Srishti Resident Welfare Association, Noida V. ITO, Exemption Ward, Ghaziabad

ITA 7528/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3031 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: S KRISHNA
• Keywords: Charitable institution; Opportunity of being heard; Benefit of exemption
• Section: 271(1)(c); 143(3); 12A; 12AA; 27; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.7528 & 7529/DEL/2018 ASSESSMENT YEARS: 2012-13 & 2014-15 SRISHTI RESIDENT WELFARE ASSOCIATION, T-6/803, PARSVANATH PRESTIGE-II, PLOT NO.2, SECTOR 93A, GHAZIABAD, UTTAR PRADESH. PAN: AAEAS2644D VS. ITO, EXEMPTION WARD, GHAZIABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. KRISHNA, ADVOCATE REVENUE BY : SHRI S.L. ANURAGI, SR.DR DATE OF HEARING : 19.02.2019 DATE OF PRONOUNCEMENT : 27.02.2019 ORDER THE ABOVE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER DATED 30 TH AUGUST, 2018 OF THE CIT(A)-1, NOIDA, RELATING TO A SSESSMENT YEAR 2012-13 AND 2014-15, RESPECTIVELY. FOR THE SAKE OF CONVENI ENCE, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. 2. IN BOTH THE APPEALS, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN LEVYING PENALTY U/S 271(1)(C) OF THE IT ACT ON THE INCOME ENHANCED BY HIM. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A RESIDENT WELFARE ASSOCIATION AND REGISTERED UNDER THE REGISTRAR OF S OCIETIES, MEERUT VIDE CERTIFICATE NO.1573 DATED 25 TH FEBRUARY, 2009. THE ASSESSEE IS ALSO REGISTERED U /S 12AA BY ITA NOS.7528 & 7529/DEL/2018 2 COMMISSIONER OF INCOME TAX, GHAZIABAD VIDE C.NO.57( 03)/REGN.12A/CIT- GZB/2010-11/2545 DATED 26.10.2010. IT FILED ITS RET URN OF INCOME ON 3 RD OCTOBER, 2012 DECLARING NIL INCOME IN THE STATUS OF CHARITAB LE SOCIETY. THE ASSESSING OFFICER, IN THE ORDER PASSED U/S 143(3) ON 27 TH FEBRUARY, 2015, DETERMINED THE TOTAL INCOME AT RS.6,36,590/-. WHILE DOING SO, HE OBSERVED ON PERU SAL OF THE INCOME & EXPENDITURE ACCOUNT THAT THE GROSS RECEIPTS INCLUDES SURPLUS AM OUNT OF RS.6,39,591/- WHICH WAS EARNED FROM COMMERCIAL ACTIVITIES. HE EXAMINED THE OBJECTS OF THE SOCIETY AS PER ITS BYE-LAWS AND NOTED THAT NONE OF THE OBJECTIVES AS N ARRATED IN THE BYE-LAWS OF THE SOCIETY ARE CHARITABLE IN NATURE. RELYING ON THE A MENDED DEFINITION OF CHARITABLE PURPOSES U/S 2(15) OF THE IT ACT W.E.F. 01.04.1999 , HE HELD THAT THE ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY AS PROVIDED U/S 2(15) OF THE ACT AND, THEREFORE, CANNOT BE GIVEN BENEFIT OF EXEMPTION U/S 11 AND 12 AS CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME. HE ACCORDINGLY, DETERMINED THE T OTAL INCOME AT RS.6,36,590/-. SIMILARLY, FOR ASSESSMENT YEAR 2014-15, HE DETERMIN ED THE TOTAL INCOME OF THE ASSESSEE AT RS.33,88,780/-. 4. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) INSTEAD OF GIVING ANY RELIEF TO THE ASSESSEE ISSUED ENHANCEMENT NOTIC E. THE LD.CIT(A) WAS OF THE OPINION THAT THE ASSESSEE HAS WRONGLY CLAIMED REGIS TRATION U/S 12AA OF THE ACT AND, THEREFORE, THE ENTIRE RECEIPT OF THE ASSESSEE SOCIE TY SHOULD BE TREATED AS INCOME OF THE ASSESSEE. HE FURTHER OBSERVED THAT THE ASSESSEE IS NOT ENTITLED FOR THE BENEFIT OF THE DOCTRINE OF MUTUALITY. SINCE, ACCORDING TO HIM, TH E ENTIRE EXPENDITURE OF THE ASSESSEE SOCIETY IS FOR THE BENEFIT OF THE MEMBERS OF THE AS SOCIATION OR PERSONS AND THEIR ITA NOS.7528 & 7529/DEL/2018 3 RELATIVES, THEREFORE, THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 13 OF THE INCOME-TAX ACT. HE ACCORDINGLY ENHANCED THE INCOME OF THE ASSESSEE SOCIETY. 5. SUBSEQUENTLY, THE LD.CIT(A) INITIATED PENALTY PROCE EDINGS U/S 271(1)(C) OF THE IT ACT. REJECTING THE VARIOUS EXPLANATIONS GIVEN B Y THE ASSESSEE AND OBSERVING THAT THE ASSESSEE HAS DELIBERATELY AND WILLFULLY FURNISH ED INACCURATE PARTICULARS OF ITS INCOME AND HAS DELIBERATELY AND WILLFULLY CONCEALED THE PARTICULARS OF ITS INCOME WITH THE INTENTION OF EVADING TAX ON ITS FULL AND CORREC T INCOME LIABLE TO BE TAXED, HE DIRECTED THE ASSESSING OFFICER TO LEVY PENALTY @ 20 0% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE ON THE QUANTUM OF INCOME WHICH WAS ENHANCED BY HIM OVER AND ABOVE THE INCOME ASSESSED BY THE ASSESSING OFFICER AGAINS T THE INCOME RETURNED BY THE ASSESSEE IN ITS RETURN FOR BOTH THE ASSESSMENT YEAR S. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING VARIOUS GROUNDS WHEREIN IT HAS CHALLENGED THE DIRECTION OF THE CIT(A) LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, FI LED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 AND 2014-15 VIDE ITA NO.3028 & 3029/DEL/2018, ORDER DATED 06.11.2018. R EFERRING TO THE ORDER OF THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO PARA 10 OF THE ORDER WHEREIN THE TRIBUNAL HAS SET ASIDE THE OR DER OF THE CIT(A) IN ENHANCING THE INCOME OF THE ASSESSEE. SO FAR AS THE ADDITION MAD E BY THE ASSESSING OFFICER IS CONCERNED, THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. HE ITA NOS.7528 & 7529/DEL/2018 4 ACCORDINGLY SUBMITTED THAT SO FAR AS THE IMPUGNED P ENALTY APPEALS ARE CONCERNED, IT HAS NO LEGS TO STAND SINCE THE TRIBUNAL HAS ALREADY SET ASIDE THE ORDER OF THE CIT(A). 8. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON TH E ORDER OF THE CIT(A). 9. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO CONSID ERED THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMPUGNED ASSESSMENT YEA RS FOR THE QUANTUM PROCEEDINGS. I FIND, AFTER THE INCOME OF THE ASSESSEE WAS ENHANCED BY THE CIT(A) FOR THE IMPUGNED ASSESSMENT YEARS, THE ASSESSEE HAD FILED APPEAL BEF ORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITA NOS.3028 & 3029/DEL/2018, ORDER DATED 06.1 1.2018 FOR ASSESSMENT YEARS 2012-13 AND 2014-15 HAD SET ASIDE THE ORDER OF THE CIT(A) BY OBSERVING AS UNDER:- 10. I HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. I HAVE ALSO GONE THROUGH THE CONTENTS OF THE AFFIDA VIT FILED BY THE SECRETARY OF THE APPELLANT-SOCIETY. THE UNDISPUTED FACT IS THAT THE APPELLANT SOCIETY WAS ENJOYING THE REGISTRATION GRANTED TO IT BY THE CIT(E), GHAZI ABAD U/S 12AA OF THE ACT. I FAIL TO UNDERSTAND HOW CAN THE CIT(A) QUESTION THE AUTHO RITY OF THE CIT(EXEMPTIONS) FOR GRANTING REGISTRATION U/S 12AA OF THE ACT. IT I S FOR THE CIT(EXEMPTIONS) TO DECIDE THE ALLOWABILITY OR OTHERWISE OF THE REGISTR ATION U/S 12A OF THE ACT. IN MY CONSIDERED OPINION, THE CIT(A) SHOULD NOT HAVE MADE ANY OBSERVATION ON THAT ASPECT AND SHOULD HAVE RESTRICTED HIMSELF TO THE IS SUES RAISED BEFORE HIM. AT THE MOST, THE CIT(A) COULD HAVE ENHANCED THE ADDITION M ADE BY THE ASSESSING OFFICER, WHICH IS WITHIN HIS POWERS. BUT BY NO STRE TCH OF IMAGINATION IT CAN BE ACCEPTED THAT THE FIRST APPELLATE AUTHORITY IS MAKI NG ENHANCEMENT WHILE COMMENTING ON THE POWERS OF THE CIT(EXEMPTIONS).IN MY HUMBLE OPINION, THE FIRST APPELLATE AUTHORITY HAS CROSSED HIS POWERS IN DECIDING THE APPEAL AND, THEREFORE, HIS FINDINGS HAVE TO BE SET ASIDE. I DIR ECT ACCORDINGLY. 11. COMING TO THE ACTION OF THE ASSESSING OFFICER, I FIND THAT THE ASSESSING OFFICER HAS DOUBTED THE SURPLUS RS. 6,36,591/-WITHO UT EXAMINING EACH AND EVERY ITEM OF INCOME. I, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO EXAMINE EACH A ND EVERY ITEM OF INCOME AND DECIDE THE ISSUES AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE ENHANCEMENT IS SET A SIDE AND THE ORDER OF THE ASSESSING OFFICER IS RESTORED BACK TO HIS FILE. ITA NOS.7528 & 7529/DEL/2018 5 10. ADMITTEDLY, THE ORDER OF THE TRIBUNAL CAME AFTE R THE PENALTY WAS LEVIED BY THE CIT(A) U/S 271(1)(C) OF THE IT ACT FOR BOTH THE YEA RS. SINCE THE TRIBUNAL HAS SET ASIDE THE ORDER OF THE CIT(A), THEREFORE, THE VERY BASIS ON WHICH THE PENALTY WAS LEVIED BY THE CIT(A) DOES NOT SURVIVE. THEREFORE, THE PENALT Y LEVIED BY THE CIT(A) IS DIRECTED TO BE DELETED. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 7.02.2019. SD/- ( R.K. PANDA) ACCOUNTANT MEMFBE R DATED: 27 TH FEBRUARY, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI