Asstt. Commissioner of Income Tax-1, Kanpur V. M/s GoldMohar Gramudyog Sansthan, Kanpur

ITA 639/LKW/2013

• Counselvise Citation: 63923714 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 16-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K DEY
• Keywords: Charitable institution; Opportunity of being heard; Benefit of exemption
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 639/LKW/2013 ASSESSMENT YEAR: 2010 - 11 ASSTT. CIT - 1 KANPUR V. M/S GOLDMOHAR GRAMUDYOG S ANSTHAN 3/44, VISHNUPURI KANPUR PAN: AAAAG3341H (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. P.K. DEY, D.R. RESPONDENT BY: SHRI. ABHINAV MEHROTRA, ADVOCATE DATE OF HEARING: 05 09 2014 DATE OF PRONOUNCEMENT: 29 0 9 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS WHICH ARE AS UNDER: - 1 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - LL, KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ADMITTING FR ESH EVIDENCE IN THE FORM OF CERTIFICATE ISSUED BY KVIC IN COMPLETE VIOLATION OF RULE 46 A OF I . T. RULES BY NOT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE EVIDENCE FILED FIRST TIME BEFORE THE LD. CIT (A) - LL, KANPUR. 2 . THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) - II , KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ALLOWING THE BENEFIT OF SECTION 10(23 B ) OF INCOME TAX ACT,1961 TO THE ASSESSEE ON THE BASIS OF CERTIFICATE ISSUED BY KVIC WHICH WAS NEVER PRODUCED BEFORE THE ASSESSING OFFI CER DURING THE COURSE OF PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : ASSESSMENT PROCEEDINGS. 3 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - LL, KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ALLOWING THE CLAIM OF THE ASSESSEE U/S 10(23B) OF THE INCOME TAX ACT, 1961 WHEREAS THE SAME WAS RIGHTF ULLY REJECTED BY THE ASSESSING OFFICER IN VIEW OF FAILURE ON THE PART OF THE ASSESSEE IN PRODUCING THE CERTIFICATE ISSUED BY KVIC BEFORE THE ASSESSING OFFICER. 4 . THAT THE ORDER OF THE LD. CIT (A) - LL, KANPUR DATED 20.05.2013 NEEDS TO BE QUASHED AND THE ORDER PASSED BY THE ASSESSING OFFICER DATED 11.02.2013 BE RESTORED. 2 . THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE BENEFIT OF EXEMPTION ALLOWED UNDER SECTION 10(23B) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') BY THE LD. C IT(A), HAVING RELIED UPON THE CERTIFICATE ISSUED BY THE KHADI & VILLAGE INDUSTRIES COMMISSION (KVIC) IN COMPLETE VIOLATION OF RULE 46A OF THE INCOME - TAX RULES BY NOT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE EVIDENCE FILED FIRST TIME B EFORE THE LD. CIT(A). 3 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSING OFFICER HAS DENIED EXEMPTION CLAIMED UNDER SECTION 10(23B) OF THE ACT ON THE GROUND THAT THE ASSESSEE COULD NOT PLACE THE CERTIFICATE ISSUED BY THE KVIC. THE ASSESSE E PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND BEFORE THE LD. CIT(A) ASSESSEE HAD FURNISHED THE CERTIFICATE ISSUED BY THE KVIC AND HAVING RELIED UPON THE SAME, THE LD. CIT(A) GRANTED BENEFIT OF EXEMPTION UNDER SECTION 10(23B) OF THE ACT TO THE ASSESSEE. 4 . A GGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE LD. D.R. HAS CONTENDED THAT BEFORE THE ASSESSING OFFICER ASSESSEE COULD NOT FILE THE CERTIFICATE ISSUED BY THE KVIC FOR THE IMPUGNED PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : ASSESSMENT YEAR, BUT THE KVIC CERTIFICATE WAS FIL ED FIRST TIME BEFORE THE LD. CIT(A) AND THE LD. CIT(A) WITHOUT AFFORDING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER OR WITHOUT CALLING ANY REMAND REPORT, HAS ADMITTED THE SAME AND GRANTED BENEFIT OF EXEMPTION TO THE ASSESSEE. THE LD. D.R. HAS FURTHER CONTENDED THAT THE ASSESSING OFFICER IS REQUIRED TO EXAMINE THE CLAIM OF EXEMPTION IN THE LIGHT OF KVIC CERTIFICATE. SINCE THE ASSESSING OFFICER HAS DENIED THE BENEFIT OF EXEMPTION IN THE ABSENCE OF KVIC CERTIFICATE, THE MATTER MAY BE RESTORED BA CK TO THE ASSESSING OFFICER FOR VERIFICATION OF THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE , WHICH ENTITLED IT FOR REGISTRATION BY THE KVIC. 5 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, KVIC CERTIFICATE WAS NOT AVAILABLE WITH THE ASSESSEE AND IT WAS RECEIVED AFTER ASSESSMENT ORDER WAS PASSED AND DURING THE PENDENCY OF APPEAL BEFORE THE LD. CIT(A). THEREFORE, THE LD. CIT(A) HAS TAKEN COGNIZANCE OF THE SAME AND GRANTED BENEFIT OF EXEMPTION TO THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT AS PER PROVISO TO SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER CANNOT DENY THE BENEFIT OF EXEMPTION UNDER SECTION 10(23B) OF THE ACT , IF THE ASSESSEE PLACE THE CERTIFICATE I SSUED BY THE KVIC AND UNLESS THE ASSESSING OFFICER HAS INTIMATED THE CENTRAL GOVERNMENT OR THE PRESCRIBED AUTHORITY WITH REGARD TO THE CONTRAVENTION OF THE PROVISIONS OF CLAUSE (23B) OF SECTION 10 OF THE ACT . THE ASSESSING OFFICER HAS NO JURISDICTION TO DENY THE BENEFIT OF EXEMPTION UNDER SECTION 10(23B) OF THE ACT, IF THE ASSESSEE HAS FILED CERTIFICATE ISSUED BY KVIC. THEREFORE, NO PURPOSE WOULD BE SERVED FOR RESTORING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. 6 . IN REBUTTAL, THE LD. D.R. HAS C ONTENDED THAT AS PER SECTION 10(23B) OF THE ACT , ONCE REGISTRATION IS GRANTED BY THE KVIC, IT CAN ALSO BE WITHDRAWN BY THE COMMISSIONER IF HE IS SATISFIED THAT THE INSTITUTION HAS NOT APPLIED OR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : ACCUMULATED ITS INCOME IN ACCORDANCE WITH THE PROVISIONS CONT AINED IN THE FIRST PROVISO OR THE ACTIVITIES OF THE INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH SUCH INSTITUTION WAS APPROVED . THEREFORE, IT IS NOT A BLANKET CERTIFICATE THAT ONCE IT IS GRANTED, I T CANNOT BE WITHDRAWN. SO FAR AS THE POWER OF THE ASSESSING OFFICER IS CONCERNED, THE ASSESSING OFFICER CANNOT DENY THE BENEFIT OF EXEMPTION UNDER SECTION 10(23B) OF THE ACT IN THE LIGHT OF THE CERTIFICATE ISSUED BY THE KVIC, BUT IF HE FINDS THAT THE ASSE SSEES ACTIVITIES ARE IN VIOLATION OF THE PROVISIONS OF SECTION 10(23B) OF THE ACT, HE CAN CERTAINLY INFORM THE COMMISSIONER, KVCI FOR NECESSARY ACTION FOR WITHDRAWAL OF THE CERTIFICATE AND THEREAFTER THE DECISION IS TO BE LEFT WITH THE COMMISSIONER AND IF THE COMMISSIONER WITHDRAW OR CANCEL THE REGISTRATION, THE BENEFIT OF EXEMPTION UNDER SECTION 10(23B) OF THE ACT CAN BE DENIED. THE CERTIFICATE ISSUED BY THE KVIC WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER AND IT WAS FILED BEFORE THE LD. CIT(A) FOR TH E FIRST TIME. THEREFORE, THE ASSESSING OFFICER HAS NOT BEEN ABLE TO APPLY HIS MIND WITH REGARD TO THE EXEMPTION CLAIMED UNDER SECTION 10(23B) OF THE ACT IN THE LIGHT OF THE CERTIFICATE ISSUED BY THE KVIC. THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER. 2 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT UNDISPUTEDLY THE CERTIFICATE ISSUED BY THE KVIC WAS NOT FILED BEFORE THE ASSESSING OFFICER, AS IT WAS NOT AVAILABLE WITH THE ASSESSEE. IT WAS OBTAINED DURING THE COURSE OF APPELLATE PROCEEDINGS AND IT WAS FILED BEFORE THE LD. CIT(A). WHEN NEW EVIDENCE WAS FILED BEFORE THE LD. CIT(A), THE LD. CIT(A) OUGHT TO HA VE CALLED A REMAND REPORT FROM THE ASSESSING OFFICER IN THIS REGARD, BUT THE LD. CIT(A) , INSTEAD OF CALLING FOR A REMAND REPORT , HAS ALLOWED EXEMPTION UNDER SECTION 10(23B) OF THE ACT HAVING RELIED UPON THE CERTIFICATE ISSUED BY THE KVIC. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : 3 . IT IS ALSO AN UND ISPUTED FACT THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND WITH REGARD TO THE EXEMPTION CLAIMED UNDER SECTION 10(23B) OF THE ACT IN THE LIGHT OF THE KVIC CERTIFICATE, AS IT WAS NOT FILED BEFORE HIM. THEREFORE, THE CLAIM OF EXEMPTION OF THE ASSESSEE SHOULD BE EXAMINED IN THE LIGHT OF THE CERTIFICATE ISSUED BY THE KVCI, BY THE ASSESSING OFFICER. 4 . SO FAR AS JURISDICTION OF THE ASSESSING OFFICER FOR DENYING BENEFIT UNDER SECTION 10(23B) OF THE ACT IS CONCERNED, WE FIND THAT AS PER PROVISIONS OF SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER CANNOT OUT RIGHTLY DENY THE BENEFIT OF EXEMPTION CLAIMED UNDER SECTION 10(23B) OF THE ACT IF KVIC CERTIFICATE IS FILED BEFORE HIM, UNLESS HE REPORTS THE MATTER TO THE COMMISSIONER, KVIC FOR CANCELLATION OR WITHDRAWA L OF CERTIFICATE , IF HE NOTICE THAT THE ACTIVITIES OF THE ASSESSEE ARE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 10(23B) OF THE ACT. BUT I T DOES NOT MEAN THAT THE ASSESSING OFFICER IS DEBARRED FROM M AKING NECESSARY ENQUIRIES WITH REGARD TO THE ACTIVIT IES OF THE ASSESSEE WHILE ALLOWING EXEMPTION UNDER SECTION 10(23B) OF THE ACT IF KVIC CERTIFICATE IS FILED BEFORE HIM . FOR THE SAKE OF REFERENCE, WE EXTRACT THE PROVISIONS OF SECTION 10(23B) OF THE ACT AND THE FIRST PROVISO TO SECTION 143(3) OF THE ACT AS UNDER: - SECTION 10(23B): ( 23B) ANY INCOME OF AN INSTITUTION CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT, IN FORCE IN ANY PART OF INDIA, AND EXI STING SOLELY FOR THE DEVELOPMENT OF KHADI OR VILLAGE INDUSTRIES OR BOTH, AND NOT FOR PURPOSES OF PROFIT, TO THE EXTENT SUCH INCOME IS ATTRIBUTABLE TO THE BUSINESS OF PRODUCTION, SALE, OR MARKETING, OF KHADI OR PRODUCTS OF VILLAGE INDUSTRIES: PROVIDED THAT -- PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : (I) THE INSTITUTION APPLIES ITS INCOME, OR ACCUMULATES IT FOR APPLICATION SOLELY FOR THE DEVELOPMENT OF KHADI OR VILLAGE INDUSTRIES OR BOTH ; AND (II) THE INSTITUTION IS, FOR THE TIME BEING, APPROVED FOR THE PURPOSE OF THIS CLAUSE BY THE KHADI AND VILLAGE INDUSTRIES COMMISSION: PROVIDED FURTHER THAT THE COMMISSION SHALL NOT, AT ANY ONE TIME, GRANT SUCH APPROVAL FOR MORE THAN THREE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR NEXT FOLLOWING THE FINANCIAL YEAR IN WHICH IT IS GRANTED: PROVIDED ALSO THAT WHERE THE INSTITUTION HAS BEEN APPROVED BY THE KHADI AND VILLAGE INDUSTRIES COMMISSION AND SUBSEQUENTLY THAT COMMISSION IS SATISFIED THAT (I) THE INSTITUTION HAS NOT APPLIED OR ACCUMULATED ITS INCOME IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN THE FIRST PROVISO ; OR (II) THE ACTIVITIES OF THE INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ALL OR ANY OF THE CONDITIONS SUBJECT TO WHICH SUCH INSTITUTION WAS APPROVED, IT MAY, AT ANY TIME AFTER GIVING A REASONABLE OPPORTUNITY OF SHOWI NG CAUSE AGAINST THE PROPOSED WITHDRAWAL TO THE CONCERNED INSTITUTION, BY ORDER, WITHDRAW THE APPROVAL AND FORWARD A COPY OF THE ORDER WITHDRAWING THE APPROVAL TO SUCH INSTITUTION AND TO THE ASSESSING OFFICER. EXPLANATION. -- FOR THE PURPOSES OF THIS CLAUS E, -- (I) 'KHADI AND VILLAGE INDUSTRIES COMMISSION' MEANS THE KHADI AND VILLAGE INDUSTRIES COMMISSION ESTABLISHED UNDER THE KHADI AND VILLAGE INDUSTRIES COMMISSION ACT, 1956 (61 OF 1956); (II) 'KHADI' AND 'VILLAGE INDUSTRIES' HAVE THE MEANINGS RESPECTIV ELY ASSIGNED TO THEM IN THAT ACT; PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : PROVISO TO SETION 143(3): PROVIDED THAT IN THE CASE OF A - (A) SCIENTIFIC RESEARCH ASSOCIATION REFERR ED TO IN CLAUSE (21) OF SECTION 10; (B) NEWS AGENCY REFERRED TO IN CLAUSE (22B) OF SECTION 10; (C) ASSOCIATION OR INSTIT UTION REFERRED TO IN CLAUSE (23A) OF SECTION 10; (D) INSTITUTION REFERRED TO IN CLAUSE (23B) OF SECTION 10 ; (E) FUND OR INSTITUTION REFERRED TO IN SUB - CLAUSE (IV) OR TRUST OR INSTITUTION REFERRED TO IN SUB - CLAUSE (V) OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB - CLAUSE (VI) OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION REFERRED TO IN SUB - CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, WHICH IS REQUIRED TO FURNISH THE RETURN OF INCOME UNDER SUB - SECTION (4C) OF SECTION 139, NO ORDER MAKIN G AN ASSESSMENT OF THE TOTAL INCOME OR LOSS OF SUCH SCIENTIFIC RESEARCH ASSOCIATION, NEWS AGENCY, ASSOCIATION OR INSTITUTION OR FUND OR TRUST OR UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION, SHALL BE MADE BY THE ASSESSING OFFICER, WITHOUT GIVING EFFECT TO THE PROVISIONS OF SECTION 10, UNLESS - (I) THE ASSESSING OFFICER HAS INTIMATED THE CENTRAL GOVERNMENT OR THE PRESCRIBED AUTHORITY THE CONTRAVENTION OF THE PROVISIONS OF CLAUSE (21) OR CLAUSE (22B) OR CLAUSE (23A) OR CLAUSE (23B) OR SUB - CLAUSE (IV) OR SUB - CLAUSE (V) OR SUB - CLAUSE (VI) OR SUB - CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, AS THE CASE MAY BE, BY SUCH SCIENTIFIC RESEARCH ASSOCIATION, NEWS AGENCY, ASSOCIATION OR INSTITUTION OR FUND OR TRUST OR UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION, WHERE IN HIS VIEW SUCH CONTRAVENTION HAS TAKEN PLACE ; AND (II) THE APPROVAL GRANTED TO SUCH SCIENTIFIC RESEARCH ASSOCIATION OR OTHER ASSOCIATION 7OR FUND OR TRUST OR INSTITUT ION OR UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR HOSPITAL OR OTHER MEDICAL INSTITUTION HAS BEEN WITHDRAWN OR NOTIFICATION ISSUED IN RESPECT OF SUCH NEWS AGENCY OR FUND OR TRUST OR INSTITUTION HAS BEEN RESCINDED. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : 7 . IN THE LIGHT OF THE AFORESAID PROVISI ONS, WE ARE OF THE CONSIDERED OPINION THAT SINCE KVIC CERTIFICATE WAS FILED FOR THE FIRST TIME BEFORE THE LD. CIT(A), THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE ACTIVITIES OF THE ASSESSEE, THEREFORE, THE MATTER MAY BE RESTORED BACK TO THE FILE O F THE ASSESSING OFFICER WITH A DIRECTION TO RE - ADJUDICATE THE ISSUE OF EXEMPTION CLAIMED UNDER SECTION 10(23B)OF THE ACT IN THE LIGHT OF CERTIFICATE ISSUED BY THE KVIC. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION OF THE IMPUGNED ISSUE AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8 . IN THE RESULT, APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH SEPTEMBER , 2014 JJ: 0509 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )