Sanatan Dharam Shiksha Samittee, Haryana V. ITO (Exemptions), Rohtak

ITA 871/DEL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3195 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 15-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Charitable institution; Audit objection; Tangible material; Speculation loss; Difference of opinion; Competent authority; Condonation of delay; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 234B; 143(1); 147; 148

Judgement Text

SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 1 OF 18 , , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . .. . . .. . ./ ././ ./ I.T.A NO.871/DEL/2017 / ASSESSMENT YEAR: 2010-11 SANATAN DHARAM SHIKSHA SAMITTEE, C/S. S. D. PUBLIC SCHOOL, NARWANA, DISTT. JIND, HARYANA- 126116. [PAN: AAETS 6172 P] V S. INCOME TAX OFFICER (EXEMPTION), ROHTAK. / APPELLANT !' /RESPONDENT /ASSESSEE BY MS. RANO JAIN , ADVOCATE , MS. MANSI JAIN CA AND PRANSHU SINGHAL CA /REVENUE BY SHRI S. S. R ANA C IT (D.R.) / DATE OF HEARING: 0 6 . 11 .2019 #$%& '() /PRONOUNCEMENT ON: 1 8 . 1 1 .2019 /O R D E R PER O.P.MEENA, AM: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), ROHTAK, DATED 25.10.2016 FOR THE ASSESSMENT YEAR 2010-11. 2. CONDONATION OF DELAY IN FILING OF APPEAL BEFORE THE TRIBUNAL: 3. AT THE OUTSET, THE LD.COUNSEL SUBMITTED THAT THERE WAS DELAY OF 41 DAYS IN FILING OF THE APPEAL BEFORE THE TRIBUNAL . AS THE APPEAL SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 2 OF 18 ORDER WAS RECEIVED ON 02.11.2016 AGAINST WHICH THE APPEAL WAS TO BE FILED WITHIN THE STATUTORY PERIOD, HOWEVER, THE SAM E HAS BEEN FILED ON 15.02.2017. THEREFORE, THERE IS DELAY BY 41 DAYS I N FILING OF THE APPEAL. THE ASSESSEE IN ITS PETITION STATED THAT TH E ASSESSEE TRUST HAS RECEIVED THE APPEAL ORDER ON 02.11.2016 AND HANDED OVER THE SAME TO ONE OF THE CLERKS WORKING ON THE OFFICE OF ITS C HARTERED ACCOUNTANT TO DRAFT THE APPEAL TO BE FILED BEFORE THE ITAT. H OWEVER, THE SAID CLERK KEPT THE ABOVE ORDER IN HIS DRAWER AND FORGET TO FI LE THE APPEAL IN THE ABOVE-MENTIONED CASE. LATER ON, WHEN THE ASSESSEE E NQUIRED FROM ITS CHARTERED ACCOUNTANT REGARDING THE STATUS OF HIS AP PEAL TO BE FILED BEFORE THE ITAT, IT CAME IN THE LIGHT THAT AT THAT THE CLERK TO WHOM THE ORDER WAS HANDED OVER HAS NOT FILED THE APPEAL AGAI NST THE ORDER OF THE LD.CIT(A). THEREAFTER, THE APPELLANT HAS TAKEN IMMEDIATE STEPS AND FILED THE APPEAL BEFORE THE ITAT WITH 41 DELAY. THUS, THE DELAY HAS BEEN CAUSED DUE TO UNAVOIDABLE CIRCUMSTANCES AN D BEYOND THE CONTROL OF THE ASSESSEE. THEREFORE IT WAS REQUESTED THAT THE DELAY IN FILING OF THE APPEAL MAY BE CONDONED AS IT WAS UNIN TENTIONAL AND BEYOND THE CONTROL OF THE ASSESSEE. 4. THE LD. CIT (DR) DID NOT SERIOUSLY OPPOSED THE COND ONATION OF THE DELAY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A SETTLED LAW THAT THE COURTS AS QUASI-JUDICIAL SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 3 OF 18 BODIES ARE EMPOWERED TO CONDONE THE DELAY, IF THE L ITIGATION SATISFIES THE COURT THAT THERE WERE SUFFICIENT REASONS FOR AV AILING THE REMEDY AFTER THE EXPIRY OF THE LIMITATIONS. SINCE, THE AS SESSEE TRUST IN HAD HANDED OVER THE ORDER OF CIT (A) TO THE CLERK OF CH ARTERED ACCOUNTANT FOR FILING OF APPEAL, BUT THAT CLERK FROM THE OFFIC E OF CHARTERED ACCOUNTANT HAS FORGOTTEN TO TAKE APPROPRIATE ACTION IN THE MATTER WITHIN THE TIME. IT WAS ONLY WHEN THE ASSESSEE CONT ACTED TO ITS CHARTERED ACCOUNTANT, THIS FACTS WAS NOTICED AND AP PEAL WAS FILED WITH 41 DAYS OF DELAY. WE FIND THAT THE EXPLANATIO N PROVIDED BY THE ASSESSEE IS SATISFACTORY AND REASONABLE AND THERE W AS NO MALAFIDE INTENTION OR NEGLIGENCE ON THE PART OF THE ASSESSEE IN FILING OF THE APPEAL. THEREFORE, WE CONDONED THE DELAY OF 41 DAY S IN FILING OF APPEAL AND ALLOW THE APPEAL BE ADMITTED FOR DECISIO N ON MERIT. 6. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND LD. AO IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. THAT THE LD. AO HAS ERRED BOTH IN THE EYES OF LA W AND FACTS OF THE CASE WHILE ISSUING THE NOTICE U/S 148 ON THE BASIS OF AU DIT OBJECTION, WITHOUT INDEPENDENT APPLICATION OF MIND, WHICH IS NOT REASO NS TO BELIEVE AS PER LAW. 3. THAT THE LD. AO HAS ERRED BOTH IN THE EYES OF LA W AND FACTS OF THE CASE IN ISSUING NOTICE U/S 148 OF THE ACT DESPITE THE FACT THAT ASSESSMENT IN THE CASE OF THE APPELLANT WAS ALREADY MADE U/S 143(3) OF THE ACT AND THE SAME ISSUE WAS DISCUSSED IN DETAIL DURING THE ORIGINAL ASSESSM ENT PROCEEDINGS. THUS REOPENING AMOUNTS TO CHANGE OF OPINION, WHICH IS NO T PERMISSIBLE UNDER THE LAW. 4. THAT THE LD. AO HAS ERRED BOTH IN THE EYES OF LA W AND FACTS OF THE CASE BY RECORDING REASON, BEFORE ISSUE OF NOTICE U/ S 148 OF THE ACT, WITHOUT MENTIONING THEREIN THE FAILURE ON THE PART OF ASSES SE TO DISCLOSE FULLY AND TRULY SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 4 OF 18 ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT AS PROVIDED IN THE FIRST PROVISO TO SECTION 147 OF THE ACT. 5. THAT THE LD. AO FAILED TO DISPOSE OFF ANY OF THE OBJECTIONS RAISED BY THE APPELLANT AGAINST THE ISSUE OF NOTICE U/S 148 O F THE ACT BY PASSING A SPEAKING ORDER AS WHICH IS AGAINST PRINCIPLES OF RE OPENING AS LAID BY THE APEX COURT IN THE CASE OF GKN DRIVE SHAFTS (INDIA) PVT. LTD. 6. THAT THE LD. AO HAS ERRED IN REOPENING THE ASSES SMENT PROCEEDING AS THE NOTICE ISSUED U/S 148 OF THE ACT WAS SANCTIO NED BY APPROPRIATE AUTHORITY WITHOUT INDEPENDENT APPLICATION OF MIND, WHICH IS A PRECONDITION FOR ACCORDING SANCTION AS PER SECTION 151 OF THE AC T. 7. THAT THE LD. AO AND LD. CIT(A) HAS ERRED IN THE EYES OF LAW AND FACTS OF THE CASE IN MAKING ADDITION OF RS.17,07,730/- BY DISALLOWING THE CLAIM OF EXEMPTION U/S 10(23C)(IIIAB) OF THE ACT. 8. THAT THE LD. CIT (A) HAS NOT CONSIDERED THE LEGA L ISSUES INVOLVED IN THE REASSESSMENT AS STATED IN GROUND NO. 1 TO 6 ABOVE. 9. THAT THE INTEREST CHARGED U/S 234B ON THE TAX CA LCULATED ON THE REASSESSED INCOME IS NOT SUSTAINABLE IN LAW AND FAC TS OF THE CASE. 10. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND O R ALTER ANY OF THE GROUNDS OF APPEAL BEFORE OR THE TIME OF PERSONAL HE ARING OR WRITTEN SUBMISSION. 7. GROUND NO.1 TO 6 & 8 ARE RELATES TO REOPENING OF AS SESSMENT U/S.147 OF THE ACT AND ISSUE OF NOTICE U/S.148 BASE D ON AUDIT REPORT, WHICH IS BAD IN LAW AND WITHOUT APPLICATION OF MIND AND AMOUNTS TO CHANGE OF OPINION. 8. SUCCINCT FACTS ARE THAT THE ASSESSEE IS A PUBLIC CH ARITABLE EDUCATIONAL INSTITUTION AND ASSESSED AS AOP. THE A SSESSEE HAS FILED ITS RETURN OF INCOME ON 30.09.2010 DISCLOSING INCOM E AT RS. NIL AND IT WAS PROCESSED U/S. 143(1) OF THE ACT. LATER ON, THE CASE WAS PICKED UP FOR SCRUTINY AND THE ASSESSMENT WAS MADE U/S.143 (3) ON 23.11.2012 ASSESSING THE INCOME AT NIL (AS RETURNED ). THEREAFTER, THE SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 5 OF 18 AO NOTICED THAT THE ASSESSEE WAS NOT ELIGIBLE FOR E XEMPTION U/S.10(23C)(IIIAB) OF THE INCOME TAX ACT. ACCORDIN GLY, A NOTICE U/S.148 WAS ISSUED ON 31.03.2015 AFTER RECORDING TH E REASONS (REPRODUCED IN THE BODY OF ASSESSMENT ORDER) AND AF TER TAKING APPROVAL OF JCIT (E) CHANDIGARH. IN RESPONSE NOTIC E UNDER SECTION 148 OF THE ACT, THE ASSESSEE VIDE LETTER DATED 20.0 4.2015 SUBMITTED THAT THE ORIGINAL RETURN FILED BY IT MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. ACCORDINGLY , STATUTORY NOTICES U/S.143(2) AND 142(1) OF THE ACT WERE ISSUED AND TH E ASSESSMENT WAS MADE U/S.143(3) R.W.S 147 OF THE ACT ON 17.12.2015 THEREBY DISALLOWING THE EXEMPTION OF RS.17,07,726/- CLAIMED U/S.10(23C)(IIIAB) OF THE ACT. 9. BEING AGGRIEVED, THE ASSESSEE FILED THIS APPEAL BEF ORE THE LD. CIT (A) CHALLENGING THE REOPENING OF THE ASSESSMENT ON THE GROUND THAT IT WAS REOPENED BASED ON AUDIT OBJECTION AND IT AMOUNT S TO MERE CHANGE OF OPINION, THEREFORE, IT WAS NOT WARRANTED UNDER THE LAW. RELIANCE WAS ALSO PLACED ON THE DECISION OF CIT VS. LUCAS TVS LTD., [2001] 249 ITR 306 (SC) WHEREIN IT WAS HELD THAT A OPINION OF THE AUDIT PARTY REGARDING APPLICATION OR INTERPRETATION OF LAW IS NOT INFORMATION, AND AS SUCH, A REASSESSMENT BASED ON O PINION OF AUDIT PARTY IS NOT VALID. IT WAS FURTHER CONTENDED THAT T HE AO WHILE FRAMING ASSESSMENT U/S.143(3) HAS CONSIDERED THE FACT ABOUT THE ASSESSEE SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 6 OF 18 BEING CHARITABLE, EXISTING SOLELY FOR EDUCATIONAL P URPOSE AND SUBSTANTIVELY FINANCED BY THE GOVERNMENT, AND THERE FORE ALLOWED EXEMPTION TO THE ASSESSEE U/S.10(23C)(IIIAB) OF THE ACT. THUS, NO NEW FACTS HAD COME IN TO THE POSSESSION OF THE AO, ON W HICH NOTICE UNDER SECTION 148 OF THE ACT HAS BEEN ISSUED. HENCE, IT A MOUNTED TO MERE CHANGE OF OPINION, WHICH IS NOT WARRANTED AND TENAB LE UNDER THE LAW. RELIANCE WAS ALSO PLACED ON THE DECISION OF APEX CO URT IN THE CASE OF ACIT VS. ICICI SECURITIES PRIMARY DEALERSHIP LTD. [ 2012] 348 ITR 299 (SC) WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE HA D DISCLOSED FULL DETAILS IN THE RETURN OF INCOME IN THE MATTER OF DE ALING ON SHARES AND THE ASSESSMENT WAS REOPENED AFTER FOUR YEARS REJECT ING THE ASSESSEES CONTENTION THAT THE LOSS INCURRED WAS A BUSINESS LO SS AND NOT A SPECULATIVE LOSS. IT WAS CLEARLY A CHANGE OF OPINIO N AND THE ORDER OF REOPENING ASSESSMENT WAS NOT TENABLE. RELIANCE WAS ALSO PLACED ON PLETHORA OF CASE LAWS, WHICH FINDS MENTIONED AT PAG E 3 OF THE ORDER OF LD. CIT (A). IT WAS ALSO CONTENDED THAT THE AO FAI LED TO DISPOSE-OFF THE OBJECTIONS RAISED BY THE APPELLANT AGAINST THE ISSU E OF NOTICE U/S.148 OF THE ACT, THEREFORE REOPENING IS NOT VALID. IT W AS FURTHER SUBMITTED THAT SANCTION BY THE JCIT, AS PER PROVISION OF SECT ION 151 OF THE ACT HAS BEEN ACCORDED WITHOUT APPLICATION OF MIND, WHIC H IS AGAINST THE SPIRITS OF THE LAW AND IS UNJUSTIFIED AND UNWARRANT ED. HOWEVER, THE LD.CIT (A) OBSERVED THAT THE PERUSAL OF FACTS ON RE CORD PROVE THAT THERE IS NO INFIRMITY IN THE ISSUE OF NOTICE U/S.148 OF T HE ACT, REASONS HAVE SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 7 OF 18 BEEN DULY RECORDED, APPROVAL BY THE JCIT (E) HAS BE EN ACCORDED AS PER THE PROCEDURE AND THE OBJECTIONS OF THE ASSESSE E FOR ISSUE OF NOTICE U/S.148 HAVE ALSO BEEN DEALT WITH. THEREFOR E, THE ASSESSEES OBJECTIONS ARE BASED ON SURMISES. MOREOVER, THE AO HAS CLEARLY STATED IN HIS ORDER THAT THE ASSESSEE HAS RECEIVED GOVERNM ENT GRANT OF RS.49,32,102/- ONLY AND ITS GROSS RECEIPTS ARE AT R S.2,23,78,924/- WHICH IS ONLY 22.03% OF THE GROSS RECEIPTS WHICH IS VERY MUCH LOW THAN 50% OF GROSS RECEIPTS, HENCE, IT IS NOT WHOLLY AND SUBSTANTIVELY FINANCED BY THE GOVERNMENT AND THEREFORE THE ASSESS EE IS NOT ENTITLED TO EXEMPTION U/S.10(23C)(IIIAB) OF THE ACT. 10. BEING AGGRIEVED, THE ASSESSEE FILED THIS APPEAL BEF ORE THIS TRIBUNAL. THE LD.COUNSEL REFERRED POINT NO. 9 OF T HE NOTICE U/S.142(1) DATED 03.02.2012 ISSUED BY THE AO [PLACED AT PAPER BOOK PAGE NO. 1] IN THE ORIGINAL ASSESSMENT PROCEEDINGS, WHEREIN THE AO HAS MADE A SPECIFIC QUERY TO SUBSTANTIATE THE CLAIM OF EXEMPTI ON U/S.10(23C)(IIIAB)/(AAIIAD) OF THE ACT. IN RESPONS E TO WHICH, THE ASSESSEE HAS FILED ITS REPLY VIDE LETTER DATED 16.0 5.2012 [PLACED AT PAPER BOOK, PAGE 3 AND 4] WHEREIN VIDE POINT NO. 8, IT HAS BEEN EXPLAINED THAT THE ASSESSEE IS AN EDUCATIONAL INSTI TUTION IMPARTING EDUCATION UNDER THE DIFFERENT COURSES AND PROGRAM, SUBSTANTIVELY/ WHOLLY FINANCED BY THE GOVERNMENT, THEREFORE IT IS WELL COVERED FOR EXEMPTION U/S.10(23C)(IIIAB) WHICH STIPULATES THAT ANY UNIVERSITY OR SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 8 OF 18 EDUCATIONAL INSTITUTION EXISTING SOLELY FOR EDUCATI ONAL PURPOSE AND NOT FOR THE PURPOSE OF PROFIT AND WHICH IS WHOLLY O R SUBSTANTIVELY FINANCED BY THE GOVERNMENT. THEREFORE, IT WAS CONTE NDED THAT POINT NO. 9, 10 AND 11 OF IMPUGNED NOTICE UNDER SECTION 1 42(1) WERE NOT APPLICABLE. THEREFORE, THE QUESTION OF ALLOWABILIT Y OF EXEMPTION U/S.10(23C)(IIIAB) WAS DULY COMPLIED WITH BY THE ASSESSEE AND THE LD.AO IN HIS ORIGINAL ASSESSMENT ORDER PASSED U/S.1 43(3) DATED 23.11.2012 HAS GIVEN HIS CLEAR OPINION DULY ACCEPTI NG THE CLAIM OF THE ASSESSEE IN RESPECT OF EXEMPTION CLAIMED U/S.10 (23C)(IIIAB) OF THE ACT. THE LD. COUNSEL FURTHER REFERRED THE REASONS R ECORDED BY THE AO, WHICH ARE APPEARING IN THE ASSESSMENT ORDER AT PAGE 1, WHICH SAYS THAT THE ASSESSEE WAS NOT ELIGIBLE FOR THE EXEMPTIO N U/S.10 (23C) (IIIAB) OF THE ACT AS THE ASSESSEES RECEIPTS WERE AT RS.2,23,78,968/- AND OUT OF THIS GRANT OF RS.49,32,102/- ONLY WAS RE CEIVED FROM THE HARYANA GOVERNMENT, THUS THE ASSESSEE WAS NOT WHOLL Y OR SUBSTANTIVELY FINANCED BY THE GOVERNMENT. THEREFOR E, THE ASSESSEE WAS REQUIRED TO GET APPROVAL U/S. 10(23C)(VI) OR TO GET REGISTERED U/S.12AA OF THE ACT FROM THE COMPETENT AUTHORITY. THE ASSESSEE HAS NOT DONE THE SAME. THEREFORE, AN AMOUNT OF RS.17,07 ,726/- HAS ESCAPED ASSESSMENT. THE LD.COUNSEL CONTENDED THAT THE AO HAS ALREADY MADE ENQUIRY ON THE ALLOWABILITY OR EXEMPTI ON U/S. U/S.10(23C)(IIIAB), THEREFORE, THE REOPENING ON THE BASIS OF SAME FACTS SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 9 OF 18 AS VERIFIED IN ORIGINAL ASSESSMENT, AMOUNTS TO CHAN GE OF OPINION ONLY FOR WHICH THE ASSESSEE HAS PLACED RELIANCE ON THE F OLLOWING CASE LAWS. 1. CIT VS. KELVINATOR OF INDIA LTD., 920100 228 CTR 04 88, SC 2. CIT VS. USHA INTERNATIONAL LIMITED, 92012) 253 CTR 0 113 (FB), DHC 3. UNITECH HOLDINGS LTD. VS. DICT, (2016) 290 CTR 0201 , DHC 4. ORIENTAL INSURANCE COMPANY VS. CIT, (2016) 283 CTR 00 78, DJHC 5. TURNER BROADCASTING SYSTEMS ASIA PACIFIC VS. DCIT,(2 016) 380 ITR 0412, DHC 6. RALSON INDIA LTD. VS. DCIT AND ANR., W.P. (C) 142/19 98, DELHI ITAT 11. THE LD.COUNSEL FURTHER SUBMITTED THAT THE REASONS R ECORDED FOR REOPENING OF ASSESSMENT U/S.148 OF THE ACT ARE NOTH ING BUT BASED ON AUDIT NOTE/OBJECTIONS RAISED BY THE SENIOR AUDIT OF FICER WHICH COULD NOT BE TAKEN AS GROUND FOR REOPENING ASSESSMENT. T HE COPY OF AUDIT OBJECTION RAISED BY THE AUDITOR WAS FILED WHICH IS PLACED AT PAPER BOOK, PAGE 10. THEREFORE, IT WAS SUBMITTED THAT TH E REOPENING BASED ON AUDIT OBJECTION IS NOT A NEW INFORMATION FOR REO PENING OF THE ASSESSMENT U/S.147 OF THE ACT AS HELD BY THE HONBL E SUPREME COURT IN THE CASE OF CIT VS. LUKAS TVS LTD., [2001] 249 I TR 306 (SC) WHEREIN IT WAS HELD THAT AN AUDIT OPINION IN REGARD TO THE APPLICATION OR INTERPRETATION OF LAW CANNOT BE TREATED AS INFOR MATION FOR REOPENING OF THE ASSESSMENT U/S.147 (B) OF THE ACT. SIMILARL Y, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SIMBHAOLI SUGAR M ILLS LTD. [2011] 333 ITR 470 (DELHI) HELD THAT THE ASSESSEE HAVING M ADE COMPLETE DISCLOSURE OF PARTICULARS BEFORE THE AO IN THE ASSE SSMENT PROCEEDINGS U/S.143 (3), REASSESSMENT PROCEEDINGS U/S.147 COULD NOT BE INITIATED BEYOND THE PERIOD OF FOUR YEARS, MERELY ON THE BASI S OF INTERNAL AUDIT SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 10 OF 18 REPORT. SINCE, IN THE CASE OF ASSESSEE, THE PARTIC ULARS WERE ALREADY AVAILABLE BEFORE THE AO WHICH WERE EXAMINED BY HIM, HENCE, THE ASSESSEE HAD MADE COMPLETE DISCLOSURE OF THE PARTIC ULARS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS U/S.143 (3), T HEREFORE, REOPENING ON THE BASIS OF REVENUE AUDIT OBJECTION I S NOT PERMISSIBLE IN LAW AS PER THE RATIO LAID DOWN BY THE HONBLE JU RISDICTIONAL DELHI HIGH COURT. SIMILARLY, THE LD.COUNSEL HAS PLACED R ELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT-8 VS. INDIA IRON STEEL COMPANY LTD., [ITA NO.88/2015 DATE D 13.02.2015] WHEREIN PLACING RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SIMBHAOLI SUGAR MILLS LTD., (SUPRA) AND AFTER APPLYING THE RATIO OF JUDGEMENT OF HON`BLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. [2010] 320 ITR 561/187 TAXMAN 312 (SC) HELD THAT INITIATION OF REASSESSMENT PROCE EDINGS ON THE BASIS OF AUDIT REPORT OBJECTION IS IMPERMISSIBLE. THE LD .COUNSEL ALSO SUPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF INCOME TAX OFFICER VS. SHRI SATYA PRAKASH AGARWAL AND SONS [IT A NO.3792/DEL/2011 DATED 15.12.2013 OF ITAT DELHI]. THE LD. COUNSEL FURTHER REFERRED PAPER BOOK PAGE NO.14, WHICH IS TH E SANCTION LETTER FOR APPROVAL GIVEN BY THE JCIT(E) FOR ISSUE OF NOTI CE U/S.148 DATED 31.03.2015 WHEREIN IT WAS MENTIONED YES, I AGREE. THUS, THE LD.COUNSEL CONTENDED THAT THERE IS GROSS NON-APPLIC ATION OF MIND BY JCIT (E), CHANDIGARH AND THAT THE APPROVAL HAS BEEN GRANTED SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 11 OF 18 MECHANICALLY. IN SUPPORT OF THIS VIEW, THE LD.COUN SEL HAS PLACED RELIANCE IN THE CASE OF PCIT VS. N. C. CABLES LTD. [2013] 391 ITR 11 (DELHI) WHEREIN IT WAS HELD THAT THE COMPETENT AUT HORITY TO AUTHORIZE REASSESSMENT NOTICE HAS TO APPLY HIS MIND AND FORM AN OPINION, MERE APPENDING OF EXPRESSION APPROVED SAYS NOTHING, IT HAS TO RECORD ELABORATE REASONS FOR AGREEING WITH THE NOTING AND AT THE SAME TIME SATISFACTION HAS TO BE RECORDED OF THE GIVEN CASE W HICH CAN BE REFLECTED IN POSSIBLE MANNER. THE LD. COUNSEL FUR THER RELIED IN THE CASE OF CIT VS. S. G. LIME AND CHEMICALS LTD., [CC. NO.11961/2015] WHEREIN THE HONBLE SUPREME COURT HAS DISMISSED THE REVENUE APPEAL AND UPHELD THE DECISION OF HONBLE MADHYA PR ADESH HIGH COURT WHERE THE SANCTION AUTHORITY BEING JCIT, HAS ONLY RECORDED APPROVAL AS YES, I AM SATISFIED FOR GIVING SANCTI ON FOR ISSUE OF NOTICE U/S.148 WHICH WAS HELD TO BE INVALID. THE LD.COUNS EL FURTHER SUBMITTED THAT VARIOUS QUESTIONS OF ALLOWABILITY OF EXEMPTION U/S.10 (23C) (IIIAB) WERE ASKED DURING THE COURSE OF ORIGI NAL ASSESSMENT PROCEEDINGS AND DULY COMPLIED WITH BY THE ASSESSEE. EVEN ON MERIT, THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE HAS RECE IVED GROSS RECEIPT OF RS.2.23 CRORE WHEREAS GOVERNMENT GRANT WAS AT RS .49.32 LAKHS WHICH FORMS 22.03% OF THE TOTAL GRANTS. THE AO DIS ALLOWED THE EXEMPTION U/S. 10(23C) (IIIAB) ON THE GROUND THAT A SSESSEE TRUST HAS NOT BEEN SUBSTANTIVELY FINANCED BY THE GOVERNMENT I .E. SAY THAT AT LEAST 51% OF THE GROSS RECEIPTS SHOULD BE RECEIVED FROM THE SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 12 OF 18 GOVERNMENT. HOWEVER, THE SAID PERCENTAGE PRESCRIBE D UNDER THE RULE 2BBB OF INCOME TAX RULES, 1961 HAS BEEN INSERT ED VIDE NOTIFICATION NO.79/2014 AND CAME INTO FORCE W. E. F . 12.10.2014 WHICH IS AFTER THE DATE OF ASSESSMENT WAS UNDER CONSIDERA TION, THEREFORE, THE SAID RULE 2BBB IS NOT APPLICABLE FOR THE YEAR U NDER CONSIDERATION. IN VIEW OF THESE FACTS, REOPENING BASED ON THIS REA SON IS ALSO NOT VALID. THE LD.COUNSEL HAS PLACED RELIANCE ON THE FOLLOWING CASE LAWS IN SUPPORT OF THIS CONTENTION: CIT VS. DESHIYA VIDYA SHALA SAMITHI, ITA NO.1133 O F 2008, KARNATAKA HC JAT EDUCATION SOCIETY VS. ITO, ITA NO.2542 & 25463/ DEL/201, ITAT DELHI CIT VS. JAT EDUCATION SOCIETY, (2016) 383 ITR 0355 P & H HC-41% DIRECTOR OF INCOME TAX (EXEMPTION) VS. DHAMAPAKASHA R AJAKARYA PRASAKTA, ITA NO.232, 235, 237 & 251/2009, (2015) 372 ITR 030 7, KARNATAKA HC- CIT VS. INDIAN INSTITUTE OF MANAGEMENT, ITA NO.529 OF 2008, KARNATAKA HC- ACIT VS. AMAR SHAHEED BABA AJIT SINGH JUJHAR SINGH M EMORIAL COLLEGE, ITA NO.1065/CHD/2011, DATED 20.0.2016, ITAT DELHI 12. PER CONTRA, THE LD.CIT (DR) SUBMITTED THAT THE AO HAS FAILED T O EXAMINE THE CASE OF THE ASSESSEE THAT WHETHER THE G RANT RECEIVED FROM STATE GOVERNMENT WERE SUBSTANTIAL AND WAS MORE THAN 50% OF THE GROSS RECEIPTS. THEREFORE, THE ALLOWABILITY OF EXEM PTION U/S. 10(23C) (IIIAB) WAS REMAINED TO BE EXAMINED. FURTHER, THE A SSESSEE HAS NOT OBTAINED REGISTRATION U/S.12AA AND THE APPLICATION MADE FOR REGISTRATION U/S.12AA WAS REJECTED BY THE CIT, WHIC H HAS BEEN AFFIRMED BY THE ITAT [ITA NO.363/DEL/2016 DATED 31. 07.2019] ON THE GROUND THAT THE BY-LAWS OF THE SOCIETY DO NOT POINT OUT ANY CHARITABLE SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 13 OF 18 ACTIVITY AND OBJECTION OF THE ASSESSEE INCLUDE PURC HASE AND SALE OF IMMOVABLE PROPERTY AS PER SOCIETIES NEEDS. FURTHER , THE TRIBUNAL ALSO OBSERVED THAT THE ASSESSEE HAS PURCHASED SHOPS FROM ITS SURPLUS FROM WHERE IT IS TO RECEIVE THE RENTAL INCOME. THI S SHOWS THAT THE ASSESSEE IS HAVING COMMERCIAL ACTIVITIES. THEREFORE , REOPENING OF ASSESSMENT AND DENYING THE EXEMPTION IS IN ACCORDAN CE WITH LAW. 13. IN REJOINDER TO ABOVE, THE LD.COUNSEL SUBMITTED THA T THE CONTENTION OF THE LD. D.R. THAT REGISTRATION U/S.12 AA HAS BEEN REJECTED IS OF NO CONSEQUENCE AS THE REOPENING OF A SSESSMENT IS SOLELY MADE ON THE GROUND OF DENIAL OF DEDUCTION U/S. 10(2 3C) (IIIAB) OF THE ACT, HENCE THIS CONTENTION HAS NO BEARING ON THE GR OUND OF REOPENING OF ASSESSMENT. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PERUSAL OF ORIGINAL ASSESS MENT ORDER PASSED U/S.143(2) OF THE ACT DATED 23.11.2012 SHOWS THAT T HE AO HAS DULY EXAMINED AND SCRUTINIZED THE DETAILS SUBMITTED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS APPLIED HIS MIND REG ARDING EXEMPTION U/S.10(23C)(IIIAB) OF THE ACT. THE AO HAD OBTAINED NECESSARY INFORMATION AND ALLOWED THE SAME BY OBSER VING IN PARA 2 OF THE ASSESSMENT ORDER WHICH READS AS UNDER : 2. THE ASSESSEE IS A PUBLIC EDUCATIONAL BODY CONST ITUTED BY THE PUBLIC IN THE YEAR 1974-75 AND IS REGISTERED AS A SOCIETY UN DER THE SOCIETY UNDER SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 14 OF 18 THE SOCIETIES REGISTRATION ACT, 1860 VIDE NO.64 OF 1974-75 DATED 12.11.1974. THE ASSESSEE IS RUNNING TWO SCHOOLS AT NARWANA TOWN OF DISTRICT JIND AND IS AFFILIATED WITH HARYANA EDUCAT ION BOARD, BHIWANI. THE MAIN OBJECT OF THE ASSESSEE, INTER-ALIA INCLUDE TO RUN SCHOOLS AND TO PROVIDE EDUCATION TO THE GENERAL PUBLIC AT LARGE. DUR ING THE YEAR, THE ASSESSEE HAS DECLARED GROSS RECEIPTS AT RS.2, 23, 78, 964/- AS PER INCOME & EXPENDITURE ACCOUNT. THE ASSESSEE WAS ASKED TO S UBSTANTIATE ITS CLAIM EXEMPTION UNDER SECTION 10(23C) (IIIAB) OF THE I. T. ACT, 1961. THE ASSESSEE FILED A WRITTEN REPLY RECEIVED ON 21.11.2012, PLACED ON RECORD, CONTENDING, INTER-ALIA, THEREIN THAT IT IS AN EDUCAT IONAL INSTITUTION REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860 AND SOLELY EXISTS FOR CHARITABLE PURPOSES TO RUN AN EDUCATIONAL INSTITUTION. IT WAS FURTHER STATED THAT THE INSTITUTION IS SUBSTANTIALLY FINANCED BY T HE GOVT. OF HARYANA AND COMPLYING WITH ALL THE REQUIREMENT AS LAID DOWN UND ER THE SECTION. HENCE, INCOME OF THE INSTITUTION IS EXEMPT UNDER SE CTION 10(23C) (IIIAB) OF IT ACT, 1961. I HAVE CAREFULLY CONSIDERED THE CLAIM OF THE ASSESSEE. THE INSTITUTION SOLELY EXISTS FOR EDUCATIONAL PURPOSES AN D NOT FOR PURPOSE OF PROFIT. THE INCOME IS, THEREOF, EXEMPT UNDER SECTION 10(23C) (IIIAB) OF THE ACT. TOTAL INCOME DECLARED AT NIL BY THE ASSESSEE I S, THEREFORE, ACCEPTED. 15. THIS FACT OF EXAMINATION AND DISCLOSURE OF INFORMAT ION IS FURTHER SUPPORTED BY THE REPLY FURNISHED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S. 142(1) DATED 03.02.2012 VIDE LETTER DAT ED 16.05.2012 [PLACED AT PAPER BOOK PAGE NO. 3 AND 4] AND LETTER DATED 21.11.2012 [PLACED AT PAPER BOOK, PAGE NO. 5 TO 7]. THEREFORE, THE ASSESSEE HAS MADE COMPLIANCE TO THE SPECIFIC QUERY RAISED BY THE AO TO SUBSTANTIATE ITS CLAIM THAT THE ASSESSEE EXISTS SOL ELY FOR EDUCATIONAL PURPOSE AND SUBSTANTIVELY FINANCED BY THE GOVERNMEN T. THEREFORE, THERE WAS NO NEW MATERIAL WHICH HAD COME INTO POSSE SSION OF THE AO SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 15 OF 18 TO FORM A BELIEF THAT BY REASON OF NON-DISCLOSURE T RULY AND FULLY ALL MATERIAL FACTS, NECESSARY FOR ASSESSMENT, THE INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE LD.COUNSEL HAS PLA CED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. USHA INTERNATIONAL LTD.[2012] 348 ITR 485 (DELHI) WHEREI N BY MAJORITY VIEW, IT WAS HELD THAT THE ASSESSMENT PROCEEDINGS CANNOT BE VALIDLY REOPENED U/S.147 OF THE ACT, EVEN WITHIN 4 YEARS, I F AN ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO THE INCOME ALLEGED TO HAVE ESCAPE D ASSESSMENT, IF THE ORIGINAL ASSESSMENT WAS MADE U/S.143(3). SO LO NG AS THE ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT AND SO LONG AS THE ASSESSMENT ORDER IS F RAMED UNDER SECTION 143(3) OF THE ACT, IT MATTERS LITTLE THAT T HE ASSESSING OFFICER DID NOT ASK ANY QUESTION OR QUERY WITH RESPECT TO ONE E NTRY OR NOTE BUT HAD RAISED QUERIES AND QUESTIONS ON OTHER ASPECT. SECT ION 114(E) OF THE EVIDENCE ACT CAN BE APPLIED TO AN ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) OF THE ACT, PROVIDED THAT THERE HAS BEEN A FULL AND TRUE DISCLOSURE OF ALL MATERIAL AND PRIMARY FACTS AT THE TIME OF ORIGINAL ASSESSMENT. IN SUCH A CASE IF THE ASSESSMENT IS RE OPENED IN RESPECT OF MATTER COVERED BY THE DISCLOSURE, IT WOULD AMOUN T TO CHANGE OF OPINION. SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 16 OF 18 16. THEREFORE, THE FACT IN THE INSTANT CASE SHOWS THAT IT AMOUNTS TO CHANGE OF OPINION, AS THE ASSESSEE HAS DISCLOSED FU LL AND TRUE PARTICULARS AT THE TIME OF ORIGINAL ASSESSMENT MADE UNDER SECTION 143 (3) OF THE ACT. THIS VIEW IS FURTHER SUPPORTED, BY THE DECISION OF HONBLE SUPREME COURT DECISION AS RELIED BY THE LD. COUNSEL IN THE CASE OF CIT VS. KELVINATOR INDIA LTD., [2010] 320 I TR 561 (SC) WHEREIN IT WAS HELD THAT THE AO HAS POWER TO REOPEN THE ASS ESSMENT U/S.147 PROVIDED AO HAS REASON TO BELIEVE THAT INCOME HAS E SCAPED ASSESSMENT AND THERE IS TANGIBLE MATERIAL TO COME I N TO THE POSSESSION OF THE AO, THAT THERE IS ESCAPEMENT OF I NCOME, MERE CHANGE OF OPINION CANNOT PER-SE BE REASON TO REOP EN THE ASSESSMENT. IN THE PRESENT CASE, THERE IS NO NEW T ANGIBLE MATERIAL, WHICH HAD COME INTO THE POSSESSION OF THE AO, THERE FORE, REOPENING ON THE SAME MATERIAL AMOUNTS TO MERE CHANGE OF OPIN ION, WHICH IS NOT PERMISSIBLE UNDER THE LAW. SIMILARLY, THE LD.C OUNSEL HAS PLACED RELIANCE IN THE CASE OF ORIENTAL INSURANCE COMPANY VS. CIT [2015] 378 ITR 421 (DELHI) WHEREIN IT WAS HELD THAT IT CAN NOT BE DISPUTED THAT THE EXEMPTION CLAIMED BY THE AO IN RESPECT OF THE PROFIT ON SALE /REDEMPTION OF INVESTMENT WAS DULY DISCLOSED AND TH E AO HAS ALSO OPINED ON THE MERITS OF TAXABILITY OF PROFITS OF SA LE / REDEMPTION OF INVESTMENT. THE INCOME FROM PROFIT ON SALE/REDEMPTI ON OF INVESTMENTS IS NOW SOUGHT TO BE TAXED AS INCOME, WH ICH HAD ESCAPED ASSESSMENT. THUS, IN OUR VIEW, CLEARLY REPRESENTS A CHANGE IN THE SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 17 OF 18 OPINION WITH REGARD TO THE TAXABILITY OF THE INCOME IN QUESTION. IT WAS WELL SETTLED THAT THE POWER UNDER SECTION 147 OF TH E ACT IS NOT A POWER OF REVIEW BUT A POWER TO REASSESS. PERMITTING REOP ENING OF ASSESSMENT ON A CHANGE OF OPINION AS TO THE TAXABIL ITY OF THE INCOME OF THE ASSESSEE IS, THUS, OUTSIDE THE SCOPE OF SECT ION 147. 17. WE FURTHER FIND THAT THE REOPENING HAS BEEN DONE IN THE PRESENT CASE ON THE BASIS OF REVENUE AUDIT OBJECTION WHICH DOES NOT CONSTITUTE AN INFORMATION FOR THE PURPOSE OF REOPEN ING OF ASSESSMENT AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LUKAS TVS LTD., (SUPRA), CIT VS. KELVINATOR INDIA (SUPRA) AND HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. M/S. INDIA IRON A ND STEEL LTD., AND M/S. XEROX MODI CORP. LTD., VS. DCIT (2013) 350 ITR 300 (DEL). 18. WE FURTHER OBSERVED THAT BEFORE INTRODUCTION OF RUL E 2BBB WITH EFFECT FROM 12.10.2014, WHERE THE PERSON HAVIN G VOTING POWER NOT LESS THAN 20% WAS DEEMED TO HAVE SUBSTANTIVE IN TEREST IN THE BUSINESS OF THE COMPANY AS PER SECTION 40(2)(A) OF THE ACT AS HELD BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. DESHIYA VIDYA SALAL SAMITI [ITA NO.1133/2008 [PB-114-121]. THEREFORE, RULE 2BBB INTRODUCED WITH EFFECT FROM 12.10.2014 IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. IN VIEW OF THESE FACTS AN D CIRCUMSTANCES, THE REOPENING IN THE INSTANT CASE AMOUNTS TO CHANGE OF OPINION AND SANATAN DHARAM SHIKSHA SAMITTEE VS. ITO,(E), ROHTAK/ ITA NO.871/DEL/2017 FOR A.Y. 2010-11 PAGE 18 OF 18 IT IS BASED ON AUDIT OBJECTION AND AS NO NEW TANGIB LE MATERIAL HAS BEEN BROUGHT ON RECORD. THEREFORE, WE HOLD THAT THE REOPENING OF ASSESSMENT WAS NOT VALID; ACCORDINGLY, THE SAME IS QUASHED. IN VIEW OF THIS, GROUND NO.1 TO 6 & 8 OF ASSESSEES APPEAL ARE ALLOWED. 19. GROUND NO.7 RELATING TO MAKING ADDITION OF RS.17,07 ,730/- BY DISALLOWING CLAIM U/S.(23C)(IIIAB) OF THE ACT. 20. SINCE, WE HAVE QUASHED THE REOPENING OF ASSESSMENT OF ASSESSMENT ITSELF, THEREFORE THIS GROUND BECOMES AN ACADEMIC IN NATURE AND INFRUCTUOUS AND HENCE NOT BEING ADJUDICA TED, ACCORDINGLY THIS IS DISMISSED AS INFRUCTUOUS. 21. SIMILARLY, GROUND NO. 8 RELATED TO INTEREST U/S. 23 4B IS CONSEQUENTIAL IN NATURE. 22. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 23. ORDER PRONOUNCED IN THE OPEN COURT ON 18-11-2019. SD/- SD/- (AMIT SHUKLA) (O.P.MEENA) /JUDICIAL MEMBER) ( /ACCOUNTANT MEMBER) / NEW DELHI , DATED : 18 TH NOVEMBER , 2019/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, NEW DELHI