UNIVERSAL EDUCATION FOUNDATION, MUMBAI V. ASSISTANT DIRECTOR OF INCOME TAX (E) II(2), MUMBAI

MA 303/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6092 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 19-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: AMANT PAI
• Keywords: Rectification of order; Charitable institution
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, A M AND SHRI SANDEEP GOSAIN, JM M . A. NO. 303/MUM/2017 (ARISING OUT OF ITA NO. 1097/MUM/2016) ( / ASSESSMENT YEAR: 2011 - 12 ) M/S. UNIVERSAL EDUCATION FOUNDATION 1 ST FLOOR, FILKA BUILDING, DAFTARY ROAD, MALAD (W), MUMBAI - 400 097 / VS. THE ASST. DIRECTOR OF INCOME - TAX (EXEMPTION) - II(2), MUMBAI ./ ./ PAN/GIR NO. AAABCU 0516 D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI AMANT PAI / RESPONDENT BY : MS. POOJA SWAROOP / DATE OF HEARING : 03.11.2017 / DATE OF PRONOUNCEMENT : 16.01 .201 8 / O R D E R PER S HAMIM YAHYA , A. M.: BY WAY OF THIS MISCELLANEOUS APPLICATION, THE ASSESSEE SEEKS RECTIFICATION OF MISTAKE U/S. 254(2) OF THE INCOME TAX ACT, 1961 IN THE ORDER OF THIS TRIBUNAL IN ITA NO. 1097/MUM/2016 FOR ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 25.5.2017. 2. THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HAS SUBMITTED THAT THE TRIBUNAL HAS NOT RECORDED VITAL SUBMISSION MADE BY THE ASSESSEE. FURTHERMORE , IT HAS BEEN SUBMITTED THAT : 2 M. A. NO. 303/MUM/2017 M/S. UNIVERSAL EDUCATION FOUNDATION (A) WHEREAS THE GROUND OF APPEAL CONCERNED THE PROVISIONS OF SECTION 11(1), THE APPEAL HAS BEEN DISPOSED BY THE HONBLE TRIBUNAL ON THE MISTAKEN PREMISE THAT IT CONCERNED THE PROVISIONS OF SECTION 11(2). (B) THE ORDER OF THE HONBLE TRIBUNAL HAS BEEN PASSED NOT WITH REFERENCE TO PROVISIONS OF SECTION 11(1) APPLICABLE TO ASSESSMENT YEAR UNDER APPEAL, BUT WITH REFERENCE TO SUBSEQUENTLY AMENDED PROVISIONS. 3. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT THIS TRIBUNAL IN THE AFORESAID ORDER HAS PASSED AN ELABORATE AND WELL REASON ED ORDER. THE ISSUE IN THAT CASE WAS CHARGEABILITY OF INCOME IN THE HANDS OF THE ASSESSEE WHICH THE ASSESSEE HAS CLAIMED THAT THE SAME HAD NOT ACCRUED TO THE ASSESSEE. THE TRIBUNAL HAD ELABORATELY CONSIDERED THE ISSUE AND IT HAS INTER ALIA OBSERVED AS UNDE R: 4.1 AT THE OUTSET BEFORE US THE LEARNED COUNSEL OF THE ASSESSEE DID NOT CONTEST THE ASSESSEES SUBMISSION BEFORE THE AUTHORITIES BELOW THAT SUM OF RS.3,55,45,600 HAS NOT ACCRUED TO THE ASSESSEE AS INCOME DURING THE YEAR. THOUGH GROUND IN THIS REGARD HA S BEEN RAISED AS GROUND NO.1 BEFORE US, LEARNED COUNSEL SUBMITTED THAT HE SHALL NOT BE PRESSING FOR THIS GROUND. HOWEVER, LEARNED COUNSEL OF THE ASSESSEE EMPHASIZED UPON GROUND NO.2 FOR THE PROPOSITION THAT THE LEARNED CIT(A) FAILED TO NOTE THAT THE AMOUNT OF RS.3,55,45,600 WAS NOT ACTUALLY RECEIVED DURING THE YEAR UNDER APPEAL AND THAT IN THIS CIRCUMSTANCE THE SAME SHOULD BE DEEMED TO BE APPLIED TOWARDS CHARITABLE PURPOSES IN TERMS OF CLAUSE (2) OF EXPLANATION TO SECTION 11(1) OF THE INCOME - TAX ACT, 1916. THAT, THIS IS MORE PARTICULARLY SO BECAUSE THE PROVISION FOR EXERCISING OPTION IN WRITING UNDER THE SAID EXPLANATION BEFORE THE EXPIRY OF TIME ALLOWED FOR FURNISHING THE RETURN U/S 139(1) IS NOT MANDATORY BUT DIRECTORY IN NATURE AND MUST THEREFORE BE LIBER ALLY INTERPRETED. 4.2 IN THIS REGARD, LEARNED COUNSEL OF THE ASSESSEE REFERRED TO SECTION 11 OF THE INCOME - TAX ACT, AND FURTHER HE PLACED RELIANCE UPON CASE LAWS IN SUPPORT OF THE PROPOSITION. 4.3 IN THIS REGARD A QUERY WAS RAISED AS TO WHETHER THE ASS ESSEE HAS RAISED THE ISSUE BEFORE THE ASSESSING OFFICER. IN THIS REGARD, LEARNED COUNSEL SUBMITTED THAT THOUGH THIS ISSUE WAS NOT SPECIFICALLY RAISED, BUT THE A.O. SHOULD HAVE REFERRED THE SAME. IN THIS REGARD, LEARNED COUNSEL FURTHER SUBMITTED THAT IT IS THE DUTY OF THE ASSESSING OFFICER TO ADVISE THE ASSESSEE REGARDING THE ACTUAL TAX PAYABLE BY THE ASSESSEE. 3 M. A. NO. 303/MUM/2017 M/S. UNIVERSAL EDUCATION FOUNDATION 4.4 PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE HAS BEEN ALTOGETHER SUBMITTING THAT THE SAID INCOME HAS NOT ACCRUED TO T HE ASSESSEE. FOR THIS PURPOSE ASSESSEE HAS PROCEEDED TO PREPARE SELF - SERVING DOCUMENTS LIKE ADDENDUM TO THE DEED OF AGREEMENT. SHE SUBMITTED THAT ONLY AFTER IT WAS CLEARLY ESTABLISHED THAT AS PER THE VALID AGREEMENT THE SAID INCOME OF RS.3,55,45,600 HAS AC CRUED TO THE ASSESSEE, AND REVENUE WAS NOT GOING TO ACCEPT THE SAME, ASSESSEE HAS DEVELOPED A STORY OF HAVING EXERCISED OPTION INDIRECTLY. SHE CLAIMED THAT LEARNED CIT(A) IS QUITE CORRECT IN HOLDING THAT IN AVAILING THE BENEFIT OF CLAUSE 2 OF EXPLANATION TO SECTION 11(1), ASSESSEE IS REQUIRED TO INTIMATE THE A.O. BEFORE THE DATE OF FILING OF THE RETURN U/S 139(1). SHE POINTED OUT THAT LEARNED CIT(A) HAS NOTED THAT NO SUCH DOCUMENT HAS BEEN PLACED ON RECORD BEFORE THE LEARNED CIT(A) NOR BEFORE THE TRIBUNAL THAT ASSESSEE HAS GIVEN ANY SUCH INTIMATION TO THE A.O. IN THESE CIRCUMSTANCES, THE LEARNED DR PLEADED THAT THERE IS NO MERIT IN THE ASSESSEES SUBMISSION AND THE ADDITION NEEDS TO BE CONFIRMED. 4.5 UPON CAREFUL CONSIDERATION WE NOTE THAT ASSESSEE IN THE PRESENT ASSESSMENT YEAR HAS SOLD THE PROPERTY FOR RS.3,55,45,600. THE ASSESSEE HAS NOT OFFERED THE SAME FOR TAXATION. WHEN CONFRONTED IN THIS REGARD ASSESSEE CAME UP WITH AN ADDENDUM TO THE AGREEMENT BY WHICH THE SALE WAS REGISTERED. THIS ADDENDUM WAS AN U NREGISTERED DOCUMENT AND TOTALLY SELF - SERVING DOCUMENT BY WAY OF WHICH THE ASSESSEE INTENDED TO DEFER THE ACCRUAL OF THE INCOME. ALL ALONG ASSESSEE AND THE COUNSEL HAD BEEN PLEADING THAT THE SAID INCOME HAD NOT ACCRUED. AUTHORITIES BELOW HAD TO REFER TO H ONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL TO REJECT THIS CONTENTION OF THE ASSESSEE. 4.6 WHEN THIS PLEA OF THE ASSESSEE TOTALLY FAILED ASSESSEE CLAIMED THAT SINCE THE ASSESSEE HAS NOT RECEIVED THE AMOUNT PROVISIONS OF SECTION 11(1) EXPLANATIO N 2 SHOULD HAVE BEEN APPLIED BY THE ASSESSING OFFICER. IT IS NOTED THAT THERE WAS NO REQUEST IN THIS REGARD WHATSOEVER BEFORE THE ASSESSING OFFICER. THIS HAS BEEN RIGHTLY NOTED BY THE LEARNED CIT(A). 4. FURTHERMORE, THE TRIBUNAL HAS REFERRED TO THE PROVIS IONS OF SECTION 11 AND THEREAFTER IT HAD CONCLUDED AS UNDER: 4.7 A READING OF THE ABOVE PROVISIONS OF THE ACT MAKES IT CLEAR THAT INCOME FROM TRUST PROPERTY WILL BE EXEMPT FROM TAX IF 85% THEREOF IS APPLIED FOR THE PURPOSE OF THE TRUST. IF THE APPLICATION OF INCOME FALLS SHORT OF 85% FOR THE REASON OF NON - RECEIPT OF INCOME ASSESSEE MAY DEFER UTILIZATION OF 85% OF THE INCOME TO ANOTHER YEAR. FOR THIS ASSESSEE WAS REQUIRED TO GIVE NOTICE IN WRITING WITH THE ASSESSING OFFICER IN THE PRESCRIBED MANNER EXPLAINI NG THE PURPOSE FOR 4 M. A. NO. 303/MUM/2017 M/S. UNIVERSAL EDUCATION FOUNDATION WHICH THE INCOME IS BEEN ACCUMULATED AND SET APART AND THE PERIOD FOR WHICH THE INCOME IS TO BE ACCUMULATED AND SET APART. IT HAS FURTHER BEEN PROVIDED THAT THE MONEY SO ACCUMULATED AND SET APART IS TO BE INVESTED AND DEPOSITED IN SPECIF IED MANNER. 4.8 WE FIND THAT ADMITTEDLY ASSESSEE HAS NOT EXERCISED ANY SUCH OPTION. ASSESSEE HAS BEEN ALL ALONG BEEN CLAIMING THAT THE SAID INCOME HAS NOT ACCRUED. HENCE THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO CONSIDER THE SAME. FURTHERMORE, TH E PROVISIONS OF THE ACT ENVISAGE THAT THE ASSESSEE HAS TO EXPLAIN IN THE SAID NOTICE THE PURPOSE FOR WHICH THE INCOME IS BEING ACCUMULATED OR SET APART. THERE IS NO WHISPER WHATSOEVER IN THE ASSESSEE'S SUBMISSIONS IN THIS REGARD. HENCE WE ARE IN FULL AGREE MENT WITH THE LEARNED CIT(A) THAT THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO CONSIDER THIS ASPECT OF ASSESSEE'S PLEA. AS CLEAR FROM THE ABOVE DISCUSSION, SUCH A PLEA WAS NOT PRIMA FACIE TENABLE ALSO. 4.9 ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENTS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A), ACCORDINGLY, WE UPHOLD THE SAME. 5. NOW IT IS THE SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE THAT THOUGH THE ASSESSEE HAS NOT EXERCISED ANY OPTION U/S. 11(1), THE A SSESSING OFFICER SHOULD HAVE INFERRED THE SAME FROM THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS PLEA OF THE ASSESSEE HAS BEEN REJECTED BY ALL THE AUTHORITIES CON CURRENTLY. HENCE, WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE THAT THE TRIBUNA L SHOULD HAVE RECORDED THAT THERE WAS SUCH AN IMPLIED EXERCISE OF OPTION BY THE ASSESSEE. FURTHERMORE , WE NOTE THAT THE TRIBUNAL HAS PROPERLY APPRECIATED THE CONCERNED SECTION AND THE ENTIRE FACTS AND CIRCUMSTANCES. THE TRIBUNAL HAD CLEARLY NOTED THAT THE ASSESSEE HA S SOLD THE PROPERTY FOR RS.3,55,45,600/ - . THE ASSESSEE HAD NOT OFFERED THE SAME FOR TAXATION. WHEN CONFRONTED IN THIS REGARD, THE ASSESSEE CAME UP WITH AN ADDENDUM TO THE AGREEMENT BY WHICH THE SALE WAS REGISTERED. THIS ADDENDUM WAS AN UNREGISTE RED 5 M. A. NO. 303/MUM/2017 M/S. UNIVERSAL EDUCATION FOUNDATION DOCUMENT AND TOTALLY SELF - SERVING DOCUMENT BY WAY OF WHICH THE ASSESSEE INTENDED TO DEFER THE ACCRUAL OF THE INCOME. ALL ALONG ASSESSEE AND THE COUNSEL HAD BEEN PLEADING THAT THE SAID INCOME HAD NOT ACCRUED. AUTHORITIES BELOW HAD TO REFER TO HONBLE A PEX COURT DECISION IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) TO REJECT THIS CONTENTION OF THE ASSESSEE. HENCE , IT IS CLEAR THAT THE ASSESSEE WAS FOUND TO HAVE ENTERED INTO AN ACTIVITY WHICH WAS COLORABLE IN NATURE. 6. IN CONSEQUENCE TO THE ABOVE FINDING, IT WAS OBSERVED THAT THE ASSESSEE HAS NOT FOLLOWED THE RELEVANT MANDATE OF LAW. THE REFERENCE OF AMENDED SECTION AS POINTED OUT BY THE ASSESSEE DOES NOT POINT OUT ANY ERROR WHATSOEVER, AS THERE IS NO MATERIAL DIFFERENCE. HENCE, IN OUR CO NSIDERED OPINION , THERE IS NO MISTAKE APPARENT FROM THE RECORD LIABLE FOR RECTIFICAT ION U/S. 254(2) OF THE ACT. IN OUR CONSIDERED OPINION , WHAT THE ASSESSEE IS SEEKING IS RE - APPRECIATION OF THE FACTS WHICH IS NOT MANDATED UNDER THE PROVISIONS OF SECTION 25 4(2) OF THE I. T. ACT. HENCE, THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE STANDS DISMISSED. 7. IN THE RESULT, THE ASSESSEES M ISCELLANEOUS PETITION IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.2018 SD/ - SD/ - ( SANDEEP GOSA IN ) (S HAMIM YAHYA ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 16.01.2018 . . ./ ROSHANI , SR. PS 6 M. A. NO. 303/MUM/2017 M/S. UNIVERSAL EDUCATION FOUNDATION / COPY OF THE ORDE R FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI