Muzaffarnagar Development Authority, Muzaffarnagar V. CIT, Muzaffarnagar

ITA 5798/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4014 (ITAT-DELHI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-05-2011
• Assessment Year: misc
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Assessee Lawyers: LAKSHMISH KANT
• Keywords: Cancellation of registration
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI SHAMIM YAHYA ITA NO. 5798/DEL/2010 ASSESSMENT YEAR: - MUZAFFARNAGAR DEVELOPMENT AUTHORITY, VS. COMMISSION ER OF IT, 1133 SOUTH CIVIL LINES, MUZAFFARNAGAR. MUZAFFARNAGAR. (PAN AAALM0437D) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI LAKSHMISH KA NT, CA RESPONDENT BY: SHRI KISHOR E B., SR.DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED COMMISSIONER, MUZAFFARNAGAR PASSED UNDER SEC. 12AA( 3) OF THE INCOME-TAX ACT, 1961. THE GROUNDS OF APPEALS TAKEN BY THE ASSE SSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES, THEY AR E DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF, THE SOLITARY GRI EVANCE OF THE ASSESSEE RELATES TO DENIAL OF REGISTRATION UNDER SEC. 12AA O F THE ACT BY THE LEARNED COMMISSIONER, MUZAFFARNAGAR. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE M/S. 2 MUZAFFARNAGAR DEVELOPMENT AUTHORITY (HEREINAFTER RE FERRED TO MDA) WAS ENJOYING EXEMPTION UNDER SEC. 10(20A) OF THE ACT. T HIS SECTION WAS OMITTED FROM THE INCOME-TAX ACT, 1961 BY FINANCE ACT 2002 W .E.F. IST OF APRIL 2003. ON 31.3.2003, ASSESSEE MOVED AN APPLICATION BEFORE THE LEARNED COMMISSIONER FOR GRANT OF REGISTRATION UNDER SEC. 1 2AA OF THE ACT. IT EMERGES OUT THAT SUCH REGISTRATION WAS GRANTED TO T HE ASSESSEE VIDE ORDER DATED 30.04.2008 BUT ON THE SAME DAY, A SHOW-CAUSE NOTICE FOR CANCELLATION OF REGISTRATION WAS ISSUED TO THE ASSESSEE. THIS NO TICE WAS ISSUED ON THE GROUND THAT ASSESSEE WAS CONDUCTING WORK ON COMMERC IAL LINE FOR PROFIT PURPOSES, AS SELLING LAND AND CONSTRUCTING HOUSE ON COMMERCIAL RATES TO EARN PROFIT AND WAS FOLLOWING COMMERCIAL ACCOUNTING PRIN CIPLES, THUS IT HAS NOT BEEN CARRYING OUT ANY CHARITABLE WORK. ASSESSEE FIL ED A DETAILED REPLY. LEARNED COMMISSIONER, CANCELLED THE REGISTRATION GR ANTED TO THE ASSESSEE VIDE ORDER DATED 4.6.2008. THIS ORDER WAS CHALLENGE D BEFORE THE ITAT VIDE APPEAL NO.2554/DEL/08. THE ITAT HAS ALLOWED THE APP EAL OF THE ASSESSEE FOR STATISTICAL PURPOSES BY OBSERVING AS UNDER: 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE BYE LAWS AND REGULATIONS NOW PRODUCED B EFORE US ARE A MATTER OF PUBLIC RECORD. THE ORDER UNDER APPEAL DOE S NOT SHOW THAT THE LEARNED COMMISSIONER REQUIRED THE ASSESSEE, A DEVEL OPMENT AUTHORITY, TO PRODUCE THESE BYE LAWS AND REGULATION S. THE ASSESSEE DID 3 NOT HAVE ANY OPPORTUNITY IN THIS REGARD. HOWEVER, S INCE THE BYE LAWS AND REGULATIONS HAVE NOW BEEN PRODUCED BEFORE US, T HE ISSUE OF GRANT/CONTINUATION OF REGISTRATION TO THE ASSESSEE, A DEVELOPMENT AUTHORITY UNDER SEC. 12AA OF THE ACT, REQUIRES TO B E RE-EXAMINED IN THE LIGHT OF THESE BYE LAWS AND REGULATIONS. IT IS ONLY THEREAFTER, THAT THE DECISION WITH REGARD TO THE ASSESSEE SHALL BE P OSSIBLE. THEREFORE, IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO THE FIL E OF THE LEARNED COMMISSIONER, TO BE DECIDED AFRESH IN ACCORDANCE WI TH LAW ON CONSIDERING THE BYE LAWS AND REGULATIONS GOVERNING THE ASSESSEE, A DEVELOPMENT AUTHORITY, AS PRODUCED BEFORE US. 9. IN THE RESULT, FOR STATISTICAL PURPOSES, THE ASS ESSEES APPEAL IS TREATED AS ALLOWED. 6. IN PURSUANCE OF THE ITATS ORDER, LEARNED COMMIS SIONER HAS GONE THROUGH THE RECORD AND DECIDED THE APPLICATION OF T HE ASSESSEE VIDE ORDER DATED 7.7.2009. IT CANCELLED THE REGISTRATION. 7. DISSATISFIED WITH THE ORDER, ASSESSEE CARRIED TH E MATTER IN APPEAL BEFORE THE ITAT IN ITA NO.4042/DEL/09. THE ITAT A GAIN SET ASIDE THE ISSUE TO THE FILE OF THE LEARNED COMMISSIONER. THE ITAT HAS TAKEN INTO CONSIDERATION A LARGE NUMBER OF ORDERS RELIED UPON BY THE ASSESSEE I.E. KHURJA DEVELOPMENT AUTHORITY AND SAHARANPUR DEVELOP MENT AUTHORITY ETC. IN FACT, IT WAS CONTENDED BY THE ASSESSEE THAT REGI STRATION UNDER SEC. 12AA 4 HAS BEEN ALLOWED TO TEN SUCH AUTHORITIES IN THE STA TE OF UP. THE ITAT AFTER REPRODUCING ORDERS OF THE ITAT IN ITA NO.1690/LUC/0 3 IN THE CASE OF UP AWAS EVAM VIKAS PARISHAD, SET ASIDE THE ISSUE TO TH E LEARNED COMMISSIONER FOR DECIDING IT AFRESH ON MERIT. THE O BSERVATIONS MADE BY THE ITAT IN PARAGRAPH NO.6 READ AS UNDER: 6. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING M /S. KHURJA DEVELOPMENT AUTHORITY (SUPRA) AND U.P. AWAS EVAM VIKAS PARISHAD CITED THEREIN, SINCE THE TRIBUNAL, IN SIM ILAR CASES OF LOCAL DEVELOPMENT AUTHORITIES, HAS HELD THAT TO BE ELIGIB LE FOR REGISTRATION, THE MATTER AT HAND IS REMITTED TO THE FILE OF THE L EARNED COMMISSIONER TO DECIDE IT DE NOVO IN ACCORDANCE WITH LAW, KEEPIN G IN VIEW THE JUDICIAL PRECEDENTS ON THE ISSUE. 8. LEARNED COMMISSIONER AGAIN CANCELLED THE REGISTR ATION GRANTED TO THE ASSESSEE. WE FIND THAT LEARNED COMMISSIONER DID NOT APPLY HIS MIND TO ANY ASPECT. HE HAS ONLY ADDED THE FOLLOWING PARAGRAPH I N HIS ORDER: THE LEARNED ITAT VIDE HIS ORDER ITA NO. 4042(DEL) 2009 DATED 01.02.2010 REMITTED THE FILE TO THIS OFFICE TO DECI DE REGISTRATION ISSUE U/S. 12AA OF THE I.T. ACT IN ACCORDANCE WITH LAW. THE SECTION 12AA (PROCEDURE FOR REGISTRATION) OF T HE I.T. ACT CLEARLY STATES THAT AFTER SATISFYING HIMSELF (COMM ISSIONER OF INCOME- TAX) ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF 5 ITS ACTIVITIES COMMISSIONER OF INCOME-TAX SHALL PA SS ON ORDER OF GRANTING OR REFUSING THE REGISTRATION ON AS PER LAW . THE ASSESSEE (MDA) WAS GIVEN AN OPPORTUNITY VIDE N OTICE DATED 27.04.2010, HEARING DATE FIXED ON 13.05.2010 (NONE ATTENDED) AND SUBSEQUENT DATES I.E. 21.05.2010, 16.06.2010, 0 5.07.2010 (NONE ATTENDED) AND 31.08.2010. HOWEVER, MUZAFFARNAGAR DE VELOPMENT AUTHORITY FAILED TO FURNISH COPIES OF THE BYE-LAWS AS REQUIRED FOR ESTABLISHING CHARITABLE ACTIVITIES CONDUCTED BY THE MDA ACCORDANCE WITH THE BYE LAWS OF THE DEVELOPMENT AUTHORITY. XXX XXXX XXXX DUE TO THE REASONS, FACTS & REASONABLE OPPORTUNITI ES GIVEN TO THE MDA, THE MDA IS NOT FOUND TO BE FIT CASE FOR REGIST RATION U/S.12AA. AS I AM OF THE VIEW THE MDA IS A STATE GOVERNMENT A UTHORITY AND IT IS NOT A TRUST/SOCIETY OR INSTITUTION, THE REGISTRA TION ALREADY CANCELLED VIDE ORDER DATED 07.07.2009 WILL REMAIN EFFECTIVE . 9 THE REST OF THE PART IS VERBATIM REPRODUCTION OF THE ORDER DATED 07.07.2009. THIS IS THE THIRD ROUND OF LITIGATION U P TO THE LEVEL OF ITAT. WE FAIL TO UNDERSTAND IN WHAT SENSE LEARNED COMMISSION ER HAS COMPLIED WITH THE DIRECTIONS GIVEN IN THE TWO ORDERS REFERRED BY US. IN THE ORDER PASSED IN ITA NO.4042/DE/09, ITAT HAS POINTED OUT TEN ORDERS, WHERE SIMILAR 6 AUTHORITIES WERE HELD AS ELIGIBLE FOR REGISTRATION UNDER SEC. 12AA. LEARNED COMMISSIONER OUGHT TO HAVE MADE A REFERENCE TO THOS E ORDERS AS WELL AS THE ORDER OF THE ITAT. HE SHOULD COME OUT WITH PLAUSIBL E REASONS, AS TO HOW THE CASE OF ASSESSEE IS DISTINGUISHABLE FROM THOSE CASE S. LEARNED COMMISSIONER INSTEAD OF DOING THAT EXERCISE DID NOT BOTHER TO MA KE A REFERENCE OF THE PREVIOUS HISTORY. HE FAILED TO POINT OUT AS TO WHY THE CASE OF THE ASSESSEE CANNOT BE TREATED AT PAR WITH THE CASE OF KHURJA DE VELOPMENT AUTHORITY AND OTHER AUTHORITIES. THERE IS FAILURE ON THE PART OF THE LEARNED COMMISSIONER TO CONSIDER ALL THESE ASPECTS IN A LOGICAL WAY. ON THE OTHER HAND, HE HAS REFERRED IN ACTION AT THE END OF THE ASSESSEE IN SU BMITTING THE COPIES OF BYE LAWS AND OTHER DETAILS. WE CONFRONTED THE LEARNED C OUNSEL FOR THE ASSESSEE AS TO WHY THE ASSESSEE FAIL TO SUBMIT THESE DETAILS AS OBSERVED BY THE LEARNED COMMISSIONER IN PARAGRAPH 3 OF THE IMPUGNED ORDER. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT COPIES OF THE BYE LAWS WERE SUBMITTED TO THE LEARNED COMMISSIONER IN THE ORIGINAL ROUND OF LITIG ATION. IN OUR OPINION, ASSESSEE SHOULD HAVE FILED THESE DETAILS IN THE FRE SH ROUND OF LITIGATION. THERE IS CONTRIBUTORY NEGLIGENCE AT BOTH ENDS. WE WOULD H AVE IMPOSED A COST UPON THE ASSESSEE FOR ITS IN ACTION, BUT AFTER HAVING A GLANCE OVER THE ORDER OF THE LEARNED COMMISSIONER, WE DESIST FROM VISITING THE A SSESSEE WITH COST. TAKING INTO CONSIDERATION ALL THESE ASPECTS, WE SET ASIDE THE ORDER OF THE 7 LEARNED COMMISSIONER FOR READJUDICATION. WE DIRECT THE LEARNED COMMISSIONER TO COMPLY WITH THE DIRECTIONS ISSUED B Y THE ITAT IN ITS TWO EARLIER ORDERS EXTRACTED SUPRA. THE ASSESSEE IS DIR ECTED TO CO-OPERATE WITH THE LEARNED COMMISSIONER. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 20.05.201 1 SD/- SD/- ( SHAMIM YAHYA ) ( RAJPA L YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20/05/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR