARH IN ITA NO. 40/CHD/2012 AND THE TRIBUNAL VIDE ITS ORDER DATED 27.06.2012 DIRECTED THE LD. COMMISSIONER OF INCOME TAX TO GRANT REGISTRATION TO THE ASSESSEE TRUST UNDER SECT ION 12AA OF THE ACT, OBSERVING AS UNDER : 13. NOW COMING TO THE FACTS OF THE PRESENT CASE, TH E ASSESSEE TRUST WAS RUNNING A SCHOOL AT LATALA. THE TRUST 6 WAS FORMED ON 04.02.2000 AND WAS FILING ITS RETURNS O F INCOME FROM A.Y. 2000-01 ALONGWITH AUDITED ACCOUNTS. THE ASSESSEE HAD EARLIER FILED APPLICATION FOR REGISTRAT ION OF TRUST, WHICH WAS NOT FOLLOWED UP AND HENCE REJECTED. THE AS SESSEE FILED THE PRESENT APPLICATION U/S 12A OF THE ACT ON 31.05.2007. THE CIT HAD CONDONED THE DELAY FOR FILL ING THE APPLICATION FOR REGISTRATION AND REGISTRATION WAS T O BE ALLOWED PROSPECTIVELY FROM A.Y. 2012-13, TO WHICH THE LEARNED A.R. FOR THE ASSESSEE AGREED. HOWEVER, THE SAME WA S REJECTED ON INVOCATION OF SECTION 13(L)(II) OF THE AC T AND LIFE LONG MEMBERSHIP OF THE TRUSTEES AND ASSESSEE BEING BOTH SOCIETY AND TRUST. 14. APPLYING THE PRINCIPLES LAID DOWN BY THE HON'BL E PUNJAB & HARYANA HIGH COURT IN SURYA EDUCATIONAL & CHARITABLE TRUST, WE FIND THAT THE CIT WHILE GRANTI NG REGISTRATION U/S 12AA OF THE FACT IS TO LOOK INTO THE OBJECTS OF THE TRUST AND WHETHER THE TRUST IS CARRYING ON THE SAID OBJECTS OF THE TRUST. THE OBJECTS OF THE PRESENT AS SESSEE TRUST WERE IN THE LINE OF EDUCATION AND THE ASSESSEE WAS RUN NING BOTH SCHOOL AND COLLEGE. ONCE A TRUST IS ENGAGED IN THE ACTIVITIES OF PROVIDING EDUCATION BY WAY OF SETTI NG UP SCHOOL AND COLLEGE, WHICH IS ONE OF THE RECOGNIZED OBJECT OF CHARITABLE ACTIVITY AND /NO EVIDENCE HAVING BEING B ROUGHT ON RECORD, THAT THE SAID ACTIVITIES OF THE TRUST WERE NOT GENUINE, THE SAID TRUST IS ENTITLED TO REGISTRATION U/S 12AA OF THE ACT. THE SATISFACTION OF CONDITIONS OF SEC. 11 TO 13 OF THE ACT IS TO BE GONE INTO BY ASSESSING OFFICER, WHILE DETERMI NING THE INCOME OF TRUST AT THE TIME OF ASSESSMENT AND NOT T O BE GONE INTO BY CIT, WHILE GRANTING -REGISTRATION U/S 12AA OF THE ACT. THE NEXT OBJECTION OF THE CIT IS THAT THE ASSESSEE IS BOTH TRUST AND SOCIETY IS RECOGNIZED SYSTEM AND ONCE IT IS REGISTERED AS TRUST, PROVISION OF ELECTION ARE N OT APPLICABLE TO TRUSTS. THE NEXT OBJECTION OF THE CIT THAT TRUSTEE AND THEIR SUCCESSOR WERE LIFE LONG MEMBER A ND HENCE ACTIVITIES OF TRUST BEING NOT GENUINE ARE NOT CORRECT, AS THE RULE AGAINST PERPETUITY IS NOT APPLICABLE IN CASE OF PUBLIC CHARITABLE TRUST, AS PER SECTION 18 OF TRANS FER OF PROPERTY ACT. IN VIEW THEREOF, WE FIND NO MERIT IN THE ORDER OF CIT AND DIRECT THE CIT TO GRANT REGISTRATION U/S 12AA OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASS ESSEE ARE ALLOWED. 5. THE REVENUE CHALLENGED THE ORDER OF THE TRIBUNAL DATED 27.06.2012 BY WAY OF APPEAL BEFORE THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN ITA NO. 2 OF 2013, AND THE HO N'BLE HIGH COURT VIDE ITS ORDER DATED 08.10.2013 AFFIRMED THE ORDER OF THE TRIBUNAL IN GRANTING REGISTRATION UNDER SECT ION 12AA OF 7 THE ACT TO THE ASSESSEE TRUST AND THE APPEAL FILED BY THE REVENUE WAS DISMISSED. 6. THE ASSESSEE FILED THE RETURN OF INCOME FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION DECLARING INCO ME AT RS. NIL AFTER CLAIMING EXEMPTION UNDER SECTION 10 (23C)(IIIAB) OF THE INCOME TAX ACT,1961 AND THE RETURNS WERE PRO CESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE ASSESSMENTS WERE REOPENED UNDER SECTION 147 AND NOT ICES UNDER SECTION 148 WERE ISSUED SINCE THE ASSESSEE WA S NOT GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT BY THE LD. COMMISSIONER OF INCOME TAX-I, LUDHIANA VIDE HIS ORD ER DATED 30.11.2007. THE REGISTRATION WAS REFUSED MAINLY FO R THE FOLLOWING REASONS: '....THAT THE TRUST CAME INTO EXISTENCE ON 04.02.200 0 AND APPLICATION FOR REGISTRATION WAS FILED ON 31.05.2007 . THE ASSESSEE HAS SUBMITTED THAT THE DELAY IN FILING OF A PPLICATION U/S 12A WAS UNAVAILABILITY OF COUNSEL OF THE TRUST. THI S CANNOT BE HELD AS SUFFICIENT REASON FOR DELAY IN FILING APPLI CATION FAR REGISTRATION U/S 12A(A) OF THE INCOME TAX ACT, 1961. HENCE, THE REQUEST FOR CONDONING THE DELAY IN FILING THE APPLICAT ION U/S 12A IS REJECTED. AS PER THE REPORT OF THE ASSESSING OFFICER AND THE JOINT COMMISSIONER OF INCOME TAX, RANGE-II, LUDHIANA.-II, L UDHIANA, THE TRUST HAS NOT PERFORMED ANY CHARITABLE ACTIVITI ES DURING THE ASSESSMENT YEAR 2004-05 TO 2006-07. MOREOVER THE FI NAL ACCOUNTS SUBMITTED FOR THE ASSESSMENT YEAR 2004-05 TO 2006-0 7 REVEALS THAT A MEAGER AMOUNT HAS BEEN UTILIZED FOR DISTRIBUT ION OF PRIZES AND UNIFORM, WHICH DOES NOT TANTAMOUNT TO EITHER ED UCATIONAL OR CHARITABLE PURPOSE. THE ASSESSEE IS A REGULAR ASSESSEE AND IS CLAIMING ITS INCOME EXEMPT UNDER SECTION 10(23C) (I IAB) OF THE I.T.ACT. 1961 FOR ASSESSMENT YEAR 2001-02 TO 2006-07. THE TRUST IS NOT ENTITLED FOR SUCH EXEMPTION AS THE PROVISIONS OF THIS SECTION ARE NOT APPLICABLE TO IT. IT IS NEITHER A UNIVE RSITY NOT EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATIONAL PURPOSE AND WHOLLY OR SUBSTANTIALLY FINANCED BY THE GOVERNMEN T. THE CONDUCT OF THE ASSESSEE IS THUS NOT IN ACCORDANCE W ITH THE PROVISIONS OF LAW. KEEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE, A LETTER NO. 3385 DATED 06.11.07 WAS ISSUED TO T HE TRUST FOR 8 HEARING ON 15.11.2007 AT 4.30PM BUT NOBODY ATTENDED THE OFFICE. AGAIN A LETTER WAS ISSUED TO THE TRUST FOR HEARING ON 26.11.2007 AT 4.30 PM, WHICH WAS SERVED ON 22.11.2007. IN RESPONSE TO THIS LETTER ALSO, NOBODY ATTENDED THE OFFICE NOR FILED ANY WRITTEN REPLY IN SUPPORT OF ITS APPLICATION FOR REGISTRATION. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 I S HEREBY REJECTED.' 7. NOTICES UNDER SECTION 143(2) AND 142(1) OF THE A CT ALONGWITH DETAILED QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICES, THE ASSESSEE SUBMITTED THE REQUISITE INFORMATION. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESS EE AS TO WHY THE STATUS OF THE ASSESSEE SHOULD NOT BE TREATE D AS ASSOCIATION OF PERSONS (AOP) AS REGISTRATION HAS NO T BEEN GRANTED BY THE LD. COMMISSIONER OF INCOME TAX, LUDH IANA. THE ASSESSING OFFICER OBSERVED THAT DURING ASSESSME NT YEARS UNDER CONSIDERATION, THE ASSESSEE HAS EARNED SUBSTA NTIAL INCOME FROM FDRS AGAINST WHICH, AS PER INCOME & EXPENDITURE ACCOUNT THE ASSESSEE HAS DEBITED EXPENS ES UNDER VARIOUS HEADS THEREBY SHOWING NET INCOME OF R S. 73,996/-, RS. 91,565/- RS. 16,724/- FOR ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04 RESPECTIVELY. ACCORDI NG TO ASSESSING OFFICER, THE INCOME OF THE TRUST WAS NOT EXEMPT UNDER SECTION 10(23C)(IIIAB) OF THE ACT, HE, THEREF ORE, OBSERVED THAT THE INCOME OF THE ASSESSEE IS TAXABLE IN THE STATUS OF AOP, WHICH FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS FAR AS T HE CLAIM OF THE EXPENSES AGAINST THE INCOME FROM FDRS IS CONCER NED, NONE OF THESE ARE RELATABLE TO THE INCOME DERIVED U NDER THE 9 HEAD INCOME FROM OTHER SOURCES. THE ASSESSING OF FICER HELD THAT THE EXPENSES CLAIMED BY THE ASSESSEE WERE NOT ADMISSIBLE UNDER SECTION 57 OF THE ACT. HE, THEREFO RE, DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE AGAINST THE INCOME OF FDR INTEREST AND THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES WAS ASSESSED TO TAX. THE ASSESSING OFFICER ASSESSED TH E INCOME AT RS. 1,63,541/-, RS. 1,18,125/- AND RS. 1,57,500/ - FOR THE ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04 RESPECTIVELY. 8. AGGRIEVED BY THE RE-ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED THREE SEP ARATE APPEALS BEFORE THE LD. CIT(APPEALS)-II LUDHIANA, WH O VIDE HIS CONSOLIDATED ORDER DATED 31.01.2014 DISMISSED THE A PPEALS OF THE ASSESSEE FOR ALL THE THREE ASSESSMENT YEARS UND ER CONSIDERATION. 9. AGGRIEVED BY THE ORDER OF LD. CIT(APPEALS)-II, L UDHIANA, ASSESSEE HAS PREFERRED THESE THREE APPEALS FOR THE ASSESSMENT YEARS 2001-02, 2002-03 AND 2003-04 BEFOR E THE TRIBUNAL. 10. VIDE COMMON GROUND NOS. 1 & 2 OF THE APPEALS, T HE ASSESSEE HAS CHALLENGED THE VALIDITY OF RE-OPENING OF THE ASSESSMENTS FRAMED UNDER SECTION 147/148 OF THE ACT . 11. AT THE VERY OUTSET, SHRI TEJ MOHAN SINGH, LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SOLE BASIS FOR ISSU E OF NOTICE(S) UNDER SECTION 148 IS INCOME HAVING ESCAPED 10 ASSESSMENT FOR NOT HAVING FILED THE RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2001-02 TO 2003-04; WHEREAS CLAIM FOR DEDUCTION UNDER SECTION 10(23C)(IIIAB) OR REJECTION OF APPLICATION UNDER SECTION 12A BY THE LD. COMMISSION ER OF INCOME TAX WAS MUCH LATER (APPLICATION HAVING BEEN FILED ON 24.05.2007) WAS ONLY A NARRATIVE OR A PASSING REFER ENCE HAVING NO RATIONAL CONNECTION OR RELEVANT BEARING O N THE FORMATION OF THE BELIEF. ACCORDING TO THE LD. COUN SEL FOR THE ASSESSEE, RATIONAL CONNECTION POSTULATES THAT THERE MUST BE DIRECT NEXUS OR LIVE LINK BETWEEN MATERIAL COMING T O THE NOTICE OF THE ASSESSING OFFICER AND THE FORMATION O F BELIEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR. RELIANCE W AS PLACED ON THE DECISION OF HON'BLE KOLKATA HIGH COURT IN TH E CASE OF BERGER PAINTS (2004) 266 ITR 462 (CAL). HE ALSO SUB MITTED THAT IT IS WELL SETTLED LAW THAT IT IS NOT ANY AND EVERY MATERIAL, HOWEVER VAGUE AND INDEFINITE OR DISTANT, OR REMOTE AND FAR FETCHED WHICH WOULD WARRANT THE FORMATION O F THE BELIEF RELATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT AS PER REASONS RECO RDED BY THE ASSESSING OFFICER, THE ASSESSEE TRUST HAD OPENI NG BALANCE OF RS. 15,59,245/- AND SINCE NO RETURNS HAV E BEEN FILED FOR THE PRECEDING YEARS, PRIMA-FACIE THERE WE RE REASONS TO BELIEF THAT A PART OF THE DONATIONS EXCEEDING RS . 1 LAC HAD BEEN RECEIVED BY THE ASSESSEE TRUST DURING THE ASSE SSMENT YEARS 2001-02, 2002-03 AND 2003-04 WHICH IS/WAS PER SE UNFOUNDED AND INCORRECT AS THE RETURNS OF INCOME FO R ALL 11 THESE THREE YEARS HAD BEEN FILED ON 26.12.2003 IN F ORM NO. 3A. ACKNOWLEDGEMENTS AND RELEVANT DOCUMENTARY EVID ENCE ARE AVAILABLE IN ASSESSEE'S PAPER BOOK AT PAGES 114 & 115. SHRI TEJ MOHAN SINGH, SUBMITTED THAT INITIATION OF PROCEEDINGS UNDER SECTION 147/148 ON A NON-EXISTENT GROUND CANNOT BE SUSTAINED. RELIANCE WAS PLACED ON THE DE CISION OF THE HON'BLE GUJRAT HIGH COURT IN THE CASE OF SAGAR ENTERPRISES VS ASSSTT. COMMISSIONER (2002)257 ITR 3 35 (GUJ). 12. SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSES SEE VEHEMENTLY ARGUED THAT AS PER THE REASONS RECORDED FOR THE RE-OPENING OF THE ASSESSMENTS DATED 29.01.2008 FOR ALL THE THREE YEARS REFERRED TO THE OPENING BALANCE OF THE TRUST FUNDS AT RS. 15,92,245/-LEADING TO THE FORMATION OF BELIE F THAT A PART OF THE ABOVE DONATIONS EXCEEDING RS. 1 LAC, BE ING THE INCOME AS PER SECTION 2(24)(IIA) HAS ESCAPED ASSESS MENT, WHEREAS THE RETURNS OF INCOME ALREADY STOOD FILED S HOW THAT NO DONATION EXCEEDING RS. 1 LAC HAVING BEEN ESCAPED ASSESSMENT, WHICH ESTABLISHES CLEARLY THAT THE VERY BASIS OF FORMING BELIEF HAD NO RATIONAL CONNECTION OR RELEVA NT BEARING ON THE FORMATION OF THE BELIEF. SHRI TEJ MOHAN SIN GH FURTHER SUBMITTED THAT IT IS WELL SETTLED LAW THAT IF THE V ERY BASIS AND ORIGIN OF INITIATION GOES TO THE GROUND, RE-OPENING CANNOT BE SUSTAINED OR THE VERY BASIS IS FOUND TO BE INCORREC T OR DID NOT HAVE ANY RATIONAL NEXUS BETWEEN THE REASONS AND THE BELIEF. SHRI TEJ MOHAN SINGH ALSO RELIED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. PARAM JIT KAUR (2009) 331 ITR 38 (P&H), WHEREIN THE HON'BLE HIGH C OURT HAS 12 HELD THAT RE-ASSESSMENT PROCEEDINGS CANNOT BE SUSTA INED ON ASSESSING OFFICERS FAILURE TO EXAMINE INFORMATION BEFORE RECORDING SATISFACTION OF ESCAPED INCOME. 12(A) SHRI TEJ MOHAN SINGH ALSO SUBMITTED THAT BE FORE THE LOWER AUTHORITIES, THE ASSESSEE HAD SUBMITTED THAT THERE WAS A TYPOGRAPHICAL ERROR AND THE EXEMPTION WAS ACTUALL Y ALLOWABLE UNDER SECTION 10(23C)(IIIAD) INSTEAD OF S ECTION 10(23C)(IIIAB) OF THE ACT TO THE ASSESSEE. HE FURT HER SUBMITTED THAT PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT ARE VOID ABINITIO SINCE THERE COULD BE N O REASONS TO BELIEVE THAT THERE HAS BEEN ANY ESCAPEMENT OF INCOM E IN AS MUCH AS THERE IS NONE. DISALLOWANCE OF EXEMPTION U NDER SECTION 10(23C)(IIIAD) [WRONGLY TYPED AS 10(23C)(II IAB)] OR DECLINING TO ALLOW REGISTRATION UNDER SECTION 12AA WITHOUT ASCRIBING ANY REASONS, PARTICULARLY WHEN THE TRIBUN AL HAD ALLOWED REGISTRATION UNDER SECTION 12AA AND HAS BEE N UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT, MAY NOT B E INFERRED ESCAPEMENT OF THE INCOME. 13. IN VIEW OF THE ABOVE, SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RE-ASSE SSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRME D BY THE LD. CIT(APPEALS) ARE LIABLE TO BE QUASHED. ACCORDI NGLY, IT WAS SUBMITTED THAT THE RE-ASSESSMENT ORDERS MAY BE QUAS HED BEING INVALID. 14. SHRI MANJIT SINGH, LD. DR, ON THE OTHER HAND, S UBMITTED THAT THE GROUNDS TAKEN BY THE ASSESSEE BEFORE TRIBU NAL HAVE BEEN APPROPRIATELY ADJUDICATED BY THE LD. CIT(APPEA LS) BY 13 RELYING UPON VARIOUS CASE LAWS. HE FURTHER SUBMITT ED THAT AS THE RETURNS FILED BY THE ASSESSEE WERE PROCESSED UN DER SECTION 143(1) OF THE ACT ONLY, THESE CASES WERE RI GHTLY SUBJECTED TO RE-ASSESSMENT PROCEEDINGS AS PER THE R ATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF ACIT VS RAJESH JHAVERI STOCK BROKERS (P) LTD. 291 ITR 500 ( S.C). SHRI MANJIT SINGH, LD. DR ALSO RELIED ON THE DECISI ON OF HON'BLE APEX COURT IN THE CASE OF RAYMOND WOOLLEN M ILLS LTD. VS ITO 236 ITR 34 (S.C) WHEREIN THE HON'BLE SUPREME COURT HELD THAT, INFORMATION OBTAINED BY THE DEPARTMENT FROM SUBSEQUENT ASSESSMENT PROCEEDINGS IS VALID FOR RE-O PENING OF THE ASSESSMENT. IN VIEW OF THE ABOVE, LD. DR SUBMITTED THAT THE RE-OPENING OF THE ASSESSMENTS WAS VALID AND THE REFORE, COMMON GROUND NO. 1 & 2 OF THE APPEALS MAY BE REJEC TED. 15. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECOR D. SECTION 147 OF THE ACT READS AS UNDER : 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEV E THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LO SS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEV ANT ASSESSMENT YEAR): 16. FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT THE POWER OF THE ASSESSING OFFICER UNDER SECTION 147 IS TO BE EX ERCISED SUBJECT TO THE PROVISIONS OF SECTION 148. UNDER SE CTION 14 148(1), THE ASSESSING OFFICER IS REQUIRED TO SERVE ON THE ASSESSEE A NOTICE BEFORE MAKING ASSESSMENT, RE-ASSE SSMENT OR COMPUTATION UNDER SECTION 147. SECTION 148(2), H OWEVER, PROVIDES THAT BEFORE ISSUING ANY NOTICE UNDER SECTI ON 148(1), THE ASSESSING OFFICER HAS TO RECORD HIS REASONS FOR DOING SO. THE REASONS TO BE RECORDED BY THE ASSESSING OFFICER UNDER SECTION 148(2) MUST RELATE TO HIS BELIEF UNDER SECT ION 147 THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT FOR ANY ASSESSMENT YEAR. THUS, THE REASON FOR THE BELIEF OF THE ASSESSING OFFICER THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN ANY ASSESSMENT YEAR MUST EXI ST AND MUST BE RECORDED BEFORE ANY NOTICE UNDER SECTION 14 8(1) IS ISSUED TO THE ASSESSEE AND BEFORE MAKING ANY ASSESS MENT, RE- ASSESSMENT OR COMPUTATION UNDER SECTION 147. IT IS WELL SETTLED LAW THAT THE REASONS REFERRED TO MUST SHOW APPLICATION OF MIND BY THE ASSESSING OFFICER. IN M Y CONSIDERED OPINION, RECORDING OF THE REASONS IS THE FOUNDATION OF INITIATION OF PROCEEDINGS UNDER SECTI ON 148, THEREFORE, WOULD NOT BE AFFECTED BY THE PROVISIONS OF SECTION 292B OF THE ACT. IN THE INSTANT CASE, IT IS CRYSTA L CLEAR THAT THE ASSESSING OFFICER PROCEEDED FOR RE-OPENING OF T HE ASSESSMENT FOR NON-EXISTENT AND FACTUALLY INCORRECT REASONS AND HAS NOT APPLIED HIS MIND AND DID NOT VERIFY THE ASSESSMENT RECORDS/RETURNS OF INCOME SUBMITTED BY T HE ASSESSEE PRIOR TO RECORDING OF THE REASONS. FOR AL L THE THREE YEARS, ASSESSING OFFICER REOPENED THE ASSESSMENTS F OR THE FOLLOWING REASONS ( SIMILAR REASONS FOR ASSESSMENT YEARS 15 2002-03 AND 2003-04) AS RECORDED UNDER SECTION 148( 2) OF THE ACT : THE ASSESSEE TRUST WAS CREATED ON 4.02.2000. FOR T HE RELEVANT PERIOD THE ASSESSEE HAS NOT FILED ANY INCOME TAX RET URN. MOREOVER NO RETURNS FOR THE ASSESSMENT YEAR 2002-03 2003-04 HAVE BEEN FILED. THE PERUSAL OF INCOMES-TAX RETURN FILED FOR ASSTT. Y EAR 2004- 2005 FURTHER REVEALS THAT THE ASSESSEE HAD SHOWN OP ENING BALANCE OF TRUST FUNDS AT RS.L592245/-. AS NO RETURNS HAVE BEEN FILED FOR YEARS PRECEDING TO ASSESSMENT YEAR 2004-05, PRIMA-FACIE 1 HAVE REASONS TO BELIEVE THAT A PART OF ABOVE DONATION/TRUST FUND EXCE EDING RS. 1 LAKHS HAVE BEEN RECEIVED BY THE ASSESSEE DURING ASSESSMENT YEAR 2001-2002. THE SAME IS INCOME OF TH E ASSESSEE AS PER SECTION 2(24)(IIA) OF INCOME TAX AC T, 1961 WHICH HAS ESCAPED ASSESSMENT. I HAVE THEREFORE REASONS TO BELIEVE THAT THE ASSESSE E' S INCOME OF MORE THAN RS.L LAKH HAS ESCAPED ASSESSMENT. THUS PR OCEEDINGS ARE INITIATED UNDER SECTION 147 OF INCOME TAX ACT, 1961 BY ISSUING NOTICE UNDER SECTION 148. (SD/-) ( RAJESH PATWAL) INCOME TAX OFFICER, WARD-11(1), LUDHIANA. 17. ON A PERUSAL OF THE ABOVE REASONS, IT IS CLEAR THAT THE SOLE BASIS FOR ISSUE OF NOTICES UNDER SECTION 148 I S INCOME HAVING ESCAPED ASSESSMENT FOR NOT HAVING FILED THE RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2001-02 TO 2003-04 , WHEREAS CLAIM OF DEDUCTION UNDER SECTION 10(23C)(II IAB) OR REJECTION OF APPLICATION UNDER SECTION 12AA BY THE LD. COMMISSIONER OF INCOME TAX WAS MUCH LATER (APPLICA TION HAVING FILED ON 24.05.2007) WAS ONLY A NARRATIVE OR PASSING REFERENCE HAVING NO RATIONAL CONNECTION OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. FROM THE FACTS NAR RATED HEREIN ABOVE, IT IS CLEAR THAT THE APPLICATION DATE D 16 24.05.2007 FILED BY THE ASSESSEE FOR GRANT OF REGIS TRATION UNDER SECTION 12AA OF THE ACT WAS REJECTED BY THE L D. COMMISSIONER OF INCOME TAX-I LUDHIANA WITHOUT GRANT ING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE SAID ORDER WAS SET ASIDE BY THE TRIBUNAL IN ITA NO. 609/CHD/20 11 VIDE ITS ORDER DATED 20.09.2011 OBSERVING THAT, THE IMPU GNED ORDER WAS PASSED IN HASTY MANNER WITHOUT AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE T RIBUNAL DIRECTED THE LD. COMMISSIONER OF INCOME TAX TO DECI DE THE MATTER AFRESH IN ACCORDANCE WITH LAW. THE ORDER PA SSED BY THE LD. COMMISSIONER OF INCOME TAX-I LUDHIANA DATED 30.11.2007 WAS NOT A FINAL ORDER BUT AN EXPARTE ORD ER WHICH WAS PASSED WITHOUT CONSIDERING MERITS OF THE CASE. HOWEVER, IN SECOND TIME WHEN THE MATTER CAME UP BEFORE THE T RIBUNAL IN ITA NO. 40/CHD/CHD/2012, THE TRIBUNAL HAS CATEGORICALLY HELD THAT THE ASSESSEE TRUST IS ENGAGED IN THE ACTIVITIES OF PROVIDING EDUCATION BY WAY OF SETTING UP SCHOOL AND COLLEGE WHICH IS ONE OF THE RECOGNIZED OBJECT O F CHARITABLE ACTIVITY AND NO EVIDENCE HAVING BEING BROUGHT ON R ECORD, THAT THE SAID ACTIVITIES OF THE TRUST WERE NOT GENUINE, THE SAID TRUST IS ENTITLED TO REGISTRATION UNDER SECTION 12A A OF THE ACT. THE ABOVE ORDER STANDS CONFIRMED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN ITA NO. 2 OF 2013 VID E ITS ORDER DATED 08.10.2013. FURTHER, THE REASONS AS RECORDED BY THE ASSESSING OFFICER REVEAL THAT THE ASSESSEE TRUST HA D OPENING BALANCE OF RS. 15,59,245/- AND SINCE NO RETURNS HAD BEEN FILED FOR THE PRECEDING YEARS, THE ASSESSING OFFICE R PRESUMED THAT THERE WERE REASONS TO BELIEVE THAT A PART OF T HE ABOVE 17 DONATION EXCEEDING RS. 1 LAC HAD BEEN RECEIVED BY T HE ASSESSEE TRUST DURING THE ASSESSMENT YEARS 2001-02, 2002- 03 AND 2003-04, WHICH IS PER-SE UNFOUNDED AND INCO RRECT AS THE RETURNS OF INCOME FOR ALL THESE THREE YEARS HAD BEEN FILED ON 26.12.2003 IN FORM NO. 3A. THIS FACT IS CLEARLY BORNE OUT FROM THE ASSESSMENT ORDERS FOR ASSESSMENT YEARS 200 1-02, 2003-04 AS ARE BEING REPRODUCED HEREUNDER : ASSESSMENT YEAR 2001-02 'RETURN DECLARING INCOME OF RS. NIL, AFTER CLAIMING EXEMPTION OF RS. 73996/- UNDER SECTION 10(23C)(IIIAB) OF THE INCOME T AX ACT, 1961, FILED AND PROCESSED U/S 143(1) OF THE INCOME TAX AC T, 1961. SUBSEQUENTLY THE CASE WAS REOPENED U/S, 147 AND ISSU E OF NOTICE U/S, 148 SINCE THE ASSESSEE WAS NOT GRANTED REGISTR ATION U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 BY THE CO MMISSIONER OF INCOME TAX-L, LUDHIANA VIDE ORDER DATED 30-11-2007' ASSESSMENT YEAR 2002-03 'RETURN DECLARING INCOME OF RS. NIL, AFTER CLAIMING EXEMP TION OF RS. 91565 U/S 10(23C)(IIIAB) OF THE INCOME TAX ACT, 1961, F OLD AND WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. SUB SEQUENTLY THE CASE WAS REOPENED U/S, 147 AND ISSUE OF NOTICE U/S 1 48 SINCE THE ASSESSEE WAS NOT GRANTED REGISTRATION U/S, 12AA(L)(B) (II) OF THE INCOME TAX ACT, 1961'- ASSESSMENT YEAR 2003-04 'RETURN DECLARING INCOME OF RS. NIL, AFTER CLAIMING EXE MPTION OF RS. 16724 U/S (10(23C)(IIIAB) OF THE INCOME TAX ACT, 1961 F ILED AND WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. S UBSEQUENTLY THE CASE WAS REOPENED U/S, 147 AND ISSUE OF NOTICE U /S 148 SINCE THE ASSESSEE WAS NOT GRANTED REGISTRATION U/S 12AA(L)(B)(II OF THE INCOME TAX ACT, 1961' 18. IN THE REASONS RECORDED BY THE ASSESSING OFFICE R DATED 29.01.2008 (FOR ALL THE THREE ASSESSMENT YEARS) HE HAS REFERRED TO THE OPENING BALANCE OF THE TRUST FUND A T RS. 15,92,245/- WHICH IS THE BASIS OF FORMATION OF BELI EF THAT A PART OF THE ABOVE DONATION EXCEEDING RS. 1 LAC, BEI NG THE INCOME AS PER SECTION 2(24)(IIA) HAS ESCAPED INCOME 18 ASSESSMENT; WHEREAS THE RETURNS OF INCOME ALREADY S TOOD FILED AS STATED HEREIN ABOVE WITH NO DONATION EXCEE DING RS. 1 LAC HAVING ESCAPED ASSESSMENT DEMONSTRATING CLEARLY THAT THE VERY BASIS OF FORMING THE BELIEF HAD NO RATIONAL CO NNECTION OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. I N OTHER WORDS, THE BELIEF ENTERTAINED BY THE ASSESSING OFFI CER WAS NOT AT ALL BONAFIDE. IN FACT, THE OPINION FORMED IS BASED ON WRONG AND INCORRECT FACTS AND SUSPICION. IN MY OP INION, THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F RAJESH JHAVERI STOCK BROKERS (P) LTD. (SUPRA) IS NOT APPLI CABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID CASE, IT HAS BEEN HELD THAT THE RE-OPENING OF ASSESSMENT COMPLETED ORIGINA LLY UNDER SECTION 143(1) IS PERMISSIBLE WITHOUT THERE BEING A NY NEW MATERIAL COMING TO THE POSSESSION OF THE ASSESSING OFFICER IF THE REASONS RECORDED FOR RE-OPENING OF ASSESSMENT A RE OTHERWISE VALID. IN THE SAID CASE, THE REASONS REC ORDED FOR RE-OPENING OF ASSESSMENT WERE NOT UNDER CHALLENGE A ND THE REASONS WERE VALID. HOWEVER, IN THE INSTANT CASE, THE ASSESSING OFFICER PROCEEDED FOR RE-OPENING OF ASSES SMENT ON NON-EXISTENT AND FACTUALLY INCORRECT REASONS AND HE DID NOT APPLY HIS MIND PRIOR TO RECORDING OF REASONS. IN T HE REASONS RECORDED BY THE ASSESSING OFFICER, IT IS CLEARLY ST ATED THAT, FOR THE ASSESSMENT YEAR 2001-02, THE ASSESSEE HAS N OT FILED ANY INCOME TAX RETURN. MOREOVER, NO RETURNS FOR TH E ASSESSMENT YEAR 2002-03 AND 2003-04 HAVE BEEN FILED . ON THE CONTRARY, THE ASSESSING OFFICER HIMSELF HAS ADM ITTED IN THE ASSESSMENT ORDERS THAT THE RETURNS FOR ALL THE THREE YEARS UNDER CONSIDERATION WERE FILED BY THE ASSESSEE. NO T ONLY 19 THIS, EVEN THE LD. CIT(APPEALS) HAS AFFIRMED THIS FACT. IT IS RELEVANT TO OBSERVE HERE THAT THE REASONS RECORDED FOR RE- OPENING OF THE ASSESSMENTS REPRODUCED BY THE ASSESS ING OFFICER IN THE ASSESSMENT ORDER AND BY LD. CIT(APPE ALS) IN PARA 3.1 OF THE IMPUGNED ORDER ARE NOT THE ACTUAL/O RIGINAL REASONS RECORDED BY THE ASSESSING OFFICER FOR RE-OP ENING OF THE ASSESSMENTS. IN FACT, THESE ARE THE FINDINGS GI VEN BY THE LD. COMMISSIONER OF INCOME TAX-I LUDHIANA FOR REFUS ING TO GRANT REGISTRATION TO THE ASSESSEE TRUST. IT IS CL EAR THAT BOTH THE AUTHORITIES BELOW HAVE WRONGLY CONSIDERED THE F INDINGS GIVEN BY THE LD. CIT-I, LUDHIANA AS REASONS RECORDE D FOR REOPENING OF THE ASSESSMENTS. THEREFORE, ON THIS S CORE ALONE, THE RE-ASSESSMENT ORDERS ARE NOT SUSTAINABLE. FOR ARGUMENT SAKE, IF THE REASONS RECORDED FOR RE-OPENING REPROD UCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDERS AND BY THE LD. CIT(APPEALS) ARE IGNORED, EVEN THEN THE REASONS REC ORDED ON 29.01.2008 BY THE ASSESSING OFFICER FOR RE-OPENING OF THE ASSESSMENTS FOR THE YEAR UNDER CONSIDERATION, ARE I NVALID BECAUSE THE ASSESSING OFFICER PROCEEDED FOR RE-OPEN ING OF THE ASSESSMENT ON NON-EXISTENT AND FACTUALLY INCORRECT BASIS AND HAS NOT APPLIED HIS MIND AND DID NOT VERIFY THE ASS ESSMENT RECORDS/ RETURNS OF INCOME SUBMITTED BY THE ASSESSE E PRIOR TO RECORDING OF REASONS. IN THE CASE OF SAGAR ENTE RPRISES VS ACIT (2002) 257 ITR 335, THE HON'BLE GUJRAT HIGH C OURT HELD (HEAD NOTE )AS UNDER : THAT IT WAS APPARENT THAT THE FACT OF NON-FILING O F THE RETURN FOR THE ASSESSMENT YEAR 1991-92 HAD WEIGHED WITH TH E RESPONDENT FOR ARRIVING AT THE SATISFACTION ABOUT T HE FAILURE ON THE PART OF THE ASSESSEE AND ESCAPEMENT OF ASSES SMENT OF INCOME. HOWEVER, THE MATERIAL ON RECORD SHOWED THA T THE RETURN HAD BEEN FILED. IN SUCH CIRCUMSTANCES, IT C OULD NOT BE 20 SAID WITH CERTAINTY AS TO WHICH FACTS WOULD HAVE WE IGHED WITH THE OFFICER CONCERNED AND ONCE IT WAS SHOWN TH AT AN IRRELEVANT FACT HAD BEEN TAKEN INTO CONSIDERATION, TO WHAT EXTENT THE DECISION WAS VITIATED WOULD BE DIFFICULT TO SAY. MOREOVER, THE INCOME-TAX OFFICER HAD STATED THAT TH E PAYMENT WHICH WAS STATED TO BE UNDISCLOSED INCOME RELEVANT FOR THE ASSESSMENT YEAR 1991-92 COULD HAVE BEEN MADE DURING THE FINANCIAL YEAR 1990-91 RELEVANT TO THE ASSESSMENT Y EAR 1991-92 AND HENCE TO COVER UP THAT PROBABILITY, PR OTECTIVE ADDITION WAS MADE IN THE ASSESSMENT YEAR 1992-93. THE FIRST APPELLATE AUTHORITY DECIDED THE APPEAL FOR TH E ASSESSMENT YEAR 1992-93 ON JANUARY, 1996, AND THE REASONS HAD BEEN RECORDED THEREAFTER ON AUGUST 18, 1997. THE NOTICE OF RE-ASSESSMENT WAS NOT VALID AND WAS L IABLE TO BE QUASHED. 19. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT TH E A.O. HAD TAKEN AN IRRELEVANT FACT INTO CONSIDERATION AND REO PENED THE ASSESSMENTS ON THE BASIS OF SUSPICION. FURTHER MOR E, THE ASSESSING OFFICER PROCEEDED FOR RE-OPENING OF THE A SSESSMENT ON NON-EXISTENT AND FACTUALLY INCORRECT BASIS/REASO NS AND HAS NOT APPLIED HIS MIND AND DID NOT VERIFY THE ASS ESSMENT RECORDS/RETURNS FILED BY THE ASSESSEE PRIOR TO RECO RDING OF THE REASONS, THEREFORE, RE-OPENING OF THE ASSESSMENTS F OR ASSESSMENT YEAR 2001-02, 2002-03 AND 2003-04 IS INV ALID AND LIABLE TO BE SET ASIDE/QUASHED. ACCORDINGLY, T HE ORDERS OF THE AUTHORITIES BELOW ARE NOT SUSTAINABLE AND HE NCE DESERVE TO BE QUASHED. I ORDER ACCORDINGLY. 20. GROUND NO. 3 & 4 READ AS UNDER : 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN HOLDIN G NOTICE AS ISSUED UNDER SECTION 148 TO BE VALID WITHOUT APPREC IATING THAT IT WAS MANDATED TO BE ISSUED IN THE STATUS OF AOP AND NOT TRUST. 4. THAT THE LD. CIT(A) HAS FURTHER ERRED IN NOT ALL OWING ELIGIBILITY OF CLAIM UNDER SECTION 10(23C)(IIIAD) W HEN THE APPELLANT TRUST WAS CONCEIVED AND FORMED FOR THE SO LE PURPOSE OF DISSEMINATION OF EDUCATION. 21. SINCE I HAVE QUASHED THE ASSESSMENT ORDERS AND ALSO THE ORDERS OF LD. CIT(APPEALS) ON LEGAL ISSUE, THER EFORE, I DO NOT THINK IT NECESSARY TO DECIDE THESE GROUNDS OF A PPEAL 21 BECAUSE THE DISCUSSION ON THESE ISSUES WILL BE OF A CADEMIC INTEREST. 22. IN THE RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MAY,2015. SD/- (H.L.KARWA) VICE PRESIDENT DATED : 29 TH MAY, 2015 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR