SENGUNTHA MUDALIAR KALYANA MANDAPAM, SALEM V. ITO, EXEMPTION WARD, SALEM

ITA 80/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3813 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 09-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Keywords: Depreciation; Period of limitation; Set aside
• Section: 143(3); 12A; 143(1); 147; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNALA(SMC) BENCH: CHENNAI (CAMP AT COIMBATORE) . . . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ./ I.T.A.NOS.78, 79, 80, 81 & 82/CHNY/2019 ( / ASSESSMENT YEARS: 2010-11 TO 2014-15) M/S. SENGUNTHA MUDALIAR KALYANA MANDAPAM, NO.222, TVK ROAD, AMMAPET, SALEM 636 007. VS INCOME TAX OFFICER, EXEMPTION WARD, SALEM. PAN: AAAAS 2160C ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI G.BASKAR, ADVOCATE / RESPONDENT BY : SHRI A.R.V. SREENIVASAN, ADDL. CIT /DATE OF HEARING : 03.02.2020 !' /DATE OF PRONOUNCEMENT : 03.02.2020 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE FIVE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX (AP PEALS), SALEM DATED 24.10.2018 & 29.10.2018 AND PERTAINS TO THE A SSESSMENT YEARS (AYS) 2010-11 TO 2014-15. 2 ITA NOS.78 TO 82/CHNY/2019 ITA NO.78/CHNY/2019 FOR ASSESSMENT YEAR 2010-11 : 2. SHRI G.BASKAR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER REOPENED ASSESSMENT BEYOND TH E STATUTORY PERIOD OF FOUR YEARS. THERE IS NOT EVEN WHISPER IN THE ASSES SMENT ORDER THAT THERE WAS NEGLIGENCE ON THE PART OF THE ASSESSEE IN DISCL OSING THE ENTIRE DETAILS FOR THE ASSESSMENT. THEREFORE, THE REOPENING OF TH E COMPLETE ASSESSMENT BEYOND THE PERIOD OF FOUR YEARS IS NOT JUSTIFIED. 3. ON THE CONTRARY, SHRI A.R.V. SREENIVASAN, THE LD . DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS NOT RAISED THAT THE ISSUE OF LIMITATION IN REOPENING THE ASSESSMENT EITHER BE FORE THE AO OR BEFORE THE LD. CIT(A) AND HE HAS NO RECORDS TO ARGUE THE C ASE. 4. HAVING HEARD THE LD. COUNSEL FOR THE ASSESSEE AN D THE LD. DEPARTMENTAL REPRESENTATIVE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT REOPENING OF THE ASSESSMENT BEYOND THE STATUTO RY LIMIT OF FOUR YEARS GOES TO THE ROOT OF THE MATTER, THEREFORE IT IS NOT NECESSARY EITHER FOR THE ASSESSEE OR TO THE DEPARTMENT TO RAISE THE ISSUE BE FORE THIS TRIBUNAL. EVEN THOUGH THERE WAS NO NECESSITY FOR RAISING THIS ISSUE OF LIMITATION, THIS TRIBUNAL IS EXPECTED TO RECORD A FINDING WHETHER TH E ASSESSMENT WAS REOPENED WITHIN THE PERIOD OF LIMITATION. IN THIS C ASE, THE ASSESSEE HAS 3 ITA NOS.78 TO 82/CHNY/2019 TAKEN A SPECIFIC GROUND BEFORE THIS TRIBUNAL AS 2.1 SAYING THAT THE ASSESSMENT WAS REOPENED U/S. 147 OF THE ACT BEYOND FOUR YEARS. AS RIGHTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESE E THERE WAS NOT EVEN A WHISPER IN THE ASSESSMENT ORDER THAT THE ASSESSEE F AILED TO DISCLOSE THE ENTIRE DETAILS REQUIRED FOR COMPLETION OF THE ASSES SMENT. IT IS NOT IN DISPUTE THAT THE ASSESSMENT WAS REOPENED BEYOND FOU R YEARS PERIOD. THEREFORE, THIS ASSESSMENT IS BARRED BY LIMITATION UNDER PROVISO TO S.147 OF THE ACT. THEREFORE, THE ORDERS OF BOTH THE AUTHORIT IES BELOW ARE SET ASIDE AND THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.78/CHNY/2019 FOR ASSESSMENT YEAR 2010-11 STANDS ALLOWED. ITA NOS.79, 80, 81 & 82/CHNY/2019 FOR AYS 2011-12 T O 2014-15 : 6. IN ITA NO.79/CHNHY/2019 FOR ASSESSMENT YEAR 2011 -12 SHRI G. BASKAR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT WAS REOPENED WITHIN FOUR YEARS. THE RETURN WAS PROCESS ED U/S. 143(1) OF THE ACT AND THERE WAS NO ORDER U/S. 143(3) OF THE ACT. REF ERRING TO THE MERIT OF THE CASE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE ASSESSEE IS RUNNING KALYANA MANDAPAM. ONE OF THE OBJECTS OF THE ASSESSEE IS TO ESTABLISH AND MAINTAIN KALYANA MANDAPAM APART FROM OTHER OBJECTS INCLUDING ESTABLISHING AND MAINTENANCE OF CREMATION GROUND, D ONATIONS TO THE STUDENTS, RECREATION ETC. ON A QUERY FROM THE BENC H HOW RUNNING A KALYANA 4 ITA NOS.78 TO 82/CHNY/2019 MANDAPAM WOULD BE A CHARITABLE ACTIVITY U/S. 2(15) OF THE ACT, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E CHARGING VERY NOMINAL AMOUNT FROM THE GENERAL PUBLIC, THEREFORE, IT HAS T O BE CONSIDERED AS CHARITABLE ACTIVITY. REFERRING TO THE ISSUE OF DEP RECIATION, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS NOT ENT ITLED FOR DEPRECIATION IN CASE EXEMPTION WAS GRANTED U/S. 11 OF THE ACT, IF T HE EXEMPTION U/S. 11 OF THE ACT WAS NOT GRANTED, THE ASSESSEE MAY BE ENTITLED F OR DEPRECIATION. 7. ON THE CONTRARY, SHRI A.R.V. SREENIVASAN, THE LD . DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE MAIN OBJECT OF TH E ASSESSEES TRUST IS RUNNING KALYANA MANDAPAM, WHICH CANNOT NOT BE CONST RUED AS CHARITABLE ACTIVITY. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT. REFERRING TO S. 11(6) OF THE ACT, THE LD. COU NSEL SUBMITTED THAT THE SUPREME COURT HELD THAT THIS PROVISION IS PROSPECTI VE IN NATURE THEREFORE, NOT APPLICABLE FOR EARLIER ASSESSMENT YEARS. 8. HAVING HEARD THE LD. COUNSEL FOR THE ASSESSEE AN D THE LD. DEPARTMENTAL REPRESENTATIVE, THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT ESTABLISHING AND RUNNING KALYANA MANDAPAM IS N OT A CHARITABLE ACTIVITY. IT IS PURELY A COMMERCIAL ACTIVITY. THE REFORE, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S. 11 OF THE ACT. THE MA TTER WOULD STAND DIFFERENT, IN CASE ESTABLISHING KALYANA MANDAPAM IS AN ANCILLA RY OBJECT FOR SECURING 5 ITA NOS.78 TO 82/CHNY/2019 FUNDS TO CARRY OUT CHARITABLE ACTIVITY. IN THE CAS E ON HAND, ESTABLISHING KALYANA MANDAPAM IS ONE OF THE MAIN OBJECT. ESTABL ISHING KALYANA MANDAPAM BEING ONE OF THE MAIN OBJECT MAY NOT BE A CHARITABLE ACTIVITY. MERE REGISTRATION OF U/S. 12A OF THE ACT MAY NOT EN TITLE THE ASSESSEE TO CLAIM EXEMPTION. AT THE BEST, REGISTRATION U/S. 12 A OF THE ACT IS ONLY TO IDENTIFY THE ENTITY. THE ASSESSEE APART FROM REGIS TRATION U/S. 12A OF THE ACT, HAS TO ESTABLISH THAT IT IS ENGAGED IN THE CHA RTABLE ACTIVITY. SINCE NO CHARITABLE ACTIVITY IS CARRIED ON BY THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT ELIGIBL E FOR EXEMPTION U/S. 11 OF THE ACT. ACCORDINGLY, THE ORDERS OF THE LOWER A UTHORITIES ARE CONFIRMED AND ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE IN ITA NOS.79, 80, 81 & 82/CHNY/2019 FOR ASSESSMENT YEARS 2011-12 TO 2014 -15 STAND DISMISSED. HOWEVER, ITA NO.78/CHNY/2019 STANDS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD FEBRUARY, 2020 AT CHENNAI (CAMP AT COIMBATORE). SD/- ( (( ( . .. . . .. . . . . . ) )) ) (N.R.S. GANESAN) / JUDICIAL MEMBER /CHENNAI, /DATED, THE 03 RD FEBRUARY, 2020. EDN, SR. PS 6 ITA NOS.78 TO 82/CHNY/2019 #$ %& '& /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ( )/CIT(A) 4. ( /CIT 5. &)* + /DR 6. *, - /GF