State Innovation in Family Planning Services Project Agency, Lucknow V. Income Tax Officer-2(iii), Lucknow

ITA 763/LKW/2014

• Counselvise Citation: 76323714 RSA 2014
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK MISHRA
• Keywords: Principle of natural justice
• Section: 143(3); 12; 10; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.763/LKW/2014 ASSESSMENT YEAR:2010 - 11 INCOME TAX OFFICER - 2(III), LUCKNOW. VS STATE INNOVATION IN FAMILY PLANNING SERVICES PROJECT AGENCY, 19 - A, OM KAILASH TOWER, LUCKNOW. PAN:AABTS4498M (RESPONDENT) (APPELLANT) SHRI S. C. DIXIT, ADVOCATE APPELLANT BY SHRI VIVEK MISHRA, C.I.T., D. R. RESPONDENT BY 18/11/2014 DATE OF HEARING 07 / 01 /201 5 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 18/09/2014 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE THE IMPUGNED ORDERS DATED 18.09.2014 AND 17.05.2013 PASSED BY THE BOTH AUTHORITY AGAINST AS PER REQUIREMENT PROVISION OF PROVISO 1ST OF CLAUSE (II) OF SUB SECTION 3 OF SECTION 143 OF THE INCOME TAX ACT. THE IMPUGNED ORDER DATED 18.09.2014 AND AS WELL AS ORDER DATED 17.05.2013 PASSING IN PURSUANCE THERE OF DESERVES TO BE QUASHED AS VOID AB INITIO. 2. BECAUSE THE LEARNED BOTH AUTHORITY HAS ERRED IN FACTS AND IN LAW IN COMPUTING THE INCOME AT HIGHER AMOUNT RS.15,58,3 79/ - AS AGAINST THE RETURN TOTAL INCOME OF RS. NIL. 2 3. BECAUSE THE IMPUGNED ORDER HAS PASSED BY THE BOTH LOWER AUTHORITY AGAINST FACTS OF THE CASE WHICH WAS SUBMITTED BY THE APPELLANT. 4. BECAUSE THE PROJECT GRANT AGREEMENT (PGA) DATED 3 0.09.1992 AS HAD BEEN ENTERED INTO BETWEEN THE PRESIDENT OF INDIA AND US AID WAS NOT AN 'AGREEMENT' SIMPLICITOR AS HAS BEEN OBSERVED AND HELD BY THE ASSESSING OFFICER BUT HAS THE STATUS OF AN 'INTERNATIONAL TREATY' BETWEEN THE TWO SOVEREIGN STATES HAVING O VERRIDING EFFECT ON THE TAX - LAWS OF THIS COUNTRY AND IN THIS VIEW OF THE MATTER, THE 'APPELLANT' OBJECTS TO THE 'INCOME ASSESSED' AND TAX AMOUNTING TO RS.66940850/ - LEVIED THEREON IT IN TERMS OF ASSESSMENT ORDER DATED 17.05.2013 BASES UNDER SECTION 143 (3) /154 OF INCOME TAX ACT. 5. BECAUSE MERELY FOR THE REASON THAT THE 'APPELLANT' HAD ADDITIONALLY SOUGHT FOR REGISTRATION UNDER SECTION 12 A FROM CIT AND APPROVAL UNDER SECTION 10 (23C) (IV) FROM CC I T, LUCKNOW (WHICH HAD BEEN GRANTED ALSO BY THE AUTHORITIES CONCERNED), ITS CLAIM FOR EXEMPTION BASED ON THE 'INTERNATIONAL TREATY' AS AFORESAID CANNOT BE SAID TO HAVE BEEN DEFEATED AND THE 'ASSESSING OFFICER' ACTED ERRONEOUSLY, IN NOT GRANTING FULL EXEMPTION TO THE 'APPELLANT', IN TERMS OF SAID 'TREATY' ITSELF. 6 . BECAUSE 'ASSESSING OFFICER' AS WELL AS LOWER APPELLATE AUTHORITY HAS ERRED IN LAW AND ON FACTS IN MAKE A ADDITION FOR THE AMOUNT IN RS. 15,58,53,973/ - TO THE INCOME OF 'APPELLANT' ON THE BASES OF WRONG THE INTERPRETATION OF THE PROVISIONS OF UNDER SECTION 1 1 (3)(C) AND AGAINST PROVISION U/S 143(3) OF THE INCOME T AX ACT. WITHOUT CONSIDERING THE FACTS SUBMITTED BY THE APPELLANT. 7. BECAUSE THE 'ASSESSING OFFICER' AS WELL AS COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN FACTS AND IN LAW IN COMPUTING THE IN COME AT RS.15,58,53,973/ - AS AGAINST THE RETURN TOTAL INCOME OF NIL. THE SAID ADDITION IS TOTALLY AGAINST PROVISIONS OF LAW U/S 143(3) OF IT ACT AND NATURAL JUSTICE. 3 8. BECAUSE THE 'ASSESSING OFFICER' HAS ERRED IN LAW AND ON FACTS IN ( A ) P RESUMING THAT THERE WAS ACCUMULATED INCOME OF RS. 15,58,53,973/ - AT THE END OF THE FINANCIAL YEARS 2002 - 03. ( B ) SUCH AN ACCUMULATED INCOME REMAINED UTILIZED TILL FINANCIAL YEAR 2008 - 09 (RELEVANT TO THE ASSESSMENT YEAR 2009 - 10) ( C ) SUCH UNUTILIZED ACCUMULATED INCOME IS CHARGEABLE TO T AX AS PER SECTION 1 1(3)(C) IN THE 'PRECIOUS YEAR 2009 - 10'AND IN SUBJECTING THE 'APPELLANT' TO TAXATION ON THE SAID SUM IN THE ASSESSMENT YEAR 2010 - 11, THE YEAR UNDER APPEAL, BY INVOKING THE PROVISIONS OF SECTION 11(3)(C). 9. BECAUSE CLAUSE (C) OF SUB SEC TION (3) OF SECTION 11 MERELY REFERS TO INCOME REMAINING UNUTILIZED 'FOR THE PURPOSE FOR WHICH IT IS SO ACCUMULATED OR SET APART' BUT THE SAME BEING NOT COVERED BY THE 'CHARGING PART' OF SUB SECTION (3) GIVEN AFTER CLAUSE (D) THEREOF, THE APPELLANT COULD N OT HAVE BEEN SUBJECTED TO ASSESSMENT ON THE SAID SUM OF RS. 155853973/ - . 10. BECAUSE ON A CORRECT AND CONJOINT READING OF SUB SECTION (2) & (3) OF SECTION 11 OF THE ACT. THE SURPLUS AT THE END OF THE FINANCIAL YEAR 2002 - 03 INCLUDED SURPLUS FOR EARLIER YEAR ALSO, STOOD FULLY UTILIZED DURING THE NEXT FIVE THE ASSESSING OFFICER TO HOLD THAT THE SUM REMAINED UNUTILIZED BY THE END OF THE 5 TH YEAR I.E. FINANCIAL YEAR 2008 - 09 AND IN SUBJECTING THE SAME TO ASSESSMENT IN THE ASSESSMENT YEAR 2010 - 1 1 (YEAR UNDER APPE AL). 11. BECAUSE EVEN IF THE SUM OF RS.15585397 3 / - BE TREATED TO BE AN ACCUMULATION AT THE END OF THE FINANCIAL YEAR 2002 - 03, THEN ALSO THE CONSEQUENCES THAT FOLLOW ARE, THAT ( A ) THE SAID SUM STOOD FULLY UTILIZED MUCH BEFORE EXPIRY OF A PERIOD OF FIVE YEAR; AND ( B ) IN ANY CASE THE SAME COULD NOT HAVE BEEN SUBJECTED TO ASSESSMENT IN THE PREVIOUS YEAR 2009 - 10 RELEVANT TO THE ASSESSMENT YEAR 2010 - 11 (YEAR UNDER APPEAL) 12. BECAUSE THE CASE OF THE 'APPELLANT' IS NOT COVERED UNDER SECTION 11(3)(C) OF THE INCOME TAX ACT, THE 'ASSESSING 4 OFFICER' HAS PASSED ORDER UNDER SECTION 154 OF INCOME TAX ACT AND REJECTED THE MAIN ISSUE, WHICH WAS SUBMITTED BY THE 'APPELLANT'. 13. BECAUSE GRANT RECEIVED TO THE APPELLANT ISSUED BY THE US AID AS PER AGREEMENT. THE GRANT CANNOT ACCUMULATE AT THE END OF THE FINANCIAL YEAR AS PER PRINCIPAL OF STANDARD ACCOUNTING REMAINING GRANT END OF THE FINANCIAL YEAR AUTOMATICALLY CARRY FORWARD TO THE NEXT FINANCIAL YEAR, THIS RELEVANT POINT HAS NOT CONSIDER BY THE BOTH LOWER AUTHORITY AT THE TIME OF PASSING IMPUGNED ORDERS. 14. BECAUSE WHOLLY WITHOUT PREJUDICE TO THE CONTENTIONS RAISED VIDE GROUND NOS. 2 TO 12 HEREINAFTER, THE 'APPELLANT' IS ENTITLED FOR EXEMPTION UNDER SECTION 10 (23C) (IV) ALSO, AS IT STOOD APPROVED THERE UNDER RIGHT UP TO THE ASSESSMENT YEAR 2011 - 12 IN TERMS OF THE CONSOLIDATION ORDER DATED 23 RTL1 JULY, 2008 AS PASSED BY THE LEARNED CHIEF COMMISSIONER ON INCOME TAX, LUCKNOW. 15. B ECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO FACTS, LAW AND PRINCIPALS OF NATURAL JUSTICE. 16. BECAUSE IN RELATION TO THE GROUNDS OF APPEAL TAKEN HEREINAFORE, THE 'APPELLANT' BEGS TO REFER AND RELY UPON THE AVERMENTS THAT HAVE BEEN MADE IN THE STATEME NT OF FACTS ACCOMPANYING THE MEMO OF APPEAL ITSELF. 17. BECAUSE THE ORDER PASSES BY THE LEARNED BOTH LOWER AUTHORITY ARE WITHOUT OPPORTUNITY AND BAD IN LAW ADDITION IS NOT SUSTAINABLE IS LIABLE TO BE DELETED. IN THE INTEREST OF THE JUSTICE. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT AS PER PROVISO TO SUB SECTION (3) OF SECTION 143, THE ASSESSING OFFICER CANNOT PASS AN ORDER UNDER THIS SECTION WITHOUT GIVING EFFECT TO THE PROVISION OF SECTION 10 UNLESS THE APPROVAL GRANTED TO THE AS SESSEE HAS BEEN WITHDRAWN OR NOTIFICATION ISSUED IN RESPECT OF SUCH NEWS AGENCY OR FUND OR TRUST OR INSTITUTION HAS BEEN RESCINDED. HE SUBMITTED THAT IN THE PRESENT CASE, THIS REQUIREMENT HAS NOT BEEN FULFILLED AND THEREFORE, ASSESSMENT ORDER PASSED BY TH E ASSESSING OFFICER 5 DESERVES TO BE QUASHED AS VOID AB INITIO. HE PLACED RELIANCE ON A JUDGMENT OF HON'BLE KERALA HIGH COURT RENDERED IN THE CASE OF CIT VS. JANATHA STEEL MILLS P. LTD. [2007] 294 ITR 668 (KER) AND ON ANOTHER JUDGMENT OF HON'BLE KERALA HIGH COURT RENDERED IN THE CASE OF CIT VS. KESARIA TEA CO. LTD. [1998] 233 ITR 700 (KER). 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. W E FIND THAT IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON 30/03/2013 U/S 143(3) OF THE ACT, IT IS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT FURNISHED THE YEAR - WISE BREAK - UP OF ACCUMULATED INCOME OF RS.52,00,45,745/ - AND THEREFORE, HE PRESUMED THAT THE ENTIRE ACCUMULATION OF INCOME IS IN RESPECT OF ASSESSMENT YEAR 2002 - 03 WHICH SHOULD HAVE BEEN UTILIZED TILL FINANCIAL YEAR 2008 - 09 AND BECAUSE THE ASSESSEE HAS NOT UTILIZED THIS ACCUMULATION, HE HAS MADE ADDITION OF THIS AMOUNT. IN PARA 9 OF THE ASSESSMENT ORDER, IT IS OBSERVE D BY THE ASSESSING OFFICER THAT THIS ADDITION IS OPEN TO RECTIFICATION IF THE ASSESSEE FURNISHES THE YEAR WISE BREAK - UP OF ACCUMULATED INCOME OF RS.52,00,45,745/ - ALONG WITH SUPPORTING ACCOUNTS AND OTHER REQUIRED DOCUMENTS IN THE RECTIFICATION APPLICATION FILED BY THE ASSESSEE U/S 154 OF THE ACT. IN THE PROCEEDINGS U/S 154, THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS BEFORE THE ASSESSING OFFICER AS HAS BEEN NOTED BY THE ASSESSING OFFICER IN THE IMPUGNED ORDER PASSED U/S 154 AND HE HAS NOTED THAT AS PER THES E WRITTEN SUBMISSIONS AND THE CHART SUBMITTED ALONG WITH THESE WRITTEN SUBMISSIONS, IT IS SUBMITTED BY THE ASSESSEE THAT THE ACCUMULATED INCOME PERTAINING TO FINANCIAL YEAR 2002 - 03 IS RS. 5,58,53,973/ - AND THE BALANCE ACCUMULATED INCOME OF RS.3,64,19,402/ - PERTAINS TO ASSESSMENT YEAR 2003 - 04. ACCORDINGLY, THE ASSESSING OFFICER GRANTED RELIEF TO THE ASSESSEE AND REDUCED THE ASSESSED INCOME TO THE EXTENT OF RS.5,58,53,973/ - BEING ACCUMULATED INCOME IN FINANCIAL YEAR 2002 - 03 AS HAS BEEN SUBMITTED BY THE 6 ASS ESSEE AS PER WRITTEN SUBMISSIONS IN COURSE OF PROCEEDINGS U/S 154 OF THE ACT. REGARDING THE ISSUE RAISED BY THE ASSESSEE IN THESE PROCEEDINGS BEING THE CHARGEABILITY OF TAX ON SUCH UNUTILIZED ACCUMULATED INCOME, IT IS OBSERVED BY THE ASSESSING OFFICER THA T THIS ISSUE IS OUTSIDE THE SCOPE OF RECTIFICATION PROCEEDINGS U/S 154 OF THE ACT. THE CIT(A) HAS ALSO HELD THAT THIS ISSUE RAISED BY THE ASSESSEE IN THE RECTIFICATION PETITION CANNOT BE DECIDED IN THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154. BEFOR E US ALSO, THE APPEAL IS PENDING IN RESPECT OF THESE PROCEEDINGS U/S 154 AND NO SEPARATE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE MAIN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT. WE ARE IN AGREEMENT WITH THE FINDINGS OF THE AUTHO RITIES BELOW THAT THIS ISSUE RAISED BY THE ASSESSEE IN THE RECTIFICATION PETITION U/S 154 THAT THIS ACCUMULATED INCOME NOT UTILIZED AS PER LAW IS TAXABLE OR NOT CANNOT BE DECIDED IN THE PROCEEDINGS U/S 154 OF THE ACT. 6. REGARDING THE ARGUMENT OF LEARNED A.R. OF THE ASSESSEE THAT THERE IS NO ACCUMULATION OF INCOME U/S 11 AND THIS ENTIRE RECEIPT IS AS PER THE AGREEMENT WITH PRESIDENT OF INDIA, THROUGH MINISTRY OF FINANCE, NEW DELHI AND THEREFORE, NO PART OF THIS INCOME CAN BE TAXED, WE ARE OF THE CO NSIDERED OPINION THAT SUCH A CONTENTION CANNOT BE EXAMINED AND DECIDED IN THE PROCEEDINGS U/S 154. 7. REGARDING THIS ARGUMENT OF LEARNED A.R. OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS NOT MADE ASSESSMENT AS PER THE PROVISO TO SECTION 143(3), WE ARE OF THE CONSIDERED OPINION THAT AS PER THE FIRST PROVISO TO SECTION 143(3), THE ASSESSING OFFICER CANNOT DENY BENEFIT U/S 10 WITHOUT INTIMATING THE CENTRAL GOVERNMENT BUT WE FIND THAT IN THE PRESENT CASE , THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ON T HIS BASIS. T HE ASSESSING OFFICER HAD MADE ADDITION ON THE BASIS THAT THERE IS VIOLATION OF REQUIREMENT OF SECTION 11(2) AND 11(3) . HENCE, THIS ARGUMENT OF LEARNED A.R. OF THE ASSESSEE IS NOT RENDERING ANY HELP TO THE ASSESSEE. AS PER THE ASSESSMENT 7 ORD ER DATED 30/03/2013, IT IS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT FURNISHED YEAR - WISE BREAK - UP OF ACCUMULATED INCOME OF RS.52,00,45,745/ - AND THEREFORE, THE ASSESSING OFFICER PRESUMED THAT THE SAME IS ACCUMULATED INCOME FOR ASSESSMENT YEAR 2002 - 03 AND ACCORDINGLY THE SAME IS CHARGEABLE TO TAX IN THE PRESENT YEAR BECAUSE THE SAME REMAINED UNUTILIZED TILL FINANCIAL YEAR 2008 - 09. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ADDITION IS OPEN TO RECTIFICATION IF THE ASSESSEE FURNISHED YEAR - WISE BREAK - UP OF ACCUMULATED INCOME ALONG WITH THE SUPPORTING ACCOUNTS AND DOCUMENTS. WHEN THE ASSESSEE FURNISHED THE YEAR - WISE BREAK - UP OF SUCH ACCUMULATED INCOME, THE ASSESSING OFFICER IN THE IMPUGNED ORDER PASSED BY HIM ON 17/05/2013 U/S 154 OF THE AC T HAS ALLOWED RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.36,41,91,502/ - BECAUSE IT WAS SHOWN BY THE ASSESSEE THAT THIS MUCH ACCUMULATION IS PERTAINING TO ASSESSMENT YEAR 2003 - 04 AND RESTRICTED THE ADDITION OF RS.5,58,53,973/ - . IN OUR CONSIDERED OPINION, I F THERE IS ANY CALCULATION MISTAKE IN THE RELIEF ALLOWED BY THE A.O. IN HIS ORDER /S 154 , THE SAME CAN BE CHALLENGED BY THE ASSESSEE BY FILING APPEAL AGAINST THIS ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE ACT BUT IN THE PRESENT APPEAL, THE ASSES SEE IS NOT RAISING ANY ISSUE ABOUT THE COMPUTATION OF THE AMOUNTS DONE BY THE ASSESSING OFFICER IN THE IMPUGNED ORDER. THE CASE OF THE ASSESSEE IS THAT NO SUCH ADDITION IS CALLED FOR BECAUSE THERE IS NO ACCUMULATION OF INCOME BY THE ASSESSEE. IN OUR CONS IDERED OPINION, THIS ISSUE CAN BE RAISED IN APPEAL AGAINST THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT DATED 30/03/2013 AND NOT IN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154 ON 17/0 5/2013. THEREFORE, WE DO NOT FIND ANY MERIT IN THIS CONTENTION RAISED BY LEARNED A.R. OF THE ASSESSEE AND WE ALSO DO NOT FIND ANY MERIT IN THE VARIOUS GROUNDS OF THE ASSESSEE BECAUSE THE SAME DO NOT ARISE OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER U /S 154 OF THE ACT. IN PROCEEDINGS U/S 154, THE SCOPE IS VERY LIMITED I.E. AN APPARENT MISTAKE CAN BE RECTIFIED IN AN ORDER 8 PASSED U/S 154. SINCE THE ISSUE INVOLVED HERE IS THIS THAT THERE IS ACCUMULATION OF INCOME OR NOT, IT IS NOT AN APPARENT MISTAKE IN THE ASSESSMENT ORDER AND HENCE , THE SAME CANNOT BE DISPUTED AND DECIDED IN THE PROCEEDINGS U/S 154. THE JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE ARE ALSO NOT RENDERING ANY HELP TO THE ASSESSEE. HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A ). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 07 / 01 /201 5 . *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