Kandi Friends Educational Trust V. CIT-II, Chandigarh

ITA/191/2012

AI Insights

The case involves Kandi Friends Educational Trust, the appellant, contesting an order under Section 263 of the Income Tax Act, 1961, concerning the assessment year 2004-05. The primary issues revolved around the application of income as per Section 11 of the Act and the alleged failure of the Assessing Officer to consider certain information after due application of mind. The Commissioner of Income Tax had revised the original assessment, citing discrepancies such as unauthorized payments to trustees' families and unexamined issues regarding tax deductions at source. The Tribunal and subsequently the High Court upheld the Commissioner's order, dismissing the appellant's arguments.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 807988 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 04-04-2013
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Smt. Minalben S. Parikh, 215 ITR 81
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: BRIJ MOHAN MONGA
• Keywords: Application of income; Assessment Year; Change of opinion; Exemption; Income Tax; Technical Educational Trust; Cogent and Tangible Material
• Section: 263; 11; 12A; 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No.191 of 2012 (O&M) Date of Decision:04.04.2013 Kandi Friends Educational Trust .....Appellant Vs. CIT-II, Chandigarh .....Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present: Mr. Brij Mohan Monga, Advocate for the appellant. HEMANT GUPTA, J.(Oral) The present appeal under Section 260-A of the Income Tax Act, 1961 (for short, `the Act') is against the order dated 14.3.2012 in respect of assessment year 2004-05. The assessee has claimed the following substantial questions of law:- (i) Whether the ITA T is justified in not setting aside the order u/s 263 of the Income Tax Act, 1961 dated 27-03-2009, passed by the CIT, which was based upon change of opinion and not based upon any cogent and tangible material? (ii) Whether the Tribunal is justified in confirming the order of CIT, passed u/s 263 of the Act, without appreciating the detailed submissions of the appellant regarding application of income in accordance with section 11 of the Income Tax Act, 1961? (iii) Whether the ITA T is justified in holding that the information collected by the Assessing Officer was not considered by him after due application of mind whereas the same had been duly examined by the AO before framing the original assessment? The appellant is a Technical Educational Trust. The assessment proceedings in respect of assessee was finalised by the Assessing Officer on I.T.A. No.191 of 2012 (O&M) -2- 26.12.2006 at nil income. The Assessing Officer found that the assessee has incurred more than 85% of the expenditure during the year in question and, therefore, allowed the exemption under Section 11 and 12A of the Act. However, the Commissioner of Income Tax revised the said order in exercise of the provisions under Section 263 of the Act on 26.3.2009 after giving show cause notice. It was found that the families of the trustees have been paid interest whereas in terms of the deed of trust, the members of the trust are not to be paid any benefit or profit from the trust. It was also found that the Assessing Officer has failed to examine the issue of deduction of tax at source while crediting interest to the family members of the trustees. Similarly, it was found that 50% of the development fund has been utilised whereas the balance was to be utilised after ten years. The Commissioner found that there is no date of creation of development fund and the year wise break up of opening balance is also not available. It was found that towards development fund, each student was to contribute a sum of Rs.600/- per annum. It was found that such receipt is income of the trust and not exempted under Section 11 of the Act. Similarly, the discrepancies were found on account of depreciation, repayment of term loan. Such order has been affirmed in appeal by the Tribunal. Learned counsel for the appellant has argued that even if all such additions are made, still the tax effect is nil, therefore, it cannot be said that the order of Assessing Officer was prejudicial to the interest of revenue. Learned counsel for the appellant has referred to a Division Bench judgment of Gujarat High Court in Commissioner of Income Tax v. Smt. Minalben S. Parikh, 215 ITR 81 in support of such argument. I.T.A. No.191 of 2012 (O&M) -3- We have heard learned counsel for the appellant and find no merit in the present appeal. The assessee has disputed the show cause notice justifying the return filed. It was never the stand of the assessee that even if the said aspects are taken into consideration, still the income of the assessee would be nil. In the absence of any plea that the additions made will not cause loss to the revenue, we find that the appellant cannot be permitted to raise such questions in appeal without there being any factual basis. In view thereof, we do not find that any substantial question of law arises for consideration in the present appeal. Dismissed. ( HEMANT GUPTA ) JUDGE April 04, 2013 ( RITU BAHRI ) renu/Vimal JUDGE "