Rohilkhand Medical Educational Welfare Trust, Bareilly V. Income Tax Officer-2(1), Bareilly

ITA 618/LKW/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1477 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 25-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reason to believe
• Section: 142(1); 12AA; 148

Judgement Text

ITA NO. 618 /LKW/201 6 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW A BENCH LUCKNOW BEFORE SHRI P.K. BANSAL , VICE PRESIDENT AND SHRI AMARJIT SINGH JUDICIAL MEMBER ITA NO. 618 /L KW /201 6 ASSESSMENT YEAR 20 1 1 - 1 2 INCOME TAX OFFICER - 2 ( 1 ), BAREILLY 243001 VS ROHILKHAND MEDICAL EDUCATIONAL WELFARE TRUST, 345/1, KARAMCHARI NAGAR, BAREILLY 243001 PAN AABTR 6497 H (RESPONDENT) (APPELLANT) SHRI ABHINAV MEHROTRA, ADVOCATE APPELLANT BY SH RI AMIT NIGAM , CIT DR RESPONDENT BY 11 / 0 4 /201 7 DATE OF HEARING 13 /0 4 / 201 7 DATE OF PRONOUNCEMENT O R D E R PER: AMARJIT SINGH: JM 1. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), BAREILLY DATED 1 0 . 0 8 .2016 RELEVANT TO THE ASSESSMENT YEAR IS 2011 - 12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, NO NOTICE U/S 148 OF TH E CONCERNING ASSESSMENT YEAR 2011 - 12 COULD HAVE LEGALLY BEEN ISSUED AT A TIME WHEN THE TIME TO FRAME A REGULAR O RDER OF ASSESSMENT WAS STILL AVAILABLE WITH THE ASSESSING OFFICER AND IN CIRCUMSTANCES THE ASSESSMENT PROCEEDINGS WOULD BE DEEMED TO BE PENDING ON THE DATE ON NOTICE U/S 148 HAS BEEN ISSUED WHICH ACTION IS IMPERMISSIBLE UNDER LAW AS THERE CANNOT B INCOME E SCAPING ASSESSMENT DURING THE PENDENCY OF ASSESSMENT PROCEEDINGS AS HELD B RON 'TALE SC IN THE CASE OF HEH NIZAM FAMILY TRUST . ITA NO. 618 /LKW/201 6 2 2. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE REASONS RECORDED FOR TH E RE OPENING OF THE ASSESSMENT DO NOT L EAD TO THE FORMATION OF AN HONEST BELIEF THAT IN CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND THAT THE LD. CIT(A) HAS ALSO RECORDED AN INC FACT THAT THE ASSESSEE DID NOT REPLY TO A LETTER DT. 10.08.16 ISSUED BY THE AO. 3. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THERE IS NO LIVE LINK NEXUS BETWEE N THE STATEMENT OF REASONS RECORDED AND INCOME CHARGEABLE TO TAX GETTING ESCAPED FROM ASSESS: LENT MERE PURCHASE OF A IMMOVABLE PROPERTY CANNOT BE A REASON TO BELIEVE THAT INCOME CHARGEAB LE TO TA X HAS ESCAPED ASSESSMENT WITHOUT ANYTHING MORE. [224 ITR 614]. 4. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, NO ASS ESSMENT ORDER CAN BE PAS THE IN STANT ASSESSING OFFICER WITHOUT OBTAINING THE PRIOR APPROVAL OF THE AUTHORITY AS PRO U/S 151 OF THE INCOME TAX ACT. 5. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, REGISTRATION U/S 12AA HAVING GRANTED TO THE ASSESSEE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN FRAMING THE ORDER U/S 147/1 THE I.T. ACT WITHOUT GIVING THE BENEFIT OF EX EMPTION U/S 11 OF THE I.T. ACT AS PER THE PROVISI SEC. 12A. 6. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THAT THE ID. ITO HAS FURTHER FAI APPRECIATE THAT THE APPELLANT TRUST IS AN EDUCATIONAL TRUST, THE INCOME OF WHICH IS FULLY E? U/S 10(23)(C) OF THE INCOME TAX ACT, AND HE HAS GROSSLY ERRED IN NOT FOLLOWING EXEMPTION THE SAME SECTION FOR THE INCOME ASSESSED BY HIM. 7. A) BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THAT THE AVERMENT MADE T ASSESSING OFFICER THAT NO EDUC ATIONAL, ACTIVITIES WERE CARRIED ON BY THE ASSESSEE' IN THE F.Y. 2011 ARE UNFOUNDED AND BASELESS, SINCE THE APPELLANT TRUST HAD APPLIED FOR PERMISSION U.P GOVT ON 28.09.2010, AND THE UP STATE GOVT GRANTED ESSENTIAL / PERMISSION FOR ADMISS 40 STUDENTS AS PER LETTER OF JT. SECRETARY, U.P. GOVT DATED 14.10.2010 AND CONSEQUENTLY COLLEGE OF NURSING MANAGED BY ROHILKHAND MEDICAL EDUCATION WELFARE TRUST CONDUCTE COURSE ( ANM ) FOR 10 - 11 YEAR FOR WHICH PROPER CLASSES , EXAMINATION HAS BEEN CONDUCTED THE SUPERVISI ON OF U.P STATE MEDICAL FACULTY , LUCKNOW AND RESULTS ARE DECLARED BY U.P MEDICAL FACULTY , LUCKNOW ( EXAMINE BODY OF U.P GOVT, FOR NURSING COURSE ) . ITA NO. 618 /LKW/201 6 3 3. THE BRIEF FACTS OF THE CASE ARE THAT NOTICE U/S 14 8 OF THE INCOME TAX ACT, 1961 (F OR SHORT THE ACT) W AS ISSUED TO THE ASSESSEE ON 24.05.2012 AFTER RECORDING THE REASONS THAT AS PER CIB INFORMATION THE ASSESSEE (TRUST) PURCHASED IMMOVABLE PROPERTY FOR RS.38,09,000/ - DURING THE FY 2010 - 11. A QUERY LETTER DATED 10.08.2011 WAS ISSUED FIXING THE DATE OF COMP LIANCE ON 31.08.2011. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME RS.38,09,000/ - DURING THE ASSESSMENT YEAR 2011 - 12 HAVE ESCAPED ASSESSMENT. ISSUE NOTICE U/S 148 OF THE I.T.ACT, 1961. THEREAFTER THE RETURN OF INCOME ALONG WITH BALANCE SHEET AND INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR CONSIDERATION FURNISHED ON 03.07.2012 SHOWING TOTAL INCOME AT RS.NIL. THE ASSESSEE ALSO FILED WRITTEN SUBMISSION ON 06.07.2012. THEREAFTER , THE NOTICE ISSUED U/S 143(2), 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE DATED 06.07.2012 WERE SERVED UPON THE ASSESSEE AND THE ASSESSMENT WAS COMPLETED BY ASSESSING THE TOTAL INCOME TO THE TUNE OF RS. 82,82,540/ - . THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER , THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NOS.1 TO 3 4. ISSUE NOS. 1 TO 3 ARE INTER CONNECTED THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUE S, THE ASSESSEE HAS CHALLENGED VALIDITY OF NOTICE ISSUE D U/S 148 OF THE ACT. LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT ASSESSMENT WAS REOPENED ON THE BASIS OF VAGUE REASON WHICH NOWHERE DISCLOSED THAT INCOME CHARGEABLE TO TAX AS ESCAPED ASSESSMENT . IT IS ARGUED THAT PURCHASE OF ANNUAL PROPERTY CANNOT BE REASONED TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX I S ESCAPED ASSESSMENT AND IN SUPPORT OF HIS CONTENTION LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE BY FOLLOWING CASE LAWS: ITA NO. 618 /LKW/201 6 4 I) CIT VS. SHRI ATUL JAIN REPORTED IN ITA NO. 1384 OF 2006, II) PRAKRIYA PHARMACEM VS. ITO REPORTED IN 66B TAXMANN.COM 149 (GUJ.) III) CHHUGAMAL RAJPAL VS. S.P. CHAL IHA REPORTED IN 79 ITR 603 (SC) 5. ON THE OTHER HAND LD. REPRESENTATIVE OF THE DEPARTMENT HAS RELIE D UPON THE ORDER OF THE CIT(A) IN QUESTION. 6. UNDER THESE ISSUES, WE NOTICED THAT THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE NOTICE U/S 148 OF THE ACT. THE CONTENTS OF THE NOTICE ARE THAT AS PER CIB INFORMATION THE ASSESSEE (TRUST) PURCHASED IMMOVABLE PROPERTY FOR RS.38,09,000/ - DURING THE FY 2010 - 11. A QUERY LETTER DATED 10.08.2011 WAS ISSUED FIXING THE DATE OF COMPLIANCE ON 31.08.2011. THEREFORE, I HAVE REASON TO BELIEVE THAT INCOME RS.38 ,09,000/ - DURING THE ASSESSMENT YEAR 2011 - 12 HAVE ESCAPED ASSESSMENT. ISSUE NOTICE U/S 148 OF THE I.T. ACT, 1961. 7. ON APPRAISAL OF THE ABOVE MENTIONED CONTENTS OF NOTICE , WE ARE OF THE VIEW THAT THE NOTICE CONTAINED THE ONLY PARTICULAR ABOUT THE PURCHASE OF IMMOVABLE PROPERTY OF RS.38,09,000/ - THE SAID CONTENTS NOWHERE LEADS THIS FACT THAT UNDER WHICH CIRCUMSTANCES ON ACCOUNT OF THIS TRANSACTION THE INCOME OF THE ASSESSEE HAS BECOME ESCAPED ASSESSMENT. IN FACT, THERE IS NO REASON RECORDED AT THE TIME OF ISSUANCE OF NOTICE . T HE VERY MUCH FOUNDATION OF THE NOTICE IS BAD IN LAW. IN THIS REGARD , WE FOUND IN SUPPORT OF ABOVE MENTIONED FOLLOWING CASE LAWS: I) CIT VS. SHRI ATUL J AIN (SUPRA) II) PRAKRIYA PHARMACEM VS. ITO (SUPRA) III) CHHUGAMAL RAJPAL VS. S.P. CHALIHA (SUPRA) ITA NO. 618 /LKW/201 6 5 8. IN VIEW OF THE ABOVE MENTIONED DISCUSSION, WE ARE OF THE VIEW THAT NOTICE U/S 148 OF THE ACT IS WRONG AGAINST THE LAW AND IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. THEREFORE, WE ORDERED TO QUASH THIS NOTICE DATED 24.05.2012 . T HERE IS NO NEED TO SAY THAT THE SUBSEQUENT PROCEEDING WILL NOWHERE REMAIN IN EXISTENCE . ACCORDINGLY THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NOS. 4 TO 12 9. SINCE THE ASSESSMENT PROCEEDING INITIATED ON THE BASIS OF ISSUANCE OF NOTICE U/S 148 OF THE ACT HAS BEEN SET ASIDE THEREFORE THERE IS NO NEED TO DECIDE THESE ISSUES BECAUSE THE DECISION ON THESE ISSUES WOULD BECOME ONLY IN ACADEMIC IN NATURE. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/ - SD/ - (P.K. BANSAL) (AMARJIT SINGH) VICE PRESIDENT JUDICIAL MEMBER DATED: 13 / 04 /201 7 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR