The Mumbai Metropolitan Regional Iron & steel Market, Raigad V. ACIT, Raigad

ITA 931/PUN/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9816 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VARMAMS ANN KAPTHUAMA
• Assessee Lawyers: ARUN SATHE
• Keywords: Business income; Non compliance; Benefit of exemption
• Section: 12A; 12AA; 12; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 931 & 1569/PN/2012 (ASSTT. YEARS : 2004-05 & 200 5-06) THE MUMBAI METROPOLITAN REGIONAL IRON & APPELLANT STEEL MARKET COMMITTEE , CENTRAL FACILITY BUILDING, STEEL MARKET YARD, KALAMBOLI, DIST. RAIGAD PAN : AAALT 0433E V. ASSTT. COMMISSIONER OF INCOME TAX RESPONDENT PANVEL CIRCLE, PANVEL, DIST. RAIGAD APPELLANT BY : SHRI. ARUN SATHE RESPONDENT BY : SHRI. MUKESH VARMA/MS. ANN KAPTHUAMA DATE OF HEARING : 19/10/1 2 DATE OF PRONOUNCEMENT : 27-11-12 O R D E R PER R.S. PADVEKAR, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE CHALLE NGING THE IMPUGNED ORDERS OF THE LD CIT(A)-I, THANE DATED 30 TH MAY 2012 AND 31 ST JANUARY 2012 RESPECTIVELY FOR THE A.YS. 2004-05 AND 2005-06.THE ISSUE ARISING IN THESE APPEALS ARE COMMON AS WELL AS FACT S ARE IDENTICAL, HENCE BOTH THESE APPEALS ARE DISPOSED OFF BY THIS CONSOLI DATED ORDER. THE SOLITARY ISSUE WHICH REVOLVE AROUND THE CONTROVERSY IS DENIAL OF EXEMPTION TO THE ASSESSEE U/S. 11 OF THE I.T. ACT. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL WHICH ARE IDENTICAL IN BOTH THE APPEALS : 1) THE C.I.T.(A) ERRED IN NOT FOLLOWING THE PRINCI PLES OF JUDICIAL DISCIPLINE AND IN DISREGARDING THE DIRECTIONS OF TH E HONBLE ITAT, PUNE IN THE CASE OF ITA NO. 1551/PN/2008 DATED 15 TH APRIL, 2009, WHEREBY THE HONBLE ITAT, PUNE HAD REMANDED THE MATTER BACK TO THE ASSESSING OFFICER (A.O.) FOR DE-NOVO ASSESSMENT, WITH THE FOL LOWING DIRECTIONS :- WE VACATE THE ORDER OF THE AUTHORITIES BELLOW AND REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICERS FOR FRAMING O F ASSESSMENT DE NOVO. WHILE DOING SO, THE ASSESSING OFFICER WILL T AKE INTO ACCOUNT 2 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 THE REGISTRATION GRANTED TO THE ASSESSEE U/S. 12AA W.E.F. 1 ST APRIL 2003, AND AUDIT REPORT AS ALSO OTHER DOCUMENTS FILE D BY HIM IN SUPPORT OF CLAIM OF BENEFIT U/S. 11. THE ASSESSING OFFICER SHALL ALSO GIVE DUE AND FAIR OPPORTUNITY OF HEARING TO THE ASS ESSEE AND DEAL WITH THE CONTENTIONS OF THE ASSESSEE BY WAY OF A SP EAKING ORDER. THE MATTER THUS STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER.: 2) THE C.I.T.(A) ERRED IN NOT APPRECIATING THAT THE DELAY, ON THE PART OF THE APPELLANT IN FILING THE FORM 10, AUDIT REPOR T AND OTHER SUPPORTING DOCUMENTS TO CLAIM EXEMPTION UNDER SECTION 11 WAS O N ACCOUNT OF THE FACT THAT THEIR REGISTRATION UNDER SECTION 12AA WAS PENDING, WITHOUT WHICH THEY WERE NOT ENTITLED FOR THE EXEMPTION UNDER SECT ION 11 OF THE ACT. 3) THE C.I.T.(A) ERRED IN NOT APPRECIATING THAT THE SUPREME COURT JUDGMENT IN THE CASE OF CIT V/S. NAGPUR HOTEL OWNER S ASSOCIATION REPORTED IN 247 ITR 201(SC) IS NOT APPLICABLE TO TH E FACTS OF THE PRESENT CASE, IN AS MUCH AS THE SAID JUDGMENT DID NOT CONSI DER THE CBDT CIRCULAR NO. 273 DATED 3-6-1980 (REPORTED IN 126 ITR 27(ST.) ), WHEREIN POWERS HAVE BEEN CONFERRED ON THE CONCERNED C.I.TS TO CON DONE THE DELAY IN FILING FORM NO. 10 AND OTHER RELATED DOCUMENTS, WHI CH ARE REQUIRED AS PER RULE 17 OF THE INCOME-TAX RULES, 1962 (HEREAFTER SA ID RULES) TO CLAIM EXEMPTION UNDER SECTION 11 OF THE ACT. 4) THE C.I.T.(A) ERRED IN NOT APPRECIATING THAT IN THE PRESENT CASE, THE APPELLANT HAD BELATEDLY FILED FORM NO. 10 AND OTHER RELATED DOCUMENTS TO CLAIM EXEMPTION UNDER SECTION 11, AS THEIR APPLICAT ION FOR REGISTRATION UNDER SECTION 12AA WAS PENDING AND THE ITAT, PUNE S UBSEQUENTLY BY ORDER DATED 31 ST JANUARY, 2008, ALLOWED THE APPELLANT REGISTRATION UNDER SECTION 12AA W.E.F. FROM 1 ST APRIL, 2003. 3. THE RELEVANT FACTS WHICH REVEAL FROM THE ORDERS OF THE AUTHORITIES BELOW CAN BE NARRATED AS UNDER. THE ASSESSEE IS CO NSTITUTED UNDER THE MUMBAI METROPOLITAN REGION SPECIFIED COMMODITIES MA RKETS (REGULATION OF LOCATION) ACT 1983 AND STARTED FUNCTIONING W.E.F 19.11.87. UP-TO A.Y. 2002-03, THE ASSESSEE WAS ENJOYING THE BENEFIT OF E XEMPTION U/S. 10(20) OF THE ACT. DUE TO THE CHANGE OF LAW, THE ASSESS EE DECIDED TO AVAIL THE BENEFIT OF THE EXEMPTION U/S. 11 OF THE INCOME TAX ACT AND AS ONE OF THE CONDITION FOR GETTING THE BENEFIT U/S. 11 IS THAT T HE TRUST SHOULD BE REGISTERED U/S. 12AA OF THE I.T. ACT. ACCORDINGLY , THE ASSESSEE FILED THE APPLICATION FOR GETTING THE REGISTRATION U/S. 12A/1 2AA OF THE I.T. ACT 3 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 BEFORE THE LD CIT II, THANE W.E.F. 1.4.2003. THE SAID APPLICATION WAS FILED ON 26-3-2007. THE ASSESSEES APPLICATION WAS ALLOWED BY THE LD CIT AND GRANTED THE REGISTRATION U/S. 12AA, BUT THE SAM E WAS W.E.F. 1.4.2006. THE ASSESSEE CHALLENGED THE IMPUGNED ORD ER OF THE LD CIT, THANE, BEFORE THE ITAT, PUNE AND THE ITAT DIRECTED THE LD CIT TO CONDONE THE DELAY IN FILING THE APPLICATION AND TO GRANT THE REGISTRATION TO THE ASSESSEE U/S. 12AA OF THE ACT TO TREAT IT AS A TRUST W.E.F. 1.4.2003 VIDE ORDER DATED 31 ST JANUARY 2008. IN COMPLIANCE WITH THE DIRECTION OF THE ITAT, PUNE, THE ASSESSEE WAS GRANTED REGISTRATI ON BY THE LD CIT II, THANE BY ORDER DATED 23 RD APRIL 2008 U/S. 12AA OF THE ACT. WHEN THE ISSUE OF GRANTING THE REGISTRATION U/S 12AA WAS IN LITIGATION, THE A.O COMPLETED THE ASSESSMENT ORDERS FOR A.Y. 2003-04, 2 004-05 AND 2005- 06. SO FAR AS A.Y. 2004-05 IS CONCERNED, THE ASSES SMENT WAS COMPLETED BY THE A.O DENYING THE BENEFIT TO THE ASSESSEE U/S. 11 BY DETERMINING THE TAXABLE INCOME AT RS. 1,87,06,330/-. SAME WAY FOR THE A.Y. 2005- 06, THE ASSESSMENT WAS COMPLETED, BUT THE BENEFIT O F EXEMPTION U/S. 11 OF THE ACT WAS DENIED. THE SAID ORDER I.E. FOR THE A.Y. 2005-06 WAS CONFIRMED BY THE LD CIT(A) AND MATTER WAS CARRIED BEFORE THE TRIBUNAL BY THE ASSESSEE BY FILING THE APPEAL VIDE ITA NO. 1 551/PN/2008. VIDE ORDER DATED 15 TH APRIL 2009, THE TRIBUNAL RESTORED THE MATTER TO TH E FILE OF A.O. THE OPERATIVE PART OF THE ORDER OF THE TRIBUN AL IS AS UNDER : 8. WE HAVE NOTED LEARNED CIT(A)S DISINCLINATION T O CONSIDER LATER DEVELOPMENTS. HOWEVER, WE ARE OF THE VIEW THAT AN APPELLATE PROCEEDING BEFORE THE CIT(A) IS NOTHING BUT A CONTINUATION OF ASSESSMENT PROCEEDING, AND THE CIT(A) CANNOT DECLINE TO TAKE INTO ACCOUNT ORDERS OF THE H ONBLE COURTS AND TRIBUNALS, AS LONG AS THEY HAVE BEARING ON ISSUES BEFORE HIM, MERELY ON HE GROUNDS THAT SUCH ORDERS WERE NOT PASSED BEFORE THE ASSESSMENT ORDER WAS PASSED. WHEN INCOME TAX ACT ITSELF PROVIDES FOR REMOVING BARRIERS OF LI MITATION OF TIME TO GIVE EFFECT TO FINDINGS OR DIRECTIONS IN ANY APPELLATE ORDER, IT IS FUTILE TO SUGGEST THAT ALL DEVELOPMENTS, POST FRAMING OF ASSESSMENT ORDER, ARE TO BE IGNORED IN THE FIRST APPELLATE PROCEEDINGS. WE DISAPPROVE THE APPROACH O F THE CIT(A) AND HOLD THAT HE OUGHT TO HAVE TAKEN INTO ACCOUNT THE FACT THAT THE REGISTRATION U/S 12AA IS AVAILABLE TO THE ASSESSEE W.E.F. 1 ST APRIL 2003. 9. AS REGARDS RELIANCE PLACED BY THE LEARNED CIT(A) ON HONBLE GUJARAT HIGH COURTS JUDGMENT IN THE CASE OF GUJARAT MARITIME BO ARD (SUPRA), WE SEE NO SUBSTANCE IN THIS EITHER. THEIR LORDSHIPS WERE IN S EISIN OF THE QUESTION WHETHER OR NOT THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSEE FULFILLS THE CONDITIONS NECESSARY FOR GRANT OF REGISTRATION U/S 12AA. IT WAS IN THIS CONTEXT, AND WHILE RESTRICTING THE SCOPE OF WHAT A COMMISSIONER NEEDS TO EXAMINE WHILE SO GRANTING THE REGISTRATION. THEIR LORDSHIPS POINTED OUT THAT WHETHER THE ASSESS EE HAS INCOME FROM BUSINESS OR NOT AND IF THERE IS BUSINESS INCOME, WHETHER IT IS INCIDENTAL TO THE ATTAINMENT OF OBJECT OF THE TRUST OR NOT, IS TO BE SEEN BY THE ASSESSING OFFICER WHILE FRAMING THE 4 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 ASSESSMENT. IN OTHER WORDS, THE COMMISSIONER WAS NO T BE ADDRESS HIMSELF TO THESE ASPECTS WHILE CONSIDERING GRANT OF REGISTRATION U/S . 12AA. WE ARE UNABLE TO APPRECIATE RELEVANCE OF THIS LEGAL PROPOSITION IN R EJECTING THE ASSESSEES CLAIM FOR BENEFIT OF SECTION 11, PARTICULARLY WHEN THE ASSESS ING OFFICER OR THE CIT(A) HAS NOT EVEN EXAMINED THESE ASPECTS OF THE MATTER. NOTHING, EXCEPT PERHAPS HIS INERTIA, PREVENTED THE CIT(A) FROM CALLING FOR DETAILS AND C ARRYING OUT WHATEVER EXAMINATION OF FACTS HE WANTED. HIS POWERS, WE MUST EMPHASIZE A T THE COST OF REPETITION, ARE CO TERMINUS WITH THE POWERS OF THE ASSESSING OFFICER. WHATEVER ASSESSING OFFICER CAN DO, THE CIT(A) CAN DO AS WELL. IT IS ALSO ELEMENTAR Y THAT WHENEVER A PUBLIC FUNCTIONARY HAS AN AUTHORITY TO DO SOMETHING, HE HA S A CORRESPONDING DUTY TO DO SO WHEN CIRCUMSTANCES SO JUSTIFY OR WARRANT. THE CIT(A ), THEREFORE, WRONGLY DECLINED THE BENEFIT OF DEDUCTION U/S 11 ON THE GROUND THAT THE BASIC FACTORS ESTABLISHING ELIGIBILITY OF BENEFIT U/S 11 WERE NOT EXAMINED BY THE ASSESSING OFFICER. THE OTHER ASPECT OF THE MATTER IS REGARDING COMPLIANCE WITH T HE REQUIREMENTS OF SUBMITTING AUDIT REPORT AND OTHER PROCEDURAL REQUIREMENTS FOR CLAIMING BENEFITS OF SECTION 11. ONCE IT IS HELD IN PRINCIPLE THAT THE ASSESSEE IS E NTITLED TO THE BENEFITS U/S 11 ON MERITS, THE SAME CANNOT BE DECLINED ON THE GROUND O F NON COMPLIANCE WITH THE PROCEDURAL REQUIREMENTS. HONBLE COURTS HAVE HELD S O TIME AND AGAIN. IN THE LANDMARK JUDGMENT OF HONBLE ANDHRA PRADESH HIGH CO URT, IN THE CASE OF CIT VS. ANDHRA PRADESH ROAD TRANSPORT CORP (285 ITR 147), T HEIR LORDSHIPS, REFERRING TO HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NA GPUR HOTEL OWNERS ASSOCIATION (209 ITR 441) AS WELL, HAVE HELD THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT BENEFITS OF SECTION 11 WILL BE AVAILABLE TO THE ASS ESSEE EVEN AS THE REQUISITE AUDIT REPORTS WERE NOT FILED ALONGWITH THE RETURN OF INCO ME, BUT WERE FILED LATER. IN THE PRESENT CASE, THE ASSESSEE HAS FILED THE AUDIT REPO RTS, OTHER DOCUMENTS, ON 30 TH JULY 2008 AND AFTER THE ASSESSEE WAS GRANTED REGISTRATIO N W.E.F. 1 ST APRIL 2003. WE ARE OF THE CONSIDERED VIEW THAT THE BENEFITS OF SECTION 11 CANNOT BE DECLINED TO THE ASSESSEE MERELY BECAUSE OF DELAY IN COMPLIANCE WITH PROCEDURAL ASPECTS, PARTICULARLY WHEN IT IS ON ACCOUNT OF A BONAFIDE RE ASON. WE DO NOT APPROVE THE HYPER TECHNICAL APPROACH ADOPTED BY THE CIT(A). 10. FOR THE REASONS SET OUT ABOVE, WE VACATE THE OR DERS OF THE AUTHORITIES BELLOW AND REMIT THE MATTER TO THE FILE OF THE ASSESSING O FFICER FOR FRAMING OF ASSESSMENT DE NOVO. WHILE DOING SO, THE ASSESSING OFFICER WILL TA KE INTO ACCOUNT THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12 AA W.E.F. 1 ST APRIL 2003, AND AUDIT REPORTS AS ALSO OTHER DOCUMENTS FILED BY HIM IN SUPPORT OF CLAIM OF BENEFIT U/S 11. THE ASSESSING OFFICER SHALL ALSO GIVE DUE AND FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE AND DEAL WITH THE CONTENTIONS OF THE ASSESSEE BY WAY OF A SP EAKING ORDER. THE MATTER THUS STRANDS RESTORED TO THE FILE OF THE ASSESSING OFFIC ER. 4. IN SUM AND SUBSTANCE, THE A.O WAS DIRECTED TO FR AME THE ASSESSMENT DE NOVO. IN THE A.Y. 2004-05, THE TRIB UNAL RESTORED THE MATTER TO THE FILE OF THE A.O. FOLLOWING THE DECISI ON IN THE ASSESSEES APPEAL FOR THE A.Y. 2005-06 AS THE SAID APPEAL WAS DECIDED FIRST. THE A.O. PASSED THE ASSESSMENT ORDER DE NOVO AS PER THE DIRECTIONS OF THE TRIBUNAL AND AGAIN, REJECTED THE CLAIM OF THE ASSES SEE U/S. 11 OF THE ACT. THE ORDER PASSED BY THE A.O IN THE A.Y. 2004-05 AN D 2005-06 IN THE DE NOVO PROCEEDINGS ARE ALMOST IDENTICAL. IN THE A.Y. 2004-05, AS PER PARA NO.5 OF THE SAID ORDER, THE A.O DENIED THE BENEFIT OF EXEMPTION TO THE 5 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 ASSESSEE U/S. 11 BY GIVING THE FOLLOWING MAIN REASO N, PARA NO. 5 OF THE ASSESSMENT ORDER READS AS UNDER : 5. ON THE ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E, IT IS ABUNDANT CLEAR THAT FOR CLAIMING THE EXEMPTION U/S. 11, THE ASSESSEE HAS NOT FULFILLED THE FOLLOWING STATUTORY CONDITIONS/REQUIR EMENTS. (1) THE ASSESSEE DID NOT FILE THE RETURN OF INCOME IN T HE PRESCRIBED FORM FOR CLAIMING EXEMPTION U/S. 11. (2) THE ASSESSEE HAD NOT CLAIMED THE EXEMPTION U/S. 11 WITHIN THE PRESCRIBED TIME LIMIT AS PER INCOME TAX ACT, 19 61. THE RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL DE CISIONS : (1) CIT VS. APMC (2007) 291 ITR 419 BOMBAY HIGH COURT (2) MAYADEBI BANSAL VS CIT 117 ITR 125 (CAL) (1978) (3) GOETZ (INDIA) LTD V/S CIT (284 ITR 323 (SC) (4) DIT VS. SPIC EDUCATIONAL FOUNDATION (2002) 257 ITR 46(MADRAS) (5) SMT. TARULATA SHAH & ORS. VS. CIT (1977) 108 ITR 34 5(SC), (6) ACIT & ORS VS. VELLIAPPA TEXTILES LTD. & ORS (2003) 260 ITR 550(SC) (7) PRAKASH NATH KHANNA & ANR VS. CIT (2004) 266 ITR 1( SC) (8) IPCA LABORATORY LTD. VS. DCIT (2004) 266 ITR 521(SC ) HENCE, THE BENEFIT OF EXEMPTION U/S. 11 IS NOT ALLO WED TO THE ASSESSEE. 5. SAME WAY IN THE A.Y. 2005-06, ON THE SAME REASO NS, THE ASSESSEE WAS DENIED THE BENEFIT OF EXEMPTION U/S. 11. THE A SSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), THANE, CHALLENGING THE ACTION OF THE A.O FOR DENYING THE BENEFITS OF SECTION 11. THE LD CIT(A) PLACED HIS HEAVY RELIANCE ON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF CIT VS. NAGPUR HOTEL OWNERS ASSOCIATION, 247 ITR 201 ( SC) AND OBSERVED THAT THE DECISION RELIED ON BY THE ITAT, MUMBAI IN THE CASE OF NAGPUR HOTEL OWNERS ASSOCIATION, 209 ITR 441 (BOM.) WAS R EVERSED BY THE HONBLE SUPREME COURT AND THAT WAS NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL. THE LD CIT(A) CONFIRMED THE ACTION OF T HE A.O DENYING THE BENEFIT OF EXEMPTION TO THE ASSESSEE U/S. 11 OF THE I.T. ACT. AS OBSERVED THE MAIN THRUST OF THE LD CIT(A) IS ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF NAGPUR HOTEL OWNERS A SSOCIATION (SUPRA). THE OPERATIVE PART OF THE DECISION OF THE LD CIT(A) IS AS UNDER : 6 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 4.7 IT MAY ALSO BE MENTIONED HERE THAT FOR THE A.Y . 1974-75 & 1975-76 WHICH WERE BEFORE HONBLE SUPREME COURT IN THE CASE OF NAGPUR HOTEL OWNERS ASSOCIATION, (SUPRA), THE TIME LIMIT FOR FI LING FORM 10 WAS NOT PRESCRIBED. HOWEVER, NOW W.E.F. 01.04.1990 TIME LI MIT FOR FILING FORM 10 BEFORE A.O HAS BEEN PRESCRIBED IN RULE 17 MANDATING IT TO BE FILED BEFORE THE EXPIRY OF TIME ALLOWED U/S. 139(1) FOR FURNISHI NG THE RETURN OF INCOME. THUS, FILING OF FORM 10 BEFORE A.O IN TIME HAS EVEN BECOME MORE STRINGENT FOR THE CASE BEFORE HAND. UNDISPUTEDLY, FORM 10 & OTHER DOCUMENTS SUCH AS AUDIT REPORT ETC. HAVE BEEN FILED FOR THE FIRST TIME ON 30.07.2008 A LONG AFTER DUE DATE U/S. 139(1) I.E. 3 1.10.2004 AND DATE OF COMPLETION OF ASSESSMENT I.E. 29.09.2006. UNFORTUN ATELY, THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. NAGPUR HOTEL OWNERS ASSOCIATION (2001) 247 ITR 201(SC) REVERSING THE DE CISION OF HONBLE BOMBAY HIGH COURT (SUPRA) RELIED UPON BY HONBLE IT AT, PUNE IN THE CASE OF APPELLANT, WAS NOT BROUGHT TO THEIR NOTICE. HAD THE SAME BEEN BROUGHT TO NOTICE OF HONBLE ITAT, PUNE, THE OBSERVATIONS O F HONBLE BENCH MIGHT HAVE BEEN DIFFERENT IN THE MATTER. NONETHELESS, THE HONBLE ITAT, PUNE HAD ONLY SET-ASIDE THE ISSUE TO THE FILE OF ASSESSI NG OFFICER FOR FRAMING ASSESSMENT DE-NOVO WITHOUT ANY SPECIFIC DIRECTIONS ON ALLOWABILITY OF EXEMPTION U/S. 11. THIS VIEW ALSO GETS SUPPORT FRO M THE ORDER OF HONBLE HIGH COURT IN THE CASE APPELLANT WHEREIN IT HAS BEE N VERY CLEARLY STATED THAT THE TRIBUNAL HAS REMANDED THE MATTER BACK TO T HE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH L AW. THE CORRECT POSITION OF LAW ALSO STANDS CLARIFIED BY HONBLE SU PREME COURT IN THE CASE OF NAGPUR HOTEL OWNERS ASSOCIATION (SUPRA) MUCH EA RLIER TO THE ORDER OF THE HONBLE ITAT, PUNE DATED 15.4.2009 IN THE CASE OF APPELLANT AS DISCUSSED ABOVE. THEREFORE, THE SUBMISSIONS OF THE APPELLANT THAT THE HONBLE ITAT, PUNE HAS DIRECTED TO ALLOW EXEMPTION U/S. 11 ON THE BASIS OF AUDIT REPORT AND OTHER DOCUMENTS FILED LATER ON AND THE A.O HAS DISREGARDED SUCH DIRECTIONS, ARE INCORRECT AND AGAI NST THE PROVISIONS OF LAW AND HENCE THE SAME CANNOT BE ACCEPTED. 4.8. IN VIEW OF THE ABOVE POSITION OF FACTS & LAW, I AM OF THE CONSIDERED VIEW THAT NO BENEFIT U/S. 11 CAN BE GRANTED TO THE APPELLANT ON THE BASIS OF AUDIT REPORTS AND OTHER DOCUMENTS SUCH AS FORM 1 0 FILED BELATEDLY ON 30.07.2008 A LONG AFTER THE COMPLETION OF ORIGINAL ASSESSMENT DATED 29.09.2006 BECAUSE FILING OF THESE DOCUMENTS WAS A MANDATORY REQUIREMENT AND NOT AN EMPTY FORMALITY. THEREFORE, FILING OF AUDIT REPORT, FORM 10, ETC. SUBSEQUENT TO THE COMPLETION OF ASSES SMENT WILL NOT CURE VIOLATION OF MANDATORY REQUIREMENTS PARTICULARLY WH EN THERE IS NO PROVISION FOR RE-OPENING OF THE COMPLETED ASSESSMEN T FOR GRANTING A BENEFIT TO THE ASSESSEE. THUS, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT IS NOT ELIGIBLE FOR GRANT OF EX EMPTION U/S. 11 OF THE ACT AND GROUND OF APPEAL IS DISMISSED. ACTION OF ASSES SING OFFICER IS, ACCORDINGLY, UPHELD. NOW THE ASSESSEE IS IN APPEAL BEFORE US IN BOTH THE ASSESSMENT YEARS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND ALSO ANXIOUSLY PERUSED THE RECORD. THE LD COUNSEL SUBMI TS THAT THE HONBLE TRIBUNAL HAS RESTORED THE MATTER TO THE FILE OF A. O TO DO THE DE NOVO 7 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 ASSESSMENT. HE PLACED HIS RELIANCE ON THE DECISION OF THE ITAT, AHEMEDABAD BENCH IN THE CASE OF SAHELI SYNTHETIC PV T. LTD. VS. ACIT, 57 ITD 65 (AHD.) TO EXPLAIN THE MEANING OF EXPRESSION DE NOVO. AS PER THE SAID DECISION, IF THE DIRECTIONS ARE GIVEN TO DO THE DE NOVO ASSESSMENT, THEN THE ENTIRE ASSESSMENT STANDS OPEN BEFORE THE A.O AND THE FIRST ASSESSMENT BECOME NON-EST. HE SUBMITS T HAT THE A.O PASSED THE SECOND ASSESSMENT ORDER IN THE DE NOVO PROCEED INGS, AND ALL THE REQUIRED DOCUMENTS WERE BEFORE HIM. HE REFERRED TO THE PAPER BOOK PAGE NOS. 49 TO 50 OF P/B AND SUBMITTED THAT AFTER THE FIRST ASSESSMENT ORDER WAS PASSED, AUDITORS REPORT, RESOLUTION ETC., WERE ALREADY FILED BEFORE THE CIT(A) IN PROCEEDING U/SEC. 154 OF THE A CT. HE PLEADED THAT THE ASSESSEE HAS COMPLIED WITH ALL THE REQUIREMENTS OF LAW AND THE ASSESSEE HAS ALSO BEEN GRANTED REGISTRATION U/S. 12 AA AND HENCE, THE A.O MAY BE DIRECTED TO GIVE EXEMPTION TO THE INCOM E OF THE ASSESSEE U/SEC. 11 OF THE ACT. WE HAVE ALSO HEARD THE LD. D .R., WHO RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE FIND FORCE IN THE ARGUMENTS OF THE LD. COUNSE L. ON THE PERUSAL OF THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2005-06, RESTORING THE MATTER TO THE FILE OF THE A.O TO DO THE DE NOVO ASSESSMENT, A DMITTEDLY, AT THAT TIME, THE FORM NO. 10, AUDIT REPORTS AND DOCUMENTS WERE ALREADY ON THE RECORD OF A.O. IN FACT, AS HELD BY THE HONBLE SUP REME COURT IN THE CASE OF NAGPUR HOTEL OWNERS ASSOCIATION (SUPRA), THE AS SESSEE HAS TO FILE THE FORM NO. 10 AND OTHER DOCUMENTS BEFORE THE COMPLETI ON OF THE ASSESSMENT. ADMITTEDLY, THOUGH THE SAID DOCUMENTS WERE NOT BEFORE THE A.O, AT THE TIME OF PASSING THE FIRST ASSESSMENT OR DER, BUT WHILE DOING THE DE NOVO ASSESSMENT, WHICH IS A FRESH ASSESSMEN T ONLY, FORM NO. 10, AUDIT REPORTS AND OTHER DOCUMENTS WERE ALREADY ON T HE RECORD. IN OUR HUMBLE OPINION, THE ASSESSEE HAS COMPLIED WITH THE LAW AS INTERPRETED BY THE HONBLE SUPREME COURT. WE FIND THAT THE LD CIT (A) HAS CONSIDERED ONLY THE PART OF OBSERVATIONS OF HONBLE SUPREME CO URT IN THE CASE OF NAGPUR HOTEL OWNERS ASSOCIATION, BUT, NOT CONSIDER ED LATER PART OF THE OBSERVATIONS AND FINDINGS. THIS IS A PECULIAR CASE AS THE ASSESSEE WAS STRAPPED INTO THE LEGAL BATTLE DUE TO THE AMENDMENT IN THE PROVISIONS OF LAW W.E.F. A.Y. 2003-04. ADMITTEDLY, UP TO THE A.Y . 2002-03, THE ASSESSEE WAS ENJOYING THE BENEFITS OF SEC. 10(10), BUT AS THE DEFINITION OF THE LOCAL BODY WAS AMENDED AND HENCE, THE ASSESSEE FILED THE APPLICATION 8 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 FOR REGISTRATION U/S. 12A TO THE CIT, THANE. THE A SSESSEE WAS GRANTED THE REGISTRATION W.E.F. 1.4.2006, BUT SUBSEQUENTLY ON THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSEE WAS GRANTED REGISTRATION FRO M THE A.Y. 2003-04. UNDER THE SITUATION, THE ASSESSEE WAS HELPLESS AS T HE DELAY WAS NOT CONDONED BY LD. CIT THOUGH THE ASSESSEE PLEADED FOR CONDONING THE SAME ON THE BONAFIDE REASON THAT DUE TO THE CHANGE IN LAW, THERE WAS DELAY IN FILING THE APPLICATION FOR REGISTRATION U/ SW. 12AA. WE FURTHER FIND THAT THERE IS THE BOARD CIRCULAR NO. 273[F.NO. 180 /57/80-IT(A-I),DATED 3-6-1980, AS UNDER: DELAY IN FILING APPLICATION IN FORM NO. 10 BOARD S ORDER UNDER SECTION 119(2)(B) AUTHORISING COMMISSIONER TO ADMIT BELATED APPLICATIONS 1. CHARITABLE AND RELIGIOUS TRUSTS ARE ENTITLED TO EXE MPTION FROM INCOME-TAX UNDER SECTION 11 AFTER THEY FULFIL THE R EQUIREMENTS ENUMERATED IN SECTIONS 11 TO 13. THESE TRUSTS ARE ALLOWED TO ACCUMULATE OR SET APART INCOME DERIVED BY THEM FROM PROPERTY HELD UNDER TRUST PROVIDED THEY FULFIL THE CONDITION S SPELT OUT IN SECTION 11(2) READ WITH RULE 11 OF THE INCOME-TAX R ULES AND FORM NO.10. 2. VERY OFTEN TRUSTS ARE NOT ABLE TO FILE THE APPLICAT ION IN FORM NO. 10 WITHIN THE TIME ALLOWED UNDER SECTION 139(1)/139 (2) AS EXTENDED BY THE INCOME-TAX OFFICER. THE BOARD IS T HEN APPROACHED BY THESE TRUSTS FOR CONDONING THE DELAY FOR FILING APPLICATIONS. THE BOARD BY VIRTUE OF THE POWERS VE STED IN IT UNDER SECTION 119(2)(B) HAS BEEN CONDONING THE DELA Y IN INDIVIDUAL CASES AFTER SATISFYING ITSELF THAT CERTA IN CONDITIONS ARE SATISFIED. 3. WITH A VIEW TO EXPEDITING THE DISPOSAL OF APPLICAT IONS FILED BY TRUSTS FOR CONDONING THE DELAY, THE BOARD HAS PASSE D A GENERAL ORDER UNDER SECTION 119(2)(B) BY WHICH THE COMMISSI ONERS HAVE BEEN AUTHORIZED TO ADMIT BELATED APPLICATIONS UNDER SECTION 11(2) READ WITH RULE 17. A COPY OF THIS ORDER IS E NCLOSED. ALL APPLICATIONS FOR CONDONING THE DELAY UNDER SECTION 11(2) WILL, HENCEFORTH, BE DISPOSED OF BY THE COMMISSIONER IN T ERMS OF THE ENCLOSED ORDER NO. 120/57/80-IT(A-I), DATED 3060198 0 [ANNEX.]. THE C.I.T. IS VESTED WITH THE POWERS TO CONDONE THE DELAY IN FILING THE FORM NO. 10. IN OUR OPINION, THE ASSESSEE HAS COM PLIED WITH THE REQUIREMENT OF LAW AND HENCE, ENTITLED FOR BENEFIT OF EXEMPTION U/S. 11 OF THE ACT. WE, THEREFORE, SET ASIDE BOTH THE ORDERS OF THE LD CIT(A) IN BOTH THE A.YS. AND DIRECT THE A.O. TO GRANT THE EXEMPTIO N TO THE ASSESSEE U/S. 9 ITA NOS. 931/PN/2012 &1569/PN/2012 THE MUMBAI METROPOLITAN REGIONAL IRON & STEEL MARKET COMMITTEE A.YS.2004-05 & 2005-06 11. WE MAKE IT CLEAR THAT NOWHERE IT IS DISPUTED IN THIS CASE THAT THE OBJECTS OF THE TRUST ARE NOT GENUINE. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 27TH NOVEMBER 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 27TH NOVEMBER, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-II, THANE 4. THE CIT(A)-, I, THANE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE