Sanskriti KMV School , Jalandhar V. ACIT, C-1, (E), Chandigarh

ITA 7/CHANDI/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5737 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-03-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 03-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Charitable institution; Tax effect; Benefit of exemption; Condonation of delay
• Section: 11; 143(3); 139(5); 201; 143(2); 22; 10(23C)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH SMC CHANDIGARH !', # BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 7/CHD/2020 / ASSESSMENT YEAR : 2016-17 SANSKRITI KMV SCHOOL, TANDA ROAD, JALANDHAR. VS THE ACIT (EXEMPTIONS) CIRCLE-1, CHANDIGARH. ./ PAN NO: AACAS5326G / APPELLANT / RESPONDENT ! ' / ASSESSEE BY : SHRI Y.K. SUD, C.A. # ! ' / REVENUE BY : SHRI ASHOK KHANNA, ADDL. CIT $ % ! &/ DATE OF HEARING : 23.03.2021 '()* ! &/ D ATE OF PRONOUNCEMENT : 29.04.2021 HEARING CONDUCTED VIA WEBEX $%/ ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 03.10.2019 OF CIT(A) -II JALANDHAR PERTAINING TO 2016-17 ASSESSMENT YEAR IS ASSAILED O N THE FOLLOWING GROUNDS: 1. THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE AO FOR DENYING THE EXEMPTION OF RS. 4702618/- CLAIMED BY THE ASSES SEE U/S 11 OF THE INCOME TAX ACT, 1961. 2. THAT BOTH AO & CIT(A) FAILED TO APPRECIATE THAT THE EXEMPTION U/S 10(23C)(VI) WAS GRANTED BY THE IT AT VIDE THEIR ORDER DATED 22. 02.2017 EFFECTIVE FROM ASST. YEAR 2015-16. THEREFORE THE CIT(A) ERRED IS NOT GRA NTING EXEMPTION ON THE PRETEXT OF FILLING OF FORM 10BB ON 06.06.2017 DURING THE PENDENCY OF ASSESSMENT PROCEEDINGS. 3. THAT BOTH CIT(A) & AO FAILED TO APPRECIATE THAT FIL ING OF THE AUDIT REPORT IN FORM 103B IS DIRECTORY AND NOT MANDATORY AND CAN BE FILED AT THE STAGE OF ASSESSMENT. ITA 7/CHD/2020 A.Y. 2016-17 PAGE 2 OF 9 4. THAT CIT(A) WRONGLY IGNORED THE CIRCULAR NO. 10/201 9 DATED 22.05.2019 . WHEREIN THE CBDT HAD GRANTED BLANKET PERMISSION OF CONDONATION OF DELAY IN FILING FORM 10BB PERTAINING TO ASST. YEAR 2016-17 W HICH WAS BINDING ON BOTH THE AUTHORITIES. 5. THAT THE ORDER OF CIT(A) & AO ARE AGAINST THE LAW A ND FACTS OF THE CASE. 2. AT THE TIME OF HEARING, LD. AR INVITING ATTENTIO N TO THE IMPUGNED ORDER SUBMITTED THAT THE REASONS PREVAILIN G WITH THE LD. COMMISSIONER FOR DENYING THE CLAIM OF THE ASSESSEE WERE NOT RELEVANT AND MAINTAINABLE IN LAW. RELIANCE WAS PLA CED UPON THE ORDER OF THE ITAT PASSED IN ASSESSEE'S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR DATED 09.05.2019 WHEREIN IN ITA 1397/CHD/2018 ON SIMILAR FACTS AND CIRCUMSTANCES, T HE DEPARTMENTAL APPEAL WAS DISMISSED, COPY OF THIS ORD ER WAS FILED. ON A READING OF THIS SPECIFIC ORDER, IT WAS NOTICED THAT SINCE THE IMPUGNED ORDER IS DATED 03.10.2019, THE ORDER OF TH E ITAT HAVING ALREADY BEEN PASSED IN MAY, 2019 WAS THUS AVAILABLE TO THE PARTIES PRIOR TO THE PASSING OF THE IMPUGNED ORDER, THUS, W HY IT WAS NOT RELIED UPON BEFORE THE FIRST APPELLATE AUTHORITY I T WAS QUESTIONED. 3. THE LD. AR SUBMITTED THAT THE ORDER HAD SPECIFIC ALLY BEEN RELIED UPON. 4. IN THE CIRCUMSTANCES, THE LD. AR WAS REQUIRED TO POINT OUT FROM THE SUBMISSIONS ADVANCED BEFORE THE LD. CIT(A) WHETHER THE SPECIFIC ORDER HAD BEEN BROUGHT TO THE ATTENTION OF THE LD. CIT(A). ON A READING OF THE SUBMISSIONS EXTRACTED IN PARA 3 , IT WAS SUBMITTED THAT THE ASSESSEE HAD SPECIFICALLY INVITE D ATTENTION TO THE FACT THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT Y EAR, THE ORDER ITA 7/CHD/2020 A.Y. 2016-17 PAGE 3 OF 9 PASSED BY THE CIT(A) WAS IN ASSESSEE'S FAVOUR. REL YING UPON THE WRITTEN SUBMISSIONS EXTRACTED IN THE ORDER, IT WAS HIS SUBMISSION THAT ON THE SAME SET OF FACTS AND CIRCUMSTANCES, TH E ORDER OF THE CIT(A) IN ASSESSEE'S OWN CASE DECIDED IN ITS FAVOUR WAS CITED BEFORE THE CIT(A) AND THE FACT THAT THIS ORDER WAS UPHELD BY THE ITAT WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A). THE FACT UM OF THE CIT(A)S ORDER IN ASSESSEE'S FAVOUR IN THE IMMEDIATELY PRECE DING ASSESSMENT YEAR IT IS SEEN IS FOUND MENTIONED IN THE ORDER, HO WEVER, REFERENCE TO THE ORDER OF THE ITAT IS NOT FOUND THEREIN. ACC ORDINGLY, ON 10.03.2021, LD. DR WAS GIVEN TIME TO GO THROUGH THE RECORD AND POINT OUT WHETHER THERE WAS ANY DIFFERENCE IN FACTS AND CIRCUMSTANCES AS TO WHY THE ORDER PASSED IN THE IMM EDIATELY PRECEDING ASSESSMENT YEAR WAS NOT TO BE FOLLOWED BY THE CIT(A). AFTER AFFORDING TIME ON 10.03.2021 ON THIS GROUND T O THE REVENUE, THE HEARING, ACCORDINGLY, COMMENCED THEREAFTER ON 2 3.03.2021. THE RELEVANT EXTRACT OF THE COURT PROCEEDINGS ON 10 .03.2021 IS EXTRACTED HEREUNDER FOR READY REFERENCE : ITA 7/CHD/2020 A.Y. 2016-17 PAGE 4 OF 9 5. ON THE NEXT DATE OF HEARING, LD. AR AGAIN RELIED UPON THE WRITTEN SUBMISSIONS EXTRACTED IN THE IMPUGNED ORDER . INVITING ATTENTION TO THE ORDER OF THE ITAT IN ITA 1397/CHD/ 2018 DATED 09.05.2018 AND THE JOINT ORDER DATED 22.02.2017 IN THE CASE OF THE ASSESSEE BEING IN ITA 528/ASR/2016 IN CONSOLIDATED ORDER IN ITA 526/ASR/2016 IN THE CASE OF KANYA MAHA VIDYALAYA AN D OTHERS INCLUDING THE ASSESSEE. THE YEAR UNDER CONSIDERATI ON, IT WAS REITERATED IS 2016-17 ASSESSMENT YEAR. COPY OF THE ORDER OF THE CIT(A)-2 JALANDHAR FOR 2015-16 ASSESSMENT YEAR DATE D 27.08.2018 WAS RELIED UPON BEFORE THE CIT(A). THIS ORDER HAD BEEN UPHELD BY THE ITAT WHEREIN REFERENCE HAS ALSO BEEN MADE TO TH E DECISION OF THE CIT(A) DATED 14.06.2017 IN 2014-15 ASSESSMENT Y EAR. COPY OF THIS IS AVAILABLE AT PAGES 29 TO 35 OF THE PAPER BO OK WHICH HAS BEEN REFERRED TO BY THE ITAT IN THE CIRCUMSTANCES I T WAS HIS SUBMISSION THAT THE ASSESSEE'S APPEAL WAS ALLOWABLE . 6. THE LD. SR.DR RELYING UPON THE ORDER SUBMITTED T HAT THE APPROVAL U/S 10(23C)(VI) TO THE ASSESSEE WAS GRANTE D ON 22.02.2017 AND SINCE FORM 10BB HAD NOT BEEN FILED IN ACCORDANC E WITH LAW AND HAD BEEN FILED IN THE ASSESSMENT PROCEEDINGS, HE W OULD HAVE NOTHING FURTHER TO STATE. 7. THE LD. AR IN REPLY SUBMITTED THAT THERE IS AMPL E CASE LAW ON THE BASIS OF WHICH THE FILING OF FROM NO. 10BB AT T HE ASSESSMENT STAGE WAS SUFFICIENT COMPLIANCE OF LAW IN THE PECUL IAR FACTS OF THE ITA 7/CHD/2020 A.Y. 2016-17 PAGE 5 OF 9 PRESENT CASE WHERE THE APPROVAL CAME LATE. NO ADVE RSE FACT IS REFERRED TO OR AVAILABLE NON HAS THE POSITION OF LA W BEEN ASSAILED. RELYING UPON THE WRITTEN SUBMISSIONS AND THE LEGAL POSITION AS CANVASSED, IT WAS HIS SUBMISSION THAT THE CLAIM WAS ALLOWABLE. 8. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. A PERUSAL OF THE RECORD SHOWS THAT BEFORE THE CIT(A), FOLLOWING SUBMISSIONS WERE ADVANCED ON BEHALF OF TH E ASSESSEE : THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SANSKRITI KMV SCHOOL WAS ESTABLISHED BY ARYA SHIKSHA MANDAL ITS PARENT BODY IN THE YEAR 2003 FOR IMPARTING EDUCATION TO NURSERY TO XII CLASSES O THE C.B.S.E. THE SCHOOL WA S DULY AFFILIATED BY C.B.S.E. W.E.F. 0J. 04.2008 AND EVER SINCE IS RECOGNIZED AND IMPARTING EDUCATION ON THE PATTERN APPROVED BY C.B.S.E. . THE SCHOOL HAS BEEN REGULARLY FILING ITS RETURN OF INCOME BY CLAIMING EXEMPTION U/S 10(23C)(IIIAD) SINCE THE RECEIPTS OF THE SCHOOL WERE BELOW RS. 1 CRORE TILL ASST. YEAR 2008-09. THIS EXEMPTION WAS DULY ALLOWED BY THE DEPARTMENT WITHOUT RAISING ANY KIND OF DISPUTE TILL ASST. YEAR 2008-09. HOWEVE R DURING THE ASST. YEAR 2009-10 THE RECEIPTS OF THE SCHOOL EXCEEDED RS. 1 CRORE THEREFO RE APPLICATION FOR REGISTRATION OF THE SCHOOL WAS MADE TO THE CCIT LUDHIANA FOR GRANTING O F THE REGISTRATION U/S 10(23C)(VI). FURTHER ASSESSEE APPLIED FOR EXEMPTION BEFORE IT AT AMRITSAR BENCH WHO PASSED AN ORDER ALLOWING EXEMPTION U/S 10(23C)(VI) TO THE SCH OOL VIDE ITS ORDER DATED 22.02.2017. THE ASSESSEE FILED ITS RETURN OF INCOME ON 10.10.2 016 DECLARING TOTAL INCOME AT NIL AFTER CLAIMING THE ENTIRE SURPLUS AS EXEMPT U/S 10(23C)(V I). THE RETURN WAS PROCESSED U/S 143(1). THE NOTICE U/S 143(2) WAS ISSUED ON 13.07.2 017 AND ASSESSMENT U/S 143(3) WAS FRAMED AT AN INCOME OF RS 4702618/-. HENCE THIS APP EAL BEFORE YOUR GOODSELF. GROUND NO. 1, 2 & 3 IN THIS REGARD IT IS SUBMITTED THAT AMRITSAR BENCH OF IT AT HAS PASSED AN ORDER IN FAVOUR OF THE ASSESSEE BY ALLOWING EXEMPTION U/S 10(23C)(V I) VIDE ITS ORDER DT 22.2.2017(COPY ENCLOSED). IT IS NOT OUT OF PLACE TO MENTION HERE THAT APPEAL OF THE ASSESSEE FOR ASST. YEAR 2014- _ 15 AND 2015-16 HAS ALREADY BEEN ALLOWED BY YOUR GOOD SELF VIDE ORDER DATED, 10.08.2016 APPEAL NO. 2/10296/16-17 AND 27.08.2018 APPEAL NO 2 /10574/17-18 CIT(A) JAL. GROUND NO. 4 'IN THIS REGARD IT IS SUBMITTED THAT ASSESSEE SCHOO L IS AFFILIATED TO CBSE AND IT MAY BE STATED THAT IT IS NOT GOVERNMENT AIDED SCHOOL BUT P URELY PRIVATE SCHOOL IMPARTING EDUCATION TO THE STUDENTS FROM NURSERY TO +2 CLASSE S. THE SALARIES PAID TO THE STAFF ARE NEITHER GOVERNED BY CBSE NOR GOVERNED BY GOVERNMENT OF PUNJAB SINCE IT IS NOT AIDED SCHOOL OF GOVERNMENT. IT IS TOTALLY THE MANAGEMENT TO DECIDE THE SALARY STRUCTURE PAYABLE TO STAFF IT IS NOT UNDERSTOOD HOW A.O HAD PRESUMED THE SCHOOL COMPROMISES WITH THE QUALITY OF EDUCATION AND WHAT ARE THE MEASURES UNDE R WHICH YOU ARE MAKING FALSE ALLEGATIONS THAT QUALITY OF EDUCATION IS COMPROMISE D AND THERE IS TENDENCY OF EARNING HIGH PROFITS. THE ASSESSEE SCHOOL IS CHARGING FEE A S PER THE DECISION MADE BY MANAGEMENT UNDER THE VARIOUS HEADS WHICH ARE CHARGED BY ALL ED UCATION INSTITUTIONS. THE SCHOOL IS DULY ELIGIBLE TO CHARGE FEE FROM STUDENTS AND IT IS NOT FREE SCHOOL. ITA 7/CHD/2020 A.Y. 2016-17 PAGE 6 OF 9 IT IS NOT THE POWER OF THE A.O TO INTERVENE INTO TH E MATTERS OF CHARGING OF FEES FROM STUDENTS AND PAYING SALARY TO STAFF OF SCHOOL AND I T IS NOT A CRITERIA ON THE BASIS OF WHICH EXEMPTION U/S 10(23C)(VI) BE DENIED WHICH HAS ALREA DY BEEN GRANTED TO THE SCHOOL BY THE ITAT-AMRITSAR VIDE ITS ORDER DATED 22.02.2017 AND I S APPLICABLE FROM THEA.Y.2015-16. 8.1 IT IS SEEN THAT CONSIDERING THE SAME, THE CLA IM WAS DISMISSED HOLDING AS UNDER : 4.1 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE APPELLANT. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2016-17 ON 10.10.2016 DECLARING NIL INCOME. THE ASSESSEE IS RUNNING AN ED UCATIONAL INSTITUTION UNDER THE NAME AND STYLE OF 'SANSKRITI KMV SCHOOL', JALAN DHAR. THE LESSEE'S APPLICATION FOR APPROVAL U/S 10(23C)(VI) OF THE INCOME TAX ACT, 1 961 WAS REJECTED BY THE CIT(E), CHANDIGARH. THE HON'BLE ITAT VIDE ORDER IN ITA NO.528(ASR)/2016 DATED 22.02.2017 DIRECTED TO GRANT APPROVAL U/S 10(23C)(V I)TO THE ASSESSEE. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE DI D NOT HAVE APPROVAL U/S 10(23C)(VI) OF THE INCOME TAX ACT, DURING THE YEAR UNDER CONSIDERATION AS THE ORDER OF THE HON'BLE ITAT WAS PASSED ONLY ON 22.02. 2017. MOREOVER, FROM 10BB WAS ALSO FILED AFTER THE ORDER OF THE ITAT I.E. ON 06.06.2017. THEREFORE, THE ASSESSEE HAS NOT SATISFIED ONE OF THE BASIC CONDITI ONS FOR CLAIMING EXEMPTION U/S 10 (23C)(VI) OF THE ACT. FURTHER IT WAS OBSERVED THAT THE ASSESS EE WAS CHARGING HIGH FEES UNDER MULTIPLE HEADS AND PAYING LOWER SAL ARIES TO THE STAFF. THE ASSESSEE WAS THUS FUNCTIONING ON COMMERCIAL PRINCIPLE WITH M ISPLACED FOCUS ON MAXIMISATION OF SURPLUS WHICH IS BEYOND THE SCOPE O F 'CHARITABLE PURPOSE' AS DEFIND U/S 2(15) OF THE INCOME TAX ACT, 1961. 6. DURING THE APPEAL PROCEEDINGS, LD. COUNSEL HAS STAT ED THAT HON'BLE ITAT, AMRITSAR HAS ALLOWED EXEMPTION U/S 10(23C)(VI) VIDE ORDER DATED 22.02.2017. THE ASSESSEE SCHOOL IS AFFILIATED TO CBSE AND IT IS NOT GOVERNMENT AIDED SCHOOL BUT PURELY PRIVATE SCHOOL IMPARTING EDUCATION TO THE ST UDENTS, THE SCHOOL WAS ENTITLED TO CHARGE THE FEES FROM THE STUDENTS. THE ASSESSEE SCHOOL IS AFFILIATED TO CBSE. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSE E WAS FUNCTIONING ON MAXIMISATION OF PROFITS AND NOT FOR CHARITABLE PURP OSES AS IT WAS CHARGING HIGH FEES AND PAYING LOW SALARIES. IT IS OBSERVED THAT T HERE IS NO RESTRICTION SUCH ON THE RATE OF FEES CHARGED OR THE SALARIES TO BE PAID TO STAFF . MOREOVER, THE ASSESSEE HAS BEEN GRANTED EXEMPTION U/S 10(23C)(VI) VIDE ORDER O F HON'BLE ITAT ON 22.02.2017, THEREFORE, THE INSTITUTE IS RUNNING FOR THE PURPOSES OF EDUCATION I.E. FOR CHARITABLE PURPOSES. IT IS OBSERVED THAT FORM 10BB WAS FILED BY THE ASSE SSEE ON 06.06.2017 AS PER CBDT CIRCULAR 10/2019, THE ASSESSEE SHOULD HAVE FILED FO RM 10BB BY 17.10.2016. I.E. DATE OF FILING OF RETURN OF INCOME FOR A.Y. 2016-17. THE AS SESSEE HAS NOT BROUGHT ON RECORD WHETHER ANY PERMISSION WAS OBTAINED FROM THE CIT(EXEMPTION) FOR LATE FILING PF FORM 10BB. SINCE, THE ASSESSEE HAS FAILED TO FILE AUDIT REPORT IN FOR M 10BB WITHIN THE STIPULATED TIME, THEREFORE, THE ASSESSMENT MADE BY THE ASSESSING OFF ICER IS UPHELD. GROUNDS OF APPEAL OF THE ASSESSEE ARE DISMISSED. 8.2 ON A PERUSAL OF THE SAME, IT IS SEEN THAT THE RE IS NO DISCUSSION AS TO WHY THE ORDER OF THE CIT(A) PASSED IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WHICH HAS BEE N UPHELD BY ITA 7/CHD/2020 A.Y. 2016-17 PAGE 7 OF 9 THE CO-ORDINATE BENCH WAS NOT CONSIDERED WHILE DECI DING THE ISSUE. A PERUSAL OF THE RECORD SHOWS THAT IN ITA 1397/CHD/ 2018, THE CO- ORDINATE BENCH PROCEEDED TO DECIDE THE ISSUE IN THE FOLLOWING MANNER : 2. THE ASSESSEE SCHOOL IS ENGAGED IN THE ACTIVITIES OF IMPARTING EDUCATION. THE ID. CIT(A) HAS ALLOWED BENEFIT OF EXEMPTION U/S 10(23C)(VI) OF THE ACT TO THE ASSESSEE SCHOOL BY FOLLOWING THE ORDER OF THE TRIBUNAL DATED 22.02.201 7 PASSED IN THE OWN CASE OF THE ASSESSEE IN ITA NO. 528/ASR/2016 DECIDED ALONG WITH OTHER APPEALS WITH THE LEAD CASE TITLED AS 'KANYA MAHAVIDYALA VS. CIT(EXEMPTIONS)'. THE ID. CIT(A) HAS FURTHER MENTIONED THAT EVEN SUBSEQUENT TO THE DECISION OF THE TRIBUNA L DATED 22.02.2017 (SUPRA), HE HAS ALSO ALLOWED THE CLAIM OF THE ASSESSEE FOR A.Y. 201 4-15 VIDE ORDER DATED 14.06.2017. SINCE, THERE IS NO CHANGE IN THE FACTS AND CIRCUMST ANCES, THE ID. CIT(A) FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL (SUPRA) HAS ALLOWED THE CLAIM OF THE ASSESSEE FOR YEAR UNDER CONSIDERATION ALSO. 3. THE ID. DR HAS ALSO FAIRLY AGREE THAT THE ISSUE IS SQUARELY COVERED IN THE CASE OF THE ASSESSEE BY THE ORDER DATED 22.02.2017 (SUPRA) PASSED IN EARLIER ASSESSMENT YEAR. NO CONTRARY DECISION HAS BEEN CITED BEFORE US, WE THER EFORE, DO NOT FIND ANY MERIT IN THE ORDER OF THE ID. CIT(A) IN ALLOWING THE CLAIM OF TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE SAME IS ACCORDINGLY U PHELD. 8.3 THE POSITION ON FACTS AND LAW AS SUMMED UP BY THE LD. AR ARE EXTRACTED HEREUNDER FOR THE SAKE OF COMPLETENESS : DEAR, SIR, THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PUBLIC SCHOOL IMPARTING EDUCATION TO THE STUDENTS FROM NURSERY TO XII TH CLASSES. THE SCHOOL IS AFFILIATED WITH CBSE W.E.F 1-4-2008 AND EVER SINCE TILL TODAY IS RECOGNIZED AND IMPARTING E DUCATION ON THE PATTERN APPROVED BY THE CBSE. THE SCHOOL WAS CLAIMING EXEMPTION U/S 10(23C) (IIIAD) AND IT WAS ALLOWED BY THE DEPARTMENT FOR A.Y 2013-14,2014-15,2015-16. THE A.O DENIED THE EXEMPTION ON THE GROUNDS THAT THE ASSESSEE IS NOT AN INSTITUTION WHICH EXIST S SOLELY FOR EDUCATION PURPOSE AND HAS NOT BEEN REGISTERED U/S 10(23C)(VI).THE CIT (A)REVERSED THE FINDING OF THE A.O IN ALL THE THREE YEARS AND HELD THAT THE ASSESSEE IS AN EDUCATION IN STITUTION ENTITLED TO EXEMPTION U/S 10(23C)(VI), COPIES OF THE CIT(A) ORDERS FOR ALL TH E THREE YEARS ARE PLACED ON PAPER BOOK PAGES NO'S 22 TO 28, 29 TO 35 AND 36 TO 39 RESPECTI VELY. THE APPEALS OF THE DEPARTMENT AGAINST THE ORDER FOR A.Y 2013-14 AND 2014-15 WERE DISMISSE D BY THE ITAT ON TAX EFFECT. HOWEVER THE DEPARTMENT FILED APPEAL FOR A.Y 2015-16 RAISING THE GROUND BEFORE ITAT THAT THE ASSESSEE IS NEITHER REGISTERED U/S 10(23C)(VI) NOR IT EXISTS SO LELY FOR THE PURPOSE OF EDUCATION AND EXISTS FOR OTHER PURPOSES I.E FOR THE MOTIVE OF PROFITS . COPIES OF GROUNDS OF APPEAL ARE ENCLOSED FOR YOUR READY REFERENCE. THE APPEAL OF TH E DEPARTMENT WAS DISMISSED BY THE ITAT VIDE ORDER DATED 9-5-19 PLACED ON PAPER BOOK P AGE NO 45&46.THERE IS A SPECIFIC FINDING THAT THERE ARE NO CHANGES IN THE F ACTS & CIRCUMSTANCES AS COMPARED TO A.Y 14-15. IN THE A.Y 16-17 I.E THE IMPUGNED YEA R THE A.O DESPITE THE SETTLED ITA 7/CHD/2020 A.Y. 2016-17 PAGE 8 OF 9 POSITION BY THE CIT (A) AND THE ITAT AGAIN DISALLOW ED THE EXEMPTION IN PARA 11 OF THE ORDER ON 2 GROUNDS THAT ASSESSEE FAILED TO PROV E THAT IT WAS EXISTING WHOLLY & SOLELY FOR EDUCATION NOT FOR PROFIT AND SECONDLY ON THE GROUND THAT ASSESSEE DID NOT HAVE APPROVAL U/S 10(23C)(VI) OF THE ACT DURING F.Y 15-16. FURTHER THE A.O GAVE PRESUMPTIVE AND UNNECESSARY FINDINGS IN THE PARA 8 & 9 THAT THE ASSESSEE HAD BEEN PAYING LOW SALARIES TO THE TEACHERS AND THE QUALITY OF EDUCATION IS LOW. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) AND ALSO FILED WRITTEN SUBMISSIONS WHICH HAVE BEEN REPRODUCED BY HER IN PARA 3 AND ENT IRE EXPLANATION WAS GIVEN TO CIT(A). FURTHER THE ASSESSEE ALSO FILED THE ORDER O F ITAT FOR A.Y 2015-16 WHICH THE CIT (A) HAS CLEARLY IGNORED. EVIDENCE OF FILLING TH E ORDER OF ITAT ON 18/09/2019 IS ENCLOSED HEREWITH. THE CIT (A) REJECTED THE APPEAL OF THE ASSESSEE DES PITE THE ORDER OF ITAT BY GIVING A FINDING IN THE PARA 4.1 OF THE ORDER THAT THE ASSES SEE WAS AN EDUCATIONAL INSTITUTION FUNCTIONING ON COMMERCIAL PRINCIPLES WITH MISPLACE FOCUS ON MAXIMIZATION OF SURPLUS WHICH IS OUTSIDE THE SCOPE OF CHARITABLE PURPOSE AS DEFINED IN SEC 2(15). THIS FINDING OF CIT(A) IS CONTEMPTUOUS OF NOT FOLLOWING THE ORDE R OF HER PREDECESSOR FOR A.Y 15-16 WHICH WAS DULY CONFIRMED BY THE ITAT. THE SECOND OB SERVATION OF THE CIT (A) THAT FORM NO. 10BB WAS NOT FILED ALONG WITH THE RETURN O F INCOME BY 17/10/2016 AS PRESCRIBED IN PROVISO OF 10(23C)(VI). THE CIT(A) FA ILED TO APPRECIATE THAT ASSESSEE WAS DENIED EXEMPTION BY THE CIT(E) FOR F.Y 14-15 BU T THE EXEMPTION WAS ALLOWED BY ITAT BY REVERSING THE ORDER OF CIT(E) VIDE THEIR OR DER DATED 22/2/17 REFER PAPER BOOK PAGE NO 4. THE ASSESSEE COULD FILED THE FORM 1 0BB ONLY AFTER RECEIVING THIS ORDER OF ITAT WHICH WAS FILED ON 6-6-17 BEFORE THE A.O WHICH WAS NOT CONSIDERED BY THE A.O ON THE GROUND THAT FORM 10BB IS NOT FILED A LONG WITH THE RETURN OF INCOME. IT IS NOT UNDERSTOOD AS TO HOW 10BB COULD BE FILED BEF ORE THE ORDER OF ITAT DATED 22/2/17 ESPECIALLY WHEN THERE IS COLUMN NO 6 IN FOR M 10BB WHICH ASK FOR THE REGISTRATION NUMBER WITHOUT WHICH IT CANNOT BE FILE D REFER TO FORM NO 10BB ON PAGE 1 OF PAPER BOOK. LEGAL POSITION THERE ARE VARIOUS DEDUCTIONS AND EXEMPTIONS UNDER T HE INCOME TAX ACT FOR WHICH AN AUDIT REPORT IS REQUIRED TO BE OBTAINED AND ALSO TO BE FILED ALONG WITH THE RETURN OF INCOME THE SUCH SECTIONS ARE 12A(B) ,80 HHC, 801, 8 0J, 32AB . THE HON'BLE JURISDICTION HIGH COURT AS WELL AS VARI OUS OTHER HIGH COURTS OF THE COUNTRY HAVE CONSISTENTLY GIVEN A FINDING THAT THE FILLING OF THE AUDIT REPORT IS NOT MANDATORY BUT DIRECTORY IN NATURE AND CAN BE FILED TO CLAIM THE EXEMPTION /DEDUCTION AT THE TIME OF ASSESSMENT PROCEEDINGS OR EVEN APPEL LANT PROCEEDINGS. THE A.O CANNOT DENY THE EXEMPTION FOR NON FILLING OF THE AUDIT REP ORT ALONG WITH THE RETURN AND BEFORE PROCESSING OF THE RETURN CAN DIRECT THE ASSESSEE TO FILE THE SAME AS PER THE PROVISIONS OF SEC 139(5) AND 139(9). 8.4 ACCORDINGLY, IN THE LIGHT OF THE FACTS AND POSI TION OF LAW AS ARGUED WHICH STANDS UNREBUTTED, RELYING UPON CONSIS TENCY IN THE ABSENCE OF ANY ARGUMENTS TO THE CONTRARY, THE APPEA L OF THE ITA 7/CHD/2020 A.Y. 2016-17 PAGE 9 OF 9 ASSESSEE IS ALLOWED. SAID ORDER WAS PRONOUNCED AT T HE TIME OF VIRTUAL HEARING ITSELF IN THE PRESENCE OF THE PARTI ES VIA WEBEX. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 29 TH APRIL,2021. SD/- ( !' ) (DIVA SINGH) # / JUDICIAL MEMBER ' ( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR