Shyam Behari Misra Memorial Charitable Trust, Kanpur V. DCIT, Kanpur

ITA 632/LKW/2009

• Counselvise Citation: 63223714 RSA 2009
• Duration Of Justice: 5 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 30-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHASHANK DHAON
• Assessee Lawyers: K C MEENA
• Keywords: Charitable institution; Principle of natural justice; Benefit of exemption
• Section: 143(3); 12A; 12; 10; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.632/LKW/2009 ASSESSMENT YEAR:2006 - 07 SHYAM BIHARI MISRA MEMORIAL CHARITABLE TRUST, G - 14, SHANTI NAGAR, KANPUR. PAN:AAATL2323F VS. DY. C.I.T. - 1, KANPUR. (APPELLANT) (RESPONDENT) ITA NO.83/LKW/2010 ASSESSMENT YEAR:2006 - 07 DY. C.I.T. - 1, KANPUR. VS. SHYAM BIHARI MISRA MEMORIAL CHARITABLE TRUST, G - 14, SHANTI NAGAR, KANPUR. PAN:AAATL2323F (APPELLANT) (RESPONDENT) ITA NO.575/LKW/2013 ASSESSMENT YEAR:2006 - 07 DY. C.I.T. - 1, KANPUR. VS. SHYAM BIHARI MISRA MEMORIAL CHARITABLE TRUST, G - 14, SHANTI NAGAR, KANPUR. PAN:AAATL2323F (APPELLANT) (RESPONDENT) C.O. NO.36/LKW/2013 (IN ITA NO. ITA NO.575/LKW/2013 ASSESSMENT YEAR:2006 - 07 SHYAM BIHARI MISRA MEMORIAL CHARITABLE TRUST, G - 14, SHANTI NAGAR, KANPUR. PAN:AAATL2323F VS. DY. C.I.T. - 1, KANPUR. (APPELLANT) (RESPONDENT) 2 ASSESSEE BY SHRI SHASHANK DHAON, ADVOCATE ASSESSEE BY SHRI K. C. MEENA, D. R. DATE OF HEARING 21/11/2014 DATE OF PRONOUNCEMENT 0 8 /01/2015 O R D E R PER A. K. GARODIA, A.M. ALL T HESE APPEALS ARE RELATED TO THE SAME FINANCIAL YEAR I.E. ASSESSMENT YEAR 2006 - 07. IN INCLUDES TWO CROSS APPEALS IN QUANTUM PROCEEDINGS BEING I.T.A. NO.632/LKW/2009 AND I.T.A. NO.83/LKW/2010, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - II, KANPUR DATED 26/11/2009. REMAINING ONE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE IN COURSE OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, WHICH ARE DIRECTED AGAINST THE SEPARATE ORDER OF CIT(A) - II, KANPUR DATED 23/03/2013. ALL THESE APPEALS AND THE CROSS OBJECTION WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR T HE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE ASSESSEES APPEAL I.E. I.T.A. NO.632/LKW/09. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE 'CIT (APPEALS)' AFTER HAVING HIMSELF HELD THAT; ( A ) THE 'RETURN' HAD BEEN FILED BY S HYAM BEHARI MISRA MEMORIAL CHARITABLE TRUST IN THE STATUS OF 'AOP (TRUST)'; ( B ) REGULAR ASSESSMENT PROCEEDINGS BY ISSUE OF NOTICE UNDER SECTION 143(2) WERE ALSO INITIATED IN THE CASE OF THE ABOVE NAMED ASSESSEE, BUT THE ASSESSMENT ORDER DATED 21.11.2008 HAD BEEN PASSED IN THE CASE OF SHYAM BEHARI MISRA MEMORIAL CHARITABLE TRUST, A SOCIETY BEARING REGISTRATION NO.271/2012 DATED 23 RD JUNE, 2001; SHOULD HAVE HELD THAT THE SAID ASSESSMENT ORDE R WAS A NULLITY IN THE EYES OF LAW AND CONSEQUENTLY THE SAME COULD NO T HAVE B EEN RESTORED TO THE ASSESSING OFFICER, WITH VARIOUS OBSERVATIONS AND DIRECTIONS INCLUDING THE DIRECTIONS TO RE DO THE ASSESSMENT OF THE 'APPELLANT TRUST' ON PROTECTIVE BASIS. 3 WITHOUT PREJUDICE TO THE AFORESAID 2. BECAUSE THE 'CIT(A)' HAS ERRED IN HOLDING THAT; ( A ) DELHI PUBLIC SCHOOLS AT SARVODAYA NAGAR & AZAD NAGAR, KANPUR, BHARTIYA VIDYA BHAWAN PUBLIC SCHOOL AT KIDWAI NAGAR; KANPUR AND BHARTIYA VIDYA BHAWAN SCHOOL AT MAHADEO PURAM AT RAPTI NAGAR, GORAKHPUR ARE BEING RUN B Y THE 'SOCIETY' REGISTER ED AS SUCH VIDE REGISTRATION NO.271/2012 DAT ED 23 RD JUNE 2001; ( B ) THE SAID 'SOCIETY' IS A SEPARATE AND DISTINCT ENTITY FROM SHYAM BIHARI MISRA MEMORIAL CHARITABLE TRUST WHICH IS REGISTERED UNDER SECTION 12A VIDE CERTIFICATE NO.5718505 DATED 31 ST OCTOBER, 1996 , HEREINAFTER REFERRED TO AS 'APPELLANT T R UST (AOP)'; AND IN DIRECTING THE ASSESSING OFFICER 'TO COMPUTE THE INCOME AS OFFERED BY THE ASSESSEE TRUST ON PROTECTIVE BASIS'. 3. BECAUSE THE 'CIT(A ) ' ON A DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY THAT; ( A ) THE SOCIETY BEARING REGISTRATION NO.273/2001 - 02 UNDER THE SOCIETIES REGISTRATION ACT, 1860 WAS MERELY AN INSTITUTION FORMED BY THE 'APPELLANT TRUST (AOP)' IN PURSUANCE OF AND FOR FURTHERANCE OF ITS OBJECTS OF IMPARTING EDUCATION (AND SO ALSO OTHER OBJECTS OF GENERAL PUBLIC UTILITY); ( B ) THE SAID SOCIETY BY ITSELF COULD NOT BE TREATED TO BE AN ENTITY INDEPENDENT OF THE 'APPELLANT TRUST (AOP)'; ( C ) THE 'APPELLANT TRUST (AOP)' ITSELF HAD BEEN CARRYING ON THE OBJECTS OF IM PARTING EDUCATION AND OTHER OBJECTS OF GENERAL PUBLIC UTILITY THROUGH THE SCHOOLS MENTIONED ABOVE; AND ACCORDINGLY THE SURPLUS REVEALED BY THE CONSOLIDATED INCOME & EXPENDITURE ACCOUNT (ACCOMPANYING THE 'RETURN' FILED BY IT) W AS LIABLE TO BE ASSESSED IN I TS HANDS ON SUBSTANTIVE BASIS, AFTER GIVING BENEFIT O F EXEMPTION UNDER SECTION 11 READ WITH SECTION 12 OF THE 'ACT'. 4. BECAUSE THE PARTICULARS OF INCOME AS DISCLOSED BY THE 'APPELLANT TRUST (AOP)' AND SURPLUS REVEALED BY THE CONSOLIDATED INCOME & EXPENDITURE ACCOUNT DESERVE TO BE ACCEPTED AND ACCORDINGLY THE DIRECTION AS CONTAINED IN PARA 6 OF THE IMPUGNED ORDER DESERVE TO BE MODIFIED SO AS TO HAVE THE EFFECT OF ISSUING 4 DIRECTION T O THE ASSESSING OFFICER 'TO COMPUTE THE INCOME AS OFFERED BY THE AS SESSEE ON SUBSTANTIVE BASIS, SUBJECT TO EXEMPTION UNDER SECTION 11 OF THE ACT' . 5. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. BRIEF FACTS, TILL THE ASSESSMENT STAGE, ARE NOTED BY CIT(A) IN PARA 2 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 2. FACTS OF THE CASE AND DECISION 2.1 THE ASSESSEE AS THE NAME SIGNIFIES, IS A TRUST. IT CAME INTO EXISTENCE AS PER THE TRUST DEED DATED 16.10.1995. IT WAS REGISTERED UNDER SECTION 12A OF THE I.T. ACT VIDE CERTIFICATE OF REGISTRATION NO.571 /8050/REG/JUDL/95 - 96 DATED 30.01.1996. THE ASSESSEE FILED ITS RETURN OF INCOME IN I.T. RETURN NO.3A (WHICH IS FOR THE ASSESSEE CLAIMING EXEMPTION U/S 10 OR 11). WHILE FILING THE RETURN FOR M, IT HAS QUOTED THE STATUS AS 08 WHICH IS FOR AOP (TRUST). THE RETURN WAS ACCOMPANIED WITH A TAX AUDIT REPORT IN FORM NO. 10 B (WHICH IS AN AUDIT REPORT UNDER SECTION 12A(B) OF THE I.T. ACT IN THE CASE OF CHARITABLE OR RELIGIOUS TRUSTS OR INSTITUTIONS). THE PAN QUOTED IS AAATL2323F, WHICH IS FOR THE TRUST. 2.2 IT'S ASSESSEE'S VERSION : THAT IN ORDER TO PERUSE ITS OBJECT RELATED TO EDUCATION, THE SAID '1995 TRUST' GOT ITSELF REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860 VIDE CERTIFICATE OF REGISTRATION GRANTED BY THE REGISTRAR OF FIRMS, SOCIETIES & CHITS ON 30TH JUNE, 2001. FOR THIS PURPOSE AND TO CONFORM TO THE REQUIREMENTS OF REGISTRATION UNDER THE SOCIETIES REGISTRATION ACT, A MEMORANDUM OF ASSOCIATION WAS EXECUTED BY 7 PERSONS', 'THAT THE SAID 2001 S OCIETY' AS SPONSORED BY SHYAM BEHARI MISRA MEMORIAL CHARITABLE TRUST, 'THE 1995 TRUST' HAD SET UP THE FOLLOWING SCHOOLS: (I) DELHI PUBLIC SCHOOL AT KANPUR (II) BHARTIYA VIDYA BHAWAN PUBLIC SCHOOL AT KANPUR (III) BHARTIYA VIDYA BHAWAN PUBLIC SCHOOL AT GORAKHPUR 2.3 IT WAS ALSO STATED BY THE ASSESSEE : 'ALTHOUGH, FOR THE SAKE OF CONVENIENCE, SEPARATE RECORDS ARE MAINTAINED BY THESE THREE INSTITUTIONS AND ALSO BY SHYAM BEHARI MISRA MEMO RI AL CHARITABLE TRUST, THE RESULTS OF ALL THE FOUR BODIES ARE 5 CONSOLI DATED SHYAM BEHARI MEMORIAL CHARITABLE TRUST - 'THE 1995 TRUST' IS THE PERSON ASSESSABLE UNDER THE I.T.ACT AS PER SECTION 2(3)) OF THE ACT AND THE THREE SCHOOLS ARE THE SCHOOLS RUN AND SPONSORED BY IT AND ACCORDINGLY ALL THE INCOME TAX PROCEEDINGS INCLUDIN G THE REGISTRATION U/S 12A ARE TO BE DONE IN THE NAME OF ..'1995 TRUST.' 2.4 THE AO HAS GIVEN A FINDING IN THE ASSTT. ORDER THAT THE 3 SCHOOLS WERE BEING RUN BY THE 'SOCIETY' WHICH IS A DISTINCT AND SEPARATE IDENTITY AS COMPARED TO THE 'TRUST'. HE HAS FUR THER OBSERVED THAT SINCE THE 'INCOME' FROM SCHOOLS BELONGED TO THE SOCIETY AND AS 'SOCIETY' WAS NOT REGISTERED UNDER SECTION 12A OF THE I.T. ACT, NO EXEMPTION WAS AVAILABLE UNDER SECTION 11/12 OF THE I.T. ACT. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS DIRECTED THE ASSESSING OFFICER AS PER IMPUGNED ORDER TO COMPUTE THE INCOME AS OFFERED BY THE ASSESSEE TRUST ON PROTECTIVE BASIS . HE HAS FURTHER HELD THAT SINCE THE ASSESSEE TRUST IS REGISTERED U/S 12A OF THE ACT, COMPUTATION OF INCOME HAS TO BE IN ACCORDANCE TO THE PROVISIONS OF SECTION 11, 12 AND 13 OF THE ACT. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. REGARDING GROUND NO. 1 RAISED BY THE ASSESSEE, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT SINCE THE RETURN OF INCOME WAS FILED BY THE ASSESSEE IN THE STATUS OF AOP (TRUST) AND ASSESSMENT ORDER WAS FRAMED BY THE ASSESSING OFFICER IN THE STATUS OF AOP (SOCIETY), THE ASSESSMENT ORDER SHOULD BE CONSIDERED AS NULLITY IN THE EYES OF LAW. 6. LEARN ED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT AS PER THE IMPUGNED ORDER OF CIT(A), IT IS DIRECTED BY CIT(A) TO ASSESSING OFFICER THAT THE ASSESSEE TRUST HAS TO BE GRANTED BENEFIT OF EXEMPTION U/S 11, 12 & 13 AND AS A RESULT, THE INCOME OF THE ASSESSEE WILL BE NIL AFTER GRANTING THIS EXEMPTION AND THEREFORE, THIS GROUND RAISED BY THE ASSESSEE IS OF ACADEMIC INTEREST ONLY AND THEREFORE, WE DO NOT ENTER INTO THIS ASPECT OF THE MATTER AND 6 ACCORDINGLY GROUND NO. 1 IS REJECTED BEING OF ACADEMIC INTEREST ONLY IN THE FACTS OF THE PRESENT CASE. 8. REGARDING OTHER GROUNDS RAISED BY THE ASSESSEE, AS PER WHICH IT IS THE CLAIM OF THE ASSESSEE THAT THE DIRECTION OF CIT(A) SHOULD BE MODIFIED TO THE EXTENT THAT THE ASSESSING OFFICER SHOULD BE DIRECTED TO COMPUTE THE INCOME AS OFFERED BY THE ASSESSEE ON SUBSTANTIVE BASIS SUBJECT TO EXEMPTION U/S 11 OF THE ACT, WE ARE OF THE CONSIDERED OPINION THAT SINCE THE RETURN OF INCOME FILED BY THE ASSESSEE I S AT NIL IN VIEW OF THE ASSESSEES CLAIM OF EXEMPTION U/S 11 AND AS PER THE DIRECTION OF CIT(A) ALSO, THE ASSESSING OFFICER HAS BEEN DIRECTED TO ASSESS THE INCOME OF THE ASSESSEE U/S 11, 12 & 13 AND THEREFORE, THESE GROUNDS ARE ALSO OF ACADEMIC INTEREST ON LY SO FAR THIS ASSESSEE TRUST IS CONCERNED BECAUSE AS PER THIS DIRECTION OF CIT(A) AND IN THE FACTS OF THE PRESENT CASE, THE ULTIMATE ASSESSMENT OF THE ASSESSEE TRUST WILL BE AT NIL AND THEREFORE, THE RETURN OF INCOME OF THE ASSESSEE WILL STAND ACCEPTED. IT MAY BE THAT THE ASSESSING OFFICER MAY MAKE SUBSTANTIVE ADDITION IN THE HANDS OF THE ASSESSEE SOCIETY, ALTHOUGH THE ORDER OF CIT(A) IS DATED 26/11/2009 BUT NOTHING HAS BEEN BROUGHT ON RECORD BEFORE US BY ANY SIDE SHOWING THAT ANY ASSESSMENT WAS MADE IN T HE HANDS OF THE SOCIETY ON SUBSTANTIVE BASIS AND IF ANY SUCH ACTION HAS BEEN TAKEN BY THE A.O. IN THE HANDS OF THE ASSESSEE SOCIETY, WHAT IS THE FATE OF SUCH ACTION. HENCE, IN THE FACTS OF THE PRESENT CASE, THESE GROUNDS OF THE ASSESSEE ARE ALSO OF ACADEMIC INTEREST ONLY IN THE FACTS OF THE PRESENT CASE AS DISCUSSED ABOVE. HENCE, WE FEEL THAT NO A DJUDICATION IS CALLED FOR. 9. HOWEVER, THE LEARNED A.R. OF THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENT S IN SUPPORT OF ITS CONTENTION THAT THE INCOME IS ASSESSABLE IN THE HANDS OF THE ASSESSEE TRUST ON SUBSTANTIVE BASIS. THESE JUDGMENTS ARE AS UNDER: 7 ( I ) BRIHDARNAYAK MANAL (TRUST) KANPUR VS. ACIT, I.T.A. NO.421/ALLD/1993 AND 4/ALLD/1996 ( II ) BOARD OF DIRECTORS OF ALLAHABAD AGRICULTURE INSTITUTE ALLAHABAD VS. CIT, I.T.A. NO.113/ALL/2010 ( III ) PALAM JAIN EDUCATIONAL & WELFARE SOCIETY VS. DIREC TOR GENERAL OF INCOME TAX (EXEMPTIONS [2011] 15 TAXMANN.COM 127 (DELHI) 10. WE HAVE EXAMINED THE APPLICABILITY OF THESE THREE TRIBUNAL DECISIONS, CITED BY LEARNED A.R. OF THE ASSESSEE BUT WE FIND THAT IN NONE OF THESE CASES , THE FACTS ARE SIMILAR I.E. THA T A SOCIETY HAS BEEN CREATED BY A TRUST AND STILL IT WAS HELD THAT THE INCOME ACCRUE D TO THE SOCIETY IS TO BE ASSESSED IN THE HANDS OF THE TRUST. 11. IN THE FIRST CASE I.E. BRIHDARNAYAK MANAL (TRUST) KANPUR (SUPRA) , T HE FACTS ARE THAT A SEPARATE ENTITY WAS BEING RUN IN THE NAME OF LOGARITHMICA EDUCATIONAL AGENCY AND IT WAS THE CLAIM OF THE ASSESSEE THAT THE INCOME OF THIS ENTITY IS TO BE ASSESSED AS INCOME OF THE ASSESSEE TRUST WHEREAS THE STAND OF THE ASSESSING OFFICER WAS THAT THE INC OME OF THIS ENTITY WAS ASSESSABLE AS INCOME OF THE INDIVIDUAL DR. ASHWINI KUMAR AND NOT INCOME OF THE ASSESSEE TRUST. IT WAS THE FINDING OF THE TRIBUNAL IN THAT CASE THAT LOGARITHMICA EDUCATIONAL AGENCY WAS NOT AN INDEPENDENT AGENCY AS HELD BY THE ASSESSI NG OFFICER. IT IS FURTHER HELD BY THE TRIBUNAL THAT CLAUSE 4 OF THE TRUST DEED EMPOWERED THE ASSESSEE TRUST TO START EDUCATIONAL AGENCIES FOR EARNING INCOME TO ACHIEVE THE AIMS AND OBJECTS OF THE TRUST. HENCE, IT IS SEEN THAT IN THAT CASE, THE SEPARATE E NTITY WAS NOT A REGISTERED SOCIETY AS IN THE PRESENT CASE AND THEREFORE, THIS TRIBUNAL DECISION IS NOT APPLICABLE IN THE PRESENT CASE. 12. IN THE SECOND CASE I.E. BOARD OF DIRECTORS OF ALLAHABAD AGRICULTURE INSTITUTE ALLAHABAD (SUPRA) , THE ISSUE IN DISPUTE BEFORE THE TRIBUNAL WAS REGARDING VALIDITY OF THE ORDER PASSED BY CIT U/S 12A(3) DATED 08/03/2010 AND IT WAS HELD THAT SUB SECTION (3) OF SECTION 12A WAS NOT APPLICABLE WHEN 8 THE ORDER WAS PASSED BY CIT. IN THE PRESENT CASE, THE DISP UTE IS NOT REGARDING LEGAL VALIDITY OF ANY ORDER PASSED BY CIT AND THEREFORE, THIS TRIBUNAL DECISION IS ALSO NOT APPLICABLE IN THE PRESENT CASE. 13. AS PER THE THIRD JUDGMENT I.E. PALAM JAIN EDUCATIONAL & WELFARE SOCIETY (SUPRA), THE ISSUE IN DISPUTE WAS REGARDING ALLOWABILITY OF EXEMPTION U/S 10(23C) OF THE ACT, WHICH WAS DENIED BY THE ASSESSING OFFICER ON THE BASIS THAT DGIT (EXEMPTION) REJECTED GRANT OF EXEMPTION ON THE GROUND THAT THE ASSESSEE SOCIETY HAD NOT BEEN SOLELY ESTABLISHED FOR EDUCATIONAL PUR POSES BUT IT WAS FOUND ULTIMATELY THAT ON REQUISITION BY INCOME TAX OFFICER (EXEMPTION), THE ASSESSEE HAD REMOVED NON - EDUCATIONAL CL A USE S FROM ITS AIMS AND OBJECTS AND THEREFORE, IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT THE MATTER SHOULD BE REMITTED TO DGIT (EXEMPTION). IN THE PRESENT CASE, THE DISPUTE IS NOT REGARDING EXEMPTION U/S 10(23C) OF THE ACT AND THEREFORE, THIS JUDGMENT IS NOT RELEVANT IN THE PRESENT CASE. 14. AS PER THE ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED IS APP LICABLE IN THE PRESENT CASE WHEREAS WE HAVE ALSO SEEN THAT AS PER THE DIRECTION OF CIT(A) IN THE IMPUGNED ORDER, THE ULTIMATE ASSESSED INCOME OF THE ASSESSEE TRUST IS TO BE NIL AS IN THE RETURN BECAUSE IT IS DIRECTED BY CIT(A) TO ASSESSING OFFICER TO ASSES S THE INCOME UNDER THE PROVISION OF SECTION 11, 12 & 13 OF THE ACT. WE HAVE ALSO SEEN THAT IT IS NOT BROUGHT ON RECORD THAT ANY ASSESSMENT ON SUBSTANTIVE BASIS HAS BEEN MADE IN THE HANDS OF THE SOCIETY AND EVEN IF IT IS MADE , IT IS NOT RELEVANT FOR DECIDI NG THE ISSUE BEFORE US BECAUSE ADMITTEDLY , THE SOCIETY WAS HAVING AN INDEPENDENT LEGAL STATUS AND THEREFORE, ANY INCOME BELONGING TO THE SOCIETY CANNOT BE ASSESSED IN THE HANDS OF ANY OTHER PERSON I.E. THE PRESENT ASSESSEE TRUST. WHETHER THE INCOME IS ASS ESSABLE IN THE HANDS OF THE ASSESSEE SOCIETY OR NOT, CAN BE EXAMINED ONLY IN THE PROCEEDINGS, IF ANY, OF THE ASSESSEE SOCIETY IF ANY SUCH ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER IN THE HANDS OF SUCH ASSESSEE SOCIETY AND THE MATTER IS CARRIED IN APP EAL BY THE SAID ASSESSEE. 9 SINCE IN THE PRESENT CASE, THE ULTIMATE ASSESSED INCOME IS NIL AS IN THE RETURN OF INCOME FILED BY THE PRESENT ASSESSEE , THE DISPUTE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS OF ACADEMIC INTEREST ONLY AND THEREFORE, WE DO N OT ENTER INTO SUCH DISPUTE BECAUSE THE SAME IS OF ACADEMIC INTEREST ONLY. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 16. NOW WE TAKE UP THE APPEAL OF THE REVENUE IN QUANTUM PROCEEDINGS I.E. I.T.A. NO.83/LKW/10. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,37,11,738/ - BY IGNORING THE FACTS THAT THE ASSESSEE HAS DERIVED INCOME FROM THE RUNNING OF VARIOUS SCHOOLS DURING THE RELEVANT PREVIOUS YEAR UNDER THE AEGIS OF M7S SHYAM BDEHARI MISRA MEMORIAL CHARITABLE TRUST WHICH WAS A SOCIETY REGISTERED ON 23.06.2001 VIDE REGISTRATION NO.273/2001 BY THE REGISTRAR OF FIRMS & SOCIETIES U.P., KA NPUR UNDER THE RELEVANT PROVISIONS OF SOCIETIES ACT, 1860. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,37,11,738/ - BY IGNORING THE FACTS THAT A TRUST AND A SOCIETY BOTH ARE DIFFERENT ARTIFICIAL JURIDICAL PERSONS AND ARE CREATED UNDER THE RELEVANT PROVISIONS OF THE INDIAN TRUSTS ACT, 1882 AND THE SOCIETIES REGISTRATION ACT, 1860. ONCE A TRUST IS CREATED UNDER THE RELEVANT PROVISIONS OF INDIAN TRUSTS ACT, 1882, IT BECOMES 'TRUS T' WITHIN THE MEANING OF THAT ACT AND IS ASSESSED ACCORDINGLY. IN THE SAME WAY A SOCIETY CREATED UNDER THE RELEVANT PROVISIONS OF SOCIETIES REGISTRATION ACT, 1860 BECOMES 'SOCIETY' HAVING A DIFFERENT STATUS. A TRUST CREATED UNDER THE RELEVANT PROVISIONS OF THE INDIAN TRUSTS ACT CANNOT BE TREATED TO BE A SOCIETY WITHIN THE MEANING OF THE SOCIETIES REGISTRATION ACT, I860. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO ASSESSING OFFICER TO ALLOW THE DE DUCTION UNDER SECTION 10 11/ 12 & 13 OF THE INCOME TAX ACT, 1961 WHEREAS THE SOCIETY CONCERNED WAS NOT REGISTERED BY THE PRESCRIBED AUTHORITY FOR THE PURPOSES OF SECTION 12 OF THE INCOME TAX ACT 1961 AND ACCORDINGLY IT WAS NOT ENTITLED TO AVAIL THE EXEMPTIONS AVAILABLE UNDER SECTION 11 & 12 OF THE INCOME TAX ACT, 1961. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE A.O. TO COMPUTE THE INCOME AS OFFERED BY THE ASSESSEE TRUST ON PROTECTIVE BASIS IGNORIN G THE FACTS OF THE CASE THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME IN THE STATUS OF 08 I.E. A.O.P. AND THE ASSESSMENT WAS COMPLETED BY THE A.O. IN THE SAME STATUS. 5. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR BEING ER RONEOUS IN LAW AND ON FACTS, BE VACATED AND THE ORDER U/S 143(3) OF INCOME TAX ACT, 1961 DATED 21.11.2008 PASSED BY THE ASSESSING OFFICER RESTORED. 17. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPOR TED THE ORDER OF CIT(A) REGARDING THE ISSUES RAISED BY THE REVENUE IN THIS APPEAL. HOWEVER, IT WAS HIS SUBMISSION THAT AS PER THE ASSESSEES APPEAL FOR THE SAME YEAR, IT SHOULD BE HELD THAT THE ASSESSMENT OF INCOME AFTER EXEMPTION IS TO BE MADE ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEE TRUST AND NO INCOME SHOULD BE ASSESSED IN THE HANDS OF THE ASSESSEE SOCIETY. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IT IS NOT THE CASE OF THE REVENUE THAT THE INCOME IS NOT ARISING OU T OF EDUCATIONAL ACTIVITIES BEING RUN BY THREE SCHOOLS AND THEREFORE, IF IT IS HELD THAT THE INCOME IS BELONGING TO THIS ASSESSEE THEN EXEMPTION HAS TO BE ALLOWED TO THE PRESENT ASSESSEE U/S 11, 12 & 13 BECAUSE THE ASSESSEE TRUST IS REGISTERED U/A 12A AND THE ACTIVITY FROM WHICH THIS RECEIPT IS GENERATED IS EDUCATIONAL ACTIVITY COVERED BY SECTION 2 ( 15 ) OF THE ACT. HENCE, IT CANNOT BE SAID THAT THE INCOME IN THE HANDS OF THE PRESENT ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 11, 12 & 13 OF THE ACT. THE AS SESSEE SOCIETY FORMED LATER ON I.E. ON 23/06/2001 IS DISTINCT FROM THE ASSESSEE TRUST AND IF IT IS THE STAND OF THE REVENUE THAT THE INCOME IS BELONGING TO THE ASSESSEE SOCIETY THEN THE SAME INCOME CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE TRUST AND IF IT IS ADDED IN THE HANDS OF THE ASSESSEE TRUST THEN THE EXEMPTION HAS TO BE ALLOWED TO THE ASSESSEE TRUST U/S 11, 12 & 13 BECAUSE THE ASSESSEE TRUST IS DULY REGISTERED. HENCE, WE DO NOT FIND ANY MERIT IN THE VARIOUS GROUNDS OF THE REVENUE. 19. IN THE RES ULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 20. NOW WE TAKE UP THE APPEAL OF THE REVENUE IN PENALTY PROCEEDINGS I.E. I.T.A. NO.575/LKW/13. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IL, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S 271(1)(C) OF RS.45,60,000/ - WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAS DERIVED INCOME FROM THE RUNNING OF VARIOUS SCHOOLS DURING THE RELEVANT PREVIOUS YEAR UNDER THE A EGIS OF M/S SHYAM BEHARI MISRA MEMORIAL CHARITABLE TRUST WHICH WAS A SOCIETY REGISTERED ON 23.06.2001 VIDE REGISTRATION NO. 273/2001 BY THE REGISTRAR OF FIRMS & SOCIETIES U.P., KANPUR UNDER THE RELEVANT PROVISIONS OF SOCIETIES ACT, 1860. 2. THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.45,60,000/ - U/S 271(1)(C) OF THE IT ACT, 1961 HOLDING THAT PENALTY U/S 271(1)(C) CANNOT BE IMPOSED ON PROTECTIVE ASSESSMENT IGNORING THE FACTS OF THE CASE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME IN THE STATUS OF '08' I.E. AOP AND THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER IN THE SAME STATUS AND THE ASSESSMENT WAS MADE ON SUBSTANTIVE BASIS AND NOT ON PROTECTIVE BASIS. 3. THAT THE ORD ER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - IL, KANPUR DATED 22.03.2013 BEING ERRONEOUS IN 12 LAW AND ON FACTS, BE VACATED AND THE PENALTY U/S 271(1)(C) OF INCOME TAX ACT, 1961 DATED 28.03.2011 PASSED BY THE ASSESSING OFFICER BE RESTORED. 21. LEARNED D. R. OF THE REVENUE SUPPORTED THE PENALTY ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE CIT(A) HAS DECIDED THE ISSUE ON PAGE 12 & 13 OF HIS ORDE R AND RELEVANT PARAS ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - THE ABOVE SUBMISSIONS OF THE APPELLANT ALONG WITH THE CASE LAWS CITED ARE FOUND TO BE FACTUALLY CORRECT. PENALTY PROCEEDINGS CANNOT BE LEVIED ON PROTECTIVE ASSESSMENT. THE CALCUT TA HIGH COURT IN CIT V. SUPER STEEL (SALES) CO. [1989] HAS ALSO HELD THAT 'THERE CAN BE A PROTECTIVE ASSESSMENT BUT THERE CANNOT BE ANY PROTECTIVE PENALTY'. FURTHER IN VIEW ALL THE FACTS OF THE ASSESSEE HAVE BEEN BONA - FIDE DECLARED AND THERE WAS NO MALA FIDE INTENSION ON THE PART OF THE ASSESSEE. THE HON'BLE APEX COURT IN THE CASE OF PRICE WATER COOPERS DECIDED ON 25 TH SEPTEMBER 2012 HAS HELD AS UNDER: 'NOTWITHSTANDING THE FACT THAT THE ASSESSEE IS UNDOUBTEDLY A REPUTED FIRM AND HAS GREAT EXPERTISE AVAILABLE WITH IT, IT IS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A 'SILLY' MISTAKE. THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCALLY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOW ABLE U/S 40A(7) INDICATES THAT THE ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. APART FROM THE ASSESSEE, EVEN THE AO WHO FRAMED THE ORIGINAL ASSESSMENT ORDER MADE A MISTAKE IN OVERLOOKING THE CONTENTS OF THE TAX AUDIT REPORT. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. ALL THAT HAPPENED IN THE PRESENT CASE IS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR FAILED TO ADD THE PROVISION OF GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CALIBER AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING 13 TO DO WITH THE INADVERTENT ERROR. THAT THE ASSES SEE SHOULD HAVE BEEN CAREFUL CANNOT BE DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. CONSEQUENTLY, GIVEN THE PE CULIAR FACTS OF THIS CASE, THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED.' I HAVE CONSIDERED THE SUBMISSIONS AND ARGUMENTS PLACED BY THE A.R. OF THE ASSESSEE AND THE CONTENTS OF THE PENALTY ORDER DATED 28 . 03.2011 WHICH IS BASICALLY FRAMED ON THE DECISION PASSED BY THE ERSTWHILE CIT (A) - II, KANPUR VIDE NIL ORDER 18.11.2009 WHEREIN THE ADDITION IS SUSTAINED ON PROTECTIVE BASIS. A.R. HAS RIGHTLY PLACED HIS SUBMISSION AND ARGUMENTS THAT THE PENALTY HAS NO LEG TO STAND WHEN THE ADDITIONS ITSELF IS BASED ON PROTECTIVE BASIS. IT IS OBVIOUS HERE THAT THE FACTS ARE NEITHER CONCEALED NOR INACCURATE. MOREOVER, THERE IS NO MALA FIDE INTENTION IN PRESENTING THE WHOLE FACTS BEFORE THE A.O. AS SUCH ALL THE FACTS ARE CORRECTLY PRESENTED BY THE ASSESSEE WHICH S PEAKS THE BONA FIDE ON HIS PART. THEREFORE, ON CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE HAS NEITHER CONCEALED PARTICULARS NOR PRODUCED INACCURATE PARTICULARS, THEREBY, SUFFICIENCY OF BONA FIDE EXEMPTS THE ASSESSEE FROM LEVYING PENALTY UNDER SECTION 271( 1 )(C). ACCORDINGLY THE PENALTY LEVIED IS HEREBY DE LETED. 22.1 FROM THE ABOVE PARA S FROM THE ORDER OF CIT(A), WE FIND THAT IT IS HELD BY CIT(A) THAT IN QUANTUM APPEAL, IT WAS HELD BY CIT(A) THAT THE ADDITION IS SUSTAINED ON PRO TECTIVE BASIS AND THEREFORE, PENALTY IS NOT JUSTIFIED. WE FIND THAT ALTHOUGH THE ORDER OF CIT(A) IN QUANTUM PROCEEDINGS IS DATED 18/11/2009 BUT NOTHING IS PLACED ON RECORD BEFORE CIT(A) OR BEFORE US THAT IN THE APPEAL EFFECT, AS PER THE ORDER PASSED BY TH E ASSESSING OFFICER, ANY TAXABLE INCOME WAS ASSESSED BY THE ASSESSING OFFICER EVEN ON PROTECTIVE BASIS. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AND DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 23. IN THE RESULT, TH E APPEAL OF THE REVENUE STANDS DISMISSED. 24. NOW WE TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE I.E. C.O. NO.36/LKW/2013. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 14 1. BECAUSE THE LD. CIT(A) ON A DUE CONSIDERATION OF THE FACTS THAT: ( A ) 'SATISFACTION' HAD BEEN RECORDED BY THE ASSESSING OFFICER, IN TERMS OF NARRATION APPEARING IN THE ASSESSMENT ORDER DATED 27.11.2008, WHEN INCOME HAD BEEN ASSESSED ON SUBSTANTIVE BASIS; AND ( B ) STATUS OF THE SAID ASSESSMENT ORDER DATED 27.11.2008 HAD UNDERGONE A CHANGE, AFTER THE INCOME COMPUTED THERE HAD BEEN DIRECTED TO BE TREATED AS 'PROTECTIVE - BASIS' BY THE LD. CIT(A) AS PER APPELLATE ORDER DATED 26.11.2009. SHOULD HAVE HELD THAT THE 'SATISFACTION' RECORDED BY THE ASSESSING OFFICER HAD CEASED TO EXIST AND A CCORDINGLY NO PENALTY UNDER SECTION 271(1)(C) COULD HAVE BEEN LEVIED BY THE ASSESSING OFFICER. 25. IN VIEW OF OUR DECISION IN REVENUES APPEAL IN PENALTY PROCEEDINGS, THE GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJECTION ARE OF ACADEMIC INTEREST ONLY AND HENCE, NO ADJUDICATION IS CALLED FOR. 26. IN THE RESULT, THE C.O. OF THE ASSESSEE STANDS DISMISSED. 27. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESSEE AS WELL AS CROSS OBJECTION OF THE ASSESSEE AND BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. (ORDE R WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 8 /01/2015 *C.L.SINGH 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