Bharati Vidyapeeth, Pune V. Asstt.CIT, Pune

ITA 916/PUN/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7677 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1999-2000
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: SUNIL PATHAK NIKHIL PATHAK
• Keywords: Reopening of assessment; Invalid notice; Gift; Business income; Depreciation; Rectification of order; Charitable institution; Opportunity of being heard; Retrospective amendment; Tangible material; Difference of opinion; Validity of assessment; Cancellation of registration; Reason to believe; Change of opinion
• Section: 143(3); 234B; 12A; 147; 148; 154; 11; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 916 /PN/2010 (ASSTT. YEAR: 1999-2000) BHARATI VIDYAPEETH APPELLANT BHARATI VIDYAPEETH BHAWAN, LAL BAHADUR SHASHTRI ROAD, NAVI PETH, PUNE 411030 PAN : AAATB 1836D V. ASSISTANT COMMISSIONER OF INCOME TAX RESPONDENT CEN. CIR. 2(2), PUNE ITA NO. 1027 /PN/2010 (ASSTT. YEAR: 1999-2000) ASSISTANT COMMISSIONER OF INCOME TAX APPELLANT CEN. CIR. 2(2), PUNE V. BHARATI VIDYAPEETH RESPONDENT BHARATI VIDYAPEETH BHAWAN, LAL BAHADUR SHASHTRI ROAD, NAVI PETH, PUNE 411030 PAN : AAATB 1836D ASSESSEE BY : S/SHRI SUNIL PATHAK/NIKHIL PATHAK DEPARTMENT BY : SHRI S.K. SINGH DATE OF HEARING : 12.1.12 DATE OF PRONOUNCEMENT: ORDER PER I.C. SUDHIR, JM IN THE ABOVE APPEALS PREFERRED BY THE ASSESSEE AND REVENUE, THE FIRST APPELLATE ORDER DATED 26/3/2010 HAS BEEN QUESTIONED ON SEVERAL GROUNDS. 2. IN THE APPEAL PREFERRED BY THE REVENUE, GROUNDS RELATING TO MERITS HAVE BEEN RAISED, WHEREAS IN THE APPEAL OF THE ASSESSEE GROU NDS RELATING TO MERITS AS WELL AS LEGAL ISSUES HAVE BEEN RAISED. IN SUCH GROUNDS IN GROUND NOS. 1(A) AND 2.1(A) TO (E) THE ASSESSEE HAS QUESTIONED THE VALIDITY OF INI TIATION OF REOPENING PROCEEDINGS ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 2 AND ASSESSMENT MADE U/S. 147 READ WITH SECTION 143( 3) IN CONSEQUENCE THERETO. SINCE IT GOES TO THE ROOT OF THE MATTER, WE PREFERR ED TO ADJUDICATE THE SAME, FIRST. 3. IN GROUND NOS. 1 & 2.1(A) TO (E), THE ASSESSEE H AS RAISED AN ISSUE REGARDING VALIDITY OF THE REOPENING AND RE-ASSESSMENT MADE U/ S. 147 READ WITH SECTION 143(3) OF THE ACT. 4. THE RELEVANT FACTS ARE THAT THE RETURN FILED FOR THE A.Y. 1999-2000 UNDER CONSIDERATION U/S. 139 OF THE ACT WAS PROCESSED U/S . 143(1)(A) AT NIL INCOME. THE A.O INITIATED RE-OPENING PROCEEDINGS ON THE FOLLOWI NG 4 REASONS : A. THE FIRST ONE IS THAT THE ASSESSEE HAS FILED ONL Y THE INCOME AND EXPENDITURE ACCOUNT AND THE BALANCE SHEET WITH THE RETURN AND NO SCHEDULES TO THE BALANCE SHEET ARE SUBMITTED. B. THE SECOND REASON IS THAT THE ASSESSEE HAS EARNE D RENT OF RS.9,78,10,785/-. THE OBJECT OF THE ASSESSEE IS TO RUN EDUCATIONAL INSTITUTIONS AND NOT TO GIVE PROPERTIES ON RENT. T HE RENTAL INCOME IS TO BE TAXED AS INCOME FROM HOUSE PROPERTY/BUSINESS INCOME SEPARATELY. C. THE ASSESSEE HAS SHOWN RECEIPTS OF RS. 26,51,778 /- ON SALE OF BOOKS AND RS.43,83,154/- ON ACCOUNT OF INCOME FROM PRINTI NG PRESS. THESE RECEIPTS ARE OUT OF THE PURVIEW OF THE OBJECTS OF THE TRUST AND ARE TAXABLE AS BUSINESS INCOME. D. THE ASSESSEE HAS SHOWN IN THE BALANCE SHEET 20% PROFIT FROM BHARATI SAHAKARI BANK AND 20% FROM BHARATI GRAHAK BHANDAR A MOUNTING TO RS.17,34,764/-. THIS RECEIPT IS TAKEN TO THE CORPU S OF THE TRUST AND IT SHOULD HAVE BEEN CREDITED TO THE INCOME AND EXPENDITURE AC COUNT. 5. THE A.O. ACCORDINGLY FRAMED ASSESSMENT U/S. 147 R.W.S. 143(3) OF THE ACT. THE ASSESSEE QUESTIONED THE VALIDITY OF THE RE-ASSE SSMENT BEFORE THE LD CIT(A), BUT COULD NOT SUCCEED. ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 3 6. BEFORE US, THE LD. A.R. POINTED OUT THAT THE ASS ESSEE IS A CHARITABLE TRUST SET UP FOR EDUCATIONAL ACTIVITIES LONG BACK. THE TRUST WAS REGISTERED U/S. 12A ON 13.9.1973 AND FOR THE LAST NUMBER OF YEARS, IT HAS BEEN GRANTED EXEMPTION U/S. 11 AND IT WAS ASSESSED ON NIL INCOME. FOR THE A.Y. 1 999-2000, THE ASSESSEE FILED ITS RETURN OF INCOME U/S. 139 WHICH WAS ACCEPTED U/S. 1 43(1)(A ) AT NIL INCOME. ON 29.3.2006, THE A.O RE-OPENED THE ASSESSMENT U/S. 14 7. THE REASONS GIVEN HAVE BEEN MADE AVAILABLE AT PAGE NO. 65 OF THE PAPER BOO K. THE ASSESSEE INFORMED THE A.O THAT THE A.O WITH THOSE REASONS ON PAGE 65 DOES NOT JUSTIFY THE RE-OPENING. THE A.O INFORMED THE ASSESSEE THAT THOSE REASONS WE RE GIVEN BY MISTAKE AND THEY DID NOT PERTAIN TO THE ASSESSEE TRUST. HE INFORMED THE ASSESSEE THAT THE CORRECT REASONS RECORDED WERE DIFFERENT. THESE REASONS ARE MENTIONED ON PAGE NO. 91 OF THE PAPER BOOK. THE LD. A.R. SUBMITTED THAT EVEN T HESE REASONS MADE AVAILABLE AT PAGE NO. 91 OF THE PAPER BOOK DO NOT JUSTIFY THE R E-OPENING U/S. 148 AND THUS, THE RE-ASSESSMENT IS NULL AND VOID. 7. THE LD. A.R. SUBMITTED THAT ALL THE FACTS ON THE BASIS OF WHICH, THE A.O HAS NOTED THE REASONS OF HIS BELIEF THAT INCOME HAS ESC APED ASSESSMENT TO JUSTIFY THE RE-ASSESSMENT WERE PREVAILED IN THE CASE OF THE ASS ESSEE TRUST OVER THE LAST NUMBER OF YEARS. IN THOSE YEARS, THERE HAS NOT BEEN ANY A DDITION WARRANTED OR MADE IN THE ASSESSMENTS. 8. THE LD. A.R. POINTED OUT THAT A.O HAS COMPLETED THE ASSESSMENT FOR THE A.Y. 2003-04 ON 30 TH MARCH 2006, THE VERY NEXT DAY AFTER THE PRESENT RE -OPENING ON 29 TH MARCH 2006 AND THIS ASSESSMENT ORDER U/S. 143(3) H AS BEEN MADE AVAILABLE AT PAGE NUMBER 68 OF THE PAPER BOOK. FROM THE SAME, I T CAN BE NOTED THAT THE SAME A.O HAS ASSESSED ASSESSEE TRUST ON NIL INCOME BY GRANTING EXEMPTION U/S. 11 OF THE ACT. NO ADDITION ON THE BASIS OF ANY OF THE RE ASONS IS MADE IN THE A.Y. 2003-04 WHEN THE SIMILAR FACTS WERE IN EXISTENCE. THE LD. A.R. CONTENDED THAT THE VERY NEXT DAY, THE A.O IS OF THE OPINION THAT NO ADDITION IS WARRANTED ON ANY OF THESE ISSUES, ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 4 AND HENCE, HIS BELIEF THAT INCOME HAD ESCAPED ASSES SMENT FOR A.Y. 1999-2000 IS NOT CORRECT. THE LD. A.R. CONTENDED FURTHER THAT IF TH E SAME A.O IN THE SCRUTINY ASSESSMENT ON THE NEXT DAY DOES NOT MAKE ANY ADDITI ON ON ANY OF THESE ISSUES, IT INDICATES THAT WHILE RE-OPENING THE ASSESSMENT FOR THIS YEAR, THERE WAS NO APPLICATION OF ANY JUDICIAL MIND BY THE A.O. 9. THE LD. A.R. SUBMITTED THAT NONE OF THE REASONS ON WHICH THE A.O HAS RE- OPENED THE ASSESSMENT U/S. 147 OF THE ACT JUSTIFY THE RE-OPENING. THE LD. A.R. ADVANCED HIS ARGUMENT ON EACH OF THE REASONINGS SHO WN BY THE A.O FOR THE RE- OPENING AND HAS REFERRED PAGE NOS. 1 TO 263 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THESE DOCUMENTS ARE COPIES OF LIST OF INS TITUTIONS RUN BY THE TRUST; REGISTRATION CERTIFICATE DATED 13.9.73;TRUST DEED OF BHARATI VIDYAPEETH, ORDER OF THE I.T.A.T, PUNE RESTORING REGISTRATION U/S. 12A IN TH E CASE OF ASSESSEE TRUST, LETTER DATED 14.11.2007 OF THE LD. CIT (C ) AS OPPORTUNIT Y TO THE ASSESSEE FOR COMPULSORY AUDIT; ASSESSEES LETTER DATED 29.11.2007 OBJECTING COMPULSORY AUDIT, ORDER GRANTING APPROVAL U/S. 142(2A) DATED 3.12.2007 OF LD. CIT(C ), PUNE; A.OS LETTER DATED 18.12.2007; NOTICE U/S. 153C DATED 30.03.2007; A.O S LETTER DATED 10.10.2007 ENCLOSING THEREWITH THE SATISFACTION NOTE FOR PRO CEEDING U/S. 153C OF I.T. ACT IN THE CASE OF THE ASSESSEE; STATEMENT OF SHRI R.D. SHINDE DATED 21.07.2005; RELEVANT EXTRACT FROM LETTER DATED 21/07/2008 ADDRESSED TO A .O. REQUESTING CROSS EXAMINATION OF THE DONORS; NOTICE U/S. 148 DT. 29.0 3.2006 FOR A.Y. 99-00 ISSUED BY LD. ACIT CEN. CIR. 1(1), PUNE; A.O.S LETTER DATED 27.8.2007 COMMUNICATING THE REASONS FOR ISSUE OF NOTICE U/S. 148 FOR A.Y. 1999- 00 ; ASSTT. ORDERS FOR A.Y. 2000- 01 & A.Y. 2003-04 IN THE CASE OF BHARATI VIDYAPEETH ; RECTIFICATION ORDER U/S. 154 DATED 20/11/2008 FOR A.Y. 06-07 IN THE CASE OF THE ASSESSEE; CHART SHOWING DETAILS OF RENT RECEIPTS, SALE OF BOOKS & FORMS ETC; SUBMIS SION DATED 16.02.2009 BEFORE THE LD. CIT(A) ON LEGAL ISSUE OF VALIDITY OF ASSESSMENT IN THE CASE OF BHARATI VIDYAPEETH; SUBMISSION DATED 16.02.2009 BEFORE THE LD. CIT(A) ON LEGAL ISSUE OF VALIDITY OF REFERENCE FOR AUDIT U/S. 142(2A) IN THE CASE OF BH ARATI VIDYAPEETH; REMAND REPORT ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 5 DATED 03.06.2009; REMAND REPORT DATED 05.06.2009; S UBMISSION DATED 19.02.2010 BEFORE THE LD. CIT(A) ON REMAND REPORT OF LD. A.O. DT. 03.06.2009; SUBMISSION DT. 23.02.2010 BEFORE THE LD. CIT(A) ON REMAND REPORT O F LD. A.O. DT. 05.06.2009 AND BALANCE SHEET OF THE BHARATI VIDYAPEETH FOR FY 1998 -1999. 10. ON THE ISSUE OF VALIDITY OF THE REOPENING TH E LD. A.R. HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1) ACIT VS. O.P. CHAWLA , 114 ITD 69 (DEL.) (TMR) 2) LAJWANTI SIAL VS. CIT, 32 ITR 526 (BOM) 3) CIT VS. INSTITUTE OF BANKING PERSONNEL SELECTIO N, 264 ITR 110(BOM) 4) ACIT VS. THANTHI TRUST ETC., (247 ITR 785 (SC) (SUPRA) 5) VIJAYKUMAR HIRAKHANWALA (HUF) VS. ITO, 287 ITR 443 (BOM) 6) PRASHANT S.JOSHI & DATTARAM SHRIDHAR BHOSALE VS . ITO & ANR.324 ITR 154 (BOM) 7) CHUNNILAL SURAJMAL VS. CIT ,160 ITR 141 (PAT.) 8) RALLIES INDIA LTD. VS. ACIT & ANR., 323 ITR 54 (BOM) 9) RAYMOND WOOLEN MILLS LTD. VS. ITO ,236 ITR 34 ( SC) 10) JYOTI PRASAD VS. STATE OF HARYANA 1192- (SR 3) -GJX -0652 SC 11) CIT VS. SUN ENGINEERING WORKS P.LTD., 198 ITR 297 (SC) 12) CIT VS. JET AIRWAYS (I) LTD., JET AIRWAYS, 331 ITR 236 (BOM) 13) CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC) THE LD. D.R. HAS BASICALLY TRIED TO JUSTIFY THE O RDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF REOPENING. HE SUBMITTED THAT REASONS FOR ESCAPEMENT OF ASSESSMENT OF TAXABLE INCOME RECORDED BY THE A.O. FOR REOPENING I S PRIMA FACIE BELIEF OF THE A.O. AT INITIAL STAGE, SUFFICIENCY OF WHICH CAN NOT BE QUESTIONED BEFORE ANY COURT OF LAW. IN THIS REGARD THE LD. D.R. PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLEN MILLS LTD. VS. ITO (1 999) 236 ITR 34(SC). HE SUBMITTED FURTHER THAN NO ASSESSMENT U/S. 143(3) WA S MADE DURING THE A.Y. 1999- ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 6 00 UNDER CONSIDERATION, HENCE THERE IS NO QUESTION OF CHANGE OF OPINION INITIATING THE REOPENING PROCEEDINGS UNDER SECTION 147 EXPLAN ATION 2(B). THE LD. D.R. SUBMITTED FURTHER THAT EVERY ASSESSMENT YEAR IS AN INDEPENDENT UNIT IN ITSELF HENCE IT IS NOT AFFECTED BY PAST OR FUTURE ASSESSMENT. SO FAR AS THE FIRST CONTENTION OF THE LD. A.R. IS CONCERNED THAT THE A.O INITIALLY HAD SUPPLIED REASONS FOR RE-OPENING (MADE AVAILABLE AT PAGE NO. 65 OF THE PAPER BOOK) WAS NOT RELATED TO THE ASSESSEE, WE DO NOT FI ND SUBSTANCE IN THIS CONTENTION OF THE LD. A.R. SINCE WHEN IT WAS POINTED OUT BY TH E ASSESSEE TO THE A.O, HE REALIZED THE MISTAKE AND SUPPLIED CORRECT COPY OF THE REASON S ON THE BASIS OF WHICH, THE A.O HAD INITIATED THE RE-OPENING PROCEEDINGS. AT THE M AXIMUM, IN OUR VIEW, IT IS A CASE OF HUMAN ERROR WHICH ON REALIZATION WAS CORRECTED B Y THE A.O ON ITS FIRST AVAILABLE OPPORTUNITY. FINDINGS OF TRIBUNAL ON VALIDITY OF EXISTENCE OF RE ASONS TO BELIEVE REASON (A) 11. THE SUBMISSION OF THE LD. A.R. AGAINST REASON ( A) FOR RE-OPENING THE ASSESSMENT, REMAINED THAT IF THE A.O FOUND THAT THE ASSESSEE HAD NOT FILED SCHEDULE TO THE BALANCE SHEET, HE COULD HAVE ASKED FOR THE S CHEDULES. NON-FILING OF THE SCHEDULES DOES NOT IMPLY THAT THE INCOME HAS ESCA PED ASSESSMENT. IT WAS SUBMITTED THAT EVEN OTHERWISE AS IN THE CASE OF A C OMPANY, WHEREIN THE ASSESSEE HAD TO FILE THE ANNUAL REPORT WITH THE RETURN, THER E IS NO WARRANT THAT A CHARITABLE TRUST HAS TO FILE THE SCHEDULES ALONG WITH THE BAL ANCE SHEET WITH THE RETURN. IF THE INCOME EXPENDITURE ACCOUNT AND THE BALANCE SHEET A RE GIVEN WITH THE RETURN, THAT IS A SUFFICIENT COMPLIANCE. HENCE, CALLING FOR THE SCHEDULES TO THE BALANCE SHEET WOULD HAVE BEEN AT THE MOST A MODE OF ENQUIRY FOR T HE A.O BUT THAT CANNOT FORM A REASON FOR RE-OPENING. IN THIS REGARD, RELIANCE H AS BEEN PLACED BY THE LD. A.R. ON THE DECISION OF THIRD MEMBER BENCH IN THE CASE OF A CIT VS. O.P. CHAWLA (SUPRA). ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 7 HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF LAJWANTI SIAL VS. CIT, (SUPRA.) THE LD. DR HAS PLAC ED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. HAVING GONE THROUGH THESE DECISI ONS, WE FIND THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. O.P. CHAWLA (SUPRA) HAS HELD THAT RE- OPENING OF ASSESSMENT BY THE A.O ON THE GROUND THAT BALANCE SHEET OF THE ASSESSEE REVEAL THAT HE HAD RECEIVED CERTAIN AMOUNT BY WAY O F GIFT FROM AN NRI FOR WHICH NO DETAILS HAD BEEN FILED WAS NOT SUSTAINABLE. IT W AS HELD THAT THERE WAS NO INVESTIGATION OR EVIDENCE COLLECTED BY THE A.O OR D EPARTMENT HAVING A NEXUS OR LIVE LINK OR RATIONAL CONNECTION WITH INCOME ESCAPING AS SESSMENT, THE REASONS RECORDED BY THE A.O WERE ONLY A PRETENCE, AN EXCUSE TO ENQUI RE INTO GIFTS RECEIVED BY ASSESSEE, HENCE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT RE-OPENING OF ASSESSMENT WAS VOID AB-INITIO, HELD THE TRIBUNAL. IN THE PRES ENT CASE, THE FIRST REASON THAT NO SCHEDULES TO THE BALANCE SHEET WAS SUBMITTED WITH I NCOME AND EXPENDITURE ACCOUNT AND THE BALANCE SHEET FILED WITH THE RETURN, IN OUR VIEW, IS NOT SUFFICIENT TO COME TO A CONCLUSION OR FORM A REASONABLE BELIEF THAT THER E WAS ESCAPEMENT OF ASSESSMENT OF INCOME. IN OUR VIEW, AT THE MOST, IT WAS A SUBJ ECT FOR MAKING ENQUIRIES. THUS IT CAN NOT BE A BASIS FOR REOPENING OF THE ASSESSMENT. REASON (B) 12. THE A.O NOTED THAT THE ASSESSEE HAS EARNED RENT OF RS.9,78,10,785/-. HE OBSERVED THAT THE OBJECT OF THE ASSESSEE IS TO RUN THE EDUCATIONAL INSTITUTIONS AND NOT TO GIVE PROPERTIES ON RENT. THEREFORE, THE REN TAL INCOME IS TO BE TAXED AS INCOME FROM HOUSE PROPERTY/BUSINESS INCOME SEPARATE LY. THE SUBMISSION OF THE LD. A.R. IN THIS REGARD REMAINED THAT THE ASSESSEE TRUS T HAS MANY BUILDINGS WHICH ARE USED FOR ITS EDUCATIONAL INSTITUTIONS. THE INSTITU TIONS SHOW THE RENT PAYABLE TO THE HEAD OFFICE. THIS IS BECAUSE, THE ASSESSEE HAS TO TAKE INTO CONSIDERATION THE EXPENDITURE ON RENT WITH INSTITUTIONS AND THIS EXE RCISE IS REQUIRED FOR THE PURPOSES OF DETERMINING THE FEES STRUCTURE BY THE GOVERNMENT COMMITTEE. HE SUBMITTED THAT ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 8 OUT OF RS. 9.78 CRORES, THE ASSESSEES HEAD OFFICE HAS SHOWN RS. 8.84 CRORES AS RENT RECEIVED FROM ITS OWN INSTITUTES. THUS, IT IS NOT A RENTAL INCOME FROM A THIRD PARTY, BUT IT IS A BOOK ENTRY FROM THE INSTITUTE TO THE HEAD OFFICE AND BOTH ARE THE ARMS OF THE ASSESSEE TRUST. HE SUBMITTED THAT THE BALANCE RENT ABOUT RS. 90 LAKHS IS RECEIVABLE BY THE ASSESSEE FROM BHARATI SAHAKARI BHANDAR AND BHARATI SAHAKARI BANK WHICH ARE CO-OPERATIVE SOCIETIES LOCATED IN TH E BUILDINGS OF THE ASSESSEE TRUST. THE LD. A.R. SUBMITTED THAT THESE ESTABLISHMENTS AR E ESSENTIAL FOR THE ASSESSEES STUDENTS, STAFF, FACULTY ETC., BECAUSE THEY NEED A BANK IN THE CAMPUS AND THEY ALSO NEED A GROCERY STORE FOR MEETING THEIR DAY TO DAY R EQUIREMENT. HENCE, THE REASON MENTIONED BY THE A.O THAT THE PROJECT OF THE ASSESS EE IS NOT TO GIVE PROPERTIES ON RENT IS GROSSLY MIS-PLACED AND NOT CORRECT ON FACTS . THE ASSESSEE HAS GIVEN PART OF ITS PROPERTIES ONLY TO THE TWO ORGANIZATIONS WHILE MAJORR PART OF ITS RENTS IS FROM ITS OWN MAJOR INSTITUTIONS. THE LD. A.R. ALSO POINT ED OUT THAT THE SAME FACT WAS PREVALENT FOR THE LAST NUMBER OF YEARS AND THE A.O HAS NOT TAXED SUCH RENTAL. THE LD. A.R. ALSO SUBMITTED THAT SUCH RENTAL INCOME HAS ALREADY BEEN SHOWN BY THE ASSESSEE IN ITS INCOME AND EXPENDITURE ACCOUNT AND HENCE, IT IS NOT A CASE OF SOME ESCAPEMENT OF INCOME. HE PLACED RELIANCE ON THE DE CISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING P ERSONNEL SELECTION (SUPRA). THE LD. D.R. ON THE OTHER HAND PLACED RELIANCE ON THE O RDERS OF THE AUTHORITIES BELOW. 12.1. CONSIDERING THE ABOVE SUBMISSION, WE FIND SUB STANCE THEREIN IN THE CONTENTION OF THE LD. A.R. AS THERE IS NO PROHIBITI ON IN SECTION 11 THAT A CHARITABLE TRUST CANNOT GIVE ITS PROPERTIES ON RENT. FOR EXAM PLE, IF A CHARITABLE TRUST HAS RENTAL INCOME FROM A NUMBER OF PROPERTIES AND SUCH RENTAL INCOME IS SPENT ON CHARITABLE ACTIVITY, THIS INCOME WOULD BE EXEMPT U/ S. 11 OF THE ACT. WE THUS CONCOR WITH THE CONTENTIONS OF THE LD. A.R. THAT A.O WAS N OT JUSTIFIED IN HOLDING A REASON THAT THERE IS AN ESCAPEMENT OF INCOME BECAUSE ITS RENTAL INCOME WAS HIGH. WE ARE ALSO OF THE VIEW THAT THE A.O WAS NOT JUSTIFIED IN HOLDING THAT THE RENTAL INCOME IS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY/BUSINESS INCOME IN THE HANDS OF THE ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 9 ASSESSEE SINCE IN OUR VIEW, IN THE CASE OF A CHARIT ABLE TRUST U/S. 11, IT IS AN ESTABLISHED PROPOSITION OF LAW THAT INCOME IS TO BE COMPUTED AS PER THE COMMERCIAL PRINCIPLES AND NOT UNDER THE VARIOUS HEADS OF INC OME PRESCRIBED IN THE ACT. IN THIS REGARD, WE FIND SUPPORT FROM THE DECISION OF HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INSTITUTE OF BANKING PERSONNEL SELE CTION (SUPRA) RELIED UPON BY THE LD. A.R. HOLDING THAT INCOME OF THE TRUST IS REQUIR ED TO BE COMPUTED U/S. 11 ON COMMERCIAL PRINCIPLES AFTER PROVIDING FOR ALLOWANCE FOR NORMAL DEPRECIATION AND DEDUCTION THEREOF FROM GROSS INCOME OF THE TRUST. BESIDES, SUCH RENTAL INCOME HAS ALREADY BEEN SHOWN BY THE ASSESSEE IN ITS INCOME AN D EXPENDITURE ACCOUNT AND HENCE, IT IS NOT A CASE OF ESCAPEMENT OF INCOME. WE THUS FIND THAT THE REASON(B) SHOWN BY THE A.O FOR ESCAPEMENT OF ASSESSMENT OF IN COME WAS NOT HAVING LIVE LINK WITH FORMATION OF BELIEF THAT RENTAL INCOME HAS ESC APED ASSESSMENT. REASON NO. (C) 13. THE NEXT REASON SHOWN BY THE A.O IS THAT THE A SSESSEE IS EARNING INCOME FROM SALE OF BOOKS AND PRINTING PRESS. THE CONTENT ION OF THE LD A.R. ON THIS REASON REMAINED THAT ASSESSEE IS HAVING STUDENTS IN LAKHS . THUS, IT HAS TO MAKE ARRANGEMENTS FOR PROVIDING BOOKS, EXERCISE BOOKS, E XAMINATION PAPERS AND SYLLABUS, STUDY MATERIAL ETC., TO THE STUDENTS. IT IS FOR TH AT PURPOSE THE ASSESSEE IS HAVING A PRESS AND IS ALSO HAVING INCOME FROM SALE OF BOOKS. THUS, THIS ACTIVITY IS INCIDENTAL TO THE OBJECT OF THE TRUST. HE SUBMITTED THAT THIS INCOME HAS BEEN REFLECTED DULY IN THE ASSESSEES INCOME AND EXPENDITURE ACCOUNT. THE LD. A.R SUBMITTED FURTHER THAT SECTION 11(4A) ITSELF STATES THAT A CHARITABLE TRUS T CAN HAVE A BUSINESS INCOME AND SUCH INCOME IS EXEMPT IF IT IS APPLIED FOR CHARITY AND IS INCIDENTAL TO THE OBJECTS OF THE TRUST. HE CITED DECISION OF HONBLE SUPREME CO URT IN THE CASE OF ACIT VS. THANTHI TRUST ETC., (SUPRA). THE LD. A.R. SUBMIT TED FURTHER THAT THIS INCOME HAS BEEN INCLUDED BY THE ASSESSEE IN THE INCOME AND EXP ENDITURE ACCOUNT AND SUCH INCOME IS ALSO EXEMPT U/S. 11. HE POINTED OUT THAT ASSESSEE IS HAVING SUCH INCOME ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 10 FOR THE LAST NUMBER OF YEARS AND THE A.O HAS BEEN G RANTING THE EXEMPTION ON SUCH INCOME. IN SUPPORT, HE REFERRED PAGE NOS. 66 & 68 OF THE PAPER BOOK WHEREIN COPIES OF THE ASSESSMENT ORDER FOR THE A.YS 2000-0 1 AND 2003-04 HAVE BEEN MADE AVAILABLE. THE LD. D.R. HAS PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 13.1. WE FIND SUBSTANCE IN THE ABOVE CONTENTION OF THE LD. A.R. WHICH IS ALSO SUPPORTED BY THE RATIO LAID DOWN IN THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF ACIT VS. THANTHI TRUST ETC., (SUPRA) WHEREI N IT HAS BEEN HELD THAT REQUIREMENT OF SECTION 13(1)(BB) IS THAT THE EXEMPT ION U/S. 11 WILL NOT BE AVAILABLE TO SUCH TRUST THAT CARRIES ON ANY BUSINESS UNLESS THE BUSINESS IS CARRIED ON IN THE COURSE OF THE ACTUAL CARRYING OUT OF THE PRIMARY PU RPOSE OF THE TRUST, SINCE THE BUSINESS OF RUNNING A NEWSPAPER THOUGH HELD BY THE ASSESSEE TRUST AS A PART OF ITS CORPUS WAS NOT CARRIED ON IN THE COURSE OF ACTUAL A CCOMPLISHMENT OF THE CHARITABLE OBJECT OF THE TRUST, BAR OF SECTION 13(1)(BB) WAS APPLICABLE AND ASSESSEE TRUST WAS NOT ENTITLED TO EXEMPTION U/S. 11 FOR A.YS. 1979-82 , & 1983-84. THE RATIO LAID DOWN IN THE DECISION OF HONBLE SUPREME COURT SUPPO RTS THE CASE OF ASSESSEE AS THERE WAS NO TANGIBLE MATERIAL AS ON THE DATE OF RE CORDING OF THE REASON TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT REGARDING SALE OF BOOKS AND RUNNING PRINTING PRESS BY THE AS SESSEE AS THE SAME WAS NOT TOWARDS MAKING ARRANGEMENT FOR PROVIDING THE BOOKS, EXERCISE BOOKS, EXAMINATION PAPER, SYLLABUS, STUDY MATERIAL ETC., TO ITS STUDEN TS. THE CONTENTION OF THE LD. A.R THAT THE BUSINESS WAS CARRIED ON IN THE COURSE OF T HE ACTUAL CARRYING OUT OF THE PRIMARY PURPOSE OF THE TRUST I.E. IMPARTING OF ED UCATION, AS , IN THE LAST NUMBER OF YEARS, THE A.O HAS BEEN GRANTING EXEMPTION ON SUCH INCOME, HAS NOT BEEN REBUTTED BY THE REVENUE BEFORE THE TRIBUNAL. BESIDES, THE INCOME IN QUESTION HAS BEEN INCLUDED BY THE ASSESSEE IN THE INCOME AND EXPENDIT URE ACCOUNT AND SUCH INCOME IS ALSO EXEMPT U/S. 11 OF THE ACT. WE THUS FIND NO S UBSTANCE IN THIS REASON (C ) AS WELL TO FORM A REASON TO BELIEF THAT THERE WAS ESCA PEMENT OF ASSESSMENT OF INCOME ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 11 EARNED FROM SALE OF BOOKS AND PRINTING PRESS TO JUS TIFY THE RE-OPENING IN THIS REGARD BY THE A.O. REASON NO. (D) 14. THE FOURTH AND LAST REASON TO BELIEVE SHOWN BY A.O TO JUSTIFY THE RE-OPENING IS THAT THE ASSESSEE TRUST IS GETTING 20% PROFIT FR OM BHARATI SAHAKARI BANK AND BHARATHI GRAHAK BHANDAR AS A DONATION TO THE CORPUS AND THIS SHOULD HAVE BEEN INCLUDED IN THE INCOME AND EXPENDITURE ACCOUNT. 15. THE SUBMISSION OF THE ASSESSEE REMAINED THAT B OTH THE ABOVE SOCIETIES I.E. BHARATHI SAHAKARI BANK AND BHARATHI GRAHAK BHANDAR HAD PASSED RESOLUTIONS LONG BACK TO THE EFFECT THAT EVERY YEAR THEY WILL DEPOSI T 20% OF THEIR PROFITS TO THE ASSESSEE TRUST AS A CORPUS DONATION. SUCH DONATION WAS RECEIVED BY THE ASSESSEE FOR A NUMBER OF YEARS AND IT WAS NEVER TAXED BY THE A.O IN THE ASSESSEES HANDS IN ANY OF THE PAST YEARS. IT WAS SUBMITTED THAT FOR T HE A.YS. 2000-01 AND 2003-04, THE SAME FACTS WERE PREVALENT AND THE A.O HAD NOT T AXED THESE DONATIONS IN THE ASSESSMENT U/S. 143(3) FOR THESE YEARS. COPIES OF THESE ASSESSMENT ORDERS HAVE BEEN MADE AVAILABLE A PAGE NOS. 66 AND 68 OF THE PA PER BOOK. IT WAS SUBMITTED FURTHER THAT A.O FOR THE A.Y. 2003-04 WHO MADE THE ASSESSMENT U/S. 143(3) OF THE ACT FOR THAT YEAR IS THE SAME WHO HAS RE-OPENED TH E ASSESSMENT FOR THE A.Y. UNDER CONSIDERATION I.E. A.Y. 1999-2000. IT WAS POINTED OUT THAT ASSESSMENT FOR THE A.Y. 2003-04 HAS BEEN FRAMED BY THE A.O JUST ONE DAY AFT ER THE RE-OPENING INITIATED BY HIM FOR THE A.Y. 1999-2000. 16. THE ASSESSEE COULD NOT SUCCEED ON THE ISSUE BEF ORE THE LD CIT(A). BEFORE THE TRIBUNAL, THE LD. A.R WHILE REITERATING THE ABO VE SUBMISSIONS ARGUED FURTHER THAT WHEN THE DONATIONS FROM THE ABOVE TWO SOCIETI ES WERE ACCEPTED AS CORPUS DONATIONS IN ALL THE PAST YEARS AND IN THE LATER YE ARS I.E. A.YS. 2000-01 AND 2003-04, ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 12 HENCE THERE WAS NO JUSTIFICATION FOR MAKING THIS RE ASON AS A BASIS FOR INITIATION OF RE- OPENING PROCEEDINGS. IN THIS REGARD, HE PLACED REL IANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF VIJAYKUMAR HIRAKH ANWALA,(SUPRA). 17. BESIDES ABOVE SUBMISSIONS, THE LD. A.R MADE A GENERAL SUBMISSION THAT THE A.O HAS NOT MADE ADDITION IN THE ASSESSMENT ON THE BASIS OF ANY OF THE ABOVE REASONS. HE HAS TAXED THE INCOME BECAUSE HE DENIED THE EXEMPTION U/S. 11 AND ALSO BECAUSE THE REGISTRATION U/S. 12A WAS CANCELLE D BY THE LD CIT ON 8.11.2007 WHICH WAS AFTER THE ASSESSMENT WAS RE-OPENED. THE LD. A.R. SUBMITTED THAT THE LD CIT(A) HAS HELD THAT THERE WAS SEARCH ON THE ACCO UNTANT SHRI R.D. SHINDE AND WHICH INDICATED THAT THE ASSESSEE WAS CHARGING CAPI TATION FEE AND THE ASSESSEE HAS BEEN DENIED REGISTRATION AND SUCH INCOME HAS BEEN T AXABLE. HE SUBMITTED THAT THE VALIDITY OF RE-OPENING IS TO BE JUDGED ONLY ON THE BASIS OF REASONS RECORDED AND NOT ON THE BASIS OF ANY OTHER FACT. THE LD. A.R. SUBM ITTED THAT APART FROM THE FACT THAT THE ALLEGATION OF LD CIT(A) THAT THE ASSESSEE HAS B EEN CHARGING DONATION FOR ADMISSIONS ARE INCORRECT, THE REASONS TO BELIEVE C ANNOT BE SUPPLEMENTED TO THE REASONS ALREADY RECORDED FOR JUSTIFYING THE VALIDIT Y OF RE-OPENING. IN THIS REGARD, THE LD A.R. PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. PRASHANT S.JOSHI & DATTARAM SHRIDHAR BHOSALE VS. ITO & ANR. 324 ITR 154(BOM) 2. HINDUSTAN LEVER LTD. V/S. ACIT & OTHERS,268 ITR 332 (BOM) 3. CHUNNILAL SURAJMAL V. CIT, 160 ITR 141 (PATNA) 4. RALLIES INDIA LTD. VS. ACIT & ANR.,323 ITR 54 ( BOM) 5. MANOJ KUMAR GUPTA VS. ITO (2008) 114 TTJ (JP) 2 53 18. THE LD. A.R. SUBMITTED FURTHER THAT THE A.O IN THE REASONS RECORDED HAS NOT MENTIONED ANY ASPECT OF THE SEARCH ON SHRI R.D. SHI NDE, ACCOUNTANT OR THE CANCELLATION OF REGISTRATION ETC., AND HENCE NO COG NIZANCE THEREOF CAN BE TAKEN FOR ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 13 DECIDING THE VALIDITY OF RE-OPENING. IN SUPPORT HE PLACED RELIANCE ON THE DECISIONS CITED HEREINABOVE IN PARA NO. 9 AND THE FOLLOWING D ECISIONS : 1. SIEMENS INFORMATION SYSTEM LTD. VS. ACIT, 293 I TR 548 (BOM) 2. DEVIDEYAL ROLLING MILLS VS. ACIT,285 ITR 514 (B OM) 3. CIT VS. RAINEE SINGH 330 ITR 417 (DEL.) 4. GWALIOR RAYON SILK MFG. CO. VS. RAGHAVAN 150 ITR 12 (BOM) 5. ITO VS. LAKMANI MEWAL DAS 103 ITR 437 (SC) 6. ANAND KUMAR SAHARIA 232 ITR 533 (GUJ.) 7. GERMAN REMEDIES LTD. 285 ITR 26 (BOM.) 8. CIT VS. MAX INDIA LTD. 295 ITR 282 (SC) 19. WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, THE LD. A.R POINTED OUT THAT THE TRIBUNAL VIDE ITS ORDER DATED 19 TH DAY OF SEPTEMBER 2008, IN ITA NO. 1793/PN/2008 HAS ALREADY RESTORED THE REGISTRATION U/S. 12A GRAN TED TO THE ASSESSEE WHICH WAS CANCELLED BY THE LD CIT. COPY OF THE SAID ORDER OF THE TRIBUNAL HAS BEEN MADE AVAILABLE AT PAGE NOS. 18 TO 28 OF THE PAPER BOOK. 20. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTI FY THE VALIDITY OF RE-OPENING. HE SUBMITTED THAT REASONS RECORDED ARE VALID AND THE S UFFICIENCY OF THE REASONS CANNOT BE CHALLENGED BY THE ASSESSEE. THE LD. D.R SUBMITT ED FURTHER THAT UNDER THE EXPLANATION 3 TO SECTION 147, THE A.O WAS JUSTIFIED IN MAKING OTHER ADDITIONS ALSO. IN THIS REGARD, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. GKN DRIVESHAFTS (INDIA) PVT. LTD. VS. ITO 259 I TR 19 (SC) 2. RAYMOND WOOLEN MILLS LTD. VS. ITO (1999) 236 IT R 34(SC) 3. ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD., 291 ITR 500 (SC) THE LD. D.R. SUBMITTED THAT A.O HAD RECORDED REASO NS AND COMMUNICATED THE SAME TO THE ASSESSEE. ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 14 21. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THA T THERE IS NO REBUTTAL TO THE CLAIM OF THE LD. A.R THAT ASSESSEE HAD BEEN RECEIVI NG 20% PROFIT FROM BHARATI SAHAKARI BANK AND BHARATI GRAHAK BHANDAR AS A DONAT ION TO THE CORPUS OF THE ASSESSEE FOR THE LAST NUMBER OF YEARS AND IT WAS NO T TAXED BY THE A.O. IT IS ALSO WORTH NOTING THAT SAME A.O HAD FRAMED ASSESSMENT FO R A.Y. 2003-04 AND THE ASSESSMENT ORDER FOR THAT YEAR WAS PASSED JUST ONE DAY AFTER THE RE-OPENING INITIATED BY THE SAME A.O FOR THE A.Y. UNDER CONSID ERATION I.E. A.Y. 1999-2000. IN THE LATER YEARS, I.E. A.Y. 2000-01 AND 2003-04, TH E A.O HAS ACCEPTED THE DONATIONS FROM THE ABOVE 2 SOCIETIES AS CORPUS. UNDER THESE CIRCUMSTANCES, WHEN THE DEPARTMENT HAS BEEN ACCEPTING A SIMILAR DONATION IN PAST AND FUTURE YEARS, THE RE- OPENING OF THE ASSESSMENT ON THE BASIS THAT THE SAI D DONATION REMAINED TO BE TAXED FOR THE A.Y. UNDER CONSIDERATION I.E. UNDER 1999-20 00 IS NOTHING BUT MERE CHANGE OF OPINION, WHICH IS NOT ALLOWED AS A BASIS FOR IN ITIATING RE-OPENING PROCEEDINGS. IN THIS REGARD, WE FIND STRENGTH FROM THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) A ND FROM THE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF VI JAYKUMAR M. HIRAKHANWALA (HUF) VS. ITO (SUPRA). THE HONBLE SUPREME COURT IN THE C ASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) HAS BEEN PLEASED TO HOLD THAT IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED, REVIEW WOULD TAKE PLACE IN TH E GARB OF REOPENING OF ASSESSMENT. CONCEPT OF CHANGE OF OPINION IS AN IN BUILT TEST TO CHECK ABUSE OF POWER BY THE A.O. HENCE AFTER 1.4.1989 AO HAS POWE R TO REOPEN THE ASSESSMENT UNDER S. 147 PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND REASON MUST HAVE A LIVE LINK WITH THE FORMATION OF BELIEF, HELD THE HONBLE SUPR EME COURT. IN THE CASE OF VIJAYKUMAR M. HIRAKHANWALA (HUF) VS. ITO (SUPRA), T HE BUSINESS OF THE ASSESSEE WAS BEING CARRIED ON ITS FACTORIES LOCATED AT FOUR PLACES AND WAS BEING CONTROLLED AND MANAGED BY ITS OFFICE AT BOMBAY AND THE EXPENDI TURE/LOSS INCURRED BY THE BOMBAY OFFICE HAD ALL ALONG BEEN ALLOWED TO BE SET OFF AGAINST OTHER INCOME OF THE ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 15 ASSESSEE. THE HONBLE BOMBAY HIGH COURT WAS PLEASE D TO HOLD THAT A.O. COULD NOT REOPEN THE ASSESSMENT BY MERELY STATING THAT THERE IS HARDLY ANY ACTIVITY AT THE SAID OFFICE, IN THE ABSENCE OF ANY SPECIFIC MATERIAL TO SHOW THAT THE EXPENDITURE HAS BEEN ERRONEOUSLY ALLOWED IN THE PAST. IT WAS HELD THAT REASON RECORDED FOR REOPENING THE ASSESSMENT IS TOTALLY VAGUE AND CAN NOT CONSTITUTE MATERIAL OR INFORMATION SO AS TO FORM NEXUS OR REASON TO BELIE VE THAT INCOME HAS ESCAPED ASSESSMENT. IT WAS HELD THAT REOPENING IS BASE D ON PURE CHANGE OF OPINION AND THEREFORE NOTICE UNDER SECTION 148 WAS QUASHED AND SET ASIDE. WE THUS FIND SUBSTANCE IN THE CONTENTION OF THE LD. A.R. THAT TH E A.O WAS NOT JUSTIFIED IN DRAWING REASONS TO BELIEVE THAT DONATION OF 20% OF THEIR PR OFIT TO THE CORPUS OF THE ASSESSEE BY BHARATI SAHAKARI BANK AND BHARATI GRAHAK BHANDAR REMAINED TO BE TAXED IN THE HANDS OF THE ASSESSEE ESPECIALLY WHEN THE SAME HAS BEEN ACCEPTED IN PAST AND FUTURE ASSESSMENTS. 22. CONSIDERING THE OVERALL APPROACH OF THE A.O IN DRAWING THE AFORE-NOTED REASONS TO BELIEVE TO INITIATE RE-OPENING PROCEEDIN GS IN QUESTION, WE DO NOT FIND JUSTIFICATION FOR THE SAME. IN THE PRECEDING PARAG RAPHS, WE HAVE ALREADY DEALT WITH EACH OF THE REASONS TO BELIEVE NOTED BY THE A.O FO R THE RE-OPENING. BESIDES, IT IS ALSO AN ESTABLISHED PROPOSITION OF LAW THAT THE A.O IS SUPPOSED TO DRAW REASONS TO BELIEVE TO INVOKE THE RE-OPENING PROCEEDINGS U/S. 1 47 ON THE BASIS OF PREVAILING FACTS AND CIRCUMSTANCES WHICH COME TO HIS NOTICE AT THE TIME OF RECORDING OF THE REASONS. OF COURSE AS PER THE AMENDED PROVISION U/ S. 147 W.E.F. 1.4.1989, THE A.O IS EMPOWERED TO MAKE ADDITION ON OTHER HEADS TO WHI CH HE COMES ACROSS DURING THE RE-ASSESSMENT PROCEEDINGS, WITHOUT ISSUING FRESH RE ASONS TO BELIEVE AND INITIATING FRESH PROCEEDINGS SEPARATELY BUT ONLY AFTER PROVI DING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ON THOSE NEW ISSUES OF ESCAPED ASSESSM ENT. THUS, THE A.O IS EMPOWERED TO MAKE ADDITIONS ON THOSE NEW HEADS ALSO ALONG WITH THE ADDITIONS MADE ON THE HEADS WHICH REMAINED THE SUBJECT MATTE R OF REASONS TO BELIEVE FOR INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT, BUT WHEN INITIATION OF ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 16 REOPENING BASED UPON THE REASONS TO BELIEF RECORDE D BY THE A.O IS QUESTIONED IT IS INEVITABLE TO EXAMINE VALIDITY OF EXISTENCE OF EACH OF THOSE REASONS AS ON THE DATE WHEN IT WAS RECORDED. TO EXAMINE THE VALIDITY OF THE EXISTENCE OF REASON IT IS TO BE SEEN THAT THE REASON MUST BE OF AN HONEST AND PR UDENT PERSON BASED UPON REASONABLE GROUNDS AND SHOULD NOT BE BASED UPON M ERE SUSPICION, GOSSIP OR RUMOUR. IN OUR VIEW SUFFICIENCY OF REASONS FOLLOWS VALIDITY OF EXISTENCE OF THE REASONS. SO FAR AS SUFFICIENCY OF REASONS IS CONCER NED, WE FULLY AGREE WITH THE CONTENTION OF LD. D.R. THAT WE ARE NOT SUPPOSED TO EXAMINE THE SAME AS EVEN A PRIMA FACIE BELIEVE AS OF A PRUDENT PERSON UNDER T HE CIRCUMSTANCES OF A CASE REGARDING ESCAPEMENT OF ASSESSABLE INCOME IS SUFFIC IENT TO INITIATE REOPENING PROCEEDINGS. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLEN MILLS LTD. VS. ITO (SUPRA) RELIED UPON BY TH E LD. D.R IN THIS REGARD IS NOT RELEVANT IN IS THE PRESENT CASE. THE DECISION IN THE CASE OF CIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD. (SUPRA) RELIED UPON BY THE LD . D.R. IS AN DIFFERENT ISSUE REGARDING PRINCIPLE RELATING TO CHANGE OF OPINION IN THE CONTEXT OF RETURN OF INCOME PROCESSED U/S. 143(1)(A), WHEREAS IN THE PRESENT CA SE VALIDITY OF EXISTENCE OF REASONS HAS BEEN QUESTIONED. IN THE CASE OF RALLIES INDIA LTD (SUPRA) AFTER THE NOTICE U/S. 148 WAS ISSUED, THERE WAS A RETROSPECTIVE AMENDMENT IN LAW AND ON T HAT BASIS, THE REVENUE SOUGHT TO JUSTIFY THE REASONS RECORDED. IT WAS HELD THAT THE REASONS RECORDED CANNOT BE REVALIDATED BY LATER RETROSPECTIVE AMENDMENT TO LAW. IT WAS HELD BY THE HONBLE BOMBAY HIGH COURT THAT THE VALIDITY OF THE NOTICE ISSUED U/S. 148 MUST BE DISMISSED WITH REFERENCE TO THE REASONS RECORDED. IN THE CASE OF SIEMENS INFORMATION SYSTEM LTD. VS. ACIT (SUPRA), THE HONBLE BOMBAY HIGH COURT WHILE ALLOWING THE WRIT P ETITION HELD THAT IT WOULD BE CLEAR FROM THE REASONS GIVEN THAT THE AUTHORITY PRO CEEDED ON THE PRESUMPTION THAT THE LAW APPLICABLE WAS THE LAW AFTER THE AMENDMENT AND NOT THE LAW IN RESPECT OF ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 17 WHICH, THE PETITIONER HAD FILED THE RETURN FOR THE YEAR 1999-2000. THIS BY ITSELF CLEARLY DEMONSTRATED THAT THERE WAS TOTAL NON-APPLI CATION OF MIND ON THE PART OF THE AUTHORITY AND CONSEQUENTLY, THE NOTICES BASED ON TH AT REASON WOULD AMOUNT TO NON-APPLICATION OF MIND. 23. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DE CISION OF JAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF MANOJ KUMAR GUPTA VS. ITO ( SUPRA). IN THAT CASE, THE ASSESSMENT WAS RE-OPENED ON THE GROUND THAT THE INT EREST PAID ON THE CASH CREDITS WAS NOT GENUINE AND THEREFORE, THE INTEREST EXPENDI TURE CANNOT BE ALLOWED AS A DEDUCTION. IT WAS OBSERVED BY THE TRIBUNAL THAT TH E DEPARTMENT ITSELF HAD ACCEPTED THE GENUINENESS OF THE CASH CREDITS IN THE EARLIER YEARS AND THE INTEREST PAID BY THE ASSESSEE WAS ALLOWED AS A DEDUCTION. CONSIDERING T HESE FACTS, THE TRIBUNAL HELD THAT THE RE-OPENING WAS BASED ON REASONS WHICH WERE NOT MATERIAL AND RATIONAL AND HENCE, THE RE-OPENING IS INVALID IN LAW. SIMILARLY , IN THE PRESENT CASE, THE ALLEGED ESCAPEMENT OF ASSESSMENT OF INCOME SUSPECTED BY T HE A.O IN THE REASONS RECORDED ARE ACCEPTED AS NO ESCAPEMENT OF INCOME WAS NOTICED BY THE DEPARTMENT IN A.Y. 2000-01 AND 2003-04 IN SCRUTINY ASSESSMENT. IN FACT, THE SAME A.O HAS COMPLETED THE ASSESSMENT FOR A.Y. 2003-04 A ND NO SIMILAR ADDITION HAS BEEN MADE. THIS FACT CLEARLY INDICATES THAT THE RE ASONS RECORDED BY THE A.O ARE NOT BASED ON PROPER APPRECIATION OF THE FACTS OF THE CA SE AND ARE ON PRESUMPTION AND SURMISES ONLY. WHEN THE SAME A.O ACCEPTS SIMILAR CLAIMS OF THE ASSESSEE IN THE A.Y. 2003-04, IT CLEARLY ESTABLISHES THAT RE-OPENIN G HAS BEEN MADE ON THE ISSUES WHICH DO NOT JUSTIFY THE RE-OPENING OF THE CASE. BESIDES ABOVE, IT IS ALSO AN ADMITTED FACT THAT THE A.O HAD MADE RE- ASSESSMENT KEEPING IN MIND THE LATER DEVELOPMENT TH AT REGISTRATION U/S. 12A GRANTED TO THE ASSESSEE WAS CANCELLED DURING THE CO URSE OF RE-ASSESSMENT PROCEEDINGS WHICH WAS LATER ON RESTORED BY THE TRI BUNAL VIDE ITS ORDER DATED 19 TH SEPTEMBER 2008 IN ITA NO. 1793/PN/2008 (SUPRA). W E ARE ALSO OF THE VIEW THAT ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 18 THERE IS NO PROHIBITION IN SECTION 11 OF THE ACT TH AT A CHARITABLE TRUST CAN NOT GIVE ITS PROPERTIES ON RENT. THE REQUIREMENT IS THAT TH E TRUST IS DOING ACTIVITY TO FULFILL ITS AIMS AND OBJECTS FOR WHICH IT HAS BEEN GRANTED REGI STRATION U/S. 12A OF THE ACT. IT ALSO REMAINED THE CASE OF THE ASSESSEE THAT SUCH R ENTAL INCOME WAS ALREADY SHOWN BY IT IN ITS INCOME AND EXPENDITURE ACCOUNT AND IT WAS NOT A CASE OF ESCAPEMENT OF INCOME. SECTION 11(4A) ITSELF STATES THAT A CHARIT ABLE TRUST CAN HAVE A BUSINESS INCOME AND SUCH INCOME IS EXEMPT IF IT IS APPLIED F OR CHARITY AND IS INCIDENTAL TO THE OBJECT OF THE TRUST. THUS, EARNING INCOME FROM SAL E OF BOOKS AND PRINTING PRESS MEAN FOR PROVIDING STUDY MATERIALS TO THE STUDENTS CAN BE TREATED AS INCIDENTAL TO THE OBJECTS OF THE TRUST. SIMILARLY, GETTING 20% P ROFITS FROM BHARATI SAHAKARI BANK AND BHARATI GRAHAK BHANDAR AS A DONATION TO THE COR PUS OF THE ASSESSEE WAS NOT REQUIRED TO BE INCLUDED IN THE INCOME AND EXPENDITU RE ACCOUNT. UNDER THESE CIRCUMSTANCES, WE CONCUR WITH THE CONTENTION OF THE LD. A.R THAT THERE WAS NO REASONS TO BELIEVE ON THE PART OF THE A.O DURING TH E YEAR THAT SOME TAXABLE INCOME HAS ESCAPED ASSESSMENT, AS DISCUSSED ABOVE. WE THUS HOLD THAT THE A.O WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 14 7 OF THE ACT TO INITIATE RE-OPENING PROCEEDINGS IN THE PRESENT CASE. IN CONSEQUENCE, T HE INITIATION OF RE-OPENING PROCEEDINGS IS NOT VALID AND ASSESSMENT MADE U/S. 1 47 READ WITH SECTION 143(3) OF THE ACT IN FURTHERANCE THERETO IS ALSO NOT VALID. IT IS ORDERED ACCORDINGLY. WE WOULD LIKE TO MENTION OVER HERE THAT PRINCIPLE OF RES JU DICATA IS NOT APPLICABLE IN THE CASES OF INCOME TAX ACT BUT CONSISTENCY IN APPROACH ON A SIMILAR ISSUE UNDER SIMILAR FACTS IS REQUIRED TO BE MAINTAINED BY THE REVENUE. THE I SSUE RAISED IN GROUND NO. 1(A) AND 2.1(A) TO (C) QUESTIONING THE VALIDITY OF INIT IATION OF REOPENING AND ASSESSMENT MADE IN FURTHERANCE THERETO IS DECIDED IN FAVOUR OF THE ASSESSEE. THESE GROUNDS ARE THUS ALLOWED. CONSEQUENTLY, IT IS HELD THAT NO TICE ISSUED U/S. 148 WAS NOT VALID AND THE ASSESSMENT MADE IN FURTHERANCE THERETO IS NULL AND VOID. 24. IN VIEW OF THE ABOVE FINDING THAT THE ASSESSMEN T ORDER FRAMED IN FURTHERANCE TO AN INVALID NOTICE ISSUED U/S. 148 IS NULL AND VO ID, THE OTHER GROUNDS ON MERITS, ITAS . NO 916 & 1027/PN/2010 BHARATI VIDYAPEETH A.Y. 1999-2000 PAGE OF 19 19 RAISED IN THE APPEALS OF THE PARTIES QUESTIONING TH E ACTIONS OF THE AUTHORITIES BELOW IN UPHOLDING/ DELETING THE ADDITIONS HAVE BECOME AC ADEMIC ONLY. THUS, THESE GROUNDS DO NOT NEED ADJUDICATION. FOR A READY REF ERENCE, THE ASSESSEE HAS QUESTIONED THE FIRST APPELLATE ORDER ON OTHER GROUN DS AS WELL LIKE UPHOLDING THE ADDITIONS TOWARDS UN-RECOVERED DEBIT BALANCES WRITT EN OFF OF RS. 2,96,107/-; LIABILITIES WRITTEN BACK OF RS. 4,17,969/-; DISALLO WANCE OF EXPENDITURE OF RS.50,58,016/- ON THE BASIS THAT IT IS A CAPITAL EX PENDITURE; DENYING THE EXEMPTION U/S. 11; DENYING DEDUCTION U/S. 80L AND NON-DEDUCTI ON OF INTEREST CHARGED U/S. 234A, 234B AND 234C. THE REVENUE, ON THE OTHER HAN D, HAS QUESTIONED FIRST APPELLATE ORDER ON THE GROUNDS THAT THE LD CIT(A) H AS ERRED IN TREATING THE FEES COLLECTED FROM THE STUDENTS AS PER THE CIRCULARS AN D NORMS OF THE UNIVERSITY AND OTHER GOVERNMENT AUTHORITIES ( AMOUNTING TO RS.3,12 ,66,727/-) AS NON-TAXABLE; TREATING EXPENSES OF RS. 14,48,450/- AS REVENUE EXP ENSES AND WITHOUT PREJUDICE TO THIS GROUND, IN TREATING THE GRAMIN VIKAS PRATISHTA N EXPENSES AS ALLOWABLE EXPENSES. 25. IN VIEW OF THE ABOVE FINDING ON THE ISSUE RAISE D ON GROUND NO. 1 OF THE APPEAL PREFERRED BY THE ASSESSEE, THE APPEAL PREFE RRED BY ASSESSEE IS ALLOWED AND THAT PREFERRED BY THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23RD J ANUARY, 2012. SD/- SD/- ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 23RD JANUARY, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT,CENTRAL, PUNE 4. THE CIT(A)-IV, PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE