Paramarth Sadhak Sangh , Kolkata V. ADIT(E) Cir -2/Now ITO(Exem), Ward - 1(4), Kolkata , Kolkata

ITA 580/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4604 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 25-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Principle of natural justice; TDS; Set aside
• Section: 246; 154; 11; 143(3); 143(1); 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.580/KOL/2019 ASSESSMENT YEAR:2016-17 PARMARTHA SADHAK SANGHA P-113, NEW RAIPUR ROAD (E), GARIA, KOLKATA-84 [ PAN NO.AAATP 4767 F ] / V/S . INCOME TAX OFFICER, WARD-1(4), 10B, MIDDLETON ROW, KOLKTA-700 071 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI VIGYANESHWAR NATH DATTA, ADVOCATE /BY RESPONDENT SHRI SANKAR HALDER, JCIT-SR-DR /DATE OF HEARING 14-08-2019 /DATE OF PRONOUNCEMENT 28-08-2019 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2016-17 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-25, KOLKATAS ORDER DATED 25.04.2018 PASSED IN CASE NO.12/CIT(A)-25/KOL//2018-19, INVOLVING PRO CEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES ONLY SUBSTANTIVE GRIEVANCE CANVAS SED DURING THE COURSE OF HEARING IS THAT BOTH THE LOWER AUTHORITIES HAVE ER RED IN LAW AS WELL AS ON FACTS IN DISALLOWING ITS SEC. 11(2) EXEMPTION CLAIM OF 11,68,810/- IN ASSESSMENT AS WELL AS I THE LOWER APPELLATE PROCEEDINGS. I FIND THAT THE IN STANT SOLE ISSUE IS NO MORE RES INTEGRA THIS TRIBUNALS ORDER IN ASSESSMENT YEAR 2010-11 IN VOLVING ITA NO.1235/KOL/2018 DECIDED ON 10.10.2018 ACCEPTED THE VERY GRIEVANCE A S UNDER:- 2. THE ASSESSEE IS A TRUST AND HAD FILED ITS RETURN OF INCOME DECLARING 'NIL' INCOME. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT, AND THE TAXABLE INCOME WAS DETERMINED AT RS.9,00,000/- . THE ASSESSEE CLAIMED CREDIT OF TDS. THE ASSESSEE'S ITA NO.580/KOL/2019 A.Y.2016- 17 PARMARTHA SADHAK SANGHA VS. ITO WD- 1(4), KOL. PA GE 2 CLAIM OF AN AMOUNT OF RS.27,298/- WAS NOT ALLOWED. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE ID. FIRST APPELLATE AUTHO RITY, SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE T HE CLAIM OF THE TRUST U/S 2(15) OF THE ACT. 3. AGGRIEVED THE ASSESSEE IS BEFORE US. 4. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E CLAIM OF THE ASSESSEE U/S 11 OF THE ACT HAS BEEN DISALLOWED BY PROCESSING THE RETURN OF INCOME U/S 143(1)(A) OF THE ACT. SUCH ACTION IS NOT IN ACCORDANCE WITH LAW. THE ISSU E WHETHER THE ASSESSEE IS ELIGIBLE FOR CLAIM OF EXEMPTION U/S 11 OF THE ACT, OR NOT RE QUIRES FACTUAL VERIFICATION AND IS A DEBATABLE ISSUE. SUCH ADJUSTMENTS CANNOT BE MADE BY PROCESSING THE RETURN U/S 143(1)(A) OF THE ACT. FOR THIS PROPOSITION WE RELY ON THE JUDGMENT OF THE HON'BLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF COMMISSI ONER OF INCOME-TAX V. KHALSA DEWAN [2008] 300 ITR 357 (PUNJAB & HARYANA), WHEREI N IT HAS BEEN HELD AS FOLLOWS:- WE HAVE HEARD LEARNED COUNSEL FOR THE REVENUE AND P ERUSED THE RECORD. THE MATERIAL QUESTION WHICH IN OUR VIEW, REQUIRES T O BE DECIDED IS WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN CHANGING THE STA TUS OF THE ASSESSEE FROM A TRUST TO AN AOP WHILE PROCESSING THE RETURN UNDER SECTION 14 3(1)(A) OF THE ACT. THE SCOPE AND AMBIT OF POWERS VESTED WITH THE ASSESSING OFFICER F OR MAKING PRIMA FACIE ADJUSTMENTS AT THE RELEVANT TIME WAS PROVIDED UNDER THE PROVISO TO SECTION 143(1) (A) OF THE ACT AND THE SAME WAS CONFINED ONLY TO SUCH A DJUSTMENTS SPECIFICALLY ENUMERATED IN THE PROVISO (I), (II) AND (III) OF TH E ACT: IN THE CASE OF S. R F. CHARITABLE TRUST V. UNION OF INDIA [1992] 193 ITR 95. THE HON 'BLE DELHI HIGH COURT HELD THAT AS PER THE PROVISIONS OF SECTION 143(1) (A) OF THE ACT THE ASSESSING OFFICER COULD ALLOW OR DISALLOW ONLY SUCH CLAIMS WHICH WERE ADMISSIBLE/ INADMISSIBLE ON THE BASIS OF THE RETURNS AND DOCUMENTS ACCOMPANYING THE RETURN. IT W AS A/SO HELD THAT THE ASSESSING OFFICER HAD NO POWER TO DISALLOW THE CLAIM MERELY O N THE GROUND THAT NO PROOF WAS FURNISHED BY THE ASSESSEE. WHILE INTERPRETING CLAUS E [III] OF THE FIRST PROVISO TO SECTION 143(1) (A) OF THE INCOME-TAX ACT. 1961, IT WAS HELD AS UNDER ( PAGE 98 ): 'THE SAID CLAUSE CLEARLY PROVIDES THAT THE INCOME-T AX OFFICER CAN MAKE AN ADJUSTMENT TO THE INCOME OR LOSS DECLARED IN THE RE TURN IF, ON THE BASIS OF THE INFORMATION AVAILABLE IN SUCH RETURN, ACCOUNTS OR D OCUMENTS, THE DEDUCTION, ALLOWANCE OR RELIEF CLAIMED IS PRIMA FACIE INADMISS IBLE. THE CONCLUSION THAT THE CLAIM OF THE ASSESSEE IS INADMISSIBLE MUST, IN OTHER WORDS, FLOW FROM THE RETURN AS FILED. NO POWER IS GIVEN TO THE INCOME-TA X OFFICER TO DISALLOW A CLAIM FOR THE REASON THAT THERE IS NO PROOF IN SUPP ORT OF THE CLAIM MADE BY THE ASSESSEE. IN A WAY, THE SAID CLAUSE (III) OF THE PR OVISO IS ANALOGOUS TO SECTION 154 OF THE ACT. WHERE IT IS EVIDENT FROM THE RETURN AS FILED, ALONG WITH THE DOCUMENTS IN SUPPORT THEREOF; THAT A CLAIM OF THE A SSESSEE IS INADMISSIBLE, ONLY THEN AN ADJUSTMENT UNDER THE SAID PROVISO CAN BE MA DE. IF PROOF IN SUPPORT OF THE CLAIM IS NOT FURNISHED BY AN ASSESSEE, THEN FOR THE LACK OF PROOF; NO DISALLOWANCE OR AN ADJUSTMENT CAN BE MADE. THE ONLY OPTION WHICH IS OPEN TO THE INCOME-TAX OFFICER, IN SUCH A CASE, IS THAT HE CAN REQUIRE THE ASSESSEE TO FURNISH PROOF IN WHICH CASE HE WILL PRESUMABLY HAVE TO ISSUE NOTICE UNDER SECTION 143(2). THIS IS ALSO EVIDENT FROM THE FACT THAT, EXCEPT FOR THE DOCUMENTS SPECIFIED, THE ASSESSEE IS NOT REQUIRED T O FILE THE ENTIRE BOOKS OF ITA NO.580/KOL/2019 A.Y.2016- 17 PARMARTHA SADHAK SANGHA VS. ITO WD- 1(4), KOL. PA GE 3 ACCOUNT OR OTHER DOCUMENTS ALONGWITH THE RETURN. TH E PROOF IN SUPPORT OF THE CLAIM MAY BE EVIDENCED FROM CORRESPONDENCE, FROM TH E BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND IT IS NOT THE LAW, AS WE UNDERS TAND IT; THAT; IN SUPPORT OF A CLAIM MADE IN THE RETURN FOR DEDUCTION OR NON-TAXAB ILITY OF A RECEIPT, ALL THE PROOFS AVAILABLE AND ORIGINAL DOCUMENTS MUST BE FIL ED ALONG WITH THE RETURN. IT IS APPARENT ON A READING OF THE SAID PROVISION THAT ADJUSTMENT CAN BE MADE ONLY IF THERE IS INFORMATION AVAILABLE IN SUCH RETU RN THAT PRIMA FACIE A CLAIM OR ALLOWANCE IS INADMISSIBLE. ' THE SAME VIEW WAS TAKEN BY THE DELHI HIGH COURT IN THE CASE OF SAMTEL COLOR LTD. V. UNION OF INDIA [2002] 258 ITR 1 AND IT WAS HELD AS UNDER (HEADNOTE) : A BARE READING OF SECTION 143(1)(A) OF THE INCOME -TAX ACT, 1961, MAKES IT CLEAR THAT IF, ON THE BASIS OF THE RETURN FILED BY THE ASSESSEE, ANY TAX OR INTEREST IS FOUND DUE AFTER ADJUSTMENTS, AS SET OUT IN THE SECTION, AN INTIMATION HAS TO BE SENT TO THE ASSESS EE SPECIFYING THE SUM SO PAYABLE. SIMILARLY, IF ANY REFUND IS FOUND DUE T O THE ASSESSEE ON THE BASIS OF THE SAID RETURN, IT SHALL BE GRANTED. HOWE VER, THE FIRST PROVISO TO THE SECTION AUTHORISES THE ASSESSING OFFICER TO MAKE CERTAIN ADJUSTMENTS WHILE CALCULATING THE TAX OR INTEREST P AYABLE OR WHILE GRANTING REFUND. THE ADJUSTMENTS PERMITTED TO BE MA DE ARE ALSO SPECIFIED UNDER THE PROVISO. CLAUSE (III) OF THE FI RST PROVISO LAYS DOWN THAT UNLESS THE RETURN OR THE ACCOMPANYING DOCUMENT S OR ACCOUNTS SHOW, THAT THE DEDUCTION, ALLOWANCE OR RELIEF CLAIM ED THEREIN IS PRIMA FACIE INADMISSIBLE ON THE BASIS OF INFORMATION AVAI LABLE IN THE SAID DOCUMENTS, SUCH DEDUCTION OR ALLOWANCE CLAIMED CANN OT BE DISALLOWED. THE PHRASE ' PRIMA FACIE ' IS NOT DEFINED IN THE ACT IN COMMON PARLANCE THE PHRASE ' PRIMA FACIE ' MEANS ' ON THE FACE OF IT '. GOING BY THE LITERAL AND DICTIONARY MEANING OF THE PHRASE ' PRIMA FACIE ', FOR THE PURPOSES OF ADJUSTMENTS UNDER CLAUSE (III) OF THE PROVISO, A DE DUCTION CLAIMED MUST BE INADMISSIBLE ON THE FACE OF THE RETURN, DOCUMENT S AND ACCOUNTS ACCOMPANYING IT, IF THE DEDUCTION OR ALLOWANCE' OR RELIEF SO CLAIMED IS CAPABLE OF A DEBATE OR REQUIRES FURTHER PROOF IT CA NNOT BE MADE UNDER CLAUSE (III) OF THE PROVISO TO SECTION 143(1)(A) OF THE ACT IT IS NOT OPEN TO THE ASSESSING OFFICER TO MAKE ANY ADJUSTMENT IN THE RETURNED INCOME BY DISALLOWING ANY CLAIM FOR DEDUCTION, ALLO WANCE OR RELIEF, UNLESS HE IS SATISFIED ON THE BASIS OF INFORMATION AVAILABLE IN THE RETURN, DOCUMENTS AND THE ACCOUNTS ACCOMPANYING IT, THAT SU CH A CLAIM IS INADMISSIBLE ON THE FACE OF IT AND THERE IS NO POSS IBILITY OF ANY DEBATE THEREON. IF ANYTHING MORE IS READ INTO THE POWER OF THE ASSESSING OFFICER TO MAKE UNILATERAL ADJUSTMENTS IT WOULD REN DER THE PROVISION WHOLLY ARBITRARY AND UNREASONABLE BECAUSE: . (A) A DISALLOWANCE IS MADE WITHOUT GIVING AN OPPORT UNITY TO THE ASSESSEE TO EXPLAIN HIS VIEW POINT IN SUPPORT OF TH E DEDUCTION OR ALLOWANCE, AND (B) ADDITIONAL TAX ON THE INCREASED AMOUNT IS CHARG ED FROM HIM ARBITRARILY. THIS WOULD NOT ONLY BE IN TOTAL VIOLAT ION OF THE PRINCIPLES OF NATURAL JUSTICE, IT WILL ALSO BE NOT IN CONSONANCE WITH THE SPIRIT OF THE ITA NO.580/KOL/2019 A.Y.2016- 17 PARMARTHA SADHAK SANGHA VS. ITO WD- 1(4), KOL. PA GE 4 PROVISION TO CAUSE MINIMUM INCONVENIENCE TO THE ASS ESSEE AND AT THE SAME TIME PUT THE ASSESSEE ON GUARD AGAINST CLAIMIN G INADMISSIBLE DEDUCTIONS AND ALLOWANCES. NO PREJUDICE WILL BE CAU SED TO THE REVENUE. IN A GIVEN CASE WHERE THE ASSESSING OFFICE R HAS ANY DOUBT ABOUT THE ALLOWABILITY OF DEDUCTION OR CLAIM MADE B Y THE ASSESSEE, IT IS OPEN TO HIM TO ISSUE A NOTICE UNDER SUB-SECTION (2) OF SECTION 143 AND HAVE THE EVIDENCE IN SUPPORT THEREOF.' THE HON 'BLE KERALA HIGH COURT IN THE CASE OF CIT V . K V. MANKARAM AND CO. [2000] 245 ITR 353. WHILE INTERPRETING THE SCOPE OF SECTION 143(1)( A) OF THE ACT WHERE THE STATUS OF A FIRM WAS CHANGED TO AN AO P, HELD AS UNDER (HEADNOTE) : 'THE PROCEEDING UNDER SECTION 143{1)(A) DOES NOT RE SULT IN AN ORDER OF ASSESSMENT. THE INTIMATION GIVEN UNDER SECTION 143( 1) (A) CANNOT BE TREATED AN ORDER OF ASSESSMENT. IT IS ONLY TO BE DE EMED AN ORDER FOR THE LIMITED PURPOSE OF SECTIONS 154, 246 AND 264 OF THE ACT. UNDER SECTION 143(1)(A) OF THE ACT, THE INTIMATION IS DEEMED TO B E A NOTICE OF DEMAND UNDER SECTION 156 OF THE ACT. EXCEPT INTIMATION, NO OTHER ORDER IS CONTEMPLATED UNDER SECTION 143(1)(A). THERE IS A DI STINCTION BETWEEN AN ORDER OF ASSESSMENT AND A NOTICE OF DEMAND. UNDE R SECTION 246 ALSO, A CLEAR DISTINCTION IS MADE BETWEEN AN INTIMATION A ND AN ORDER OF ASSESSMENT. THE ASSESSING OFFICER CANNOT, UNDER SEC TION 143(1)(A), CHANGE THE STATUS OF A FIRM TO ' ASSOCIATION OF PERSONS ' WHICH CAN BE DONE UNDER SECTION 185 OF THE ACT, AT THE TIME OF A SSESSMENT.' WE ARE IN RESPECTFUL AGREEMENT WITH THE JUDGEMENTS IN SAMTEL COLOR LTD. 'S CASE [2002] 258 ITR 1 (DELHI) AND K V. MANKARAM AND CO.'S CASE [2000] 245 ITR 353 (KER). THE SCOPE AND AMBIT OF THE POWERS VESTED WITH THE A SSESSING OFFICER FOR MAKING PRIMA FACIE ADJUSTMENTS AT THE TIME OF PROCE SSING THE RETURN UNDER SECTION 143(1)(A) ARE VERY LIMITED. THE CHANGE OF S TATUS OF THE ASSESSEE FROM TRUST TO AN AOP IS NOT COVERED IN THE NATURE OF ADJ USTMENTS MENTIONED IN ANY OF THE PROVISOS TO SECTION 143(1)(A) MUCH LESS UNDE R THE PROVISO (III) OF THE SAID SECTION. IT IS IMMATERIAL THAT THE TRUST WAS N OT REGISTERED WITH THE COMMISSIONER OF INCOME- TAX AND WAS NOT ELIGIBLE FO R THE EXEMPTIONS UNDER SECTION 11 OF THE ACT BECAUSE THERE MUST BE POWER V ESTED WITH THE ASSESSING OFFICER TO ALLOW OR DISALLOW THE CLAIM WHILE PROCES SING THE RETURN WHICH IS NOT WITHIN THE SCOPE OF SECTION 143(1)(A) OF THE ACT. I T IS NOT OPEN TO THE ASSESSING OFFICER TO MAKE ANY ADJUSTMENT IN THE RETURNED INCO ME BY DISALLOWING ANY CLAIM FOR DEDUCTION, ALLOWANCE OR RELIEF, UNLESS HE IS SATISFIED ON THE BASIS OF INFORMATION AVAILABLE IN THE RETURN, DOCUMENTS AND THE ACCOUNTS ACCOMPANYING IT, THAT SUCH A CLAIM IS INADMISSIBLE ON THE FACE O F IT AND THERE IS NO POSSIBILITY OF ANY DEBATE THEREON. IF ANYTHING MORE IS READ INT O THE POWER OF THE ASSESSING OFFICER TO MAKE UNILATERAL ADJUSTMENTS IT WOULD REN DER THE PROVISION WHOLLY ARBITRARY AND UNREASONABLE. IN VIEW OF THE ABOVE, NO SUBSTANTIAL QUESTION OF LA W ARISES FOR THE DETERMINATION OF THIS COURT AND THEREFORE, THE PRES ENT APPEAL IS DISMISSED. ITA NO.580/KOL/2019 A.Y.2016- 17 PARMARTHA SADHAK SANGHA VS. ITO WD- 1(4), KOL. PA GE 5 4.1. IT IS ALSO OBSERVED THAT THE ID. CIT(A) HAS NO POWER TO SET ASIDE THE MATTER FOR VERIFICATION OF FACTS AND FRESH ADJUDICATION BY THE ASSESSING OFFICER. HENCE THE IMPUGNED APPELLATE ORDER, IS NOT IN ACCORDANCE WITH LAW. 5. ON THE ISSUE OF CLAIM OF CREDIT FOR TDS, THE ASS ESSING OFFICER IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE AND PASS APPROPRIATE ORDE R. IN ACCORDANCE WITH LAW. 3. I DECLINE THE REVENUES ARGUMENTS SUPPORTING BOT H THE LOWER AUTHORITIES ACTION UNDER CHALLENGE BY ADOPTING THE ABOVE EXTRACTED REA SONING MUTATIS MUTANDIS . 4. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS . ORDER PRONOUNCED IN OPEN COURT ON 28/08/2019 SD/- (S.S. GODARA) JUDICIAL MEMBE R KOLKATA, *DKP/SR.PS - 28/08/2019 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-PARAMARTHA SADHAK SANGHA, P-113, NEW RAI PUR ROAD (E) GARIA, KOLKATA-700 084 2. /RESPONDENT-ITO WARD-1(4), 10B, MIDDLETON ROW, KOLK ATA-71 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ ',