M/s. SIDDHI VINAYAK EDUCATION SOCIETY, Sehore V. The ACIT Circle 2(1), Bhopal

ITA 510/IND/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4591 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-02-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 23-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEB JAIN
• Assessee Lawyers: N D PATWA
• Keywords: Retrospective amendment; Benefit of exemption
• Section: 143(3); 142(1); 234B; 12AA; 147; 148; 10; 11

Judgement Text

SIDHI VINAYAK EDUCATION SOCIETY ITA NO.510/IND/2014 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE KUL BHARAT, JUDICIAL MEMBER AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.510/IND/2014 ASSESSMENT YEAR 2007-08 REVENUE BY SHRI RAJEEB JAIN, SR.D.R ASSESSEE BY S/ SHRI ASHISH GOYAL & N.D. PATWA, ADVOCATES D ATE OF HEARING 0 6 .02 .2019 DATE OF PRONOUNCEMENT 12 .0 2 .2019 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2007-08 IS DIRECTED A GAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- I (IN SHORT LD.CIT(A)], BHOPAL DATED 23.05.2014 WHICH IS ARI SING OUT OF THE ORDER U/S 147 R.W.S. 143(3) OF THE INCOME TAX ACT 1 961(IN SHORT THE ACT) DATED 28.03.2013 FRAMED BY ACIT-2(1), BHOPA L. SIDH I VINAYAK EDUC ATION SOCIETY, NEAR JILA SHIKSHA ADHIKARI OFFICER, BHOPAL NAKA, SEHORE (M.P) VS. ACIT, CIRCLE 2 (1) , BHOPAL (APPELLANT) (RESPONDENT ) PAN NO.AAALS0356F SIDHI VINAYAK EDUCATION SOCIETY ITA NO.510/IND/2014 2 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A REGISTERED SOCIETY ENGAGED IN RUNNING A COLLEGE AT SEHORE NAMELY SWAMI VIVEKANAND COLLEGE OF PROFESSIO NAL STUDIES. RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 FILED DECLARING NIL INCOME AFTER CLAIMING EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2 ) OF THE ACT WAS ISSUED ON 20.02.2013. A NOTICE U/S 142(1) OF THE A CT WITH A DETAILED QUESTIONNAIRE WAS ALSO SERVED UPON THE ASS ESSEE ON 25.02.2013. LD. ASSESSING OFFICER (IN SHORT LD. A.O ) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ADOPTED A VIEW THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 10(23C)( IIIAD) OF THE ACT AS IT IS NOT EXISTING SOLELY FOR THE EDUCATIONAL PURPO SES BECAUSE IN THE OBJECTS OF THE SOCIETY AS CONTAINED IN THE BYE-LAWS , APART FROM OBJECT OF IMPARTING EDUCATION VARIOUS OTHER OBJECTS RELATING TO POPULATION CONTROL, ENVIRONMENTAL PROTECTION, PLANT ATION, BLOOD DONATION ETC. HAVE BEEN MENTIONED. LD.A.O ACCORDIN GLY ADDED THE CASH SURPLUS OF THE SOCIETY OF PREVIOUS YEAR AT RS. 42,30,732/- TO THE INCOME AND ASSESSED IT. APPEAL OF THE ASSESSEE BEFORE LD.CIT(A) WENT IN VEIN AND NOW THE ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL TAKING FOLLOWING GROUNDS; SIDHI VINAYAK EDUCATION SOCIETY ITA NO.510/IND/2014 3 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-I), BHOPAL IS NOT JUSTIFIED IN HOLDING THAT THE ACTION U/S 147 / 148 AND THE RESULTANT ASS ESSMENT IS JUSTIFIED WHEN THE ACTION U/S 147 / 148 OF THE INCOME TAX ACT , 1961 IS CONTRARY TO THE FACTS ON RECORD, AGAINST THE PROVISIONS OF THE INCOME TAX ACT, 1961, UNJUST, UNWARRANTED AND BAD-IN-IAW AND DESERVES TO BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-I), BHOPAL IS N OT JUSTIFIED IN HOLDING THAT THE INCOME OF THE APPELLANT WAS NOT EXEMPT U/S 10 (23C) (IIIAD) OF THE INCOME TAX ACT, 1961, AND THEREBY GIVING THE FINDIN G THAT THIS INCOME AMOUNTING TO RS. 42,30,730 IS TAXABLE TO INCOME TAX . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-I), BHOPAL IS N OT JUSTIFIED IN HOLDING THAT THE APPELLANT HAD MULTIFARIOUS OBJECTS WHEN TH E APPELLANT'S ACTIVITIES, WERE CONFINED TO EDUCATION PURPOSES ONLY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER 0 INCOME TAX (APPEALS-I), BHOPAL IS NO T JUSTIFIED IN HOLDING THAT THE APPELLANT SOCIETY DID NOT SATISFY THE COND ITION THAT THE APPELLANT SHOULD HAVE EXISTED FOR EDUCATION PURPOSES ONLY AND NOT FOR PROFITS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-I), BHOPAL IS N OT JUSTIFIED IN NOT QUASHING THE FINDING OF CHARGING INTERESTS U/S 234A AND 234B OF THE INCOME TAX ACT, 1961. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS-I), BHOPAL IS N OT JUSTIFIED IN NOT QUASHING THE DIRECTION OF ID.AO TO START / INITIATE PENALTY U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961. THE APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD ANY GROUND OF APPEAL AND / OR RAISE ANY OTHER GROUND OF APPEAL. 3. ASSESSEE FURTHER RAISED FOLLOWING ADDITIONAL GRO UNDS ON 28.1.2019; 1. THAT WITHOUT PREJUDICE, SINCE THE APPELLANT SOC IETY HGAD BEEN GRANTED REGISTRATION U/S 12AA SUBSEQUENTLY, THE INCOME OF T HE APPELLANT SOCIETY SIDHI VINAYAK EDUCATION SOCIETY ITA NO.510/IND/2014 4 WOULD BE EXEMPT U/S 11-12 FOR THE CURRENT YEAR ALSO 4. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE REFER RING TO THE ADDITIONAL GROUND SUBMITTED THAT THE SOCIETY IS PUR ELY ENGAGED IN THE EDUCATIONAL ACTIVITY. IT IS TRUE THAT VARIOUS OTHER OBJECTS WERE ALSO ENUMERATED IN THE BYE-LAWS BUT ONLY THE OBJECT OF IMPARTING EDUCATION HAS BEEN CARRIED OUT WITHOUT ANY PROFIT M OTIVE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS BEEN GRANTE D CERTIFICATE U/S 12AA(1)(B)(I) W.E.F. 1.4.2013 AND AS THE OBJECT S OF THE ASSESSEE REMAINS THE SAME THE BENEFIT OF THE PROVISIONS UNDE R SECTION 11 & 12 SHOULD BE PROVIDED RETROSPECTIVELY IN RESPECT OF INCOME DERIVED FROM CARRYING EDUCATIONAL ACTIVITIES IN PRECEDING Y EARS INCLUDING THE YEAR UNDER APPEAL. 5. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE SUPPO RTED THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THE ASSESSEE IS IN APPEAL TAKING FOLLOWING THREE ISSUES; (I) CHALLENGING THE RE-OPENING OF THE ASSESSMENT A S WELL AS SIDHI VINAYAK EDUCATION SOCIETY ITA NO.510/IND/2014 5 FRAMING ORDER U/S 143(3) R.W.S. 147 OF THE ACT:- T HIS GROUND HAS NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASS ESSEE AND THE SAME IS DISMISSED AS NOT PRESSED. (II) SECOND ISSUE RAISED IN GROUND NO. 2TO 6 CHALLE NGES THE FINDINGS OF LD. CIT(A) OF NOT PROVIDING THE BENEFIT OF EXEMPTION U/S 10(23C)(IIIAD) OF THE ACT. ALONG WITH THIS ISS UE THE ASSESSEE HAS ALSO RAISED THE THIRD ALTERNATIVE ISSU E BY TAKING AN ADDITIONAL GROUND SUBMITTING THAT THE APPELLANT SOCIETY HAS BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT SUBSEQUENTLY W.E.F. 1.4.2013 AND THE INCOME OF THE APPELLANT SOCIETY WOULD BE EXEMPT U/S 11 & 12 FOR THE PRECEDI NG YEARS ALSO INCLUDING THE YEAR UNDER APPEAL I.E. ASSESSMEN T YEAR 2007-08 ALSO. 7. FROM PERUSAL OF FORM NO.35 FILED BY THE ASSESSEE BEFORE LD. CIT(A) WE OBSERVE THAT THE ADDITIONAL GROUND RAISED BEFORE US HAS NOT BEEN RAISED BEFORE LD. CIT(A). THE REASON FOR NOT RAISING THIS ADDITIONAL GROUND IS THAT THE ASSESSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT ON 11.7.2014 EFFECTIVE FROM 1.4.201 3 WHEREAS THE APPELLATE ORDER FRAMED BY LD.CIT(A) IS DATED 23.5.2 014, THEREFORE SIDHI VINAYAK EDUCATION SOCIETY ITA NO.510/IND/2014 6 LD. CIT(A) HAD NO OCCASION TO ADJUDICATE THIS ISSUE AS IT DID NOT ARISE TILL THE TIME OF FINALISATION OF APPELLATE OR DER. 8. BEFORE US THE REVENUE HAS NOT DISPUTED THE OBJEC TS OF THE SOCIETY AS MENTIONED IN THE BYE-LAWS PLACED AT PAGE 3 TO 6 WHICH REMAIN UNCHANGED SINCE ITS INCEPTION. REGISTRATION U/S 12AA OF THE ACT HAVE BEEN GRANTED BY LD.CIT, BHOPAL ON THE BASI S OF THE OBJECTS MENTIONED IN THE BYE-LAWS. 9. WE THEREFORE FOLLOWING THE JUDGMENT OF JURISDICT IONAL HIGH COURT IN THE CASE OF CIT V/S TOLARAM SOMAL 298 ITR 92 ARE BOUND TO HOLD THAT THE ADDITIONAL LEGAL GROUND WHICH HAS BEEN TAKEN BEFORE US FOR THE FIRST TIME AND WHICH GOES TO THE ROOT OF THE MATTER NEEDS TO BE SET ASIDE TO THE FILE OF LD. CIT(A) FOR ADJUDICATION IN THE LIGHT OF VARIOUS JUDGMENTS REFERRED BY LD. COUNSEL FOR THE ASSESSEE AS WELL AS THE PROVISIONS OF LAW AND DECIDE ACCORDI NGLY AS TO WHETHER THE ASSESSEE IN VIEW OF BEING REGISTERED U/ S 12AA OF THE ACT IS ELIGIBLE FOR BENEFIT OF SECTION 11 & SECTION 12 OF THE ACT FROM RETROSPECTIVE EFFECT. WE ACCORDINGLY SET ASIDE THE ADDITIONAL GROUND AS WELL AS GROUND NO.2 TO 6 RELATING TO DENIAL OF E XEMPTION U/S 10(23C)(IIIAD) OF THE ACT TO THE FILE OF LD. CIT(A) FOR AFRESH SIDHI VINAYAK EDUCATION SOCIETY ITA NO.510/IND/2014 7 ADJUDICATION. NEEDLESS TO MENTION THAT PROPER OPPO RTUNITY SHOULD BE GIVE TO THE ASSESSEE TO PRESENT THE CASE. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.201 9. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 12 FEBRUARY, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE