The Income Tax Officer (Exemptions), Jammu V. M/s Sai Shyam Educatinal Society, Jammu

ITA 59/ASR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7857 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GHULAM MUSTAFA MUGHL OO
• Assessee Lawyers: U K HANDOO
• Keywords: Bonafide belief; Wrong claim; Competent authority
• Section: 143(3); 12A; 12AA; 27; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER I.T.A NO. 59/(ASR)/2017 ASSESSMENT YEAR: 2010-11 PAN: AACTS-8409H INCOME TAX OFFICER (EXEMPTIONS), WARD-JAMMU. VS. M/S SAI SHYAM EDUCATIONAL SOCIETY, H. NO. 27, MOHINDER NAGAR, CANAL ROAD, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. GHULAM MUSTAFA MUGHL OO (D. R.) RESPONDENT BY: SH. U. K. HANDOO (C.A.) DATE OF HEARING: 23.08.2017 DATE OF PRONOUNCEMENT: 24.08.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LD. CIT(A), JAMMU DATED 29.08.2016 FOR ASST. YEAR: 2010-11. 2. THE GROUNDS OF APPEAL TAKEN BY REVENUE ARE REPRO DUCED BELOW: 1.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE P ENALTY BY RELYING ON THE ITATS ORDER IN ALLOWING ASSESSEE TH E BENEFIT OF REGISTRATION U/S 12AA THAT HAD RECONSIDERED AN I SSUE WHICH HAD ALREADY BEEN DECIDED AGAINST THE ASSESSEE BY HON'BLE JAMMU AND KASHMIR HIGH COURT EARLIER VIDE O RDER DATED 29.01.2013 IN ITA NO. 01/2013. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LA W THE LD. CIT(A) WAS JUSTIFIED IN DELETING PENALTY BY REL YING ON THE ITATS ORDER IN ALLOWING ASSESSEE THE BENEFIT OF DE EMED REGISTRATION BY APPLYING THE RATIO OF HON'BLE SUPRE ME COURT ITA NO. 59(ASR)/2017 ASSESSMENT YEAR: 2010-11 2 DECISION IN CIT VS. SOCIETY FOR THE PROMOTION OF ED UCATION OF EDUCATION ADVENTURE SPORT & CONSERVATION OF ENVIRON MENT WHEREAS REVENUES CLAIM THAT THE ASSESSEE HAD NOT A PPLIED FOR REGISTRATION U/S 12AA HAD ALREADY BEEN UPHELD B Y THE HON'BLE. JAMMU AND KASHMIR HIGH COURT. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LA W THE LD. CIT(A) WAS JUSTIFIED IN DELETING PENALTY BY REL YING THE ITATS ORDER IN ALLOWING THE APPEAL OF THE ASSESSEE BY RELYING UPON THE STATEMENT OF AN OFFICIAL WHO WAS N OT AUTHORIZED TO RECEIVE LETTER/APPLICATION AT THE REC EIPT COUNTER WITHOUT ASCERTAINING ITS AUTHENTICITY FROM THE SUPE RIOR AUTHORITY. THE COMPETENT AUTHORITY AS PER ACT IS TH E CIT AND THEREFORE SEEKING REMAND REPORT FROM THE ASSESSING OFFICER IN THE MATTER OF REGISTRATION U/S 12AA AND RELYING ON STATEMENT OF A DRAFT WAS BLATANTLY WRONG. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE G ROUNDS OF APPEAL ON OR BEFORE THE DATE IT IS HEARD AND DISPOS ED OFF. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME EXEMPT U/S 12AA OF THE INCOME TAX ACT ON THE GROUND THAT THE ASSESSEE HAD THE DEEMED REGISTRATION AS THE APPLICA TION FILED BY THE ASSESSEE IN FORM 10A WAS NOT REJECTED BY THE COMMIS SIONER OF INCOME TAX WITHIN A PRESCRIBED PERIOD OF SIX MONTHS AS REQ UIRED UNDER THE ACT. 4. THE ASSESSING OFFICER ON THE OTHER HAND COMPLETE D THE ASSESSMENT U/S 143(3) AND DID NOT ALLOW EXEMPTION U/S 12A HOLD ING THAT ASSESSEE SOCIETY DID NOT HAVE THE REQUISITE APPROVAL OF THE CIT AND THEREFORE, IT CANNOT CLAIM THE STATUS OF A TRUST AND TAXED THE EN TIRE INCOME OF THE SOCIETY AS AN AOP. IN VIEW OF WRONG CLAIM MADE BY A SSESSEE SOCIETY THE ASSESSING OFFICER IMPOSED A PENALTY U/S 271(1)(C ) OF THE ACT. 5. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE LD . CIT(A) WHO DELETED THE PENALTY BY HOLDING AS UNDER: ITA NO. 59(ASR)/2017 ASSESSMENT YEAR: 2010-11 3 NOW, COMING TO THE IMPOSITION OF PENALTY IMPOSED B Y THE ASSESSING OFFICER U/S 271(1)( C) OF THE ACT ON THE GROUND THA T THE APPELLANT HAS WRONGLY CLAIMED THE INCOME EXEMPTED U/S 11 & 12 OF THE ACT, IT HAS BEEN ARGUED BY THE APPELLANT THAT IT HAD CLAIMED EX EMPTION U/S 11 & 12 OF THE ACT ON THE BONA FIDE BELIEF THAT THE AP PELLANT IS ENJOYING THE BENEFIT OF DEEMED REGISTRATION, AS ITS APPLICAT ION FOR GRANTING REGISTRATION WAS NOT DISPOSED OF BY THE COMMISSIONE R OF INCOME TAX WITHIN THE PRESCRIBED TIME. THE ASSESSING OFFICER, ON THE OTHER HAND, HAS STATED IN THE PENALTY ORDER U/S 271(1) (C ) OF THE ACT THAT THE APPELLANT HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS AND CLAIMED WRONG EXEMPTION U/S 11 & 12 O THE ACT. IT I S OBSERVED THAT THE APPELLANT COULD NOT ESTABLISH BEFORE THE HON'BL E ITAT BENCH THAT THE APPLICATION U/S 12A HAD BEEN MADE BY THE APPELL ANT. FURTHER THE HON'BLE HIGH COURT OF JAMMU & KASHMIR ALSO DISM ISSED THE APPEAL OF THE APPELLANT ON THIS ISSUE. I HAVE CONSIDERED THE ENTIRE FACTS OF THE CASE AND THE DECISIONS MADE BY THE LD. CIT(A) AND THE HON'BLE IT AT FOR THE A.Y. 2007-08 AND FOR THE ASSESSMENT YEAR UNDER CONSIDERA TION. THE HON'BLE TRIBUNAL HAS ALREADY DECIDED THAT THE APPEL LANT HAD FILED THE APPLICATION FOR THE REGISTRATION U/S 12 OF THE INCOME TAX ACT AND THEREBY THE APPELLANT HAS GOT THE STATUS OF A TRUST AND THE INCOME EARNED BY THE APPELLANT TRUST CANNOT BE TAXED. IN V IEW OF THE DECISION OF HON'BLE ITAT, THE PENALTY IMPOSED U/S 2 71 (1) (C ) OF THE ACT CANNOT BE SUSTAINED AND HENCE, DELETED. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. AT THE OUTSET, THE LD. DR SUBMITTED THAT THE APP LICATION OF THE ASSESSEE U/S 12AA OF THE ACT WAS ALREADY REJECTED B Y CIT (EXEMPTION) AND WHICH WAS CONFIRMED BY HON'BLE TRIBUNAL AND WHI CH WAS FURTHER CONFIRMED BY HON'BLE JAMMU & KASHMIR HIGH COURT VID E ITS ORDER DATED 29.01.2013. THE LD. DR THEREFORE ARGUED THAT IN VIE W OF THE EARLIER DENIAL OF REGISTRATION U/S 12AA UP TO HON'BLE HIGH COURT L EVEL, THE RELIANCE PLACED BY LD. CIT(A) ON A FURTHER ORDER OF HON'BLE ITAT FOR ASSESSMENT YEAR 2010-11 WAS NOT JUSTIFIED. ITA NO. 59(ASR)/2017 ASSESSMENT YEAR: 2010-11 4 8. THE LD. AR ON THE OTHER HAND SUBMITTED THAT IN A SSESSMENT YEAR 2007-08, THE ASSESSEE WAS NOT ABLE TO PROVE BEFORE HON'BLE HIGH COURT ALSO THAT ASSESSEE HAD FILED AN APPLICATION U/S 12A A OF THE ACT, WHEREAS IN ASSESSMENT YEAR 2010-11, THE ASSESSEE WAS ABLE T O DEMONSTRATE THAT THE ASSESSEE HAD FILED AN APPLICATION AND LD. CIT(E ) HAD NOT DISPOSED OFF OF THE MATTER WITHIN SIX MONTHS PERIOD AND THEREFOR E HON'BLE TRIBUNAL ALLOWED DEEMED REGISTRATION. LD. AR IN THIS RESPECT INVITED OUR ATTENTION TO PAPER BOOK PAGE 38 TO 48 WHERE A COPY OF ORDER O F HON'BLE ITAT IN ITA NO. 567/ASR/2014 FOR ASST. YEAR 2010-11 WAS PLACED. THE LD. AR SUBMITTED THAT THE HON'BLE TRIBUNAL HAS DISCUSSED T HE EARLIER ORDER OF HON'BLE HIGH COURT OF JAMMU & KASHMIR AND HAS HELD THAT IN EARLIER YEAR, THE ASSESSEE WAS NOT ABLE TO DEMONSTRATE THAT IT HAD FILED AN APPLICATION WHEREAS IN THE PRESENT YEAR, THE ASSESS EE WAS ABLE TO DEMONSTRATE THAT APPLICATION WAS FILED WITH CIT(E) BUT HE HAS FAILED TO PASS ORDER AND THEREFORE THE HON'BLE TRIBUNAL HAD R IGHTLY GRANTED REGISTRATION AS DEEMED REGISTRATION AND IN VIEW OF THE DEEMED REGISTRATION, THE LD. CIT(A) HAS RIGHTLY DELETED TH E PENALTY. [ [ 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS A FACT THAT DU RING ASST. YEAR 2007-08, THE ASSESSEE HAS BEEN DENIED EXEMPTION U/S 12AA WHI CH WAS CONFIRMED BY HON'BLE HIGH COURT OF JAMMU & KASHMIR VIDE ITS O RDER DATED 29.01.2013. THE HON'BLE HIGH COURT HAD DISMISSED TH E APPEAL OF ASSESSEE HOLDING THAT ASSESSEE WAS NOT ABLE TO SHOW THAT IT HAD EVER ITA NO. 59(ASR)/2017 ASSESSMENT YEAR: 2010-11 5 APPLIED FOR REGISTRATION U/S 12AA OF THE ACT, WHERE AS IN THE PRESENT YEAR, THE LD. CIT(A) HAD MADE A CATEGORICAL FINDING OF FA CT THAT THE ASSESSEE HAD FILED AN APPLICATION FOR REGISTRATION U/S 12AA OF THE . WE FURTHER FIND THAT FOR ASST. YEAR 2007-08, SIMILAR PENALTY U/S 27 1(1) (C) WAS IMPOSED WHICH HAS BEEN DELETED BY THE ORDER OF THE HON'BLE TRIBUNAL VIDE ITS ORDER DATED 12.05.2016 IN ITA NO. 566/ASR/2014 BY HOLDING AS UNDER: 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN UN DISPUTED FACT THAT CLAIM OF THE ASSESSEE U/S 12AA WAS DENIED BY ASSESS ING OFFICER AND WHICH HAS BEEN UPHELD BY HONBLE JAMMU & KASHMI R HIGH COURT. IT IS ALSO AN UNDISPUTED FACT THAT ASSESSEE BY CLAIMING EXEMPTION U/S 12AA OF THE ACT HAD A BONAFIDE BELIEF THAT SINCE THE DEPARTMENT HAD NOT DISPOSED OFF THE APPLICATION FOR REGISTRATION WITHIN SIX MONTHS, THEREFORE, IT WAS DEEMED TO HAVE BEEN GRANTED REGISTRATION U/S 12AA OF THE ACT. WE FURTHER FIND T HAT VIDE LETTER DATED 23.06.2014 THE ASSESSEE HAD MADE SUBMISSIONS TO THE CIT(A), WHEREBY IT HAD SUBMITTED THAT AS PER THE RE MAND REPORT OF THE ASSESSING OFFICER THE PERSON TO WHOM APPLICATIO N FOR REGISTRATION WAS HANDED OVER HAD ADMITTED OF HAVING ISSUED THE RECEIPT IN QUESTION AND HAD ALSO ADMITTED THAT DOCU MENTS WERE RECEIVED ALONG WITH FORM NO.10A AND IN THIS RESPECT HAD ENCLOSED PHOTO COPY OF REMAND REPORT ALSO. THE SUBMISSIONS O F THE ASSESSEE AS CONTAINED IN LETTER DATED 23.06.2014 ARE REPRODU CED BELOW. 1. AT THE REQUEST OF THE ASSESSEE THE CASE FOR THE A.Y 2010- 11 WAS REMANDED BACK TO THE A.O FOR RECORDING THE STATEMENT OF MR. P.N SAPROO PRESENTLY WORKING AS CL ERK IN WARD 1(3), JAMMU, WHO HAD ISSUED RECEIPT NO. 1167 D ATED 27.06.2007. AS PER THE REMAND REPORT THE SAID PERSO N HAS ADMITTED OF LIVING ISSUED THE RECEIPT IN QUESTION A ND HAS ALSO MENTIONED THAT THE DOCUMENTS RECEIVED I.E. FORM NO. 10A HAS BEEN HANDED OVER TO THE CONCERNED CLERK. WE ENCLOSE PHOTOCOPY OF REMAND REPORT FOR YOUR KIND PERUSAL & RECORD. THE ONUS OF HAVING FILED THE REQUISITE DOCUMENTS FO R SEEKING REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 ST ANDS FULLY DISCHARGED BY THE ASSESSEE AND THERE IS NO ROOM LEF T FOR ANY DOUBTS. IT IS WORTHWNILE TO MENTION THAT THE ASSESS EE HAS BEEN ALL ALONG MAINTAINING THAT FORM 10A HAS BEEN F ILED. 2.1 THE ASSESSEE REASONABLY & LEGALLY BELIEVED THAT IN ABSENCE OF REJECTION OF APPLICATION FOR SEEKING REG ISTRATION U/S 12ABY THE DEPARTMENT THE ASSESSEE ENJOYED DEEME D REGISTRATION WHICH WAS HELD BY HONBLE HIGH COURT I N CASE OF ITA NO. 59(ASR)/2017 ASSESSMENT YEAR: 2010-11 6 SOCIETY FOR THE PROMOTION O EDUCATION ADVENTURE SPO RT AND CONSERVATION OF ENVIRONMENT V/S CIT. THE SAID CASE HOLD GOOD AT THE TIME OF FILING OF RETURN BY THE ASSESSE E FOR THE A.Y 2007-08. 2.2 SIMILAR VIEWS WERE HELD IN CASE OF BHAGWAD SARU P SHRI SHRI DEVRAHA BABA MEMORIAL SHRI PARMARTH DHAM TRUST V/S CI1 DEHRADUN (2007) 17 SOT 281 (DELHI) SB. THE ITAT CONSIDERED THE SUBMISSIONS OF THE PARTIES AND DIREC TED THE A.O TO ASSESSEE THE ASSESSEE AS HAVING BEEN REGISTE RED U/S 11, 2 & 13 OF THE ACT, SUBJECT TO SATISFACTION OF O THER CONDITIONS LAID DOWN IN THESE SECTIONS. IN VIEW OF THESE FACTS, THE ASSESSEE HAS NOT CONCEA LED EITHER THE INCOME OR THE FACTS AND AS SUCH LEVY OF PENALTY IS TOTALLY UNJUSTIFIED AND NOT IN ACCORDANCE WITH LAW. THE ASSESSEE, THEREFORE, PRAYS THAT THE PENALTY IMP OSED BY THE A.O MAY PLEASE BE DROPPED AND JUSTICE GRANTED. HOWEVER, LEARNED CIT(A) DID NOT CONSIDER THE SUBMIS SIONS OF THE ASSESSEE AND ON THE BASIS OF HONBLE HIGH COURTS D ECISION AGAINST THE ASSESSEE UPHELD THE PENALTY. WE FIND THAT THE ACTION OF LEARNED CIT(A) IS NOT CORRECT AS ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS. THOUGH ASSESS MENT PROCEEDINGS DO HAVE SOME EFFECT ON PENALTY PROCEEDI NGS YET THE ASSESSMENT PROCEEDINGS CANNOT BE TOTALLY RELIED UPO N FOR PENALTY PROCEEDINGS. MOREOVER, WE FIND THAT HONBE SUPREME COURT IN THE CASE OF CIT VS. SOCIETY FOR THE PROMOTION OF EDUCAT ION, ALLAHABAD (SC), HAS HELD THAT IF THE APPLICATION OF ASSESSEE FOR REGISTRATION U/S 12AA IS NOT DISPOSED OFF WITHIN SIX MONTHS THEN ASS ESSEE IS ENTITLED TO ASSUME DEEMED REGISTRATION. THOUGH, IN THE PRESE NT YEAR IN ASSESSMENT PROCEEDINGS THE ASSESSEE WAS NOT ABLE TO DEMONSTRATE UP TO HONBLE HIGH COURT LEVEL REGARDING FILING OF APPLICATION FOR REGISTRATION YET DURING PENALTY PROCEEDINGS THE ASS ESSEE HAD THE EVIDENCE IN THE FORM OF REMAND REPORT OF ASSESSING OFFICER WHEREBY, HE HAD ADMITTED THAT ASSESSEE HAD FILED APPLICATION U/S 12AA. THEREFORE, LEARNED CIT(A) SHOULD HAVE DELETED THE P ENALTY AS ASSESSEE HAD BROUGHT INTO THE NOTICE OF LEARNED CIT (A) VIDE ITS LETTER DATED 23.06.2014. 7. THE LD. CIT(A) IN THE PRESENT CASE HAS HELD THE ASSESSEE ELIGIBLE TRUST ON THE BASIS OF DEEMED REGISTRATION AND SINCE THE ASSESSEE HAS BEEN ALLOWED EXEMPTION U/S 12AA OF THE ACT VIDE TRI BUNAL ORDER DATED 12.05.2016, THE LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY. ITA NO. 59(ASR)/2017 ASSESSMENT YEAR: 2010-11 7 12. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE R EVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.08.2017 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24.08.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER