Waqf Nawab Azmat Ali Khan, Muzaffarnagar V. JCIT, Muzaffarnagar

ITA 6101/DEL/2012

• Counselvise Citation: 610120114 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 04-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDREKAR
• Assessee Lawyers: MOHD SHAHID
• Keywords: Condonation of delay
• Section: 143(3); 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H , NEW DELHI BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER I.T.A.NO. 6 101 /DEL/20 1 2 A.Y. 200 9 - 10 WAQF NAWAB AZMAT ALI KHAN SARRAFA BAZAR MUZAFFARNAGAR PAN: AAATW 2625 D VS. J CIT, RANGE 2 MUZAFFARNAGAR (APPELLANT) (RESPONDENT) A PPELLANT BY : SH. MOHD.SHAHID, C. A. RESPONDENT BY : SH. J.P.CHANDREKAR, SR. DR ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD.CIT(A) , MUZAFFARNAGAR DATED 12. 1 0.201 2 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 200 9 - 10 . 2. FACTS IN BRIEF: - THE ASSESSEE IS A WAQ F CONTROLLED BY U.P.SUNNI CENTRAL WAQF BOARD , A U.P. GOVERNMENT BODY WHICH CONTROL S MUSLIM WAQFS IN U.P. THE WAQF IS REGISTERED AS A TRUST U/S 12A OF THE INCOME TAX ACT, 1961 (THE ACT). THE A.O. PASSED AN ORDER U/S 143(3) ON 22.12.2011 WHEREIN CERTAIN DISALLOWANCES WERE MADE. THE LD.CIT(A) HAS CONFIRMED THE SAME. THE ASSESSEE IS IN APPEAL. 3. THE ASSESSEE HAS DISPUTED THE FOLLOWING DISALLWOANCES BEFORE US. ( A ) DISALLOWANCE OF SALARY AND ALLOWANCES OF RS.5,91,120/ - , ( B ) DISALLOWANCE OF EXCESS OF INCOME OVER EXPENDITURE OF RS.23,27,889/ - . 3.1. THE EXPENDITURE OF RS.23,27,889/ - WAS DISALLOWED BY THE A.O. AS THE ASSESSEE HAD SUBMITTED FORM NO.10 ALONG WITH THE RETURN OF INCOME, WHICH ITA 6101/DEL/2012 WAQF NAWAB AZMAT ALI KHAN A.Y. 2009 - 10 2 WAS FILED LATE, BY SETTING ASIDE AN AMOUNT OF RS.16,93,565/ - TOWARDS THE PURPOSE AS STATED IN FORM NO.10 ALONG WITH THE RETURN OF INCOME. THIS FORM NO.10 FILED WAS NOT FILED WITHIN THE TIME ALLOWED FOR FURNISHING THE RETURN OF INCOME U/S 139(1) OF THE ACT. 3. 2 . THE SALARY WAS DISALLOWED BY THE A.O. ON THE GROUND THAT THE ASSESSEE EXPRESSED HIS INABILITY TO FURNISH REPLIES TO THE QUERIES RAISED. 3. 3 . ON APPEAL THE FIRST APPELLATE AUTHORITY CALLED FOR THE REMAND REPORT AND AFTER CONSIDERING THE REJOINDER, UPHELD THE ORDER OF THE A.O. 3. 4 . AGGR IEVED THE ASSESSEE IS IN AP PEAL BEFORE US. 4. WE HAVE HEARD MR.MOHD SHAHI D , THE LD.COUNSEL FOR THE ASSESSEE AND SHRI AP CHANDRAKAR, THE LD.SR.D.R. ON BEHALF OF THE REVENUE. 4.1. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE ORDERS OF AUTHORITI ES BELOW, CASE LAWS CITED, WE HOLD AS FOLLOWS. 4.2. GROUND NO.2 IS ON DISALLOWANCE OF AN AMOUNT OF RS.23,27,889/ - MADE , AS THE INTIMATION IN FORM NO.10 WAS FILED ALONG WITH THE RETURN OF INCOME ON 28.7.2010 AND NOT , WITHIN THE TIME ALLOWED FOR FURNISHI NG THE RETURN OF INCOME U/S 139(1) OF THE ACT. 4.3. IN OUR VIEW SUCH DISALLOWANCE IS BAD IN LAW , FOR THE FOLLOWING REASONS. (A) IN CIT VS. NAGPUR HOTEL OWNER'S ASSOCIATION 247 ITR 201 (SC), THE HON'BLE SUPREME COURT WHILE DEALING WITH SEC.11(2) OF THE ACT AND RULE 17 OF THE RULES HELD THAT IT WAS ABUNDANTLY CLEAR FROM THE WORDINGS OF SUB - SEC. (2) OF S. 11 THAT IT IS MANDATORY FOR THE PERSON CLAIMING THE BENEFIT OF S. 11 TO INTIMATE TO THE ASSESSING AUTHORITY THE PARTICULARS REQUIRED, UNDER R. 17 IN FORM NO . 10. IF DURING THE ASSESSMENT PROCEEDINGS THE AO DOES NOT HAVE THE NECESSARY INFORMATION, QUESTION OF EXCLUDING SUCH INCOME FROM ASSESSMENT DOES NOT ARISE AT ALL. AS A MATTER OF FACT, THIS BENEFIT OF EXCLUDING THIS PARTICULAR PART OF THE INCOME FROM THE N ET OF TAXATION ARISES FROM S. 11 AND IS SUBJECTED TO THE CONDITIONS SPECIFIED THEREIN. THEREFORE, IT IS NECESSARY THAT THE ASSESSING AUTHORITY MUST HAVE THIS INFORMATION AT THE ITA 6101/DEL/2012 WAQF NAWAB AZMAT ALI KHAN A.Y. 2009 - 10 3 TIME HE COMPLETES THE ASSESSMENT. IN THE ABSENCE OF ANY SUCH INFORMATION, IT WI LL NOT BE POSSIBLE FOR THE ASSESSING AUTHORITY TO GIVE THE ASSESSEE THE BENEFIT OF SUCH EXCLUSION AND ONCE THE ASSESSMENT IS SO COMPLETED, IT WOULD BE FUTILE TO FIND FAULT WITH THE ASSESSING AUTHORITY FOR HAVING INCLUDED SUCH INCOME IN THE ASSESSABLE INCOM E OF THE ASSESSEE. THEREFORE, EVEN ASSUMING THAT THERE IS NO VALID LIMITATION PRESCRIBED UNDER THE ACT AND THE RULES EVEN THEN, IT IS REASONABLE TO PRESUME THAT THE INTIMATION REQUIRED UNDER S. 11 HAS TO BE FURNISHED BEFORE THE ASSESSING AUTHORITY COMPLETE S THE CONCERNED ASSESSMENT BECAUSE SUCH REQUIREMENT IS MANDATORY AND WITHOUT THE PARTICULARS OF THIS INCOME THE ASSESSING AUTHORITY CANNOT ENTERTAIN THAT THE ASSESSEE UNDER S.11, THEREFORE, COMPLIANCE OF THE REQUIREMENT OF THE ACT WILL HAVE TO BE ANY TIME BEFORE THE ASSESSMENT PROCEEDINGS. FURTHER, ANY CLAIM FOR GIVING THE BENEFIT OF S.11 ON THE BASIS OF INFORMATION SUPPLIED SUBSEQUENT TO THE COMPLETION OF ASSESSMENT WOULD MEAN THAT THE ASSESSMENT ORDER WILL HAVE TO BE REOPENED. THE ACT DOES NOT CONTEMPLATE SUCH REOPENING OF THE ASSESSMENT. (B) THE HON'BLE GUJARAT HIGH COURT IN CIT VS. MAYUR FOUNDATION (2005) 194 CTR (GUJ) 197 : (2005) 274 ITR 562 (GUJ), AFTER CONSIDERING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NAGPUR HOTEL OWNER ASSOCIATI ON (SUPRA) HAS HELD THAT ASSESSMENT PROCEEDING CAN BE SAID TO BE PENDING TILL THE APPEAL IS BEARD AND DISPOSED OF BY THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL IS GIVEN EFFECT TO AND, THEREFORE, TRIBUNAL WAS WELL WITHIN ITS JURISDICTION TO ENTERTAIN THE N EW GROUND BY WHICH THE ASSESSEE - TRUST CLAIMED THE BENEFIT UNDER 11 (2) DURING PENDENCY OF THE APPEAL AND IN ALLOWING THE BENEFIT OF S. 11 (2) TO THE ASSESSEE - TRUST ONCE IT FOUND THAT THE ASSESSEE - TRUST HAD COMPLIED WITH ALL THE REQUIREMENTS OF S. 11 (2). (C ) IN KERALA RURAL EMPLOYMENT & WELFARE SOCIETY VS. ASSTT. DIRECTOR OF IT & ANR. (2009) 312 ITR 51 (KER), IT HAS BEEN HELD THAT NOTICE FOR ACCUMULATION OF INCOME IN FORM NO. 10 HAS TO BE DELIVERED BEFORE THE EXPIRY OF TIME ALLOWED UNDER S. 139(1); IN VI EW OF THE FACT THAT THE PETITIONER IS A STATE GOVERNMENT UNDERTAKING AND HAS BEEN REGISTERED UNDER S. 12A FOR QUITE SOME TIME AND THAT THE NOTICE IN FORM NO. 10 FOR ACCUMULATION WAS NOT FILED WITHIN THE TIME INDICATED IN R. 17 OWING TO DELAY ON THE PART OF THE CHARTERED ITA 6101/DEL/2012 WAQF NAWAB AZMAT ALI KHAN A.Y. 2009 - 10 4 ACCOUNTANT TO FINALIZE THE ACCOUNTS, THE IMPUGNED ORDER PASSED BY THE CIT REJECTING THE APPLICATION FOR CONDONATION OF DELAY IN FILING FORM NO. 10 IS QUASHED AND HE IS DIRECTED TO PASS APPROPRIATE ORDERS. 4.4. APPLYING THE PROPOSITIONS LAID DOWN IN THE CASE LAWS CITED ABOVE TO THE FACTS OF THE CASE WE DELETE THIS ADDITION. THUS G ROUND NO.2 OF THE ASSESSEE IS ALLOWED. 5. GROUND NO.1 IS ON DISALLOWANCE OF RS.5,91,120/ - BEING SALARIES AND ALLOWANCES . T HE ASSESSEE HA D SUBMITTED AS FOLLOWS BEFORE THE A.O. IN SUPPORT OF ITS CONTENTIONS THAT THE ASSESSEE HAD EMPLOYEES AND HAS INCURRED EXPENSES ON THEM. ( A ) RENT HAS TO BE COLLECTED FROM LARGE NUMBER OF PROPERTIES; ( B ) REPAIRS AND MAINTENANCE ARE CARRIED OUT ON TRUST PROPERTIES; ( C ) HANDLING OF DISPUTES A ND LITIGATION WORK WITH NUMBER OF TENANTS ; ( D ) THE PROPERTY OF THE TRUST SHOULD BE SECURED FROM GRABBING FROM UNSOCIAL ELEMENTS; ( E ) ADMINISTRATIVE WORK LIKE MAINTENANCE OF BOOKS, DEALING WITH BANKERS, COMPLETING STATUTORY COMPLIANCES HAS TO BE UNDERTAKEN. 5.1. THE ASSESSEE ALSO PRODUCED A LIST OF EMPLOYEES TO WHOM SALARY WAS PAID, ALONG WITH CONFIRMATIONS FROM ALL THE EMPLOYEES REGARDING THE SALARIES RECEIVED BY THEM. 5.2. ON A PERUSAL OF THESE EVIDENCES, WE ARE OF THE CONSIDERED OPINION, KEEPING IN VIEW THE SI ZE OF THE TRUST, THE NATURE OF ACTIVITIES ETC. T HE CLAIM IS HIGHLY REASONABLE AND DOES NOT CALL FOR ANY DISALLOWANCE. THUS WE DELETE THE DISALLOWANCE AND ALLOW THIS GROUND OF THE ASSESSEE. ITA 6101/DEL/2012 WAQF NAWAB AZMAT ALI KHAN A.Y. 2009 - 10 5 6. IN THE RESULT THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OP EN COURT ON 1 1 T H SEPTEMBER, 2015. S D / - S D / - [ G.C. GUPTA ] [J. SUDHAKAR REDDY] VICE PRESIDENT ACCOUNTANT MEMBER DT. THE 1 1 T H SEPTEMBER , 2015 MANGA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES