SHRI JAIN SHWETAMBER MURTIPUJAK SAMAJ,RAIPUR V. INCOME TAX OFFICER, RAIPUR

ITA 329/RPR/2024

AI Insights

The case involves Shri Jain Shwetamber Murtipujak Samaj, a trust, appealing against the orders of the Income Tax Officer (ITO) and the Commissioner of Income-Tax (Appeals), which pertained to the assessment year 2011-12. The trust contested the legality of the notice issued under section 148 and the subsequent assessment order under sections 143(3) r.w.s. 147 of the Income-tax Act, 1961. The primary contention was the failure to provide a copy of the 'reasons to believe' for the notice under section 148, which the trust argued compromised the validity of the assessment. The ITAT found that the CIT(Appeals) had not adequately addressed this issue and thus restored the matter for a detailed examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469765 (ITAT-RAIPUR)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-10-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 17-07-2024
• Other Referred Cases: GKN Driveshafts (India) Limited vs Income Tax Officer, Paramjeet Narang vs ITO, Gajraj Giri vs Income Tax Officer, Saraswati Garewal vs Income Tax Officer, CIT Vs Trends Electronics, CIT vs Videsh Sanchar Nigam Limited
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL; AW
• Assessee Lawyers: PRAVEEN GOYAL
• Keywords: Opportunity of being heard; Capital receipt; Charitable institution
• Section: 147; 148; 143(3); 142(1); 143(2); 11; 12A; 12; 10

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 329/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2011-12 Shri Jain Shwetamber Murtipujak Samaj, Behind Jain Mandir, Vivekananda Nagar, Raipur (C.G.)-492 001 (C.G.) PAN : AAJTS4458F .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Praveen Goyal, CA Revenue by : Dr. Priyanka Patel, Sr. DR a/w. Shri N. Khalkho, ITO, Ward-1(2), Raipur सुनवाई कȧ तारȣख / Date of Hearing : 29.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 28.11.2024 2 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee trust is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 07.06.2024, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 03.12.2018 for the assessment year 2011-12. The assessee trust has assailed the impugned order on the following grounds of appeal: “1. That on the facts and circumstances of the case and in law, the notice u/s.148 of the Act dated 19/08/2018 issued by the assessing officer and assessment order passed u/s.143(3) r.w.s. 147 of the Act dated 03/12/2018 is illegal and bad in law. 2. That on the facts and circumstances of the case, the Ld. C'IT(A) erred in holding that the appellant trust is not registered u/s 12A of the Act. 3. That on the facts and circumstances of the case and in law, the assessing officer as well as Ld. CIT(A) erred in making addition of Rs.4,50,000/- to the returned income of the appellant. 4. The appellant craves to add, alter or delete any, of the above grounds of appeal during the course of appellate proceedings.” 2. Succinctly stated, the A.O based on information that though the assessee trust during the year under consideration had made cash deposits of Rs.10 lacs in its savings bank account, but not filed its return of income, initiated proceedings u/s. 147 of the Act. Notice u/s. 148 of the Act, dated 18.08.2018 was issued by the A.O. In compliance, the assessee 3 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 trust filed its return of income for A.Y.2011-12 declaring an income of Rs.1,50,330/-. Thereafter, the A.O issued notice u/s. 143(2) of the Act. 3. During the course of assessment proceedings, the A.O called upon the assessee trust to put forth an explanation as regards the source of the cash deposits of Rs.10 lacs in its bank account. The assessee trust at the threshold clarified that the cash deposits in its bank account aggregated to Rs.6 lacs and not Rs.10 lacs. As regards the cash deposits of Rs.6 lacs, it was the claim of the assessee trust that the same were sourced from the donations which it had received from various persons. The assessee trust further claimed that as it had applied for registration u/s.12AA of the Act on 22.09.2010 but no action was taken by the department, therefore, it was to be deemed to have been registered u/s.12A of the Act. Alternatively, it was the assessee’s claim that the cash deposits in its bank account were sourced from the corpus receipts that were received by it during the year under consideration. The assessee trust further claimed that as the donations that were received by it were in the nature of capital receipts, therefore, the same could not be brought to tax. However, the aforesaid explanation of the assessee did not find favour with the A.O. 4. Apropos the claim of the assessee trust that it was to be deemed to have been registered u/s. 12A of the Act, the A.O was of the view that as the assessee trust had not raised any claim for exemption u/ss.11 & 12 of 4 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 the Act in its return of income filed in compliance to notice u/s. 148 of the Act, therefore, the same was devoid of any merit. As regards the assessee’s claim that subject cash deposits were sourced out of corpus donations, the A.O was of the view that as the assessee trust was not registered u/ss. 12A/12AA of the Act, therefore, it could not avail any exemption u/s. 11 of the Act. Apart from that, the A.O observed that the assessee had not placed on record any documentary evidence to establish the nature of the donations that it had received. 5. The A.O observed that as the assessee had disclosed the income of Rs.1.50 lacs in its return of income for the year under consideration, therefore, the addition of the balance amount of Rs.4.50 lacs [Rs.6 lacs (-) Rs.1.50 lacs] that was taken by it in its balance sheet as donation of corpus fund was called for in its case. Accordingly, the A.O vide his order passed u/s. 147 r.w.s. 143(3) of the Act, dated 03.12.2018 determined the income of the assessee trust at Rs.6,00,330/-. 6. Aggrieved, the assessee trust carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: “6. FINDING & DECISION 6.1 I have gone through the assessment order and grounds of appeal. The learned A.O has carried out addition by disallowing exemption claimed under section 10 of the IT Act. Aggrieved by the 5 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 order of assessment, the appellant has filed appeal which we disposed off as under: 6.2 The appellant is a Trust and had received donation of Rs.6,00,000/-. Out of said donation, the appellant had claimed exemption U/s 11 for sum of Rs.4,50,000/-. The appellant had not received registration U/s 12A of the IT Act and thus it had filed return as AOP. 6.3 During the assessment proceedings, the appellant had also agreed that it has not received registration U/s 12A. Thus, the Ld. AO had disallowed the deduction claimed by the appellant and enhanced the total income of appellant. 6.4 During the appellate proceedings, the appellant had mentioned that since the registration application was filed in 2010 and since till date it was not granted registration, it was deemed to be registered. 6.5 Provisions of section 12A are re-produced \"12A. The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Chief Commissioner or Commissioner before 1st day of July 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later: Provided that the Chief Commissioner or Commissioner may, in his discretion, admit an application for the registration of any trust or institution after the expiry of the period aforesaid; (b) ……………… In view of the above, it is clear th-at' registration U/s 12A is pre- condition to claim deduction U/s 11 and 12 of the IT Act. Further reliance is also placed on Judicial pronouncement of Hon'ble Supreme Court in case of U.P. Forest Corporation And Anr vs Dy. Commissioner Of Income Tax, [ appeal No- 9432 of 2003] \"We are of the considered view that for claiming benefit under Section 11(1)(a), registration under Section 12A is a condition precedent. Section 11 provides for exemption of income which is applied for charitable purposes. Section 12 is in the nature of an explanation of Section 11. Section 12A provides that provisions of 6 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 Sections 11 and 12:shall not apply in relation to income of any trust or institution unless certain conditions are satisfied, one of which is clause (a), the same is reproduced as under... 6.6 In view of the above and having regard to judicial pronouncement of Hon'ble Supreme Court, I am of the considerate opinion that the since the appellant is not being granted approval U/s 12A, the exemption as per provision of section 11 and 12 are not applicable. Therefore, the addition made by the learned AO is liable to be upheld. 6.7 Accordingly, the appeal of the appellant is disposed on merits and based on information/documents available on records.” 7. The assessee trust being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal. 8. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 9. Shri Praveen Goyal, Ld. Authorized Representative (for short ‘AR’) for the assessee trust at the threshold submitted that as the assessee trust despite specific request was not supplied with the copy of the “reasons to believe”, based on which, proceedings u/s. 147 of the Act were initiated in its case, therefore, the A.O had grossly erred in law and facts of the case in assuming jurisdiction and framing the assessment vide his order passed u/s. 147 r.w.s. 143(3) of the Act, dated 03.12.2018. Elaborating further on his contention, the Ld. AR submitted that though the assessee trust had 7 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 assailed the validity of the assessment on the aforesaid count before the CIT(Appeals) and had pressed into service a host of a judicial pronouncements but the latter had failed to adjudicate the same. The Ld. AR in order to substantiate his aforesaid contention had taken me through body of the order of the CIT(Appeals). 10. Alternatively, the Ld. AR submitted that as the notice u/s. 148 of the Act, dated 18.08.2018 was not served upon the assessee by the postal authority, therefore, the assessment order passed by the A.O could not be sustained and was also liable to be struck down on the said count. Also, the Ld. AR had assailed the validity of the jurisdiction assumed by the ITO, Ward-1(4), Raipur for framing the assessment vide his order u/s. 147 r.w.s. 143(3) of the Act, dated 03.12.2018 for the reason that no order of transfer u/s. 127 of the Act was passed transferring the case from the ITO, Ward-2(1), Raipur who had issued notice u/s. 148 of the Act, dated 18.08.2018 to the A.O who had framed the assessment i.e. ITO, Ward-1(4), Raipur. 11. The Ld. AR in support of his contention that in a case where the assessee had though complied with the notice issued by the A.O u/s. 148 of the Act, but despite his specific requests the copy of the “reasons to believe” forming the basis for initiating proceedings u/s. 147 of the Act were not made available to him, then the consequential assessment so 8 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 famed cannot be sustained and is liable to be quashed, had relied on the following judicial pronouncements: 1. GKN Driveshafts (India) Limited vs Income Tax Officer [2002] 259 ITR 19 (SC) 2. Paramjeet Narang vs ITO, ITA No. 22,23 & 183 of 2017 (Raipur Tri.) 3. Gajraj Giri vs Income Tax Officer pm 158 taxmann.com 8 (Raipur Tri.) 4. Saraswati Garewal vs Income Tax Officer [2024] 158 taxmann.com 37 (Raipur Tri.) 5. CIT Vs Trends Electronics [2015] 379 ITR 456 (Bombay) 6. CIT vs Videsh Sanchar Nigam Limited [2012] 21 taxmann.com 53 (Bombay) 12. Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. As the assessee trust had assailed the validity of the jurisdiction that was assumed by the A.O for framing the assessment based on his aforesaid contention, therefore, the Ld. DR was directed to obtain a report from the ITO, Ward-1(2), Raipur. The Ld. DR pursuant to the direction of the Tribunal dated 28/29.10.2024, had placed on record a report of the A.O dated 25.10.2024 on the aforesaid issue, wherein, it is inter alia stated by him as under (relevant extract): “3. In brief, the facts of the are that the assessee had not filed ITR as per the provision of section 139(1)/139(4) of the Act for A.Y.2011-12. On the basis of credible information regarding source of cash deposit of Rs.10,00,000/- during the F.Y.2009-10 relevant to A.Y.2011-12 deposited in the bank account 9 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 maintained with Bank of Baroda, notice u/ s 148 of the Act was issued on 31.03.2018 by RPAD. However, the assessee had not filed ITR on or before 30 days prescribed in the notice. A letter has also been issued to assessee on 04.07.2018 for furnishing ITR. Subsequently, in compliance to the notice u/s 148 of the Act, the assessee had filed ITU. on 15.10.2018 declaring total income of Rs.1,50,330/- for A.Y.11-12. Further, notices u/s 143(2) and 142(1)of the Act were issued on 28.11.2018 and 12.07.2018 and 22.10.2018 respectively. 4. In compliance thereto, the assessee filed on 16.10.2018 in response to notice u/s 142(1) of the Act vide which certain details were provided. On the same date the assessee has filed separate latter for intimation regarding filling of ITR filed on 15.10.2018 and also made request for furnish the copy of reason recorded for issuance of notice. In this regard, most respectively it is submitted that on carefully perusal of the case record, no such communication letter regarding supply of copy of reasons recorded seen.” 13. As the Ld. AR had based on his aforesaid multi-facet contentions assailed the validity of the jurisdiction that was assumed by the A.O for framing assessment vide his order passed u/s. 147 r.w.s. 143(3) of the Act, dated 03.12.2018, therefore, I shall first deal with the same. 14. On a perusal of the order of the CIT(Appeals), it transpires that the assessee trust had in the course of the proceedings before him, assailed the validity of the jurisdiction that was assumed by the A.O for framing the assessment vide his order passed u/s. 147 r.w.s. 143(3) of the Act, dated 03.12.2018, for the reason that despite specific requests, the A.O had failed to make available a copy of the “reasons to believe”, based on which, the proceedings u/s. 147 of the Act were initiated in its case, but the said 10 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 grievance of the assessee trust had not been addressed by the first appellate authority. 15. At this stage, it would be relevant to point out that though the CIT(Appeals) in the body of his order had culled out the “Ground of appeal No.1”, wherein the assessee trust had challenged the validity of the assessment in absence of making available of a copy of “reasons to believe” despite specific requests by the assessee and had also culled out the written submission of the assessee on the said issue a/w. a host of judicial pronouncements [Page 2, Para 4 to 11 of CIT(Appeals)’s order], but there is no whisper in his order as regards the adjudication of the said specific ground of appeal, based on which, the validity of the assessment was assailed before him. 16. As the CIT(Appeals) had not only failed to deal with and adjudicate the aforesaid specific “Ground of appeal No.1”, despite the fact that he had culled out in the body of his order the submissions of the assessee trust on the aforesaid issue a/w. a host of judicial pronouncements that were pressed into service by him but also, had not given any reason as to why he had refrained from dealing with the said issue, therefore, the half- hearted approach adopted by him for disposing off the appeal cannot be subscribed on my part. Accordingly, I am of a firm conviction that the matter in all fairness requires to be restored to the file of the CIT(Appeals) 11 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 with a direction to adjudicate the aforesaid grievance of the assessee trust i.e. validity of the assessment order passed by the A.O u/s.147 r.w.s. 143(3) of the Act, dated 03.12.2018 without making available a copy of the “reasons to believe”, which were specifically requested for by the assessee trust in the course of the assessment proceedings after carrying out necessary compliance to the notice issued u/s. 148 of the Act. Needless to say, the CIT(Appeals) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee trust. Thus, the Grounds of appeal Nos.1 to 3 raised by the assessee trust are allowed for statistical purposes in terms of the aforesaid observations. 17. As I have restored the matter to the file of the CIT(Appeals) in terms of my aforesaid observations, therefore, I refrain from adverting to and dealing with the other contentions that were advanced by the Ld. AR, based on which, he has assailed the validity of the jurisdiction that was assumed by the A.O for framing of the impugned assessment vide order u/s. 147 r.w.s. 143(3) of the Act, dated 03.12.2018, which, thus, are left open. 12 Shri Jain Shwetamber Murtipujak Samaj Vs. ITO, Raipur (C.G.) ITA No. 329/RPR/2024 18. In the result, appeal of the assessee trust is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 28th day of November, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 28th November, 2024. ***SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "