Sadhu Singh Hamdard Trust V. The Assistant Commissioner of Income Tax, Jalandhar

CWP/16890/1995

AI Insights

The case involves the Sadhu Singh Hamdard Trust, which challenged multiple show cause notices issued by the Assistant Commissioner of Income Tax, Jalandhar, for re-assessment of income for various assessment years from 1984-85 to 1992-93. The notices were issued under Sections 147 and 148 of the Income Tax Act, 1961, following amendments to Section 11(4A) by the Finance Act, 1983, and the Finance (No.2) Act, 1991. The Trust argued that the re-assessment was based on a mere change of opinion and that all material facts had been disclosed in the original assessments. However, the court found that the Assessing Officer had not examined the conditions under Section 13 read with Section 11 of the Act during the original assessments, which justified the issuance of the notices for re-assessment.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 795945 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 04-07-2013
• Assessment Year: misc
• Other Referred Cases: Calcutta Discount Co. Ltd. Vs. Income Tax Officer, Companies District I, Calcutta & another, Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers(P) Ltd., Commissioner of Income Tax Vs. Kelvinator of India Ltd., Vipin Khanna Vs. Commissioner of Income Tax, The Commissioner of Income Tax, Jalandhar \\u2013 II Vs. M/s Sadhu Singh Hamdard Trust, Thanthi Trust Vs. Assistant Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: VIVEK SETHI
• Assessee Lawyers: SANJAY BANSAL; RAJIV SHARMA; GURJEET SINGH
• Keywords: Charitable Trust; Income escaping assessment; Re-assessment; Show cause notice
• Section: 147; 148; 143(3); 143(1); 149; 143(1)(a); 11(4A)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision : 04.07.2013 C.W.P.No.16890 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another C.W.P.No.16893 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another C.W.P.No.16894 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another C.W.P.No.16895 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 2 C.W.P.No.16896 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another C.W.P.No.16897 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another C.W.P.No.16898 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another C.W.P.No.16899 of 1995 Sadhu Singh Hamdard Trust ...Petitioner Versus The Assistant Commissioner of Income ...Respondents Tax, Jalandhar & another CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MS. JUSTICE RITU BAHRI Present : Mr. Sanjay Bansal, Senior Advocate, with M/s Rajiv Sharma & Gurjeet Singh, Advocates, for the petitioners. Mr. Vivek Sethi, Advocate, for the respondents. HEMANT GUPTA, J. Challenge in the afore-mentioned writ petitions is to the show cause notices served upon the petitioners under Sections 147 & 148 of the Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 3 Income Tax Act, 1961 for re-assessment of the income. Before invoking the jurisdiction of this Court, the petitioner has filed returns in pursuance of the show cause notices served for re-assessment. The details of the assessment years; the dates of issuance of show cause notices and the dates on which the revised returns were filed in pursuance of such notices are as under: Sr.No. CWP Numbers Assessment Years Dates of issuance of show cause notices Dates on which revised returns were filed 1. CWP No.16897 of 1995 1984-85 04.08.1994 02.09.1994 2. CWP No.16894 of 1995 1985-86 30.03.1995 11.08.1995 3. CWP No.16899 of 1995 1986-87 04.08.1994 02.09.1994 4. CWP No.16890 of 1995 1987-88 30.05.1995 11.08.1995 5. CWP No.16896 of 1995 1988-89 30.05.1995 11.08.1995 6. CWP No.16898 of 1995 1989-90 30.05.1995 11.08.1995 7. CWP No.16895 of 1995 1990-91 19.08.1994 30.11.1990 8. CWP No.16893 of 1995 1991-92 19.08.1994 30.09.1994 2. In respect of Assessment Years 1984-85, 1985-86, 1986-87 & 1990-91, the returns filed by the petitioner have been finalized in terms of Section 143(3) of the Act; in respect of Assessment Years 1987-88 & 1988- 89, the returns were accepted finalized under the then existing provisions of Section 143(1) of the Act; whereas in respect of Assessment Years 1989-90, 1991-92 & 1992-93, the assessee was intimated about the acceptance of returns in terms of Section 143(1)(a) of the Act. 3. The petitioner – Sadhu Singh Hamdard Trust, was registered as a Public Charitable Trust under Section 12A of the Act. The Trust was created by Deed of Trust executed on 17.08.1977 by S. Sadhu Singh Hamdard, the sole owner of the properties i.e. assets of ‘Ajit’ Newspaper including good will & 1/3rd share of ‘Gobind Farm’ situated at Village Bal, District Roop Nagar. The said two properties including the business undertaking of ‘Ajit’ Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 4 Newspaper were conveyed and transferred to the petitioner – Trust. The principal object of the Trust was general public utility namely promotion of the interest of Punjab, Punjabi and Punjabiat. The author of the Trust by Supplementary Deed of Trust dated 22.11.1977 conveyed and transferred the property of Daily Ajit Printers including its machinery, goodwill, stock etc. to the Trust. The Assessment Years in question are Assessment Years 1984-85 to 1992-93. 4. The basis of the notices issued to the petitioner is insertion of sub-section (4A) in Section 11 of the Act by Finance Act, 1983 w.e.f. 01.04.1984. Sub-section (4A) has been again substituted by Finance (No.2) Act, 1991 w.e.f. 01.04.1992. The relevant statutory provisions before insertion/substitution and after insertion/substitution, for the Assessment Years in question, read as under: Section 11. Income from property held for charitable or religious purposes xx xx xx Inserted by Finance Act, 1983 w.e.f. 01.04.1984 Substituted by Finance (No.2) Act, 1991 w.e.f. 01.04.1992 (4A) Sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) shall not apply in relation to any income, being profits and gains of business, unless – (a) the business is carried on by a trust wholly for public religious purposes and the business consists of printing and publication of books or publication of books or is of a kind notified by the Central Government in this behalf in the Official Gazette; or (b) the business is carried on by an institution wholly for charitable purpose and the work in connection with the business is mainly carried on by the beneficiaries of the institution, And separate books of account are maintained by the Trust or institution in respect of such business. (4A) Sub-section (1) or sub-section (2) or sub- section (3) or sub-section (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate books of account are maintained by such trust or institution in respect of such business. Section 147 - Income escaping assessment As it existed in the year 1984 As substituted by the Direct Tax Laws (Amendment) Act w.e.f. 1.4.1989 147. If – (a) the Assessing Officer has reason to believe 147. If the Assessing Officer has reason to believe that any income chargeable to tax has Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 5 that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recomputed the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) Provided that where an assessment under sub- section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year Section 148 - Issue of notice where income has escaped assessment As it existed in the year 1984 As Substituted by the Direct Tax Laws (Amendment) Act w.e.f. 1.4.1989 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of this Act shall, so far as may be apply accordingly as if the notice were a notice issued under that sub-section. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. 148. (1) Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. Section 149 – Time limit for notice As it existed in the year 1984 As Substituted by the Direct Tax Laws (Amendment) Act w.e.f. 1.4.1989 149. (1) No notice under section 148 shall be issued, (a) in cases falling under clause (a) of section 149. (1) No notice under section 148 shall be issued for the relevant assessment year – (a) in a case where an assessment under sub- Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 6 147 – (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under sub-clause (ii); (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; (b) in cases falling under clause (b) of section 147, at any time after the expiry of four years from the end of the relevant assessment year. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year. section (3) of Section 143 or section 147 has been made for such assessment year – (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; (iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees one lakh or more for that year; (b) in any other case – (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-clause (ii) or sub-clause (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees twenty-five thousand or more for that year; (iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year. (2) no change (3) no change 5. Learned counsel for the petitioner vehemently argued that the returns for the Assessment Years 1984-85, 1985-86, 1986-87 & 1990-91 were finalized in terms of Section 143(3) of the Act. The petitioner has truly and completely disclosed all the facts and the assessment was completed thereafter. Learned counsel for the petitioner referred to the order of assessment dated 18.09.1986 respect of assessment for the year 1984-85, which reads as under: “Return declaring Nil income has been filed on 30.03.1985. The return is supported by Statement of Income and Expenditure statements, Balance Sheet, Audit Report in Form No.10B. In response to notice u/s 143(2), Shri Partap Singh, Accountant appeared alongwith Sh. J.K.Sood, Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 7 Advocate. The case has been discussed with them. On examination of the account, I find that the income has been applied for the purpose of trust. It is a case of public Charitable trust. The registration has been granted to the trust u/s 12A(a) of the Income Tax Act by the Commissioner of Income Tax, Jull. vide order dated 12.11.1979. The object of the trust for this year is the same as in the earlier years. Keeping in view the past history of the case, income declared at Nil figure is accepted. Requisite documents are issued.” 6. Learned counsel for the petitioner referred to the identical reasons recorded for re-assessment in respect of all the assessment years in question, which are as under: “The assessee M/s Sadhu Singh Hamdard Trust filed return of income on 30.03.1985 for the Financial Year ending 31.12.1983 relevant to assessment year 1984-85. The assessee derived income from business activities by running Daily Ajit newspaper and others. After adjusting the loss from Ajit English weekly, depreciation and unabsorbed loss of earlier year net income was shown at Rs.737153/-. However, the same was claimed exempt u/s 11 with the noting: “Total amount applied to charitable purposes” The exemption claimed was allowed on the basis that registration u/s 12A(a) has already been granted by the CIT. Since Section 12A(a) is only one of the conditions for registration of so called Trust and registration does not mean confirmation of exemption u/s 11, 12 or u/s 80G(v) of the Act. As is apparent that the then AO while passing order u/s 143(3) on 18.09.1986 had not examined the question; whether the trust fulfilled conditions laid down in Section 13 read with section 11 and assessability of income earned from the business carried on. The then AO allowed exemption as claimed u/s 11 on the basis of registration allowed u/s 12A(a). I have examined the records and found that the assessee did not fulfill the conditions laid down in Cl.(b) of sub-sec.(4A) of Section 11 i.e. there was no named beneficiaries of the Trust and the income wrongly allowed exempt u/s 11 of the Income Tax Act, 1961. I have, therefore, reasons to believe that by allowing exemption u/s 11 wrongly at Rs.737153/- the income chargeable to tax has escaped assessment for the assessment year 1984-85. In view of the above facts, necessary sanction to issue notice u/s 148 may kindly be accorded.” Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 8 7. It is, therefore, contended that the show cause notice for re- assessment is based upon mere change of opinion in respect of four assessment years as mentioned above as the assessment was framed under Section 143(3) of the Act, thus, the notice for re-assessment is without jurisdiction of the Assessing Authority. It is contended that since the Assessing Officer has returned a finding that income has been applied for the purposes of Trust, therefore, the reasons recorded that the Assessing Officer has not examined the question; whether the Trust fulfilled the conditions laid down in Section 13 read with Section 11 and that income earned from the business has escaped assessment is merely a change of opinion of the Assessing Officer. Reliance is, inter alia, placed upon Supreme Court judgments reported as Calcutta Discount Co. Ltd. Vs. Income Tax Officer, Companies District I, Calcutta & another 1961 (41) ITR 191; Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers(P) Ltd. (2007) 291 ITR 500 & Commissioner of Income Tax Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 apart from the judgment of this Court in Vipin Khanna Vs. Commissioner of Income Tax (2002) 255 ITR 220. 8. Learned counsel for the petitioner has also argued that the provisions including the provisions in respect of time limits as are existed on the date of issuance of show cause notices of re-assessment have to be examined to determine the legality and validity of the show cause notices and not the provisions as were in existence during the Assessment Years in question. In support of such argument, reliance is placed upon Circular No.549 dated 31.10.1989 issued by the Central Board of Direct Taxes and the judgment of Chandi Ram Vs. Income Tax Officer & another (1997) 225 ITR 611. Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 9 9. On the other hand, Mr. Sethi, learned counsel for the Revenue, vehemently argued that the assessment under Section 143(3) of the Act has been framed by the Assessing Officer without taking into consideration the statutory provisions contained in substituted sub-section (4A) of Section 11 of the Act. The assessment has been framed merely on the basis of the fact that the petitioner is a registered Charitable Trust under Section 12A of the Act. The Assessing Officer has failed to examine the application of income in terms of the amended provisions of the Statute. Therefore, the notices of re- assessment are within the jurisdiction to examine; whether the income of the petitioner has been applied for general public utility, so as to seek exemption from the provisions of the Act. It is contended that it is not change of opinion, but on account of provisions of the Statute having escaped the notice of the Assessing Officer either intentionally or negligently, which is the basis of the show cause notices, therefore, the Revenue is entitled to re-assess the income of the assessee. 10. It is also contended that after substitution of sub-section (4A) of Section 11 of the Act w.e.f. 01.04.1992, this Court in ITA No.75 of 2004 titled ‘The Commissioner of Income Tax, Jalandhar – II Vs. M/s Sadhu Singh Hamdard Trust’ and other 9 connected appeals decided on 26.07.2012 has remanded the case to the Tribunal to re-adjudicate the issues relating to the exemption claimed under Section 11 with reference to Section 11A of the Act. Therefore, the question of re-assessment in respect of assessments prior to 01.04.1992 is also required to be re-determined in view of the statutory provisions. 11. The issue in respect of subsequent assessment years in the assessee’s own case has been examined by a Division Bench of this Court in Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 10 ITA No.75 of 2004 titled ‘The Commissioner of Income Tax, Jalandhar-II Vs. M/s Sadhu Singh Hamdard Trust’ decided on 26.07.2012. One of the arguments raised by the assessee was that for 15 years i.e. for the assessment years 1978-79 to 1992-93, the assessee was accepted to be charitable institution and income was held to be non-taxable for all these years, therefore, the revenue was not entitled to adopt different approach from the assessment years 1993-94. The said argument raised in the aforesaid case was misleading inasmuch as the present writ petitions challenging the re- assessment proceedings pertaining to assessment years 1984-85 to 1992-93 were pending before this Court at the time of hearing of the said appeals. Be as it may, the fact remains that the Division Bench of this Court in the aforesaid order has examined the provisions of Section 11(4A) of the Act as substituted on 01.04.1992. The Court upheld the findings recorded by Tribunal that the assessee was entitled to exemption under Section 11 of the Act, but in respect of exemption of income, the Court referred to the Supreme Court judgment in Assistant Commissioner of Income Tax Vs. Thanthi Trust (2001) 247 ITR 785 and returned the following finding: “30. Under Section 11(1)(a) of the Act, the income derived from property held under trust only for charitable or religious purpose is exempt of its utilization for that purpose. However, wherever there is accumulation or setting aside for application to such purposes in India, the accumulation or setting apart is not to be in excess of twenty five per cent of the income from such property. However, this has been reduced to fifteen per cent by Finance Act, 2002 with effect from 01.04.2003. According to Section 11 (4A) of the Act, an exemption is permissible where the activities are incidental to the attainment of the objectives of the trust and separate books of account are maintained by the trust or the institution in respect of such business. The Tribunal recorded that the only activity of the assessee was running newspaper to attain the main object of promoting Punjab, Punjabi and Punjabiat and the conditions of Section 11(4A), thus, automatically stood satisfied. However, the CIT(A) had recorded that there was net Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 11 income of Rs.22,99,905/- from publication of newspaper and there was nothing to show that this amount had been utilized for charitable purpose for claiming exemption under Section 11 of the Act. The Tribunal while allowing the appeal of the assessee had not adverted to this aspect with reference to any material on record.” 12. The Supreme Court in Thanthi Trust’s case (supra), was examining a case of publication of newspaper by a Trust registered as a charitable trust. The argument of the revenue before the Supreme Court in respect of the provisions of sub-section (4A) as inserted vide Finance Act, 1983 and also the substituted sub-section (4A) inserted by Finance Act No.2 of 1991 was as under: “20. This brings us to the second controversy, relevant to Assessment Years 1984-85 to 1991-92 during which period of time sub-section (4A) of Section 11, as originally enacted, was in operation. It was contended by the learned Solicitor General that by reason of sub-section (4A) the income derived from a business held under trust wholly for charitable or religious purposes would not be included in the total income of the previous year in the case only of (a) a trust for public religious purposes, if the business was of printing and publishing books or of a notified kind; or (b) an institution wholly for charitable purposes, if the work in connection with the business was mainly carried on by the beneficiaries of the institution, provided that separate books of accounts had been maintained in respect of such business.” 13. The Court held that sub-section (4A) restricts the benefit under Section 11 so that it is not available for income derived from business unless (a) the business is carried on by a trust only for public religious purposes and it is of printing and publishing books or any other notified kind, or (b) it is carried on by an institution wholly for charitable purposes and the work in connection with the business in mainly carried on by the beneficiaries off the institution, provided, in both cases, separate books of accounts are maintained by the trust or the institution in respect of such business. It was held that the Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 12 Trust was not entitled to the exemption contained in Section 11 in respect of the income of its newspaper. 14. The Supreme Court further noticed that substituted sub-section (4A) as substituted vide Finance Act No.2 of 1991 is couched in wide language and a trust is entitled to the benefit of Section 11 if it utilized the income of its business for the purposes of achieving its objects. The Court observed that the scope of substituted sub-section (4A) is more beneficial to a Trust or institution than was the scope of sub-section (4A) as originally enacted. The Court observed as under: “25. The substituted sub-section (4A) states that the income derived from a business held under trust wholly for charitable or religious purposes shall not be included in the total income of the previous year of the trust or institution if ‘the business is incidental to the attainment of the objective of the trust or, as the case may be, institution’ and separate books of accounts are maintained in respect of such business. Clearly, the scope of sub- section (4A) is more beneficial to a trust or institution than was the scope of sub-section (4A) as originally enacted. …” 15. Thus, in respect of subsequent assessment years, when more beneficial sub-section (4A) was in force, this Court in assessee’s own case has remanded the matter to the Tribunal to re-adjudicate the issue relating to exemption claimed under Section 11 with reference to provisions of Section 11(1)(a) of the Act. We find that issue in respect of originally inserted sub- section (4A), which is restricted in language, is required to be examined by the Authorities under the Act in respect of application of its income for stated purpose of general public utility. 16. Since the learned counsel for the petitioner has challenged the issuance of the show cause notices for re-assessment on other grounds, we will examine each ground of challenge hereinafter. Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 13 17. Firstly, we shall examine the question as to whether the show cause notices are beyond the period of limitation as per the amended provisions of the Act vide Finance Act No.2 of 1991. The argument of learned counsel for the petitioner is based upon the circular dated 31.10.1989 issued by the Board, wherein in paras 7.13 and 7.14, it has been laid down that since the provisions of Sections 147 to 152 lay down procedural law, these have retrospective effect. The relevant clauses from the said Circular read as under: “7.13 These amendments come into force w.e.f. the 1st April, 1989. However, it may be clarified that since the provisions of ss. 147 to 152 lay down procedural law, these have retrospective effect, unless the amending statute provides otherwise. Therefore, the amendments made to these sections by the Amending Acts, 1987 and 1989, discussed in the preceding paragraphs, which came into force w.e.f. 1st April, 1989, will be retrospective in the sense that these will apply to all matters which were pending on 1st April, 1989, and had not become closed or dead on this date. 7.14 Thus, from 1st April, 1989 onwards, any action for opening or reopening an assessment for the asst. yr. 1988-89, and earlier assessment years will have to be taken in accordance with the amended provisions. The following examples will clarify the position:- (i) No notice under s. 148 can now be issued for the asst. yrs. 1973- 74 to 1978-79, even if the escaped income is Rs.50,000 or more in each year, although under the old provisions this could have been done with the Board’s approval. (ii) Notice under s. 148 can now be issued for any of the asst. yrs. 1979-80 to 1981-82, if the following conditions are fulfilled:- (a) In a scrutiny case (i.e. where an assessment order had been passed under s. 143(3) or 147), if the escaped income is Rs.1 lakh or more in each year and approval of the Chief CIT or CIT has been obtained. (b) In a non-scrutiny case, if the escaped income is Rs.50,000/- or more in each year, and approval of the Dy. CIT has been obtained. (Under the old provisions, there was no distinction between a scrutiny and a non-scrutiny case. Action could have been taken in respect of both types of cases Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 14 for the asst. yr. 1981-82, with the approval of the Chief CIT or CIT, whatever be the amount of escaped income, while for the asst. yrs. 1979-80 and 1980-81, action could have been taken with the Board’s approval if the escaped income was Rs.50,000 or more in each year. These old provisions, however, have no application now from 1st April, 1989 onwards). (iii) Notice under s. 148 can now be issued for any of the asst. yrs. 1982-83 to 1984-85, if the following conditions are fulfilled:- (a) In a scrutiny case, if the escaped income is Rs.50,000 or more in each year and approval off the Chief CIT or CIT has been obtained. (b) In a non-scrutiny case, if the escaped income is Rs.25,000 or more in each year and approval of the Dy. CIT has been obtained. (Under the old provisions, action could have been taken for these assessment years, in respect of both types of cases, with the approval of the Chief CIT or CIT, whatever be the amount of escaped income. These old provisions, however, have no application now from 1st April, 1989, onwards). (iv) Notice under s. 148 can now be issued for any of the asst. yrs. 1985- 86 to 1988-89, whatever be the amount of income which has escaped assessment, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment. (Under the old provisions action could have been taken for these assessment years, if the circumstances mentioned in cl. (a) or (b) of the old s. 147 were satisfied. These old provisions, however, have no application now from 1st April, 1989, onwards). (v) A scrutiny assessment for any assessment year cannot be reopened now by an Assessing Officer below the rank of an Asstt. CIT. Under the old provisions, there was no such restriction.” 18. The arguments raised by learned counsel for the petitioners is required to be examined keeping in view Section 6 of the General Clauses Act, 1897. As per Section 6 of the said Act, the repeal of any enactment shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed, as also affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 15 forfeiture or punishment as aforesaid. Section 6 of the said Act reads as under: “6. Effect of repeal - Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not- (a) Revive anything not in force or existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurrent under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.” 19. The above said circular issued by the Board has been referred to by Rajasthan High Court in a judgment reported as Chandi Ram’s case (supra), wherein the Court has held that the provisions of amended Act would be applicable only in those cases where the limitation in respect of old law has not expired. The Court held to the following effect: “19. It is an established law that no one has vested right in procedural law and whenever a change is made with regard to procedure, it is retrospective in nature. In a matter of reassessment proceedings under the IT Act the change has been brought with regard to circumstances and limitation as well. If the limitation has already expired, then the amended law would not revive the matters where the limitation is already expired by taking into consideration the amended provisions of law on the ground that the limitation is extended. The provisions of amended Act, therefore, would be applicable only in those cases where the limitation under the old law has not expired. So far as the question as to whether the phraseology used in the Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 16 repealed section and in the amended section is concerned, I am of the view that there was no vested right in an assessee not to pay the correct tax. The provisions of assessment are meant for determination of the correct liability of tax in accordance with law which should be on the basis of correct income and if there is any escapement, then the ITO has power to reopen the matter. The repealed section refers to the ‘information’ on the basis of which the reassessment proceedings could have been initiated. The information with regard to correct state of law by way of judgment of the apex court is also an information on the basis of which the action could have been taken under the repealed section. Now, the ITO can reassess for any reason, therefore, the amended section cannot be considered to be effecting any right of the assessee…… xx xx xx 20. In the case of the assessee, the power could have been exercised under the repealed section as well as the amended section. The matter with regard to the applicability of the repealed section is merely an academic argument, however, in view of the fact that the power of reopening was existing in respect of escaped assessment prior to 1st April, 1989, therefore, it cannot be said that any new right has been acquired by the ITO or the said amendment has effected any vested right of the assessee. The object of reassessment is to assess the correct income and is a matter of procedure. The provisions of Section 148, therefore, have to be considered as procedural in nature. A change in the procedure may be by way of limitation or otherwise does not effect the vested right and as such I am of the opinion that the ITO was competent to invoke the provisions after 1st April, 1989 in accordance with the amended law, in respect of previous year which have not become time barred.” 20. Hon’ble Supreme Court in a judgment reported as Vinod Gurudas Raikar v. National Insurance Co. Ltd., (1991) 4 SCC 333, examined the provisions of the Motor Vehicle Act, 1988 in respect of filing of claim petitions with an application for condonation of delay. The argument raised was that the right to seek condonation of delay under the un-amended statute is vested right and cannot be curtailed. The Court observed as under: “7. It is true that the appellant earlier could file an application even more than six months after the expiry of the period of limitation, but can this be treated to be a right which the appellant had acquired. The answer is in the negative. The claim to compensation which the appellant was entitled to, by Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 17 reason of the accident was certainly enforceable as a right. So far the period of limitation for commencing a legal proceeding is concerned, it is adjectival in nature, and has to be governed by the new Act — subject to two conditions. If under the repealing Act the remedy suddenly stands barred as a result of a shorter period of limitation, the same cannot be held to govern the case, otherwise the result will be to deprive the suitor of an accrued right. The second exception is where the new enactment leaves the claimant with such a short period for commencing the legal proceeding so as to make it unpractical for him to avail of the remedy. (…..emphasis supplied) xx xx xx 8. The learned counsel strenuously contended that the present case must be considered as one where an accrued right has been affected, because the option to move an application for condonation of delay belatedly filed should be treated as a right. This cannot be accepted. There is a vital difference between an application claiming compensation and a prayer to condone the delay in filing such an application. Liberty to apply for a right is not in itself an accrued right or privilege. To illustrate the point, we may refer to some cases. …..” 21. In the present case, the re-assessment proceedings could be initiated within the time limits prescribed under the un-amended Section 149 of the Act subject to the fulfilment of certain conditions. If such conditions are satisfied, the revenue has right to initiate proceedings for reassessment. Such right cannot be curtailed by subsequent amendment, when no specific provision was made to curtail the period of limitation for initiating such proceedings. The right to reassess the income is vested with revenue after following the procedure prescribed. The amending Act changing the period of limitation for issuance of notice for reassessment has not made provision of the amending Act applicable retrospectively. Though the limitation is a provision dealing with procedure and all amendments in respect of procedure are retrospective but where the amendment has the effect to curtail a right vested, then the amended provisions cannot be applicable to the vested rights. Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 18 22. The Supreme Court in the case of T. Kaliamurthi v. Five Gori Thaikkal Wakf, (2008) 9 SCC 306, examined the argument that in terms of the amended provisions, the suitor has a right to initiate proceedings though under the un-amended law, the remedy has become time barred. The Court observed: “37. Such being the view, we have already expressed on the question of limitation, let us now examine whether Section 107 of the Wakf Act can have the effect of reviving a barred claim. xxx xxx xxx 39. Section 107 lays down that nothing contained in the Limitation Act, 1963 shall apply to any suit for possession of immovable property comprised in any wakf or for possession of any interest in such property. Thus, it can be said that this section virtually repeals the Limitation Act, 1963 so far as the wakf properties are concerned. Therefore, it can be concluded without any hesitation in mind that there is now no bar of limitation for recovery of possession of any immovable property comprised in a wakf or any interest therein. 40. In this background, let us now see whether this section has any retrospective effect. It is well settled that no statute shall be construed to have a retrospective operation until its language is such that would require such conclusion. The exception to this rule is enactments dealing with procedure. This would mean that the law of limitation, being a procedural law, is retrospective in operation in the sense that it will also apply to proceedings pending at the time of the enactment as also to proceedings commenced thereafter, notwithstanding that the cause of action may have arisen before the new provisions came into force. However, it must be noted that there is an important exception to this rule also. Where the right of suit is barred under the law of limitation in force before the new provision came into operation and a vested right has accrued to another, the new provision cannot revive the barred right or take away the accrued vested right. 41. At this juncture, we may again note Section 6 of the General Clauses Act, as reproduced hereinearlier. Section 6 of the General Clauses Act clearly provides that unless a different intention appears, the repeal shall not revive anything not in force or existing at the time at which the repeal takes effect, or affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder, or affect any right, privilege, obligation or liability acquired, accrued, or incurred under any enactment so repealed. Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 19 xxx xxx xxx 47. Let us now look at the other ground taken by the High Court to hold that Section 107 has a retrospective effect. The High Court has held that it is a settled proposition of law that in procedural matters, there is no vested right and hence any amendment to the procedural matters would apply to pending proceedings also. xxx xxx xxx 53. In view of the above authorities, we are of the view that in the present case, once it is held that the suit for possession of the suit properties filed at the instance of the Wakf were barred under the Limitation Act, 1908, the necessary corollary would be to hold that the right of the Wakf to the suit properties stood extinguished in view of Section 27 of the Limitation Act, 1963 and, therefore, when Section 107 came into force, it could not revive the extinguished rights. The authorities relied upon by the learned counsel for the respondents in this regard in Sree Bank Ltd. v. Sarkar Dutt Roy & Co. AIR 1966 SC 1953, Dhannalal v. D.P. Vijayvargiya (1996) 4 SCC 652, New India Assurance Co. Ltd. v. C. Padma (2003) 7 SCC 713 and S. Gopal Reddy v. State of A.P. (1996) 4 SCC 596 have no application to the facts of the case because in these cases, unlike the present case, there was no extinguishment of the rights. 54. Let us now answer the submissions on behalf of the learned counsel for the respondents. The learned counsel for the respondents relied on a decision of this Court in Dayawati v. Inderjit AIR 1966 SC 1423 to suggest that the law affecting procedure is always retrospective and, therefore, Section 107 should be given retrospective effect. xxx xxx xxx 57. After considering this submission of the learned counsel for the respondents, it may appear that the controversy has narrowed down to the point whether Section 6 of the General Clauses Act would apply in this case or not. That is to say, it may appear that if we answer this question in the negative thereby holding that Section 112 is self-contained, the appeal would fail because then the question of reviving a barred claim would not arise at all because Section 112 does not contemplate or provide for any such provision. However, if we answer this question in the affirmative, the inevitable result would be that the appeal would have to be allowed because on all other points discussed hereinearlier, the arguments of the learned counsel for the appellants have been accepted. However, in our view, the authorities relied upon by the respondents deal only with the question of repeal and savings but do not answer the question raised by the learned Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 20 counsel for the appellants, i.e. whether Section 107 can revive an extinguished right. 58. We may note that the authority relied upon by the learned counsel for the appellant in Yeshwantrao Laxmanrao Ghatge Vs. Baburao Bala Yadav (1978) 1 SCC 669 cannot be ignored. That decision was not a case of repeal and accordingly, there was no reference to Section 6 at all in that Act. Nevertheless, it was held in that case that a right extinguished under Section 28 of the Limitation Act, 1908 cannot be revived by Section 52-A. Similarly, in the present case, we are of the opinion that applicability of Section 6 is inconsequential because admittedly, there was an extinguishment of rights under Section 28, and Section 107 of the Wakf Act cannot revive those extinguished rights. 59. In view of the above discussions, we are, therefore, of the view that Section 107 cannot revive a barred claim or extinguished rights.” 23. It is well settled that each of the assessment year is independent proceeding. Reference may be made to Radhasoami Satsang Vs. Commissioner of Income Tax (1992) 193 ITR 321, wherein it has been held that strictly speaking res judicata does not apply to income tax proceedings. Each assessment year being a unit what is decided in one year may not apply to the following year. Therefore, the right to initiate re-assessment in terms of the un-amended provisions of Section 149 of the Act cannot be curtailed by an amendment. Such right to reassessment is protected in favour of the Revenue in terms of Section 6 of the General Clauses Act, 1897, as vested rights cannot be taken away by amendment. 24. Learned counsel for the petitioner has vehemently argued that the petitioner has disclosed all material facts in its return filed, therefore, assessment finalized by the Assessing Officer cannot be reopened only on the basis of change of opinion of a subsequent Assessing Officer. Such argument is primarily restricted to the assessments framed under Section 143(3) of the Act in respect of the assessment years 1984-85, 1985-86, 1986-87 & 1990-91. The assessment in respect of other assessment years was finalized either Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 21 under Section 143(1) of the Act prior to its amendment w.e.f. 01.04.1989 or thereafter in terms of Section 143(1)(a) of the Act accepting the return filed subject to correction of the mistakes. Since the intimation of the assessment was given to the assessee, it cannot be said that the Assessing Officer has examined the return which may bar the Assessing Officer to reopen the assessment. 25. In relation to assessment year 1984-85, the record of which was produced by learned counsel for the petitioner, there is a communication addressed by the petitioner to the Income Tax Officer on 15.03.1984, wherein it is asserted by the petitioner that the petitioner is a Trust wholly for charitable purposes; the business is in furtherance of the objects of the Trust and is wholly for charitable purposes; the work in connection with the business in mainly carried on by the beneficiaries of the Trust and not the Trustees and the separate books of account are maintained by the Trust in respect of such business. In the revised returns filed pursuant to the show cause notice served, the petitioner has asserted that total amount of income applied to charitable purposes. In part IV of the return, it is asserted that the business of the Trust is incidental to the attainment of the objective of the institution and separate books of accounts are maintained in respect of business and such is not hit by Section 11(4A) of the Income Tax Act. 26. However, we may observe that in the communication dated 15.03.1984, it is asserted that the work in connection with the business is mainly carried on by the beneficiaries of the Trust. The trustees are running the newspaper and cannot be the beneficiaries of the Trust. The trustee and the beneficiary have the conflicting interest and thus, one person cannot be a trustee and a beneficiary. Though there is assertion that separate books of Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 22 accounts are maintained, but the balance-sheets produced by the petitioner do not show that separate books of accounts were maintained in respect of charitable activities undertaken by the petitioner. The income and the expenditure account in the balance sheet does not reflect the separate books in respect of charitable activities, which is the requirement of sub-section (4A) of the Act. 27. However, we find that even in respect of assessment years 1984- 85, 1985-86, 1986-87 & 1990-91, the return was finalized in terms of Section 143(3) of the Act. The Assessing Officer was within its jurisdiction to issue a show cause notice for re-assessment. The order of assessment, as reproduced above, shows that the Assessing Officer has returned a finding that income has been applied for the purpose of the Trust in view of the noting of the assessee in the return filed. The reason for re-assessment is that the Assessing Officer has not examined; the question whether the Trust fulfilled the condition laid down in Section 13 read with Section 11 of the Act and whether the income earned from the business is exempt from Tax as it has been utilized for the beneficiaries and by keeping separate accounts. These are the requirements for claiming exemption in view of the judgment of the Supreme Court in Thanthi Trust’s case (supra) as also the Division Bench of this Court in the assessee’s own case for the subsequent assessment years. Since the question was not examined by the Assessing Officer while framing assessment under Section 143(3) of the Act, and that the assessment framed was in ignorance of the statutory provisions and thus, the test that the income has escaped assessment on the basis of return filed stands satisfied. A perusal of the record produced by the assessee does not show that separate books of Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh CWP No.16890 of 1995 & other connected matters 23 accounts were maintained in respect of income for charitable purposes, the test categorically laid down in Thanthi Trust’s case (supra). 28. Since the question is one of a fact, we leave it open to the Assessing Officer to examine the questions of fact, but we are unable to agree with the argument raised that the assessment is sought to be reopened only on account of change of opinion. In fact the return is sought to be reopened on account of non-disclosure of material facts relating to application of the income for charitable purposes. Consequently, we do not find any merit in the present set of writ petitions. The same are accordingly dismissed. (HEMANT GUPTA) JUDGE 04.07.2013 (RITU BAHRI) Vimal JUDGE Kumar Vimal 2013.07.08 14:19 I attest to the accuracy and integrity of this document Chandigarh "