Sri Madhuradastri Ayodhyabai Rathi Charitable Trust, Hyderabad V. DIT (E), Hyderabad

MA 191/HYD/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6604 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 03-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: K L RATHI
• Keywords: Rectification of order; Charitable institution; Reasonable cause
• Section: 80G; 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT & SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER M.A. NO. 191/HYD/2010 (ARISING OUT OF I.T.A. NO. 1067/HYD/2009 R.W. M.A. NO. 74/HYD/2010) ASSESSMENT YEAR : NIL SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST, HYDERABAD PAN: AAFTS3414F) V . THE DIRECTOR OF INCOME - TAX (EXEMPTIONS), HYDERABAD APPL IC ANT RESPONDENT APPELLANT BY: MR. K.L. RATHI RESPONDENT BY: MR. NIVEDITA BISWAS O R D E R PER CHANDRA POOJARI, AM: THIS IS A SECOND MISCELLANEOUS APPLICATION BY THE ASSESSEE THROUGH WHICH THE ASSESSEE SEEKS RECTIFICATION / REVIEW OF THE ORDER OF THIS TRIBUNAL DATED 23 RD JULY, 2010 IN M.A. NO. 74/HYD/2010 ARISING OUT OF ORDER OF IN I.T. A. NO. 1067/HYD/2009 DATED 26 TH MARCH, 2010. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HONBLE TRIBUNAL HAS DISMISSED THE ASSESSEES PETITION IN M.A. NO. 74/HYD/2010 ON THE GROUND THAT ALL MATERIAL FACTS H AVE BEEN TAKEN INTO CONSIDERATION IN DISPOSING OF THE APPEA L REFERRED ABOVE, BUT QUESTION OF TAKING INTO CONSIDERAT ION OF MATERIAL FACTS AS SUCH DOES NOT ARISE AS THERE IS NO D ISPUTE SO FAR MATERIAL FACTS ARE CONCERNED, BUT THE FUNDAMENTAL A ND VITAL ISSUE AGITATED BY THE ASSESSEE IS ASSESSEES BON E OF CONTENTION WAS THAT IF THE DIT (E) DID NOT WITHDRAW THE REGISTRATION U/S. 12AA, QUESTION OF DENYING APPROVAL F OR THE PURPOSE OF 80G(5) DOES NOT AT ALL ARISE. THEREFORE, THE TRUST IS M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 2 A CHARITABLE INSTITUTION AND IN SUCH CASE THE GRANT OF A PPROVAL U/S. 80G(5) CANNOT BE DENIED. IN SUPPORT OF THIS CON TENTION, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DE CISIONS OF SUPREME COURT I.E., SURAT CITY GYMKHANA [300 ITR 214 (SC)] AND RADHASOAMI SATSANG V. CIT (193 ITR 321) AND THE ASSESSEES CASE IS TOTALLY AND SQUARELY GOVERNED BY TH ESE DECISIONS. THE LEARNED COUNSEL FOR THE ASSESSEE CON TENDED THAT WHEN THE ASSESSEES ISSUE IS COVERED BY THE SUPREM E COURT DECISIONS, ALL AUTHORITIES ARE SUPPOSED TO FOLLO W THE SUPREME COURT DECISION AS IS PROVIDED IN ARTICLE 141 OF CONSTITUTION OF INDIA. BUT IN ASSESSEES CASE THESE T WO CASES ALTHOUGH MENTIONED IN PARAS 3 AND 4 OF THE M.A. ORDER, THE TRIBUNAL DID NOT ADJUDICATE ON THIS ISSUE WITH REFERE NCE TO THE SUPREME COURT ORDERS CITED ABOVE. IF THE TRIBUNAL WAS OF THE VIEW THAT THE ABOVE SUPREME COURT DECISIONS ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE THEN THE S AME FACT SHOULD HAVE BEEN MENTIONED IN THE M.A. ORDER. 3. NOW THE ASSESSEE AGAIN PRAYS THAT THIS TRIBUNAL MAY DISPOSE THIS FUNDAMENTAL ISSUE IN THE LIGHT OF THE ABOVE DECISIONS OF THE SUPREME COURT WHICH WOULD AMOUNT TO DISPOSAL OF ORIGINAL APPLICATION OTHERWISE THE VERY OB JECT OF SECTION 254(2) WILL STAND DEFEATED. THE TRIBUNAL IS BOUND TO DECIDE THE FUNDAMENTAL ISSUE IN THE LIGHT OF THE SUPREM E COURT DECISIONS CITED (SUPRA). OMISSION TO FOLLOW TH E SUPREME COURT DECISIONS IS A MISTAKE APPARENT FROM THE RECORD A ND IF THE SAME IS NOT TREATED AS A MISTAKE, IT WOULD AMOUNT T O CONTEMPT OF COURT. 4. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON ANOTHE R DECISION OF SUPREME COURT IN THE CASE OF U.P. POLLUT ION CONTROL M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 3 BOARD & ORS. V. KANORIA INDUSTRIAL LTD. & ANR. [259 I TR 321 (SC)] WHEREIN IT WAS HELD AS UNDER: HELD , DISMISSING THE PETITIONS AND AFFIRMING THE DECISION OF THE HIGH COURT, (I) THAT IN MATTERS ARI SING UNDER PUBLIC LAW WHEN THE VALIDITY OF A PARTICULAR PROVISION OR LEVY IS CHALLENGED THE LEGAL POSITION IS THAT WHEN THE SUPREME COURT DECLARES THE LAW AND HOLDS EITHER A PARTICULAR LEVY TO BE VALID OR INVAL ID IT IS WRONG TO CONTEND THAT THE LAW LAID DOWN BY THE SUPREME COURT IN THAT JUDGEMENT WOULD BIND ONLY THOSE PARTIES WHO WERE BEFORE THE COURT AND NOT OTHERS IN RESPECT OF WHOM APPEAL HAD NOT BEEN FILED . TO DO SO WOULD BE TO IGNORE THE BINDING NATURE OF A JUDGEMENT OF THE SUPREME COURT UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA. TO CONTEND THAT THE CONCLUSION REACHED BY THE SUPREME COURT IN A CASE RELATING TO THE VALIDITY OF A LEVY WOULD APPLY ONLY TO THE PARTIES BEFORE THE COURT IS TO DESTROY THE EFFI CACY AND INTEGRITY OF THE JUDGEMENT AND TO MAKE THE MANDATE OF ARTICLE 141 ILLUSORY. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE DECISION OF ITAT V. V.K. AGARWAL AND ANR. [235 ITR 175 (SC)] WHEREIN THE HEAD-NOTE READS AS FOLLOWS: ARTICLE 129 OF THE CONSTITUTION PROVIDES THAT THE SUPREME COURT SHALL BE A COURT OF RECORD AND SHALL HAVE ALL THE POWERS OF SUCH A COURT INCLUDING THE POWER TO PUNISH FOR CONTEMPT OF ITSELF. THE ARTICL E CONFERS POWER ON THE SUPREME COURT TO PUNISH FOR CONTEMPT OF ITSELF AND IN ADDITION, IT CONFERS SOME ADDITIONAL POWER RELATING TO CONTEMPT AS WOULD APPEAR FROM THE EXPRESSION INCLUDING. ..... IT FURTHER HELD IN THE SAME IN PARA 3, WHICH READS AS FOLLOWS: .... THE CASE OF CONTEMPT IS NOT STRICT SENSUAL C AUSE OR A MATTER BETWEEN THE PARTIES, INTER SE. IT IS A MATTER BETWEEN THE COURT AND THE CONTENDER. WHENEVER AN ACT ADVERSELY AFFECTS THE ADMINISTRATION OF JUSTICE OR TENDS TO IMPEDE ITS COURSE, OR SHAKES PUBLIC CONFIDENCE IN A JUDICIAL M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 4 INSTITUTION, THE POWER CAN BE EXERCISED TO UPHOLD T HE DIGNITY OF THE COURT OF LAW AND PROTECT ITS PROPER FUNCTIONING. 6. ACCORDINGLY, THE LEARNED COUNSEL FOR THE ASSESSEE REQUESTED THE TRIBUNAL TO RECTIFY THE MISTAKE BY FOLLOWI NG THE JUDGEMENT OF SUPREME COURT IN CASE OF SURAT CITY GYMKH ANA [300 ITR 214 (SC)] AND IN CASE OF RADHASOAMI SATSAN G V. COMMISSIONER OF INCOME-TAX [193 ITR 321 (SC)] AND CO NTENDED THAT OMISSION TO FOLLOW THE ABOVE SC DECISIONS IS MIS TAKE APPARENT FROM THE RECORD AND HENCE REQUIRES RECTIFICATI ON U/S. 254(2). 7. THE LEARNED DR SUBMITTED THAT THERE IS NO FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE AND TH IS SECOND MISCELLANEOUS APPLICATION CANNOT BE ENTERTAINE D. SHE SUBMITTED THAT THE RATIO OF JUDGEMENT IN THE CASE OF RADHASAOMI SATSANG (SUPRA) DOES NOT APPLY TO THE FACT S OF THE PRESENT CASE. THE LEARNED DR DREW OUR ATTENTION TO THE LAST PARA OF THE JUDGEMENT IN THE CASE OF RADHASAOMI SATSANG (SUPRA) WHEREIN IT IS SPECIFICALLY MENTIONED THAT THE DE CISION IS CONFINED TO THE FACTS OF THAT CASE AND MAY NOT BE TREATED AS AN AUTHORITY ON ASPECTS WHICH HAVE BEEN DECIDED FOR GENE RAL APPLICATION. REGARDING JUDGEMENT IN THE CASE OF SURAT C ITY GYMKHANA (SUPRA), SHE SUBMITTED THAT IN THAT CASE THE ISS UE WAS REGARDING REGISTRATION U/S 12A. IT WAS HELD THAT REGISTRATION OF A TRUST ONCE DONE IS A FAIT ACCOMPLI AND THE ASSESSING OFFICER CANNOT THEREAFTER MAKE FURTHER PROB E INTO THE OBJECTS OF THE TRUST. THIS WAS AN APPEAL BY SPECIAL L EAVE ARISING FROM THE JUDGEMENT OUT OF IN THE CASE OF HIRALA L BHAGHAWATI VS. CIT (246 ITR 188) (GUJ.). IN HIRALAL BHAGHAWATI CASE, THE COMMISSIONER HAS PASSED THE ORDE R U/S M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 5 12A AND SUBSEQUENTLY THE INCOME TAX OFFICER RAISED OBJ ECTION TO THE OBJECT OF THE TRUST. THE RATIO OF THIS CASE IS THAT A LOWER AUTHORITY CANNOT RAISE OBJECTIONS ON THE ISSUE WHICH COMMISSIONER ALREADY HAS DECIDED. ACCORDINGLY, SHE SUBMITTED THAT AS SEEN FROM THE FACTS OF THE PRESENT CASE, THE ORDER WAS PASSED BY THE DIT (EXEMPTIONS) HIMSELF. HE NCE, THIS CASE DOES NOT APPLY TO THE PRESENT CASE. FURTHER, SHE SUBMITTED THAT THE PROCEEDINGS U/S 12A IS SEPARATE FROM THE PROCEEDINGS U/S 80G (5). THE GRANT OF EXEMPTION U/S 80G FOLLOWS RULE 11AA, IN WHICH ONE OF THE CRITERIA IS REGISTRATION U/S 12A. THEREFORE, IT IS NOT NECESSARY THAT HAVING REGISTRATION U/S 12A AUTOMATICALLY QUALIFIES OR ENTITLES FOR APPROVAL U/S 80G. ACCORDINGLY, IT IS NOT NECESSARY TH AT REJECTING THE APPROVAL U/S 80G HAS TO BE FOLLOWED BY REJECTION OF REGISTRATION U/S 12AA. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY THIS IS THE SECOND MISCELLANEOUS APPLICATION WHICH CANNOT BE ENTERTAINED U/S. 254(2) OF THE INCOME-TAX ACT, 1961. THE TRIBUNAL HAS REJECTED THE FIRST MISCELLANEOUS APPLICATION FILED U/S. 254(2) OF THE ACT ON THE GROUND THAT THERE WAS NO MISTAKE APPARENT ON TH E FACE OF THE RECORD IN THE ORDER OF THE TRIBUNAL. IT WAS NOT OPEN TO THE TRIBUNAL TO ENTERTAIN THE SECOND APPLICATION WHICH WAS FILED ON THE SAME SET OF FACTS AND TO RECALL ITS APPELLA TE ORDER ON THE ALLEGED PREMISE THAT THERE WAS AN ERROR APPAREN T IN THE ORDER OF THE TRIBUNAL. WE PLACE RELIANCE ON THE JUDG EMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. THE CHEMI CAL AND ALLIED PRODUCTS (296 ITR 297). M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 6 9. FURTHER IT IS WELL SETTLED THAT STATUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SUCH POWER IS EXPRE SSLY CONFERRED. THERE IS NO EXPRESS POWER OF REVIEW CO NFERRED ON THIS TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DO ES NOT EXTENT TO RE-HEARING OF THE CASE ON MERIT. IT IS HELD I N THE CASE OF CIT VS. PEARL WOOLLEN MILLS (330 ITR 164): HELD, THAT THE TRIBUNAL COULD NOT READJUDICATE THE MATTER UNDER SECTION 254(2). IT IS WELL SETTLED THAT A ST ATUTORY AUTHORITY CANNOT EXERCISE POWER OF REVIEW UNLESS SU CH POWER IS EXPRESSLY CONFERRED. THERE WAS NO EXPRESS POWER OF REVIEW CONFERRED ON THE TRIBUNAL. EVEN OTHERWISE, THE SCOPE OF REVIEW DID NOT EXTENT TO REHEARING A CASE ON THE MERITS. NEITHER BY INVOKING INHERENT POWER NOR THE PRINCIPL E OF MISTAKE OF COURT NOT PREJUDICING A LITIGANT NOR BY INVOLVING DOCTRINE OF INCIDENTAL POWER, COULD THE TRIBUNAL RE VERSE A DECISION ON THE MERITS. THE TRIBUNAL WAS NOT JUSTI FIED IN RECALLING ITS PREVIOUS FINDING RESTORING THE ADDITI ON, MORE SO WHEN AN APPLICATION FOR THE SAME RELIEF HAD BEEN EA RLIER DISMISSED. 10. THE SCOPE AND AMBIT OF APPLICATION OF SECTION 254(2) I S VERY LIMITED. THE SAME IS RESTRICTED TO RECTIFICATION OF MISTAKES APPARENT FROM THE RECORD. WE SHALL FIRST DEAL WITH THE QUESTION OF THE POWER OF THE TRIBUNAL TO RECALL AN ORDE R IN ITS ENTIRETY. RECALLING THE ENTIRE ORDER OBVIOUSLY WOULD M EAN PASSING OF A FRESH ORDER. THAT DOES NOT APPEAR TO BE THE LEGISLATIVE INTENT. THE ORDER PASSED BY THE TRIBUNAL U NDER S. 254(1) IS THE EFFECTIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED UNDER S. 254(2) EITHER ALLOWING THE AMENDMENT OR REFUSING TO AMEND GETS MERGED WITH THE ORI GINAL ORDER PASSED. THE ORDER AS AMENDED OR REMAINING UN - AMENDED IS THE EFFECTIVE ORDER FOR ALL PRACTICAL PURPO SES. AN ORDER UNDER S. 254(2) DOES NOT HAVE EXISTENCE DE HORS THE ORDER UNDER S. 254(1). RECALLING OF THE ORDER IS NO T PERMISSIBLE UNDER S. 254(2). RECALLING OF AN ORDER AUTOMATICALLY M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 7 NECESSITATES REHEARING AND RE-ADJUDICATION OF THE ENTIR E SUBJECT-MATTER OF APPEAL. THE DISPUTE NO LONGER REMA INS RESTRICTED TO ANY MISTAKE SOUGHT TO BE RECTIFIED. POWER TO RECALL AN ORDER IS PRESCRIBED IN TERMS OF RULE 24 O F THE ITAT RULES, 1963, AND THAT TOO ONLY IN CASE WHERE THE ASSESS EE SHOWS THAT IT HAD A REASONABLE CAUSE FOR BEING ABSENT A T A TIME WHEN THE APPEAL WAS TAKEN UP AND WAS DECIDED EX-P ARTE. JUDGED IN THE ABOVE BACKGROUND THE ORDER PASSED BY TH E TRIBUNAL IS INDEFENSIBLE. 11. THE WORDS USED IN S. 254(2) ARE SHALL MAKE SUCH AMENDMENT, IF THE MISTAKE IS BROUGHT TO ITS NOTICE. CL EARLY, IF THERE IS A MISTAKE, THEN AN AMENDMENT IS REQUIRED TO BE CARRIED OUT IN THE ORIGINAL ORDER TO CORRECT THAT PARTIC ULAR MISTAKE. THE PROVISION DOES NOT INDICATE THAT THE TRIBU NAL CAN RECALL THE ENTIRE ORDER AND PASS A FRESH DECISION . THAT WOULD AMOUNT TO A REVIEW OF THE ENTIRE ORDER AND THAT IS NOT PERMISSIBLE UNDER THE IT ACT. THE POWER TO RECTIFY A MISTAKE UNDER S. 254(2) CANNOT BE USED FOR RECALLING THE ENTIR E ORDER. NO POWER OF REVIEW HAS BEEN GIVEN TO THE TRIBUNAL UND ER THE IT ACT. THUS, WHAT IT COULD NOT DO DIRECTLY COULD NOT BE ALLOWED TO BE DONE INDIRECTLY. 12. IN THE CASE OF CIT VS. HINDUSTAN COCA COLA BEVERAGES (P) LTD. (2007) 207 CTR (DEL) 119; (2007) 293 ITR 163 (D EL), THEIR LORDSHIPS WHILE CONSIDERING THE POWERS OF THE TRIBUNA L UNDER S. 254(2) OF THE IT ACT, 1961 OBSERVED AS UNDER: UNDER S. 254(2) OF THE IT ACT, 1961, THE TRIBUNAL HAS THE POWER TO RECTIFY MISTAKES IN ITS ORDER. HOWEVER, IT IS PLAIN THAT THE POWER TO RECTIFY A MISTAKE IS NOT EQUIVALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFIED. RECTIFICA TION M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 8 IS A SPECIES OF THE LARGER CONCEPT OF REVIEW. ALTHOUGH IT IS POSSIBLE THAT THE PRE-REQUISITE FOR EXERCISE OF EITHER POWER MAY BE SIMILAR (A MISTAKE APPARENT FROM THE RECORD), BY ITS VERY NATURE THE POWER TO RECTIFY A MISTAKE CANNOT RESULT IN THE REC ALL AND REVIEW OF THE ORDER SOUGHT TO BE RECTIFIED. 13. THUS THE SCOPE AND AMBIT OF APPLICATION U/S. 254(2) I S AS FOLLOWS: (A) FIRSTLY, THE SCOPE AND AMBIT OF APPLICATION OF S. 254( 2) OF IT ACT IS RESTRICTED TO RECTIFICATION OF THE MISTAKES APPARENT FROM THE RECORD. (B) SECONDLY, THAT NO PARTY APPEARING BEFORE THE TRIBUNAL SHOULD SUFFER ON ACCOUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL AND IF THE PREJUDICE HAS RESULTED TO THE PARTY, WHICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNALS MISTAKE/ERROR OR OMISSION, AND WHICH AN ERROR IS A MANIFEST ERROR, THEN THE TRIBUNAL WOULD BE JUSTIFIED IN RECTIFYING ITS MISTAKE. THE RULE OF PRECEDENT IS A N IMPORTANT ASPECT OF LEGAL CERTAINTY IN THE RULE OF LAW A ND THAT PRINCIPLE IS NOT OBLITERATED BY S. 254(2) OF THE AC T AND NON-CONSIDERATION OF PRECEDENT BY THE TRIBUNAL CAUSES A PREJUDICE TO THE ASSESSEE. (C) THIRDLY, POWER TO RECTIFY A MISTAKE IS NOT EQUIVALENT TO A POWER TO REVIEW OR RECALL THE ORDER SOUGHT TO BE RECTIFI ED. (D) FOURTHLY, UNDER S. 254(2) AN OVERSIGHT OF A FACT CANNO T CONSTITUTE AN APPARENT MISTAKE RECTIFIABLE UNDER THE SECTION. (E) FIFTHLY, FAILURE ON THE PART OF THE TRIBUNAL TO CONSID ER AN ARGUMENT ADVANCED BY EITHER PARTY FOR ARRIVING AT A M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 9 CONCLUSION IS NOT AN ERROR APPARENT ON RECORD, ALTHOUG H IT MAY BE AN ERROR OF JUDGEMENT. (F) SIXTHLY, EVEN IF ON THE BASIS OF A WRONG CONCLUSION TH E TRIBUNAL HAS NOT ALLOWED A CLAIM OF THE PARTY IT WIL L NOT BE A GROUND FOR MOVING AN APPLICATION UNDER S. 254( 2) OF THE ACT. (G) LASTLY, IN THE GARB OF AN APPLICATION FOR RECTIFICATION UNDER S. 254(2) THE ASSESSEE CANNOT BE PERMITTED TO REOPEN AND REARGUE THE WHOLE MATTER AS THE SAME IS BEYOND THE SCOPE OF S. 254(2) OF THE IT ACT. 14. KEEPING IN MIND THE ABOVE PARAMETERS, NOW WE PROCEE D TO CONSIDER AND DISPOSE OF THE MISCELLANEOUS APPLICATI ON FILED BY THE ASSESSEE AS UNDER. 15. IN THE INSTANT CASE, THE TRIBUNAL WHILE DECIDING THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 26 TH MARCH, 2010 NOT ONLY CONSIDERED THE ELABORATE ARGUMENTS ADVANCED BY TH E AUTHORISED REPRESENTATIVES OF BOTH THE PARTIES BUT ALSO T OOK INTO CONSIDERATION THE WRITTEN SYNOPSIS FILED BY THE AR FOR ASSESSEE BEFORE IT. GENERALLY THE MAIN PURPOSE OF THE TRIBUNAL FOR CALLING FOR WRITTEN SYNOPSIS FROM THE PARTIES IS THAT NOTHING IS IGNORED OR ANY POINT IN ISSUE WHICH WAS RAISED DU RING THE COURSE OF ARGUMENTS OR WHICH COULD NOT PROPERLY BE N OTED BY THE MEMBERS IN THE LOG BOOK WHILE HEARING THE ARGUMENTS OF THE PARTIES, IS LEFT UNCONSIDERED. IT MEANS THAT IT IS A LWAYS THE ENDEAVOUR OF THE TRIBUNAL THAT WHILE PASSING THE ORD ER IT CONSIDERS ALL THE ARGUMENTS AS WELL AS THE WRITTEN SYNO PSES SUBMITTED BY THE PARTIES. NOW REVERTING TO THE ORDER PASS ED BY THE TRIBUNAL DATED 26 TH MARCH, 2010, AS WELL AS THE ORDER M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 10 DATED 23 RD JULY, 2010 IN THE EARLIER MISCELLANEOUS APPLICATIO N NO. 74/HYD/2010 AND ALONG WITH THE ARGUMENTS OF THE ASSESSEE FOR THE PRESENT MISCELLANEOUS APPLICATION UND ER CONSIDERATION, WE FIND THAT THE TRIBUNAL HAS REPRODUC ED AND CONSIDERED THE CASE-LAW SUBMITTED BY THE ASSESSEE IN I TS ARGUMENTS TO SUPPORT THE CONTENTION. NOW THE ASSESSEES CONTENTION RAISED IN THE MISCELLANEOUS APPLICATION IS THAT THE CASE-LAW CITED BY THE ASSESSEE IN SUPPORT OF ITS CONTEN TION HAS NOT BEEN CONSIDERED BY THE TRIBUNAL WHILE PASSING THE ORDER AND ALSO REASON FOR NOT CONSIDERATION IS ALSO NOT GIVE N BY THE TRIBUNAL WHILE PASSING THE ORDER, HENCE, THERE IS MIS TAKE APPARENT IN THE ORDER OF THE TRIBUNAL WHICH CALLS FOR RECTIFICATION. 16. IN THIS REGARD, WE WOULD LIKE TO MENTION THAT IN THE ORDER, THE TRIBUNAL FIRST METICULOUSLY MENTIONED THE ARGUMENTS OF THE LEARNED AR FOR THE ASSESSEE, THE POIN TS RAISED BY HIM THEN THE RELEVANT CASE-LAWS RELIED UPON BY THE AR OF THE ASSESSEE. THEREAFTER, THE TRIBUNAL CONSIDE RED THE SAME AND PASSED A SPEAKING ORDER FOR NOT ENTERTAININ G THE CLAIM OF THE ASSESSEE. WHILE REJECTING THE CLAIM OF TH E ASSESSEE THE TRIBUNAL PLACED RELIANCE ON THE JUDGEMEN T OF SUPREME COURT IN THE CASE OF GANGABAI CHARITIES VS. C IT & ORS. (197 ITR 416) (SC) WHICH IS DIRECTLY ON THE ISSU E RAISED BY THE ASSESSEE. THUS, IN VIEW OF OUR DETAILED DISCUSSI ON AND APPLYING THE RATIO OF THE DECISION OF THE APEX COURT I N THE CASE OF GANGABAI CHARITIES CITED SUPRA, WE CONCLUDED THAT THE DIT (EXEMPTIONS) IS JUSTIFIED IN REJECTING THE APPROVAL U/S . 80G OF THE I.T. ACT, 1961. THE TRIBUNAL THEREAFTER OBSERVE D IN PARA M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 11 13 WHY IT DID NOT CONSIDER THE JUDGEMENTS OF THE SUPREM E COURT RELIED UPON BY THE LEARNED AR. 17. FOR CLARITY, WE WILL GO THROUGH THE JUDGEMENTS CITED BY THE LEARNED AR WHILE ARGUING THE APPEAL. IN THE CASE OF RADHASOAMI SATSANG V. CIT (193 ITR 321) THE FOLLOWI NG QUESTION WAS REFERRED TO THE SUPREME COURT IN AN SLP: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG, A RELIGIOUS INSTITUTION, IS ENTITLED TO EXEMPTION UND ER SECTIONS 11 AND 12 OF THE INCOME-TAX ACT, 1961? 18. THE ABOVE QUESTION WAS DECIDED IN FAVOUR OF THE ASSESSEE. HOWEVER, THERE WAS A SPECIFIC MENTION BY T HE HONBLE SUPREME COURT THAT THE DECISION IS CONFINED TO TH E FACTS OF THE CASE AND MAY NOT BE TREATED AS AN AUTHOR ITY ON ASPECTS WHICH HAVE BEEN DECIDED FOR GENERAL APPLICATI ON. BEING SO, THE ABOVE JUDGEMENT CANNOT BE TREATED AS A BI NDING PRECEDENT UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA . 19. IN THE CASE OF ACIT VS. SURAT CITY GYMKHANA (300 ITR 214), THE FOLLOWING TWO QUESTIONS WERE REFERRED: (A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE OBJECTS OF THE TRUST RESTRICTING BENEFIT TO THE MEMBERS OF THE CLU B WOULD FALL WITHIN THE PURVIEW OF THE ACT OF GENERAL PUBLIC UTILITY UNDER SECTION 2(15) OF THE INCOME-TAX ACT CONSTITUTING AS A SECTION OF PUBLIC AND NOT A BODY OF INDIVIDUALS? (B) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE INCOME-TAX APPELLATE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT REGISTRATION UNDER SECTION 12A WAS A FAIT ACCOMPLI TO HOLD THE M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 12 ASSESSING OFFICER BACK FROM FURTHER PROBE INTO THE OBJECTS OF THE TRUST? 20. GOING THROUGH THE ABOVE JUDGEMENT, WE FIND THAT SINCE THE DEPARTMENT HAD NOT CHALLENGED THE DECISION OF THE HI GH COURT IN THE CASE OF HIRALAL BHAGWATI VS. CIT (243 ITR 188) WHICH ATTAINED FINALITY ON THIS POINT RAISED BY THE DEP ARTMENT AND AS SUCH THE SUPREME COURT DECIDED THE ISSUE IN FA VOUR OF THE ASSESSEE. FURTHER, THE RATIO LAID DOWN IN THIS CASE IS THAT A LOWER AUTHORITY CANNOT RAISE OBJECTIONS ON THE ISSUE WH ICH A COMMISSIONER HAS ALREADY DECIDED. BECAUSE IN THAT CA SE, THE CIT(A) HAS PASSED ORDERS U/S 12A AND SUBSEQUENTLY AN INCOME TAX OFFICER HAS RAISED OBJECTION TO THE OBJECTS OF THE TRUST. BEING SO, WE ARE NOT ABLE TO APPRECIATE THE ARG UMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE, HOW THIS JUDG EMENT HELPS THE ASSESSEE, MORE SO TO BE TREATED AS A BINDIN G PRECEDENT UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA . 21. FURTHER FROM THE ORDER OF THE TRIBUNAL DATED 26 TH MARCH, 2010 IT IS EVIDENT THAT THE TRIBUNAL CONSIDERED THE ARGUM ENTS OF THE ASSESSEES COUNSEL AS WELL AS THE RATIO OF THE DECISIONS OF THE SUPREME COURT ELABORATELY DISCUSSING THE SAME IN THE ORDER. HENCE, IT CANNOT BE SAID THAT THE TRIBUNAL HAS N OT CONSIDERED THE CASE-LAW CITED BY THE LEARNED AR FOR THE ASSESSEE AS ALLEGED IN THE MISCELLANEOUS APPLICATION. ON THE CONTRARY, THE TRIBUNAL IN THE ORDER, AFTER TAKING NOTE O F THE CASE-LAW RELIED UPON BY THE LEARNED AR FOR THE ASSES SEE, GAVE REASONING WHY IT WAS NOT RELEVANT TO CONSIDER THE SAME. THE AVERMENT OF THE ASSESSEE IS THAT THE DECISION OF THE APEX COURT RELIED ON BY HIM HAS NOT BEEN APPLIED BY THE TRIBUNAL WHILE COMING TO THE CONCLUSION IN PARAS 12 AND 13 OF THE T RIBUNAL M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 13 ORDER, IS NOT A MISTAKE APPARENT ON RECORD FALLING WIT HIN THE SCOPE OF SECTION 254(2) OF THE I.T. ACT IN VIEW OF O UR DISCUSSION HEREINABOVE IN THIS ORDER AS RECONSIDERING THE SAME W OULD AMOUNT TO RECALLING AND REVIEWING THE ORDER AND PASSI NG A FRESH ORDER AFTER RECONSIDERING THE ELABORATE ARGUME NTS ADVANCED BY THE PARTIES. 22. FURTHER THE TRIBUNAL CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND DECIDED THE ISSUE ON THE FACE OF JUDGEMENT OF THE SUPREME COURT IN THE CASE OF GANGABAI CHARITIES VS. CIT, 197 ITR 416 (SC). BEING SO, NOW WE CANNOT REVIEW THE SAME ON THE BASIS OF FRESH ARGUMENTS ADVANC ED BY THE LEARNED AR. FURTHER IF THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS ACCEPTED THAT SHALL LEAD TO CONCLUSION THAT ONCE REGISTRATION U/S. 12AA IS GRANTED TO AN ASSESSEE TRUST, THE DEPARTMENT THEREAFTER SHALL BE DEBARR ED FROM MAKING ANY FURTHER ENQUIRY REGARDING THE OBJECTS OF THE TRUST EVEN IF THE OBJECTS OF THE TRUST ARE FOUND TO BE VAG UE OR NON-CHARITABLE IN NATURE. WE WOULD LIKE TO MENTION HER EIN THAT THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE CO URSE OF HEARING OF THE PRESENT (I.E., SECOND) MA HAS CONTENDED THAT THE TRIBUNAL IS BOUND BY THE JUDGEMENTS OF THE SUPREME COU RT AS PER ARTICLE 141 OF THE CONSTITUTION OF INDIA, OTHERWISE IT AMOUNTS TO CONTEMPT OF COURT UNDER ARTICLE 129 OF THE CONSTITUTION OF INDIA. HE ALSO FILED A COPY OF THE S AME WHICH IS PLACED ON RECORD AND SUBMITTED THAT IN THE LIGHT OF TH E ARTICLE 129 OF THE CONSTITUTION OF INDIA, THE TWO DECIS IONS OF THE SUPREME COURT CITED (SUPRA) BY HIM ARE BINDING UPO N THE TRIBUNAL AND IF NOT FOLLOWED IT AMOUNTS TO CONTEMPT OF C OURT. AS REGARDS TO LEGAL POSITION TO THE BINDING NATURE OF THE M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 14 DECISIONS OF SUPREME COURT ON COURTS AND TRIBUNAL IN THE COUNTRY THERE IS NO AMBIGUITY TO IT. BUT IN OUR CONSID ERED JUDICIAL VIEW THE ABOVE JUDGEMENTS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE FOR THE REASONS ALREADY STATED IN EARLIER PARAS AND ALSO IN THE ORDER OF THE M.A. DATED 23 RD JULY, 2010, FILED BY THE ASSESSEE. 23. IN THE CASE OF KUNHAYAMMED & ORS. VS. STATE OF KERALA & ANR. (245 ITR 360) THE SUPREME COURT HELD THAT IT IS W ELL SETTLED PRINCIPLES OF LAW THAT WHEN AN SLP IS SUMMARILY DISMISSED UNDER ARTICLE 136 OF CONSTITUTION OF INDIA, SUCH DISMISSAL DOES NOT LAY DOWN ANY LAW. RATHER IT SHALL BE DEEMED THAT THE SUPREME COURT SIMPLY HELD THAT IT IS NO T A FIT CASE WHERE SLP SHOULD BE GRANTED. THE SAME PRINCIP LE WILL NOT APPLY IN A CASE WHERE CIVIL APPEAL IS DISMISSED BY THE SUPREME COURT HOLDING THAT THE APPEAL HAS NO MERIT. WH EN CIVIL APPEAL IS DISMISSED AFTER HEARING BOTH THE PARTI ES BY THE SUPREME COURT HOLDING THAT THE APPEAL HAS NO MERIT THEN SUCH ORDER BECOMES THE ONE WHICH ATTRACTS ARTICLE 141 O F THE CONSTITUTION OF INDIA, WHICH PROVIDES THAT THE LAW DEC LARED BY THE SUPREME COURT SHALL BE BINDING ON ALL THE COURTS AN D TRIBUNALS WITHIN THE TERRITORY OF INDIA. IN OTHER WOR DS, DISMISSAL OF SLP BY A NON-SPEAKING ORDER HAS NO BIN DING EFFECT UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA. 24. ARTICLE 141 OF THE CONSTITUTION OF INDIA PROVIDES THAT T HE LAW DECLARED BY THE SUPREME COURT SHALL BE BINDING O N ALL COURTS AND TRIBUNALS IN THE INDIAN TERRITORY. THE DE CLARATION OF LAW IS COMPLETE AS SOON AS THE JUDGEMENT IS PRONO UNCED. IMMEDIATELY WITH THE DECLARATION OF LAW, THE PRINCIPL ES OF M.A. NO. 191/HYD/2010 SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST ====================== 15 ARTICLE 141 WOULD BE ACTIVATED. IT IS THE FOREMOST DUTY OF ALL COURTS AND TRIBUNALS IN THE COUNTRY TO DECIDE ALL ISSUE S OF LAW ARISING BEFORE THEM IN ANY CASE IN THE LIGHT OF THE L AW LAID DOWN BY THE SUPREME COURT AS ARTICLE 141 OF THE CONSTI TUTION OF INDIA MAKES IT IMPERATIVE TO FOLLOW THE LAW LAID DOW N BY THE SUPREME COURT IN LETTER AND SPIRIT. IT IS ONLY WHEN THE ISSUE IS NOT COVERED BY THE DECISION OF SUPREME COURT THEN THE SA ME HAS TO BE DECIDED KEEPING IN VIEW THE LAW LAID DOWN BY THE HIGH COURTS IN THE COUNTRY WHICH HOLD THE FIELD. 25. WE MAY MENTION HEREIN THAT WE MIGHT HAVE COMMITTED AN ERROR OF JUDGEMENT IN WRONGLY APPLYING/INTERPRETIN G THE JUDGEMENT OF THE SUPREME COURT AS MENTIONED ON THE MATTER , BUT THE ASSESSEE IS FREE TO EXPLORE THE REMEDY AVAILAB LE UNDER THE LAW. 26. IN THE RESULT, THE MA FILED BY THE ASSESSEE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2011. SD/- (G.C. GUPTA) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 15 TH JULY, 2011 TPRAO COPY FORWARDED TO: 1. SRI MATHURADASJI AYODHYABAI RATHI CHARITABLE TRUST, C/O. SHRI K.L. RATHI, ADVOCATE, 3-5-144/5, EDEN GARDEN, HYDERABAD-500 001. 2. THE DIT(E), HYDERABAD. 3. THE DIT, HYDERABAD 4 THE CIT, HYDERABAD 5. THE DR A BENCH, ITAT, HYDERABAD