Maya Dewan Educational & Charitable & Trust, Chandigarh V. CIT (Exemptions), Chandigarh

ITA 446/CHANDI/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2519 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ADITYA JAIN
• Keywords: Revision of order; Charitable institution; Opportunity of being heard; Cancellation of registration
• Section: 143(3); 80G; 12A; 12AA; 263; 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.446/CHD/2015 (ASSESSMENT YEAR : 2010-11) MAYA DEWAN EDUCATION & VS. THE C.I.T.(EXEMPTIONS), CHARITABLE TRUST, CHANDIGARH. HOUSE NO.52, SECTOR 18-A, CHANDIGARH. PAN: AAATM2288C (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI ANIL BATRA & ADITYA JAIN RESPONDENT BY : SHRI SUSHIL KUMAR, DR DATE OF HEARING : 08.12.2015 DATE OF PRONOUNCEMENT : 05.01.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INC OME TAX (EXEMPTIONS), PANCHKULA DATED 19.3.2015, PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) FOR ASSESSMENT YEAR 2010-11. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST REGISTERED UNDER SECTION 12A OF THE ACT, AS PER THE ORDER OF THE COMMISSIONER OF INCOME TAX, 2 PATIALA DATED 5.4.L1995. IT WAS ALSO GRANTED APPRO VAL FOR EXEMPTION UNDER SECTION 80G OF THE ACT. FOR THE YE AR UNDER CONSIDERATION, IT FILED RETURN OF INCOME DECL ARING NIL INCOME, AFTER CLAIMING EXEMPTION UNDER SECTION 11 O F THE ACT AMOUNTING TO RS.1,40,789/-. THE RETURN WAS ACCEPTED AS SUCH BY THE ASSESSING OFFICER, VIDE HIS ORDER DATED 26.12.2012 FRAMED UNDER SECTION 143(3) OF THE ACT. A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT, W AS ISSUED TO THE ASSESSEE BY THE COMMISSIONER OF INCOM E TAX (EXEMPTIONS), CHANDIGARH, STATING THAT SINCE THE AS SESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 11( 2) OF THE ACT, THE ORDER OF THE ASSESSING OFFICER, IN HIS OPINION, WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERES T OF REVENUE. FURTHER, THE ASSESSEE WAS ALSO SHOW CAUSE D AS TO WHY HIS REGISTRATION UNDER SECTION 12A OF THE AC T SHOULD NOT BE WITHDRAWN. 3. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, TH E LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) VID E HIS ORDER UNDER SECTION 263 OF THE ACT DATED 19.3.2015 CANCELLED THE ORDER OF THE ASSESSING OFFICER MADE U NDER SECTION 143(3) OF THE ACT DATED 26.12.2012, HOLDING THE SAME TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. FURTHER, IN THE SAME ORDER PASSED UNDER S ECTION 263 OF THE ACT, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) ALSO CANCELLED THE REGISTRATION GRANTE D UNDER SECTION 12AA OF THE ACT, TO THE ASSESSEE TRUST. 3 4. AGGRIEVED BY THIS ORDER, THE ASSESSEE HAS COME IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) IS BAD, AGAINST FACTS AND LAW. 2. THAT IN THE ABSENCE OF ANY REVENUE RECEIPT, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) HAS ERRED IN INVOKING THE PROVISION OF SECTION 11(1) OF THE INCOME TAX ACT, 1961 AND IN UITHDRAUING THE GRANT OF EXEMPTION U/S 12AA OF THE INCOME TAX ACT, 1961. THE EXEMPTION GRANTED TO THE TRUST BE RESTORED. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) HAS ERRED IN CONCLUDING THAT THE CHARITY CARRIED OUT BY THE TRUST IS NOT FROM THE CAPITAL RECEI PT BY WAY OF INTEREST ON FIXED DEPOSITS FORMING PART O F THE CORPUS BUT OUT OF REVENUE RECEIPTS AND IN WITHDRAWING THE GRANT' OF EXEMPTION U/S 12AA OF THE INCOME TAX A CT, 1961. THE EXEMPTION GRANTED TO THE TRUST BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME ARE TAKEN UP FOR FINAL DISPOSAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE TIME OF HEARING BEFORE US, FAIRLY CONCEDED THAT THE PROVISIONS OF SECTION 263 OF THE ACT WERE RIGHTLY I NVOKED SO FAR AS THE TAXABILITY OF INTEREST ON FDR IS CONC ERNED. AT THE SAME TIME, HE CONTESTED THE INVOKING OF SECT ION 263 OF THE ACT ON THE CANCELLATION OF REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12A OF THE ACT. THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS 4 THAT SECTION 263 OF THE ACT EMPOWERS REVISION OF AN ORDER PASSED BY THE ASSESSING OFFICER WHO IS SUBORDINATE TO THE COMMISSIONER OF INCOME TAX, WHEREAS THE REGISTRATIO N UNDER SECTION 12AA IS GRANTED BY THE COMMISSIONER O F INCOME TAX HIMSELF, THEREFORE, IS NOT COVERED BY RE VISIONAL PROVISION OF SECTION 263 OF THE ACT, BUT WOULD TANT AMOUNT TO REVIEW OF HIS OWN ORDER. THE GRANT OF EXEMPTION UNDER SECTION 11 OF THE ACT IS DIFFERENT FROM THE GRANT O F REGISTRATION UNDER SECTION 12A OF THE ACT AS THE FO RMER FALLS WITHIN THE PURVIEW OF THE ASSESSING OFFICER. RELIANCE WAS PLACED ON THE JUDGMENTS OF KARNATAKA HIGH COURT IN THE CASE OF DIT VS. GARDEN CITY EDUCATIONAL TRUST (2011) 330 ITR 480 (KAR) AND THAT OF MADRAS HIGH COURT IN THE CASE OF M/S PADANILAM WELFARE TRUST VS. ACIT, CHEN NAI, ITA NOS451 TO 457/MDS/2011. 6. THE LEARNED D.R. RELIED ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS). 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE ONLY ISSUE TO BE DECIDED BEFORE US IS WHETHER T HE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) HAS THE JURISDICTION TO CANCEL THE REGISTRATION EARLIER GRA NTED TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT, BY INVO KING THE JURISDICTION UNDER SECTION 263 OF THE ACT BY TH E ASSESSING OFFICER. 5 8. THE PROVISION OF SECTION 263 OF THE ACT, SO FAR AS RELEVANT OF THE FACTS OF THE PRESENT CASE READS AS UNDER : 263. REVISION OF ORDERS PREJUDICIAL TO REVENUE (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CA LL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY TH E ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE, HE, MAY, AFTER GIVING THE ASS ESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CA USING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUST IFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESS MENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESS MENT. 9. FROM THE PERUSAL OF THE ABOVE, IT IS CLEAR THAT THE CALLING OF RECORD OF ANY PROCEEDINGS UNDER THI S ACT IS A DUTY CASE ON THE COMMISSIONER OF INCOME TAX, WHER EBY HE HAS TO FORM AN OPINION WHETHER THE ORDER PASSED OUT OF THAT RECORD IS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE. THE ORDER WHICH IS TO BE CONSIDERED BY THE COMMISSIONER OF INCOME TAX AS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF THE REVENUE IS REFERRED TO BE A S AN ORDER PASSED THEREIN BY THE ASSESSING OFFICER. OUR EMPHA SIS IS ON THE WORDS ORDER PASSED THEREIN BY THE ASSESSING OFFICER, WHEREBY IT BECOMES CLEAR THAT THE COMMISS IONER OF INCOME TAX CAN INVOKE JURISDICTION UNDER SECTION 263 OF THE ACT ON THE BASIS OF RECORDS OF AN ORDER PASSED BY THE ASSESSING OFFICER. 6 10. READING FURTHER IN THE SECTION, EXPLANATION-1, CLAUSE (A) CLARIFIES THE MEANING OF THE TERM AN OR DER PASSED, WHICH IS AS UNDER : EXPLANATION1.- FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB- SECTION,- ( A) AN ORDER PASSED [ON OR BEFORE OR AFTER THE 1ST D AY OF JUNE, 1988] BY THE ASSESSING OFFICER SHALL INCLUDE (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER] OR THE INCOME - TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED B Y THE [JOINT] COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE [JOINT] COMMISSIONER IN EXERCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUE D BY THE BOARD OR BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL DIRECTOR GENERAL OR DIRECTOR GENERAL OR PRINCIPAL COMMISSIONER OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; 11. FROM THE PERUSAL OF THE ABOVE CLAUSE, THE MEANING OF THE TERM ORDER IS GIVEN TO BE AN ORDER OF ASSESSMENT MADE BY THE ACIT, DCIT, ITO ON THE DIREC TION OF JCIT UNDER SECTION 144 OF THE ACT, OR AN ORDER M ADE BY THE JCIT UNDER SECTION 120 OF THE ACT. WE OBSERVE THAT THERE IS NO REFERENCE TO AN ORDER MADE BY THE COMMISSIONER OF INCOME TAX UNDER SECTION 12A OF THE ACT. IN VIEW OF THIS, THE LEARNED COMMISSIONER OF INCOME TAX HAS NO JURISDICTION UNDER SECTION 263 OF THE ACT TO CANCEL THE REGISTRATION EARLIER GRANTED TO THE ASSESSEE UN DER SECTION 12AA OF THE ACT. 7 12. THERE IS ANOTHER ASPECT TO THE PRESENT CASE, UNDER CHAPTER-III, SECTION 12AA, THE PROCEDURE FOR REGISTRATION IS PROVIDED. IN SUB-SECTIONS (1) AND (2) OF THE ACT, THE PROCEDURE FOR REGISTRATION IS GIVEN, WHILE IN SUB- SECTIONS (3) AND (4) SUBJECT TO CERTAIN CONDITIONS, THE POWER IS CONFERRED UPON THE PRINCIPAL COMMISSIONER OR THE COMMISSIONER TO CANCEL THE REGISTRATION UNDER S ECTION 12A OR UNDER SECTION 12AA OF THE ACT TO AN ASSESSEE GRANTED EARLIER. FROM THIS, IT EMERGES THAT SPECIF IC POWERS HAVE BEEN GRANTED TO THESE OFFICERS IN THIS REGARD UNDER SECTION 12AA(3) OF THE ACT. THE INCOME TAX A CT IS A SELF CONTAINED CODE, WHEREBY SPECIFIC PROVISIONS HA VE BEEN PROVIDED FOR SPECIFIC CONDITIONS UNDER DIFFERENT CH APTERS AND UNDER DIFFERENT SECTIONS, SUB-SECTIONS AND CLAU SES, ETC. AN AUTHORITY CAN EXERCISE ITS POWER TO DO AN Y ACT UNDER THE SPECIFIC PROVISION PROVIDED UNDER THE ACT AND NOT FROM ELSEWHERE. TO CANCEL THE REGISTRATION, TH E COMMISSIONER OF INCOME TAX HAS TO ASSUME THE POWER FROM THE PROVISIONS OF SECTION 12AA(3) OF THE ACT A ND NOT FROM SECTION 263 OF THE ACT, WHICH IS BASICALLY A P OWER GIVEN TO THE COMMISSIONER OF INCOME TAX TO REVIEW A N ERRONEOUS ORDER MADE BY AN ASSESSING OFFICER, WHICH RESULTS IN SOME PREJUDICE TO THE REVENUE. 13. FROM THE ABOVE, IT IS QUITE CLEAR THAT THE COMMISSIONER OF INCOME TAX DOES NOT HAVE POWER TO CANCEL REGISTRATION GRANTED TO THE ASSESSEE EARLIER UNDER 8 SECTION 12A OF THE ACT, UNDER THE REVISIONERY POWER S GIVEN TO HIM IN SECTION 263 OF THE ACT. TO THAT EXTENT T HE APPEAL OF THE ASSESSEE IS ALLOWED. 14. BEFORE PARTING, WE OBSERVE THAT SINCE THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS ORAL ARGUME NTS HAS FAIRLY CONCEDED THAT THE PROVISIONS OF SECTION 263 OF THE ACT ARE RIGHTLY INVOKED WITH REGARD TO TAXABILITY O F INTEREST ON FDRS. TO THAT EXTENT THE APPEAL OF THE ASSESSEE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JANUARY, 2016. SD/- SD/- (H.L. KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 5 TH JANUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH