United Education Society, Ghaziabad V. JCIT, Ghaziabad

ITA 906/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4017 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Keywords: Sale consideration of property below Jantri Value; Charitable institution; Opportunity of being heard; Bonafide belief
• Section: 44AD; 11A; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.906/DEL./2016 (ASSESSMENT YEAR : 2010-11) UNITED EDUCATION SOCIETY, VS. JCIT, C/O NIMT COLLEGE, RANGE 2, OPP. INDIRA PRIYADARSHANI PARK, GHAZIABAD. NEAR HINDON BRIDGE, MOHAN NAGAR, GHAZIABAD. (PAN : AAAAU0750C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE AND SHRI ASHISH GOYAL, CA REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 02.01.2018 DATE OF ORDER : 25.01.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, UNITED EDUCATION SOCIETY (HEREINAFT ER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 27.11.2015 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS), GHAZIABAD ON THE GROUNDS INTER ALIA THAT :- ITA NO.906/DEL/2016 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX {C IT(A)} IS BAD, BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN PASSIN G THE ORDER WITHOUT GIVING ASSESSEE A PROPER AND ADEQUATE OPPOR TUNITY OF BEING HEARD IN GROSS VIOLATION OF PRINCIPLE OF NATU RAL JUSTICE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN 'CONFIRMING T HE ORDER PASSED BY THE LEARNED ASSESSING OFFICER (AO) LEVYIN G PENALTY AMOUNTING TO RS.1,00,000/- INVOKING THE PROVISION O F SECTION 271 B OF THE ACT, 1961. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING TH E LEVIED PENALTY BY REJECTING THE CONTENTION OF THE ASSESSEE THAT BEING A CHARITABLE SOCIETY AND NOT CARRYING ON ANY BUSINESS THE PROVISIONS OF SECTION 44AB OF THE ACT ARE NOT APPLI CABLE TO THE ASSESSEE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE CONTENTION OF THE ASSESSEE THAT AUDIT OF THE ASSESSEE AS CONTEMPL ATED U/S 12(A)(B) BEEN CARRIED OUT WITHIN THE TIME SPECIFIED UNDER THE INCOME TAX ACT, 1961, NO DEFAULT HAS BEEN COMMITTED AND HENCE NO PENALTY IS LEVIABLE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE CONTENTION OF THE ASSESSEE THAT FAILURE, IF ANY, TO CARRY OUT THE AUDIT UNDER SECTION 271B WAS UNDER BONAFIDE BELIEF THAT PROVISI ONS OF SECTION 44AB ARE NOT APPLICABLE TO IT AND HENCE NO PENALTY IS LEVIABLE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE SOCIETY IS REGISTERED UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AND HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNT. AO, ON THE BASIS OF ASSESSMENT ORDER DATED 27.09.2013, INITIATED PEN ALTY PROCEEDINGS U/S 271B OF THE ACT AS THE ASSESSEE HAS FAILED TO GET ITS ACCOUNTS AUDITED UNDER THE PROVISIONS CONTAINED U/S 44AB OF THE ITA NO.906/DEL/2016 3 ACT. AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, AO LEVIED PENALTY TO THE TUNE OF RS.1,00,000/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL. FEELI NG AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY CHA LLENGING THE IMPUGNED ORDER PASSED BY LD. CIT (A) . 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE SOCIETY IS REGISTERED U/S 12A OF THE ACT AS A CHARITABLE TRUST ENGAGED IN CHARITABLE ACTIVITIES FOR IMPARTING EDUCATION THROUGH ITS COLLEGES. IT IS AL SO NOT IN DISPUTE THAT THE ASSESSEE SOCIETY HAS BEEN CLAIMING EXEMPTI ON U/S 11 OF THE ACT ON THE GROUND THAT NO BUSINESS IS BEING CARRIED OUT BY IT. 6. NOW, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS:- AS TO WHETHER THE ASSESSEE SOCIETY IS REQUIRED TO GET ITS ACCOUNTS AUDITED AS REQUIRED U/S 44AB OF THE ACT? 7. FOR FACILITY OF REFERENCE, PROVISIONS CONTAINED U/S 44AB OF THE ACT ARE REPRODUCED AS UNDER :- ITA NO.906/DEL/2016 4 44AB. EVERY PERSON, (A) CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXC EED OR EXCEEDS ONE CRORE RUPEES IN ANY PREVIOUS YEAR ; OR (B) CARRYING ON PROFESSION SHALL, IF HIS GROSS RECE IPTS IN PROFESSION EXCEED [FIFTY] LAKH RUPEES IN ANY PREVIO US YEAR; OR (C) CARRYING ON THE BUSINESS SHALL, IF THE PROFITS AND GAINS FROM THE BUSINESS ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERSON UNDER SECTION 44AE OR SECTION 44BB OR SECTIO N 44BBB, AS THE CASE MAY BE, AND HE HAS CLAIMED HIS INCOME TO B E LOWER THAN THE PROFITS OR GAINS SO DEEMED TO BE THE PROFITS AN D GAINS OF HIS BUSINESS, AS THE CASE MAY BE, IN ANY PREVIOUS YEAR; OR (D) CARRYING ON THE [PROFESSION] SHALL, IF THE PROF ITS AND GAINS FROM THE [PROFESSION] ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERSON UNDER [SECTION 44ADA] AND HE HAS CLAIM ED SUCH INCOME TO BE LOWER THAN THE PROFITS AND GAINS SO DE EMED TO BE THE PROFITS AND GAINS OF HIS [PROFESSION] AND HIS INCOM E EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TA X IN ANY [PREVIOUS YEAR; OR] [(E) CARRYING ON THE BUSINESS SHALL, IF THE PROVIS IONS OF SUB- SECTION (4) OF SECTION 44AD ARE APPLICABLE IN HIS C ASE AND HIS INCOME EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHAR GEABLE TO INCOME-TAX IN ANY PREVIOUS YEAR,] GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR AUDITED BY A N ACCOUNTANT BEFORE THE SPECIFIED DATE AND FURNISH BY THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND V ERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED : [PROVIDED THAT THIS SECTION SHALL NOT APPLY TO THE PERSON, WHO DECLARES PROFITS AND GAINS FOR THE PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) OF SECTION 4 4AD AND HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CAS E MAY BE, IN BUSINESS DOES NOT EXCEED TWO CRORE RUPEES IN SUCH P REVIOUS YEAR:] PROVIDED [FURTHER] THAT THIS SECTION SHALL NOT APP LY TO THE PERSON, WHO DERIVES INCOME OF THE NATURE REFERRED TO IN SEC TION 44B OR SECTION 44BBA, ON AND FROM THE 1ST DAY OF APRIL, 19 85 OR, AS THE CASE MAY BE, THE DATE ON WHICH THE RELEVANT SECTION CAME INTO FORCE, WHICHEVER IS LATER : PROVIDED [ALSO] THAT IN A CASE WHERE SUCH PERSON IS REQUIRED BY OR UNDER ANY OTHER LAW TO GET HIS ACCOUNTS AUDITED , I T SHALL BE SUFFICIENT COMPLIANCE WITH THE PROVISIONS OF THIS S ECTION IF SUCH ITA NO.906/DEL/2016 5 PERSON GETS THE ACCOUNTS OF SUCH BUSINESS OR PROFES SION AUDITED UNDER SUCH LAW BEFORE THE SPECIFIED DATE AND FURNIS HES BY THAT DATE THE REPORT OF THE AUDIT AS REQUIRED UNDER SUCH OTHER LAW AND A FURTHER REPORT BY AN ACCOUNTANT IN THE FORM PRESC RIBED UNDER THIS SECTION. 8. BARE PERUSAL OF THE PROVISIONS CONTAINED U/S 44A B OF THE ACT GOES TO PROVE THAT THE SAME ARE APPLICABLE TO THE P ERSON CARRYING ON BUSINESS OR PROFESSION AND IS REQUIRED TO GET ITS A CCOUNT MANDATORILY AUDITED BY AN ACCOUNTANT. BUT, IN THE INSTANT CASE, WHEN ASSESSEE IS UNDISPUTEDLY A CHARITABLE SOCIETY AND IS NOT CARRYING OUT ANY BUSINESS AND HAS BEEN CLAIMING EXE MPTION U/S 11A OF THE ACT, THE PENALTY U/S 271B OF THE ACT CAN NOT BE LEVIED. FURTHERMORE, WHEN THERE IS NO COMPUTATION OF PROFIT S AND GAINS OF THE BUSINESS OR PROFESSION AS PART OF THE TOTAL INC OME, THE ASSESSEE SOCIETY IS NOT AMENABLE TO SECTION 44AB OF THE ACT. 9. NO DOUBT, EXEMPTION CLAIMED BY THE ASSESSEE SOCI ETY TRUST U/S 11A HAS NOT BEEN GRANTED BY THE AO AND COMPLETE D THE ASSESSMENT U/S 143 (3) AT RS.6,93,54,217/- BUT IT W ILL NOT BURDEN THE ASSESSEE TO GET ITS ACCOUNT AUDITED WITH RETROSPECT IVE EFFECT SO LONG AS REGISTRATION U/S 12A OF THE ACT IS IN OPERATION. 10. IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CASE OF M/S. SANT BABA RANGI RAM VS. ITO IN ITA NO.185 (ASR)/2012 VIDE ORDER DATED 06.08.2012 IN FAVOUR OF THE ASSESSEE. ITA NO.906/DEL/2016 6 11. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT WHEN THE ASSESSEE UNDER BONAFI DE BELIEF CLAIMED THE EXEMPTION U/S 11 OF THE ACT AND HAD NOT GOT HIS ACCOUNTS AUDITED FROM THE ACCOUNTANT AS PER PROVISI ONS CONTAINED U/S 44AB, PENALTY U/S 271B CANNOT BE LEVIED, HENCE PENALTY IMPOSED U/S 271B IS HEREBY ORDERED TO BE DELETED BY REVERSING THE ORDER PASSED BY THE AO AS WELL AS LD. CIT (A). CON SEQUENTLY, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF JANUARY, 2018. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF JANUARY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.