THE GATE OF HOPE CHARITABLE TRUST,CHENNAI V. ITO(E), WARD-2, CHENNAI

ITA 1372/CHNY/2024

AI Insights

The case involves The Gate of Hope Charitable Trust, which appealed against the orders of the Income Tax Officer (ITO) and the Commissioner of Income Tax (Appeals) regarding the denial of exemption under section 11 of the Income Tax Act and the subsequent taxation of its income. The primary legal issue was the validity of the AO's decision to reopen the assessment for AY 2010-11 and AY 2011-12 based on the trust's alleged involvement in religious activities, which were not substantiated by specific evidence. The Tribunal examined whether the AO had the jurisdiction to reopen the assessment and found that the necessary legal conditions were not met.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107592 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Other Referred Cases: Hindustan Lever Ltd. vs. R.B. Wadkar, ACIT vs. Dhariyal Construction Co., CIT vs. Insecticides (India) Ltd, CIT vs. Atul Jain, CIT vs. Signature Hotels (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITHA
• Assessee Lawyers: T.V. MUTHU ABIRAMI
• Keywords: Difference of opinion; Change of opinion; Depreciation; Reopening of assessment; Accommodation entries; Reason to believe; Charitable institution; Benefit of exemption; Tangible material; Borrowed satisfaction; Bogus
• Section: 147; 148; 143(3); 143(2); 143(1); 263; 11; 12AA; 13; 142(2A)

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’\u0001यायपीठ, चे\tई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI \u0001ी एबी टी. वक , \u000bाियक सद\u0011 एवं एवं एवं एवं \u0001ी जगदीश, लेखा सद\f क े सम\u0015 BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.1372 & 2006/Chny/2024 िनधा\u000eरणवष\u000e/Assessment Years: 2010-11 & 2011-12 The Gate of Hope Charitable Trust, 142/4, 3rd Street, Kamaraj Nagar, Chengalpattu-603 001. v. The ITO (Exemptions), Ward-2, Chennai. [PAN: AAATT 7636 B] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Ms. T.V.Muthu Abirami, Advocate \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Ms. Anitha, Addl.CIT सुनवाईक\u001aतारीख/Date of Hearing : 07.01.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 05.03.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: These appealshave been preferred by the assessee Trust against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 20.03.2024 & 20.06.2024 for the Assessment Years(hereinafter referred to as ‘AY‘)2010-11 &2011-12. 2. In both these appeals, the sole issue involved is the denial of exemption claimed by the assessee trust u/s 11 of the Act and taxing its income in status of AOP on the ground that, though the assessee was a registered charitable trust u/s 12AA of the Act, but it had carried out religious activities and therefore the expenses claimed to have been incurred towards its charitable objects was action of the AO was also confirmed by the Ld. CIT(A). The assessee has raised various grounds of appeal and has also filed additional grounds [1 5] dated 06.10.2024, challenging the action both on merits and on legal grounds as well. At the outset itself, the Ld. AR of the assessee drew our attention to the legal issue that has been raised wherein the reopening u/s. 147/148 of the Income \"Act\") of the AO has been challenged by the ass inclined to adjudicate first the legal issue raised before us, because if there is merit on the legal issue then it goes to the root of the reassessment order framed pursuant to reopening itself. 3. We first take up the appeal in 2010-11. The brief facts are that, the assessee is a Charitable Trust and is registered u/s.12AA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) vide order dated 03.01.2001 and is also approved u/s.80G of the Act vide order dated 18.07.2011. Thereafter, under the new regime/amendment in law, the Trust again applied for renewal of registration u/s.12AB as well as u/s.80G of the Act, both of which were granted vide order dated 01.10.2021. Further, it is also no ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::2 :: income in status of AOP on the ground that, though the assessee was a registered charitable trust u/s 12AA of the Act, but it had carried out religious activities and therefore the expenses claimed to have been incurred towards its charitable objects was disallowed by the AO. The action of the AO was also confirmed by the Ld. CIT(A). The assessee has raised various grounds of appeal and has also filed additional grounds [1 5] dated 06.10.2024, challenging the action both on merits and on legal At the outset itself, the Ld. AR of the assessee drew our attention to the legal issue that has been raised wherein the reopening u/s. 147/148 of the Income-tax Act, 1961 (hereinafter referred to as the \"Act\") of the AO has been challenged by the assessee, therefore, we are inclined to adjudicate first the legal issue raised before us, because if there is merit on the legal issue then it goes to the root of the reassessment order framed pursuant to reopening itself. We first take up the appeal in ITA No. 1372/Chny/2024 11. The brief facts are that, the assessee is a Charitable Trust and is registered u/s.12AA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) vide order dated 03.01.2001 and is also approved u/s.80G of e Act vide order dated 18.07.2011. Thereafter, under the new regime/amendment in law, the Trust again applied for renewal of registration u/s.12AB as well as u/s.80G of the Act, both of which were granted vide order dated 01.10.2021. Further, it is also no ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust income in status of AOP on the ground that, though the assessee was a registered charitable trust u/s 12AA of the Act, but it had carried out religious activities and therefore the expenses claimed to have been disallowed by the AO. The action of the AO was also confirmed by the Ld. CIT(A). The assessee has raised various grounds of appeal and has also filed additional grounds [1- 5] dated 06.10.2024, challenging the action both on merits and on legal At the outset itself, the Ld. AR of the assessee drew our attention to the legal issue that has been raised wherein the reopening tax Act, 1961 (hereinafter referred to as the essee, therefore, we are inclined to adjudicate first the legal issue raised before us, because if there is merit on the legal issue then it goes to the root of the ITA No. 1372/Chny/2024 for AY 11. The brief facts are that, the assessee is a Charitable Trust and is registered u/s.12AA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) vide order dated 03.01.2001 and is also approved u/s.80G of e Act vide order dated 18.07.2011. Thereafter, under the new regime/amendment in law, the Trust again applied for renewal of registration u/s.12AB as well as u/s.80G of the Act, both of which were granted vide order dated 01.10.2021. Further, it is also noted that the assessee is registered with the Ministry of Home Affairs under the Foreign Contributions Regulation Act, 2010 vide Registration No.075 820 253 dated 31.10.2002. 4. From the objects of the Trust, it is noted that, it primarily exists the purpose of serving under privileged children in the area of education, physic, cognitive, economic and social through sponsorship. was involved in various charitable activities, more particularly Child Development Programs for the welfare of c the Trust. The relevant o noted to be as follows - a) To promote the interest and overall welfare of socially, educationally and economically downtrodden people of India b) To evolve and implement educational, cultural, economic and health-oriented programs for the underprivileged and weaker sections of the Society including women, youth, handicapped, working children drug addicts, urban and rural poor to enhance their social, cultur economic wellbeing. c) To create environmental awareness and educate and motivate the general public to work for the environmental equilibrium such as social forestry, tree planting, waste land management etc. d) To promote the overall welfare or th e) To establish institutional care for the children, youth, aged, orphans and all other needy. f) To help people to acquire skills and knowledge to safeguard the ecology and environment, to keep their locality clean and beautiful and to take up action programs in this field. g) To develop leadership qualities among the youth. h) To hold, organize and arrange meetings, lectures, discussions, seminars, symposia, conferences, competitions, debates, exhibitions ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::3 :: assessee is registered with the Ministry of Home Affairs under the Foreign Contributions Regulation Act, 2010 vide Registration No.075 820 253 From the objects of the Trust, it is noted that, it primarily exists purpose of serving under privileged children in the area of education, physic, cognitive, economic and social through sponsorship. was involved in various charitable activities, more particularly Child Development Programs for the welfare of children as per the Objects of relevant objects for which the Trust was registered are a) To promote the interest and overall welfare of socially, educationally and economically downtrodden people of India e and implement educational, cultural, economic and oriented programs for the underprivileged and weaker sections of the Society including women, youth, handicapped, working children drug addicts, urban and rural poor to enhance their social, cultur c) To create environmental awareness and educate and motivate the general public to work for the environmental equilibrium such as social forestry, tree planting, waste land management etc. d) To promote the overall welfare or the victims of leprosy. e) To establish institutional care for the children, youth, aged, orphans f) To help people to acquire skills and knowledge to safeguard the ecology and environment, to keep their locality clean and beautiful and to take up action programs in this field. g) To develop leadership qualities among the youth. h) To hold, organize and arrange meetings, lectures, discussions, seminars, symposia, conferences, competitions, debates, exhibitions ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust assessee is registered with the Ministry of Home Affairs under the Foreign Contributions Regulation Act, 2010 vide Registration No.075 820 253 From the objects of the Trust, it is noted that, it primarily exists for purpose of serving under privileged children in the area of education, physic, cognitive, economic and social through sponsorship. The assessee was involved in various charitable activities, more particularly Child hildren as per the Objects of bjects for which the Trust was registered are a) To promote the interest and overall welfare of socially, educationally e and implement educational, cultural, economic and oriented programs for the underprivileged and weaker sections of the Society including women, youth, handicapped, working children drug addicts, urban and rural poor to enhance their social, cultural and c) To create environmental awareness and educate and motivate the general public to work for the environmental equilibrium such as social e) To establish institutional care for the children, youth, aged, orphans f) To help people to acquire skills and knowledge to safeguard the ecology and environment, to keep their locality clean and beautiful and h) To hold, organize and arrange meetings, lectures, discussions, seminars, symposia, conferences, competitions, debates, exhibitions etc., in the fields of socio education. i) To conduct and engage in research in the fields of rural development, environment and education. j) To collect, organize and disseminate knowledge relating to ecology and environment. 5. For the relevant A income (RoI) on 20.09.2010 admitting ‘NIL’ income. time period expired for issuance of notice u/s. 143(2) of the Act, therefore originally, no scrutiny assessment was framed. Therefore, the income filed by assessee stood accepted by the Department. Subsequently, the case was re Act dated 30.03.2017 on the strength of the following reasons recorded by the AO as under: “As per the information r 07.03.2017, it is seen that an amount of Rs.1,00,15,671/ received by the assesse Trust\" from M/s. Caruna Bala religious activities. The fund was provided to M/s Gate of Hope of Charitable Trust, by Compassion International, activities, and the same has been utilized for religious activities by M/s. The Gate of Hope of Charitable Trust\" under the project names \"Ayanavaram Child Development Centre\", the place of project being Ayanavaram, Chennai and \"Chengalpattu Child Development Centre\", Chengalpet. The assessee trust M/s. The Gate of Hope charitable trust is a trust registered for Charitable purposes u/s.12AA o the order of the Commissioner of Income tax, TN C.No:2039(58)/2000- granted approval u/s.80G vide order in DIT(E) No.2039(58)/00 dated 18.07.2011. The assessee Trust filed the re 20.9.2010 admitting NIL income and the same was processed u/s.143(1) on 02.02.2012. The Gross Receipts of the assessee Trust (as per the Income and Expenditure Account) for the A.Y. 2010 ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::4 :: etc., in the fields of socio- economic problems, environment and i) To conduct and engage in research in the fields of rural development, environment and education. j) To collect, organize and disseminate knowledge relating to ecology For the relevant AY 2010-11, the assessee has filed its return of income (RoI) on 20.09.2010 admitting ‘NIL’ income. On 30.09.201 time period expired for issuance of notice u/s. 143(2) of the Act, therefore originally, no scrutiny assessment was framed. Therefore, the income filed by assessee stood accepted by the Department. Subsequently, the case was re-opened by issuing notice u/s.148 of the Act dated 30.03.2017 on the strength of the following reasons recorded As per the information received from DCIT(Exemptions) Chennai 07.03.2017, it is seen that an amount of Rs.1,00,15,671/ received by the assessee trust, M/s The Gate of Hope of Charita Trust\" from M/s. Caruna Bala Vikas, during the year, to carryout The fund was provided to M/s Gate of Hope of Charitable Trust, by Compassion International, USA, also for religious es, and the same has been utilized for religious activities by M/s. The Gate of Hope of Charitable Trust\" under the project names Ayanavaram Child Development Centre\", the place of project being Ayanavaram, Chennai and \"Chengalpattu Child Development Centre\", The assessee trust M/s. The Gate of Hope charitable trust is a trust registered for Charitable purposes u/s.12AA of the IT Act, 1961 vide the order of the Commissioner of Income tax, TN -01/TN-V dated 02.01.2001. The assessee is also granted approval u/s.80G vide order in DIT(E) No.2039(58)/00 The assessee Trust filed the return of income for A.Y.2010 20.9.2010 admitting NIL income and the same was processed u/s.143(1) on 02.02.2012. The Gross Receipts of the assessee Trust (as per the Income and Expenditure Account) for the A.Y. 2010 ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust economic problems, environment and i) To conduct and engage in research in the fields of rural j) To collect, organize and disseminate knowledge relating to ecology 11, the assessee has filed its return of On 30.09.2011 the time period expired for issuance of notice u/s. 143(2) of the Act, therefore originally, no scrutiny assessment was framed. Therefore, the return of income filed by assessee stood accepted by the Department. opened by issuing notice u/s.148 of the Act dated 30.03.2017 on the strength of the following reasons recorded nnai on 07.03.2017, it is seen that an amount of Rs.1,00,15,671/- was trust, M/s The Gate of Hope of Charitable Vikas, during the year, to carryout The fund was provided to M/s Gate of Hope of USA, also for religious es, and the same has been utilized for religious activities by M/s. The Gate of Hope of Charitable Trust\" under the project names Ayanavaram Child Development Centre\", the place of project being Ayanavaram, Chennai and \"Chengalpattu Child Development Centre\", The assessee trust M/s. The Gate of Hope charitable trust is a trust f the IT Act, 1961 vide the order of the Commissioner of Income tax, TN-V in V dated 02.01.2001. The assessee is also granted approval u/s.80G vide order in DIT(E) No.2039(58)/00-01 turn of income for A.Y.2010-11 on 20.9.2010 admitting NIL income and the same was processed u/s.143(1) on 02.02.2012. The Gross Receipts of the assessee Trust (as per the Income and Expenditure Account) for the A.Y. 2010-11 is Rs.1,04,33,790/- The same con of Caruna Bala Vikas\" of Rs.1,00,18,456/ interest. The major claim of expenditure of the assessee trust was towards child development centres under 3 projects and child survival programme under 1 project. Out of the foreign contribution of Rs. 1,00,18,456/-, the assessee has applied a sum of Rs. 90,66,711/ towards the above said projects, which are claimed as charitable activity. The amount applied exceeds 90% of the foreign receipts. But, as per the information received from the DCIT (Exemptions), contribution of Rs.1,00,15,671/ Bala Vikas to carry out religious activities and also has been spent for religious activities. Thus, the assessee trust, M/s. being a Charitable trust, has carried out religious activities involving an expenditure of Rs.1,00,15,671/ Receipts. Hence, application to the tune of Rs.90,71,612/ the claim of depreciation should be disallowed and brought to tax. The return of the income for AY 2010 and therefore the occasion to examine the purpose of utilization of fund was not available. In view of the above, I have reasons to tax has escaped assessment for A.Y.2010 Sec.147 of the Income tax Act, 1961. 6. In the course of reassessment, the AO issued statutory notices and after enquiry denied exemption u/s.11 of the A assessee as AOP and re Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to dismiss it. Now the assessee is in appeal before us. 7. Since the assessee has raised th jurisdiction before the AO to have been re have to look into the settled position of law on the legal issue. It is noted that, before the AO assumes jurisdiction to re the conditions laid down in the said section 147 has to be satisfied viz., ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::5 :: The same consists of \"Foreign Contributions Vikas\" of Rs.1,00,18,456/-, and Local account and Bank interest. The major claim of expenditure of the assessee trust was towards child development centres under 3 projects and child survival under 1 project. Out of the foreign contribution of Rs. , the assessee has applied a sum of Rs. 90,66,711/ towards the above said projects, which are claimed as charitable activity. The amount applied exceeds 90% of the foreign receipts. , as per the information received from the DCIT (Exemptions), contribution of Rs.1,00,15,671/- has been received from M/s. Caruna Bala Vikas to carry out religious activities and also has been spent for Thus, the assessee trust, M/s. The Gate of Hope of Charitable Trust, being a Charitable trust, has carried out religious activities involving an expenditure of Rs.1,00,15,671/-, amounting to 99% of its Gross Receipts. Hence, application to the tune of Rs.90,71,612/- excluding of depreciation should be disallowed and brought to tax. The return of the income for AY 2010-11 was not selected for scrutiny and therefore the occasion to examine the purpose of utilization of fund was not available. In view of the above, I have reasons to believe that income chargeable to tax has escaped assessment for A.Y.2010-11, within the meaning of Sec.147 of the Income tax Act, 1961. In the course of reassessment, the AO issued statutory notices and after enquiry denied exemption u/s.11 of the Act and treated the assessee as AOP and re-computed its income at Rs.91,80,690/ Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to dismiss it. Now the assessee is in appeal before us. Since the assessee has raised the legal issue challenging the jurisdiction before the AO to have been re-opened the assessment, we have to look into the settled position of law on the legal issue. It is noted before the AO assumes jurisdiction to re-open, it is necessary that onditions laid down in the said section 147 has to be satisfied viz., ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust sists of \"Foreign Contributions - Grant , and Local account and Bank interest. The major claim of expenditure of the assessee trust was towards child development centres under 3 projects and child survival under 1 project. Out of the foreign contribution of Rs. , the assessee has applied a sum of Rs. 90,66,711/- towards the above said projects, which are claimed as charitable activity. The amount applied exceeds 90% of the foreign receipts. , as per the information received from the DCIT (Exemptions), has been received from M/s. Caruna Bala Vikas to carry out religious activities and also has been spent for The Gate of Hope of Charitable Trust, being a Charitable trust, has carried out religious activities involving an , amounting to 99% of its Gross excluding of depreciation should be disallowed and brought to tax. 11 was not selected for scrutiny and therefore the occasion to examine the purpose of utilization of to believe that income chargeable 11, within the meaning of In the course of reassessment, the AO issued statutory notices and ct and treated the computed its income at Rs.91,80,690/-. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who was pleased to dismiss it. Now the assessee is in appeal before us. e legal issue challenging the opened the assessment, we have to look into the settled position of law on the legal issue. It is noted it is necessary that onditions laid down in the said section 147 has to be satisfied viz., AO should record \"reason to believe for that assessment year has escaped assessment. If this condition is not satisfied at the first place, then it cannot be said the AO has validly assumed jurisdiction u/s. 147 of the Act. Therefore, the question for consideration is whether on the basis of the reasons recorded by the AO, he could have validly reopened the assessment. For that it has to be seen as to whether the AO on the basis of whatever material before him, [which he had indicated in his \"reasons record holding a belief that income chargeable to tax has escaped assessment. It is important to remember that the reasons recorded by AO to reopen has to be evaluated on a stand be made or assumed, while adjudicating the legal issue of AO's usurpation of jurisdiction u/s. 147 of the Act. case of Hindustan Lever Ltd. vs. R.B. Wadkar [(2004) 268 ITR 332], has, inter alia, observed that \"…… the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons not recorded. It is for the AO to disclose and open his mind through the reasons recorded by him. He has to speak through the reasons.\" Lordships added that \" and should not keep the assessee guessing for reasons. Reasons pro ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::6 :: \"reason to believe\" that the income chargeable to tax for that assessment year has escaped assessment. If this condition is not satisfied at the first place, then it cannot be said the AO has validly assumed jurisdiction u/s. 147 of the Act. Therefore, the question for ideration is whether on the basis of the reasons recorded by the AO, he could have validly reopened the assessment. For that it has to be seen as to whether the AO on the basis of whatever material before him, [which he had indicated in his \"reasons recorded\"] had reasons warrant holding a belief that income chargeable to tax has escaped assessment. It is important to remember that the reasons recorded by AO to reopen has to be evaluated on a stand-alone basis and no addition/extrapolation can sumed, while adjudicating the legal issue of AO's usurpation of jurisdiction u/s. 147 of the Act. The Hon’ble Bombay High Court, in the Hindustan Lever Ltd. vs. R.B. Wadkar [(2004) 268 ITR , observed that \"………. It is needless t the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons or the AO to disclose and open his mind through the reasons recorded by him. He has to speak through the reasons.\" Lordships added that \"The reasons recorded should be self and should not keep the assessee guessing for reasons. Reasons pro ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust \" that the income chargeable to tax for that assessment year has escaped assessment. If this condition is not satisfied at the first place, then it cannot be said the AO has validly assumed jurisdiction u/s. 147 of the Act. Therefore, the question for ideration is whether on the basis of the reasons recorded by the AO, he could have validly reopened the assessment. For that it has to be seen as to whether the AO on the basis of whatever material before him, ed\"] had reasons warrant holding a belief that income chargeable to tax has escaped assessment. It is important to remember that the reasons recorded by AO to reopen has alone basis and no addition/extrapolation can sumed, while adjudicating the legal issue of AO's usurpation The Hon’ble Bombay High Court, in the Hindustan Lever Ltd. vs. R.B. Wadkar [(2004) 268 ITR …. It is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons or the AO to disclose and open his mind through the reasons recorded by him. He has to speak through the reasons.\"Their The reasons recorded should be self-explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion and the evidence….\". to be examined only as they were recorded by the AO before the issue of the notice. 8. Moreover, the Parliament has given power to AO to reopen the assessment, if the condition pr and not otherwise. It should be kept in mind that the concept of assessment is governed by the time acquires a right as to the finality of proceedings. Queitus of the completed assessment is the Fundamental Rule and exception to this rule is Re opening of assessment by AO under section 147 or exercise of Revisional jurisdiction by CIT under section 263 of the Act. Therefore, the Parliament in its wisdom has provided safeguards for exerc assessment jurisdiction to AO; and revisional jurisdiction of CIT by providing condition precedent which is sine qua non for assumption/usurpation of jurisdiction. In the case of reopening of assessment, the reason to believe escape jurisdictional fact and law (mixed question of fact and law) and for revisional jurisdiction the order of the AO should be erroneous as well as prejudicial to the revenue. Unless the condition precedent is not satisfied, the AO or the CIT can exercise their reopening jurisdiction or revisional jurisdiction respectively. The legislative history is that in respect to the reopening u/s. 147 of the Act, the Parliament by Direct Tax Laws ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::7 :: link between conclusion and the evidence….\". Therefore, the reasons are to be examined only as they were recorded by the AO before the issue of Moreover, the Parliament has given power to AO to reopen the assessment, if the condition precedent as discussed above are satisfied, and not otherwise. It should be kept in mind that the concept of assessment is governed by the time-barring rule and the assessee acquires a right as to the finality of proceedings. Queitus of the completed ent is the Fundamental Rule and exception to this rule is Re opening of assessment by AO under section 147 or exercise of Revisional jurisdiction by CIT under section 263 of the Act. Therefore, the Parliament in its wisdom has provided safeguards for exercise of the reopening of assessment jurisdiction to AO; and revisional jurisdiction of CIT by providing condition precedent which is sine qua non for assumption/usurpation of jurisdiction. In the case of reopening of assessment, the reason to believe escapement of income is the jurisdictional fact and law (mixed question of fact and law) and for revisional jurisdiction the order of the AO should be erroneous as well as prejudicial to the revenue. Unless the condition precedent is not satisfied, CIT can exercise their reopening jurisdiction or revisional jurisdiction respectively. The legislative history is that in respect to the reopening u/s. 147 of the Act, the Parliament by Direct Tax Laws ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust Therefore, the reasons are to be examined only as they were recorded by the AO before the issue of Moreover, the Parliament has given power to AO to reopen the ecedent as discussed above are satisfied, and not otherwise. It should be kept in mind that the concept of barring rule and the assessee acquires a right as to the finality of proceedings. Queitus of the completed ent is the Fundamental Rule and exception to this rule is Re- opening of assessment by AO under section 147 or exercise of Revisional jurisdiction by CIT under section 263 of the Act. Therefore, the Parliament ise of the reopening of assessment jurisdiction to AO; and revisional jurisdiction of CIT by providing condition precedent which is sine qua non for assumption/usurpation of jurisdiction. In the case of reopening of ment of income is the jurisdictional fact and law (mixed question of fact and law) and for revisional jurisdiction the order of the AO should be erroneous as well as prejudicial to the revenue. Unless the condition precedent is not satisfied, CIT can exercise their reopening jurisdiction or revisional jurisdiction respectively. The legislative history is that in respect to the reopening u/s. 147 of the Act, the Parliament by Direct Tax Laws (Amendment) Act 1987 w.e.f. 01.04.1989 had substitute believe escapement of income\" writing, is of the opinion'' the AO was later substituted back to income'', by he Direct Tax Laws (Amendment) Act, 1989. The Hon'ble Apex Court as well as the Hon'ble jurisdictional High Court as well as other Hon'ble High Courts have already held in plethora of cases the test of a prudent person instructed in law in understanding jurisdicti and law (mixed question of fact and law) the reason to believe escapement of income (supra). 9. The AO, who is a quasi the completed assessment only in a given case wherein there is reason to believe escapement of chargeable income to tax which is the jurisdictional fact & law and sine qua non to assume jurisdiction to reopen a completed assessment. It must be kept in mind that reasons to believe postulates foundation based on information and belief based is foundation based on information there must be some reason warrant holding the belief that income chargeable to tax has escaped assessment. It has to be kept in mind that the Hon'ble Supreme Court in Saran & Sons P. Ltd. Vs expression \"reason to believe\" expression \"if satisfied\" ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::8 :: (Amendment) Act 1987 w.e.f. 01.04.1989 had substituted believe escapement of income\" to “for reasons to be recorded by him in writing, is of the opinion'' which gave unbridled subjective satisfaction to the AO was later substituted back to “reason to believe escapement of t Tax Laws (Amendment) Act, 1989. The Hon'ble Apex Court as well as the Hon'ble jurisdictional High Court as well as other Hon'ble High Courts have already held in plethora of cases the test of a prudent person instructed in law in understanding jurisdicti and law (mixed question of fact and law) the reason to believe escapement of income (supra). The AO, who is a quasi-judicial authority is empowered to reopen the completed assessment only in a given case wherein there is reason to pement of chargeable income to tax which is the jurisdictional fact & law and sine qua non to assume jurisdiction to reopen a completed assessment. It must be kept in mind that reasons to believe postulates foundation based on information and belief based on reason. Even if there is foundation based on information there must be some reason warrant holding the belief that income chargeable to tax has escaped assessment. It has to be kept in mind that the Hon'ble Supreme Court in Saran & Sons P. Ltd. Vs. ITO (1981) 130 ITR 1 (SC) \"reason to believe\" occurring in sec. 147 \"is stronger\" and such requirement has to be met by the AO in ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust d \"for reason to for reasons to be recorded by him in which gave unbridled subjective satisfaction to reason to believe escapement of t Tax Laws (Amendment) Act, 1989. The Hon'ble Apex Court as well as the Hon'ble jurisdictional High Court as well as other Hon'ble High Courts have already held in plethora of cases the test of a prudent person instructed in law in understanding jurisdictional fact and law (mixed question of fact and law) the reason to believe judicial authority is empowered to reopen the completed assessment only in a given case wherein there is reason to pement of chargeable income to tax which is the jurisdictional fact & law and sine qua non to assume jurisdiction to reopen a completed assessment. It must be kept in mind that reasons to believe postulates on reason. Even if there is foundation based on information there must be some reason warrant holding the belief that income chargeable to tax has escaped assessment. It has to be kept in mind that the Hon'ble Supreme Court in Ganga . ITO (1981) 130 ITR 1 (SC) held that the \"is stronger\" than the and such requirement has to be met by the AO in the reasons recorded before usurping the jurisdiction u/s. 147 o It must be kept in mind that information adverse against the assessee may trigger \"reason to suspect\" reasonable enquiry to collect material which would make him belief that there is in fact an escapement of inco event, then proceed to reopen the assessment and not before that event, because reason to believe Act, and not the reason to suspect distinction should be borne in mind while adjudicating the legal issue raised by assessee. 10. It is also to be kept in mind that of income should be that of AO, and not that of any other authority, because then it will be against one of the basic feature of the Constitution of India i.e., the Rule of Law, wherein the Parliament has empowered this reopening jurisdiction only to that of Assess the reason to believe escapement of income is not that of AO, the assumption of jurisdiction to re law, because assumption of jurisdiction to reopen will be on the basis of borrowed satisfaction. 11. The above laid down proposition finds support from the decision of the Hon’ble Supreme Court in the case of ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::9 :: the reasons recorded before usurping the jurisdiction u/s. 147 o It must be kept in mind that information adverse against the assessee \"reason to suspect\"then the AO is duty bound to make reasonable enquiry to collect material which would make him belief that there is in fact an escapement of income.And on satisfaction of such an event, then proceed to reopen the assessment and not before that event, reason to believe is the jurisdiction requirement u/s 147 of the reason to suspect escapement of income ion should be borne in mind while adjudicating the legal issue It is also to be kept in mind that, the reason to believe escapement should be that of AO, and not that of any other authority, because then it will be against one of the basic feature of the Constitution , the Rule of Law, wherein the Parliament has empowered this reopening jurisdiction only to that of Assessing Officer and that is why if the reason to believe escapement of income is not that of AO, the assumption of jurisdiction to re-open, is vitiated; and resultantly bad in law, because assumption of jurisdiction to reopen will be on the basis of The above laid down proposition finds support from the decision of Hon’ble Supreme Court in the case of ACIT Vs Dhariyal ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust the reasons recorded before usurping the jurisdiction u/s. 147 of the Act. It must be kept in mind that information adverse against the assessee then the AO is duty bound to make reasonable enquiry to collect material which would make him belief that And on satisfaction of such an event, then proceed to reopen the assessment and not before that event, is the jurisdiction requirement u/s 147 of the escapement of income. This subtle ion should be borne in mind while adjudicating the legal issue reason to believe escapement should be that of AO, and not that of any other authority, because then it will be against one of the basic feature of the Constitution , the Rule of Law, wherein the Parliament has empowered this ing Officer and that is why if the reason to believe escapement of income is not that of AO, the open, is vitiated; and resultantly bad in law, because assumption of jurisdiction to reopen will be on the basis of The above laid down proposition finds support from the decision of ACIT Vs Dhariyal Construction Co. (328 ITR 515) given by the DVO is only his opinion and that material for the purposes of reopening assessment under section 147 of the Income-tax Act, 1961. The Assessing Officer has to apply his mind to collected and must form had escaped assessment. We may also gainfully refer to the decision of the Hon'ble Delhi High Court in the case of Ltd (357 ITR 330) which holding as under: - \"7. We may point out at this juncture itself that the Tribunal did not go into the question of merits. It only examined the question of the validity of the proceedings under Section 147 of the said Act. The Tribunal, in essence, held that the purported reasons for reopening the assessments were entirely vague and devoid of any material. As such, on the available material, no reasonable person could have any reason to believe that income had escaped assessment. Consequently, the Tribunal held that the proceedings under Section 147 of the said Act were invalid. 8. The Tribunal gave detailed reasons for concluding that the proceedings under Section 147 were invalid. Instead of adding anything to the said reasons, we think it would be ap reproduced: -- \"In the case at hand, as is seen from the reasons recorded by the AO, we find that the AO has merely stated that it has been informed by the Director of Income that the above named company was involved in entries/transactions during the relevant year, which is actually unexplained income of the assessee company. The AO has further stated that the assessee company has failed to disclose fully and truly all material facts and source o the assessee company. In the reasons recorded, it is nowhere ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::10 :: Construction Co. (328 ITR 515) wherein it was held that, the report given by the DVO is only his opinion and that per se cannot be a tangible for the purposes of reopening assessment under section 147 of tax Act, 1961. The Hon’ble Supreme Court held that, the Assessing Officer has to apply his mind to such information, if any, rm his own reasons to believe thereon that income had escaped assessment. We may also gainfully refer to the decision of Hon'ble Delhi High Court in the case of CIT Vs Insecticides (India) which upheld the order of the ITAT Delhi Benc \"7. We may point out at this juncture itself that the Tribunal did not go into the question of merits. It only examined the question of the validity of the proceedings under Section 147 of the said Act. The Tribunal, in ld that the purported reasons for reopening the assessments were entirely vague and devoid of any material. As such, on the available material, no reasonable person could have any reason to believe that income had escaped assessment. Consequently, the unal held that the proceedings under Section 147 of the said Act 8. The Tribunal gave detailed reasons for concluding that the proceedings under Section 147 were invalid. Instead of adding anything to the said reasons, we think it would be appropriate if the same are \"In the case at hand, as is seen from the reasons recorded by the AO, we find that the AO has merely stated that it has been informed by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 that the above named company was involved in giving and taking bogus entries/transactions during the relevant year, which is actually unexplained income of the assessee company. The AO has further stated that the assessee company has failed to disclose fully and truly all material facts and source of these funds routed through bank account of the assessee company. In the reasons recorded, it is nowhere ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust wherein it was held that, the report cannot be a tangible for the purposes of reopening assessment under section 147 of Hon’ble Supreme Court held that, the information, if any, his own reasons to believe thereon that income had escaped assessment. We may also gainfully refer to the decision of CIT Vs Insecticides (India) upheld the order of the ITAT Delhi Bench by \"7. We may point out at this juncture itself that the Tribunal did not go into the question of merits. It only examined the question of the validity of the proceedings under Section 147 of the said Act. The Tribunal, in ld that the purported reasons for reopening the assessments were entirely vague and devoid of any material. As such, on the available material, no reasonable person could have any reason to believe that income had escaped assessment. Consequently, the unal held that the proceedings under Section 147 of the said Act 8. The Tribunal gave detailed reasons for concluding that the proceedings under Section 147 were invalid. Instead of adding anything propriate if the same are \"In the case at hand, as is seen from the reasons recorded by the AO, we find that the AO has merely stated that it has been informed by the tax (Inv.), New Delhi, vide letter dated 16.06.2006 giving and taking bogus entries/transactions during the relevant year, which is actually unexplained income of the assessee company. The AO has further stated that the assessee company has failed to disclose fully and truly all f these funds routed through bank account of the assessee company. In the reasons recorded, it is nowhere mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or transactions. It is also n through which mode the bogus entries and transactions were made by the assessee. What was the information given by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 has also not been mentioned. In other words, the contents of the letter dated 16.06.2006 of the Director of Income been given. The AO has vaguely referred to certain communications that he had received from the DIT(Inv.), New Delhi; the AO did not m the facts mentioned in the said communication except that from the informations gathered by the DIT (Inv.), New Delhi that the assessee was involved in giving and taking accommodation entries only and represented unsecured money of the assessee comp unexplained income of the assessee company or that it has been informed by the Director of Income dated 16.06.2006 that the assessee company was involved in giving and taking bogus entries/transactions duri AO did not mention the details of transactions that represented unexplained income of the assessee company. The information on the basis of which the AO has initiated proceedings u/s 147 of the Act are undoubtedly vague sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. In other words, the reasons recorded by the AO are totally vague, scanty and ambiguous. They are not Shri Udit Kumar Dugar, AY 2012 13 clear and unambiguous but suffer from vagueness. The reasons recorded by the AO do not disclose the AO's mind as to what was the nature and amount of transaction or entries, which had been given taken by the assessee in the relevant year. The reasons recorded by the AO also do not disclose his mind as to when and in what mode or way the bogus entries or transactions were given or taken by the assessee. From the reasons recorded, nobody can know nature of bogus entries or transactions given and taken by the assessee in the relevant year and with whom the transaction had taken place. As already noted above, it is well settled that only the reasons recorded by the AO for initiating proceedings u/s 147 of the Act are to be looked at or examined for sustaining or setting aside a notice issued u/s 148 of the Act. The reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No a made to those reasons. Therefore, the details of entries or amount mentioned in the assessment order and in respect of which ultimate addition has been made by the AO, cannot be made a basis to say that the reasons recorded by the AO were wi mentioned in the assessment order. The reasons recorded by the AO are ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::11 :: mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or transactions. It is also nowhere mentioned as to on which dates and through which mode the bogus entries and transactions were made by the assessee. What was the information given by the Director of tax (Inv.), New Delhi, vide letter dated 16.06.2006 has also not ned. In other words, the contents of the letter dated 16.06.2006 of the Director of Income-tax (Inv.), New Delhi have not been given. The AO has vaguely referred to certain communications that he had received from the DIT(Inv.), New Delhi; the AO did not m the facts mentioned in the said communication except that from the informations gathered by the DIT (Inv.), New Delhi that the assessee was involved in giving and taking accommodation entries only and represented unsecured money of the assessee company is actually unexplained income of the assessee company or that it has been informed by the Director of Income-tax (Inv.), New Delhi vide letter dated 16.06.2006 that the assessee company was involved in giving and taking bogus entries/transactions during the relevant financial year. The AO did not mention the details of transactions that represented unexplained income of the assessee company. The information on the basis of which the AO has initiated proceedings u/s 147 of the Act are undoubtedly vague and uncertain and cannot be construed to be sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. In other words, the reasons recorded by the AO are totally vague, nd ambiguous. They are not Shri Udit Kumar Dugar, AY 2012 13 clear and unambiguous but suffer from vagueness. The reasons recorded by the AO do not disclose the AO's mind as to what was the nature and amount of transaction or entries, which had been given taken by the assessee in the relevant year. The reasons recorded by the AO also do not disclose his mind as to when and in what mode or way the bogus entries or transactions were given or taken by the assessee. From the reasons recorded, nobody can know what was the amount and nature of bogus entries or transactions given and taken by the assessee in the relevant year and with whom the transaction had taken place. As already noted above, it is well settled that only the reasons recorded by tiating proceedings u/s 147 of the Act are to be looked at or examined for sustaining or setting aside a notice issued u/s 148 of the Act. The reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No addition can be made to those reasons. Therefore, the details of entries or amount mentioned in the assessment order and in respect of which ultimate addition has been made by the AO, cannot be made a basis to say that the reasons recorded by the AO were with reference to those amounts mentioned in the assessment order. The reasons recorded by the AO are ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or owhere mentioned as to on which dates and through which mode the bogus entries and transactions were made by the assessee. What was the information given by the Director of tax (Inv.), New Delhi, vide letter dated 16.06.2006 has also not ned. In other words, the contents of the letter dated tax (Inv.), New Delhi have not been given. The AO has vaguely referred to certain communications that he had received from the DIT(Inv.), New Delhi; the AO did not mention the facts mentioned in the said communication except that from the informations gathered by the DIT (Inv.), New Delhi that the assessee was involved in giving and taking accommodation entries only and any is actually unexplained income of the assessee company or that it has been tax (Inv.), New Delhi vide letter dated 16.06.2006 that the assessee company was involved in giving and ng the relevant financial year. The AO did not mention the details of transactions that represented unexplained income of the assessee company. The information on the basis of which the AO has initiated proceedings u/s 147 of the Act are and uncertain and cannot be construed to be sufficient and relevant material on the basis of which a reasonable person could have formed a belief that income had escaped assessment. In other words, the reasons recorded by the AO are totally vague, nd ambiguous. They are not Shri Udit Kumar Dugar, AY 2012- 13 clear and unambiguous but suffer from vagueness. The reasons recorded by the AO do not disclose the AO's mind as to what was the nature and amount of transaction or entries, which had been given or taken by the assessee in the relevant year. The reasons recorded by the AO also do not disclose his mind as to when and in what mode or way the bogus entries or transactions were given or taken by the assessee. what was the amount and nature of bogus entries or transactions given and taken by the assessee in the relevant year and with whom the transaction had taken place. As already noted above, it is well settled that only the reasons recorded by tiating proceedings u/s 147 of the Act are to be looked at or examined for sustaining or setting aside a notice issued u/s 148 of the Act. The reasons are required to be read as they were recorded by ddition can be made to those reasons. Therefore, the details of entries or amount mentioned in the assessment order and in respect of which ultimate addition has been made by the AO, cannot be made a basis to say that th reference to those amounts mentioned in the assessment order. The reasons recorded by the AO are totally silent with regard to the amount and nature of bogus entries and transactions and the persons with whom the transactions had taken place. In this re jurisdictional Delhi High Court in the case of CIT v. Atul Jain [2000] 299 ITR 383, in which case the information relied upon by the AO for initiating proceedings u/s 147 of the Act did indicate the source of capital gain and nobody knew which shares were transacted and with whom the transaction has taken place and in that case there were absolutely no details available and the information supplied was extremely scanty and vague and in that light of those Jurisdictional Delhi High Court held that initiation of proceedings u/s 147 of the Act by the AO was not valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional High Court of Delhi in the case of Signature Hotels (P.) Ltd. (supra) also supports the view we have taken above.\" 12. Before us the Ld. DR appearing for the Revenue had contended that, in the present case before us, there was no original assessment completed u/s 143(3) of the Act and therefore, accor of reopening of an intimation u/s 143(1) of the Act, the above discussed stringent condition was not applicable and that there is no requirement for the Revenue to demonstrate that the reasons recorded were based on some tangible material as there is no material available on record due to absence of original assessment. For this, Hon’ble Supreme Court in the case of Brokers P. Ltd. (291 ITR 500) the assessee’s counsel drew our attention to the decision of Hon’ble jurisdictional High Court in the case of taxmann.com 155)and contented that should be based on some tangible material which com ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::12 :: totally silent with regard to the amount and nature of bogus entries and transactions and the persons with whom the transactions had taken place. In this respect, we may rely upon the decision of Hon'ble jurisdictional Delhi High Court in the case of CIT v. Atul Jain [2000] 299 ITR 383, in which case the information relied upon by the AO for initiating proceedings u/s 147 of the Act did indicate the source of capital gain and nobody knew which shares were transacted and with whom the transaction has taken place and in that case there were absolutely no details available and the information supplied was extremely scanty and vague and in that light of those facts, the Hon'ble Jurisdictional Delhi High Court held that initiation of proceedings u/s 147 of the Act by the AO was not valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional High Court of Delhi in the case of otels (P.) Ltd. (supra) also supports the view we have taken Before us the Ld. DR appearing for the Revenue had contended that, in the present case before us, there was no original assessment completed u/s 143(3) of the Act and therefore, according to him, in case of reopening of an intimation u/s 143(1) of the Act, the above discussed stringent condition was not applicable and that there is no requirement for the Revenue to demonstrate that the reasons recorded were based on ial as there is no material available on record due to absence of original assessment. For this, she relied upon the decision of Hon’ble Supreme Court in the case of ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd. (291 ITR 500). Against, such a contention of the assessee’s counsel drew our attention to the decision of Hon’ble High Court in the case of TANMAC v. DCIT and contented that formation of “reasons to believe” should be based on some tangible material which com ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust totally silent with regard to the amount and nature of bogus entries and transactions and the persons with whom the transactions had taken spect, we may rely upon the decision of Hon'ble jurisdictional Delhi High Court in the case of CIT v. Atul Jain [2000] 299 ITR 383, in which case the information relied upon by the AO for initiating proceedings u/s 147 of the Act did indicate the source of the capital gain and nobody knew which shares were transacted and with whom the transaction has taken place and in that case there were absolutely no details available and the information supplied was facts, the Hon'ble Jurisdictional Delhi High Court held that initiation of proceedings u/s 147 of the Act by the AO was not valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional High Court of Delhi in the case of otels (P.) Ltd. (supra) also supports the view we have taken Before us the Ld. DR appearing for the Revenue had contended that, in the present case before us, there was no original assessment ding to him, in case of reopening of an intimation u/s 143(1) of the Act, the above discussed stringent condition was not applicable and that there is no requirement for the Revenue to demonstrate that the reasons recorded were based on ial as there is no material available on record due to he relied upon the decision of ACIT v. Rajesh Jhaveri Stock Against, such a contention of Ld DR, the assessee’s counsel drew our attention to the decision of Hon’ble TANMAC v. DCIT (78 formation of “reasons to believe” should be based on some tangible material which comes into the possession or knowledge of the AO there is escapement of income from assessment. cannot under any circumstance bypass the essential pre forming “reasons to believe” before reo like in the present case only an intimation was issued u/s 143(1) of the Act.We observe that the Division Bench of the Hon’ble jurisdictional High Court in the case of TANMAC v. DCIT occasion to consider a case of re u/s.143(1)(a) of the Act wherein it was held that in the absence of any tangible material available with the AO to form the requisite belief regarding escapement of income, the re u/s.143(1) of the Act is bad in law have considered the decision of P. Ltd. (supra), and rendered its view Bench of the Hon’ble Delhi High Court in the case of Ltd (354 ITR 536). In this case also, t no assessment order is passed when the return is merely processed under Section 143(1) and an intimation to that effect is sent to the assessee. However,the Hon’ble High Court observed that, in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P). Ltd. (supra) held that, even where proceedings under Section taken with reference to an intimation framed earlier under Section ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::13 :: possession or knowledge of the AO for him to come to conclusion that there is escapement of income from assessment.According to her, o cannot under any circumstance bypass the essential pre forming “reasons to believe” before reopening any assessment, even if like in the present case only an intimation was issued u/s 143(1) of the he Division Bench of the Hon’ble jurisdictional High TANMAC v. DCIT (78 taxmann.com 155 nsider a case of re-opening of an intimation passed u/s.143(1)(a) of the Act wherein it was held that in the absence of any tangible material available with the AO to form the requisite belief regarding escapement of income, the re-opening of assessment ma u/s.143(1) of the Act is bad in law. The Hon’ble High Court is noted to have considered the decision ofACIT v. Rajesh Jhaveri Stock Brokers , and rendered its view by concurring with the Division Bench of the Hon’ble Delhi High Court in the case of CIT v. Orient Craft . In this case also, the Court held that no assessment order is passed when the return is merely processed under tion 143(1) and an intimation to that effect is sent to the assessee. the Hon’ble High Court observed that, the Supreme Court itself Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P). Ltd. (supra) even where proceedings under Section 147 are sought to be taken with reference to an intimation framed earlier under Section ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust to come to conclusion that According to her, one cannot under any circumstance bypass the essential pre-requisite of pening any assessment, even if like in the present case only an intimation was issued u/s 143(1) of the he Division Bench of the Hon’ble jurisdictional High 78 taxmann.com 155) had an opening of an intimation passed u/s.143(1)(a) of the Act wherein it was held that in the absence of any tangible material available with the AO to form the requisite belief opening of assessment made . The Hon’ble High Court is noted to ACIT v. Rajesh Jhaveri Stock Brokers by concurring with the Division CIT v. Orient Craft he Court held that, it is true that no assessment order is passed when the return is merely processed under tion 143(1) and an intimation to that effect is sent to the assessee. the Supreme Court itself Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P). Ltd. (supra) had 147 are sought to be taken with reference to an intimation framed earlier under Section 143(1), the ingredients of Section 147 have to be fulfilled. The High Court observed that no distinction between an intimation issued under section 143(1) and hence it is not permissible to adopt different standards while interpreting the words The ingredient is that there should exist chargeable to tax has escaped assessment. The High Court the requirement of \"reason to believe\" with reference to an intimation under Section 143(1). The High Court categorically observed that basis of a mere guess, suspicion, gossip or rumour. needs to give a schematic interpretation to the words failing which, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments, which otherwise are not valid reasons to reopen. The Court thus held that even where assessment is sought to be reopened when only an intimation u/s 143(1) was issued, it shall be open for the assessee to contend that notwithst \"change of opinion\" is not available to him, he would challenge the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belief that income chargeable to tax has escaped assessment. decided case, the Hon’ble High ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::14 :: 143(1), the ingredients of Section 147 have to be fulfilled. The Court observed that, the language employed in Section 147 makes no distinction between an order passed under section 143(3) and the intimation issued under section 143(1) and hence it is not permissible to adopt different standards while interpreting the words \"reason to believe” The ingredient is that there should exist \"reason to believe\" chargeable to tax has escaped assessment. The High Court \"reason to believe\" cannot be dispensed with even with reference to an intimation under Section 143(1). The High Court observed that, an assessment cannot be reopened on the basis of a mere guess, suspicion, gossip or rumour. It was held that, needs to give a schematic interpretation to the words \"reason to believe\" failing which, section 147 would give arbitrary powers to the Assessing ficer to reopen assessments, which otherwise are not valid reasons to reopen. The Court thus held that even where assessment is sought to be reopened when only an intimation u/s 143(1) was issued, it shall be open for the assessee to contend that notwithstanding that the argument of is not available to him, he would challenge the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the come chargeable to tax has escaped assessment. Hon’ble High Court noted that, there was no whisper in ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust 143(1), the ingredients of Section 147 have to be fulfilled. The Hon’ble the language employed in Section 147 makes order passed under section 143(3) and the intimation issued under section 143(1) and hence it is not permissible to \"reason to believe”. \"reason to believe\" that income chargeable to tax has escaped assessment. The High Court thus held that cannot be dispensed with even with reference to an intimation under Section 143(1). The High Court essment cannot be reopened on the It was held that, one \"reason to believe\" failing which, section 147 would give arbitrary powers to the Assessing ficer to reopen assessments, which otherwise are not valid reasons to reopen. The Court thus held that even where assessment is sought to be reopened when only an intimation u/s 143(1) was issued, it shall be open anding that the argument of is not available to him, he would challenge the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the come chargeable to tax has escaped assessment. In the there was no whisper in the reasons recorded, of any tangible material which came to the possession of the Assessing Officer subsequent to the issue of t intimation to exercise of the power conferred under section 147 Act, and therefore quashed the notice issued u/s 148 of the Act holding it to be bad in law. 13. From the aforesaid understanding of law governing the issue at hand, we have to exam whether the condition precedent necessary to usurp the re jurisdiction can be discerned from perusal of the reasons recorded by the AO in the instant case (supra). standalone basis the reasons recorded by the AO to reopen the assessment, which has already been extracted at noted that, the AO at Para No.1 has taken note of information received from the DCIT (Exemptions), Chennai, on 07.03.2017 fr observed that, an amount of Rs.1,00,15,671/ assessee Trust from M/s.Caruna Bala Vikas (hereinafter referred to as ‘M/s.CBV‘) to carry out religious activities; and that the fund was provided to the assessee by the Compassio religious activities and that has been utilized by the assessee for the said purpose under the project name at Chennai as well as Chengalpattu. This is simply noted to be the sweeping information ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::15 :: the reasons recorded, of any tangible material which came to the possession of the Assessing Officer subsequent to the issue of t intimation to exercise of the power conferred under section 147 Act, and therefore quashed the notice issued u/s 148 of the Act holding it From the aforesaid understanding of law governing the issue at hand, we have to examine the reasons already set out above and test whether the condition precedent necessary to usurp the re jurisdiction can be discerned from perusal of the reasons recorded by the AO in the instant case (supra). For doing that we have to examine on standalone basis the reasons recorded by the AO to reopen the , which has already been extracted at Para 5 noted that, the AO at Para No.1 has taken note of information received from the DCIT (Exemptions), Chennai, on 07.03.2017 fr observed that, an amount of Rs.1,00,15,671/- was received by the assessee Trust from M/s.Caruna Bala Vikas (hereinafter referred to as ‘M/s.CBV‘) to carry out religious activities; and that the fund was provided to the assessee by the Compassion International, USA [CI,USA] also for religious activities and that has been utilized by the assessee for the said purpose under the project name “Ayanavaram Child Development Centre” at Chennai as well as “Chengalpattu Child Development Centre” Chengalpattu. This is simply noted to be the sweeping information ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust the reasons recorded, of any tangible material which came to the possession of the Assessing Officer subsequent to the issue of the intimation to exercise of the power conferred under section 147 of the Act, and therefore quashed the notice issued u/s 148 of the Act holding it From the aforesaid understanding of law governing the issue at ine the reasons already set out above and test whether the condition precedent necessary to usurp the re-opening jurisdiction can be discerned from perusal of the reasons recorded by the For doing that we have to examine on a standalone basis the reasons recorded by the AO to reopen the Para 5 above. It is noted that, the AO at Para No.1 has taken note of information received from the DCIT (Exemptions), Chennai, on 07.03.2017 from which he was received by the assessee Trust from M/s.Caruna Bala Vikas (hereinafter referred to as ‘M/s.CBV‘) to carry out religious activities; and that the fund was provided n International, USA [CI,USA] also for religious activities and that has been utilized by the assessee for the said “Ayanavaram Child Development Centre” “Chengalpattu Child Development Centre”, Chengalpattu. This is simply noted to be the sweeping information received from the office of opinion on the matter. The aforesaid observation does not contain any reference to the purported religious activitie Trust basis which it was being alleged that the charitable funds were diverted for religious purposes. It is also not discernible as to which particular religion was being propagated and in which manner and why the utilization at the child development as religious activities. 14. In the second paragraph, the AO notes that the assessee Trust is registered u/s.12AA of the Act as a Charitable Trust in 2001 and granted approval also u/s.80G in th notes that the assessee Trust had filed its RoI for AY 2010 20.09.2010 admitting ‘NIL’ income which was processed u/s.143(1) of the Act on 02.02.2012 and the gross receipts of the assessee Trust was to the tune of Rs.1,04,33,790/ M/s.CBV of Rs.1,00,18,456/ These observations are noted to be general in nature giving the background facts of the assessee trust. 15. Thereafter, according to the AO, the major claim of the assessee Trust was under one project, but again no details of such project is given in the recorded reasons. The AO further observes that, out of the foreign ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::16 :: office of DCIT (Exemptions), Chennai giving opinion on the matter. The aforesaid observation does not contain any reference to the purported religious activities carried out by the assessee Trust basis which it was being alleged that the charitable funds were diverted for religious purposes. It is also not discernible as to which particular religion was being propagated and in which manner and why at the child development centers was being baldly inferred In the second paragraph, the AO notes that the assessee Trust is registered u/s.12AA of the Act as a Charitable Trust in 2001 and granted approval also u/s.80G in the year 2011. In the third paragraph, the AO notes that the assessee Trust had filed its RoI for AY 2010 20.09.2010 admitting ‘NIL’ income which was processed u/s.143(1) of the Act on 02.02.2012 and the gross receipts of the assessee Trust was to the tune of Rs.1,04,33,790/- which consists of foreign contributions granted M/s.CBV of Rs.1,00,18,456/- as well as local account and bank interest. These observations are noted to be general in nature giving the background facts of the assessee trust. hereafter, according to the AO, the major claim of the assessee Trust was under one project, but again no details of such project is given in the recorded reasons. The AO further observes that, out of the foreign ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust DCIT (Exemptions), Chennai giving their/his opinion on the matter. The aforesaid observation does not contain any s carried out by the assessee Trust basis which it was being alleged that the charitable funds were diverted for religious purposes. It is also not discernible as to which particular religion was being propagated and in which manner and why was being baldly inferred In the second paragraph, the AO notes that the assessee Trust is registered u/s.12AA of the Act as a Charitable Trust in 2001 and granted e year 2011. In the third paragraph, the AO notes that the assessee Trust had filed its RoI for AY 2010-11 on 20.09.2010 admitting ‘NIL’ income which was processed u/s.143(1) of the Act on 02.02.2012 and the gross receipts of the assessee Trust was to the which consists of foreign contributions granted as well as local account and bank interest. These observations are noted to be general in nature giving the hereafter, according to the AO, the major claim of the assessee Trust was under one project, but again no details of such project is given in the recorded reasons. The AO further observes that, out of the foreign contributions of Rs.1,00,18,456/ Rs.90,66,711/- towards the above said projects which are claimed as charitable activity and that the amount exceeds 90% of the foreign receipts. These observations are again noted to be the contemporaneous facts concerning the ass return and that they contain nothing adverse against the assessee nor are these observations referring to any material or information which suggests income escaping assessment. 16. In the next para 4, the AO received from the DCIT(E) which stated that the contribution of Rs.1,00,15,671/- has been received from M/s.CBV, to carry out religious activities and also has spent for religious activities. And in the next part i.e. Para No.5, the AO concludes that, the assessee Trust being a charitable Trust has carried out religious activities involving the expenditure of Rs.1,00,15,671/ and hence, he was of the opinion that application to the Rs.90,71,612/- excluding the claim of depreciation should be disallowed and brought to tax. According to him therefore, there was a reason to belief that income chargeable to tax for AY 2010 from the JCIT/CIT(E), he re ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::17 :: contributions of Rs.1,00,18,456/-, the assessee has applied a sum of towards the above said projects which are claimed as charitable activity and that the amount exceeds 90% of the foreign receipts. These observations are again noted to be the contemporaneous facts concerning the assessee, which are discernible from the income return and that they contain nothing adverse against the assessee nor are these observations referring to any material or information which suggests income escaping assessment. In the next para 4, the AO again goes back to the information received from the DCIT(E) which stated that the contribution of has been received from M/s.CBV, to carry out religious activities and also has spent for religious activities. And in the next part ara No.5, the AO concludes that, the assessee Trust being a charitable Trust has carried out religious activities involving the expenditure of Rs.1,00,15,671/-, amounting to 99% of its gross receipts and hence, he was of the opinion that application to the excluding the claim of depreciation should be disallowed and brought to tax. According to him therefore, there was a reason to belief that income chargeable to tax for AY 2010-11 and after approval from the JCIT/CIT(E), he re-opened the assessment. ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust ssee has applied a sum of towards the above said projects which are claimed as charitable activity and that the amount exceeds 90% of the foreign receipts. These observations are again noted to be the contemporaneous essee, which are discernible from the income-tax return and that they contain nothing adverse against the assessee nor are these observations referring to any material or information which again goes back to the information received from the DCIT(E) which stated that the contribution of has been received from M/s.CBV, to carry out religious activities and also has spent for religious activities. And in the next part ara No.5, the AO concludes that, the assessee Trust being a charitable Trust has carried out religious activities involving the , amounting to 99% of its gross receipts and hence, he was of the opinion that application to the tune of excluding the claim of depreciation should be disallowed and brought to tax. According to him therefore, there was a reason to 11 and after approval 17. From the aforesaid reasons recorded by AO it is evident that other than the general information given by material the AO collected himself after preliminary enquiry which could have enabled him at the t independent conclusion that assessment\". In fact, it appears that the AO never bothered to apply his own mind to the letter received from DCIT(E) but simply followed it as gospel truth. According to us, the information given by be a basis to ignite/trigger and be the starting point to enquire; and at that stage, the information of to form \"reason to suspect\" income which is the jurisdictional fact & law required to enable the AO to successfully assume jurisdiction to reopen as envisaged u/s. 147 of the Act. It has to be kept in mind that the synonymous to 'reason to suspect' information can trigger an enquiry so that it can be found out whether there is any substance or material to substantiate that there is merit in the information adduced by the has to take an independent decision whether to re or not. And at the cost of repetition dictate of any other authority like in this case from it would be borrowed satisfaction of the jurisdictional fact & law which is ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::18 :: From the aforesaid reasons recorded by AO it is evident that other than the general information given by DCIT(E),and there is no other material the AO collected himself after preliminary enquiry which could have enabled him at the time of recording reasons to come to a conscious independent conclusion that \"income of the assessee has escaped In fact, it appears that the AO never bothered to apply his own mind to the letter received from DCIT(E) but simply followed it as According to us, the information given by DCIT(E) be a basis to ignite/trigger and be the starting point to enquire; and at the information of DCIT(E) can be termed as a foundation only \"reason to suspect\" and not “reason to believe” income which is the jurisdictional fact & law required to enable the AO to successfully assume jurisdiction to reopen as envisaged u/s. 147 of the Act. It has to be kept in mind that the 'reasons to believe' 'reason to suspect'. 'Reason to suspect' information can trigger an enquiry so that it can be found out whether there is any substance or material to substantiate that there is merit in the information adduced by the DCIT(E) and after post enquiry the AO has to take an independent decision whether to re-open the assessment or not. And at the cost of repetition, we say that the AO should not act on dictate of any other authority like in this case from DCIT(E) rrowed satisfaction of the jurisdictional fact & law which is ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust From the aforesaid reasons recorded by AO it is evident that other there is no other material the AO collected himself after preliminary enquiry which could ime of recording reasons to come to a conscious \"income of the assessee has escaped In fact, it appears that the AO never bothered to apply his own mind to the letter received from DCIT(E) but simply followed it as a DCIT(E) can only be a basis to ignite/trigger and be the starting point to enquire; and at can be termed as a foundation only escapement of income which is the jurisdictional fact & law required to enable the AO to successfully assume jurisdiction to reopen as envisaged u/s. 147 of the 'reasons to believe' is not 'Reason to suspect' based on an information can trigger an enquiry so that it can be found out whether there is any substance or material to substantiate that there is merit in post enquiry the AO open the assessment we say that the AO should not act on DCIT(E) because then rrowed satisfaction of the jurisdictional fact & law which is not permitted by law and consequently vitiate the assumption of jurisdiction by AO to reopen u/s. 147 of the Act. 18. In the present case, reading of the aforesaid reasons recorded reveals that, the core allegation is that, the assessee utilized the funds given to it by M/s.CBV& M/s. Compassion International for religious purposes rather than for charitable purposes. However, nowhere in the body of the reasons recorded, the AO has stated to have the funds given to assessee has been used for advancement, support or propagation of a particular religion and its tenets. It has also not been mentioned as to the manner in which the funds were diverted for religious purposes and as to how was being inferred as religious activity. We find the reasons recorded to be lacking any tangible material or evidence in this regard whatsoever. Apart from relying on the letter received from DCIT(E) baldly the assessee had utilized charitable funds for religious purposes, the reasons so recorded does not speak out the relevant tangible material on which the belief was formed that income chargeable to tax had escaped assessment. 19. The language used in the recorded reasons by the AO appears suggest that he is also not aware that, the benefit of exemption under Section 11 is also available to religious trusts. It is necessary to keep in ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::19 :: not permitted by law and consequently vitiate the assumption of jurisdiction by AO to reopen u/s. 147 of the Act. In the present case, reading of the aforesaid reasons recorded the core allegation is that, the assessee utilized the funds given to it by M/s.CBV& M/s. Compassion International for religious purposes rather than for charitable purposes. However, nowhere in the body of the reasons recorded, the AO has stated to have alleged whether the funds given to assessee has been used for advancement, support or propagation of a particular religion and its tenets. It has also not been mentioned as to the manner in which the funds were diverted for religious purposes and as to how the monies spent had child development centers was being inferred as religious activity. We find the reasons recorded to be lacking any tangible material or evidence in this regard whatsoever. Apart from relying on the letter received from DCIT(E) baldly the assessee had utilized charitable funds for religious purposes, the reasons so recorded does not speak out the relevant tangible material on which the belief was formed that income chargeable to tax had escaped e used in the recorded reasons by the AO appears suggest that he is also not aware that, the benefit of exemption under Section 11 is also available to religious trusts. It is necessary to keep in ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust not permitted by law and consequently vitiate the assumption of In the present case, reading of the aforesaid reasons recorded the core allegation is that, the assessee utilized the funds given to it by M/s.CBV& M/s. Compassion International for religious purposes rather than for charitable purposes. However, nowhere in the alleged whether the funds given to assessee has been used for advancement, support or propagation of a particular religion and its tenets. It has also not been mentioned as to the manner in which the funds were diverted for religious the monies spent had child development centers was being inferred as religious activity. We find the reasons recorded to be lacking any tangible material or evidence in this regard whatsoever. Apart from relying on the letter received from DCIT(E) baldly alleging that the assessee had utilized charitable funds for religious purposes, the reasons so recorded does not speak out the relevant tangible material on which the belief was formed that income chargeable to tax had escaped e used in the recorded reasons by the AO appears suggest that he is also not aware that, the benefit of exemption under Section 11 is also available to religious trusts. It is necessary to keep in mind that, Section 11 exemptions can be claimed by both Pub Charitable as well as Religious Trust; and as per the Constitution of India, all religions are equal in the eyes of law; and income donated/applied for public religious purposes enjoys exemption u/s.11 of the Act. But, only if a Trust was for “the pro religion, then it may fall under the mischief of Section 13(1)(a) which provides that nothing contained in Section 11 shall operate to exempt “any part of income” from the property held under a Trust for private religious purpose which doesn’t endure for the benefit of the public. However, as noted from reading of the noted that there is no whisper/allegation neither in the informati the reasons recorded, to link assessee with any particular religious activities, which fell foul of Section 13(1)(a) of the Act. 20. It is a common knowledge that in India there are different religious activities and right to freedom of religion of the Constitution of India which comes under Part Rights] of the Constitution of India. u/s.11 of the Act for charitable or religious Trust would be denied only if activity falls in the mischief of section 13 of the Act is only when the income of a Trust or Institution is applied for the benefit of any particular religion, community or caste. Section 11 of the Act allows exemption for income derived from the property he ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::20 :: mind that, Section 11 exemptions can be claimed by both Pub Charitable as well as Religious Trust; and as per the Constitution of India, all religions are equal in the eyes of law; and income donated/applied for public religious purposes enjoys exemption u/s.11 of the Act. But, only if the promotion and aiding” of the work of a particular religion, then it may fall under the mischief of Section 13(1)(a) which provides that nothing contained in Section 11 shall operate to exempt ” from the property held under a Trust for private religious purpose which doesn’t endure for the benefit of the public. However, as noted from reading of the reasons recorded noted that there is no whisper/allegation neither in the informati the reasons recorded, to link assessee with any particular religious activities, which fell foul of Section 13(1)(a) of the Act. It is a common knowledge that in India there are different religious to freedom of religion is granted as per Article 25 to 28 of the Constitution of India which comes under Part-III [Fundamental Rights] of the Constitution of India. As noted, the exemption granted u/s.11 of the Act for charitable or religious Trust would be denied only if vity falls in the mischief of section 13 of the Act is only when the income of a Trust or Institution is applied for the benefit of any particular religion, community or caste. Section 11 of the Act allows exemption for income derived from the property held under Trust wholly for charitable ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust mind that, Section 11 exemptions can be claimed by both Public Charitable as well as Religious Trust; and as per the Constitution of India, all religions are equal in the eyes of law; and income donated/applied for public religious purposes enjoys exemption u/s.11 of the Act. But, only if ” of the work of a particular religion, then it may fall under the mischief of Section 13(1)(a) which provides that nothing contained in Section 11 shall operate to exempt ” from the property held under a Trust for private religious purpose which doesn’t endure for the benefit of the public. reasons recorded by AO, it is noted that there is no whisper/allegation neither in the information nor in the reasons recorded, to link assessee with any particular religious It is a common knowledge that in India there are different religious is granted as per Article 25 to 28 III [Fundamental he exemption granted u/s.11 of the Act for charitable or religious Trust would be denied only if vity falls in the mischief of section 13 of the Act is only when the income of a Trust or Institution is applied for the benefit of any particular religion, community or caste. Section 11 of the Act allows exemption for ld under Trust wholly for charitable or religious purposes. Unless, the AO had information that the assessee Trust has utilized/applied its income for the benefit of any particular religion, community or caste, the question of disallowing the exemption claimed u/s 11 for registered trust u/s.12A of the Act does not arise. In this case, there is no whisper in the recorded reasons about assessee applying its income for the benefit of any particular religious or caste in violation of Section 13(1)(a) of the A information stated in Para No.1 and conclusion thereafter, has got no nexus whatsoever basis which any prudent person properly instructed in law could draw a linkage that the AO was in possession of tangible material that there is an escapement of income from assessment to the tune of Rs.90,71,612/-. on the basis of the letter from DCIT(E) there is an escapement of income which is erroneous since satisfy the jurisdictional fact and law for reopening as envisaged u/s. 147 of the Act. The AO simply taking note of the the satisfaction without independent application of mind to form reason warrant holding a beli assessment. Just because a letter has been received from the AO cannot reopen the assessment even if original assessment was u/s. 143(1) of the Act. ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::21 :: or religious purposes. Unless, the AO had information that the assessee Trust has utilized/applied its income for the benefit of any particular religion, community or caste, the question of disallowing the exemption aimed u/s 11 for registered trust u/s.12A of the Act does not arise. In this case, there is no whisper in the recorded reasons about assessee applying its income for the benefit of any particular religious or caste in violation of Section 13(1)(a) of the Act. Even the reference to the information stated in Para No.1 and conclusion thereafter, has got no nexus whatsoever basis which any prudent person properly instructed in law could draw a linkage that the AO was in possession of tangible e is an escapement of income from assessment to the . At the cost of repetitions, we note that AO simply letter from DCIT(E) has jumped into conclusion that there is an escapement of income which is erroneous since satisfy the jurisdictional fact and law for reopening as envisaged u/s. 147 of the Act. The AO simply taking note of the DCIT(E) letter has borrowed the satisfaction without independent application of mind to form reason warrant holding a belief that income chargeable to tax has escaped assessment. Just because a letter has been received from the AO cannot reopen the assessment even if original assessment was u/s. ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust or religious purposes. Unless, the AO had information that the assessee Trust has utilized/applied its income for the benefit of any particular religion, community or caste, the question of disallowing the exemption aimed u/s 11 for registered trust u/s.12A of the Act does not arise. In this case, there is no whisper in the recorded reasons about assessee applying its income for the benefit of any particular religious or caste in ct. Even the reference to the information stated in Para No.1 and conclusion thereafter, has got no nexus whatsoever basis which any prudent person properly instructed in law could draw a linkage that the AO was in possession of tangible e is an escapement of income from assessment to the At the cost of repetitions, we note that AO simply has jumped into conclusion that there is an escapement of income which is erroneous since it does not satisfy the jurisdictional fact and law for reopening as envisaged u/s. 147 letter has borrowed the satisfaction without independent application of mind to form reason ef that income chargeable to tax has escaped assessment. Just because a letter has been received from the DCIT(E) the AO cannot reopen the assessment even if original assessment was u/s. 21. For the reasons discussed above, in our consi reasons recorded by AO does not stand the test as laid by plethora of judicial precedence as discussed above which is sine qua non to assume jurisdiction u/s 147 of the Act, therefore, in the light of the aforesaid facts and circumstances of the case as discussed, we find that the reasons recorded by the AO to justify reopening the assessment u/s. 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee falls. Since the AO failed to validly assume jurisdiction u of the Act, the assumption of jurisdiction by him to re assessment itself is coram non judice action is null in the eyes of law and therefore, we quash the reopening and consequent reassessment order framed b therefore, succeeds on this legal issue. The 2010-11, is thus allowed. 22. We now take up the appeal of the assessee in 2006/Chny/2024 for AY 2011 the present appeal is largely similar to that of AY 2010 above. In this year the reasons recorded for reopening of assessment, were as under:- 1. Brief Details of the Assessee The assessee trust, M/s. The Gate of Hope charitable trust is a trust r for Charitable purposes u/s. 12AA of the IT Act, 1961 vide the order of the Commissioner of Income tax, TN ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::22 :: For the reasons discussed above, in our considered view, reasons recorded by AO does not stand the test as laid by plethora of judicial precedence as discussed above which is sine qua non to assume jurisdiction u/s 147 of the Act, therefore, in the light of the aforesaid facts f the case as discussed, we find that the reasons recorded by the AO to justify reopening the assessment u/s. 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee falls. Since the AO failed to validly assume jurisdiction u of the Act, the assumption of jurisdiction by him to re coram non judice and, therefore, all subsequent action is null in the eyes of law and therefore, we quash the reopening and consequent reassessment order framed by him. therefore, succeeds on this legal issue. The appeal of the assessee for AY , is thus allowed. We now take up the appeal of the assessee in for AY 2011-12. It is noted that, the issue involved in ent appeal is largely similar to that of AY 2010-11, as discussed above. In this year the reasons recorded for reopening of assessment, 1. Brief Details of the Assessee The assessee trust, M/s. The Gate of Hope charitable trust is a trust registered for Charitable purposes u/s. 12AA of the IT Act, 1961 vide the order of the Commissioner of Income tax, TN-V in C.No:2039(58)/2000-01/TN- ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust dered view, The reasons recorded by AO does not stand the test as laid by plethora of judicial precedence as discussed above which is sine qua non to assume jurisdiction u/s 147 of the Act, therefore, in the light of the aforesaid facts f the case as discussed, we find that the reasons recorded by the AO to justify reopening the assessment u/s. 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee falls. Since the AO failed to validly assume jurisdiction u/s. 147 of the Act, the assumption of jurisdiction by him to re-open the and, therefore, all subsequent action is null in the eyes of law and therefore, we quash the reopening y him.The assessee the assessee for AY We now take up the appeal of the assessee in ITA No. 12. It is noted that, the issue involved in 11, as discussed above. In this year the reasons recorded for reopening of assessment, egistered for Charitable purposes u/s. 12AA of the IT Act, 1961 vide the order of the -V dated 02.01.2001. The assessee is also granted approval u/s.80G vide order in DIT(E) No.2039(58)/00 return of income for A.Y.2011 same was processed u/s.143(1) on 17 consideration the assessee had admitted a gross receipts of Rs. 99,40, and claimed an amount of Rs. 1,10,58,707/ Tax Act. 2. Brief details of information received: An information had been received from the DCIT(Exemptions), Chennai, vide letter in No.DCIT(E)/Information/2016 Gate of Hope Charitable Trust, had received funds during the FY 2010 M/s. Caruna Bala Vikas, a society registered u/s. 12AA of the Income Tax Act to carry out the projects viz., (a)Ayanavaram Child Development Centre, Ayanavaram, Chennai and (b) Chengalpatu Child Development Centre, Chengelpet. However, the assessee, M/s. The Gate of Hope Charitable Trust had carried out the religious activities as against its charitable objects. The relevant portion of the information is a \"M/s. Caruna Bal Vikas, is a society registered under Section 12AA of the Income Tax Act and assessed in this office. The assessee society, M/s. Caruna Bal Vikas was referred to Special Audit u/s. 142(2A) of the Act for the AY 2013 that M/s. Compassion International is transferring funds to M/s. Caruna Bal Vikas, the funds are given to many channel partners to carry out religious activities. As directed by M/s.Compassion International and M/s. Caru used by the chanel partners for the purpose of carrying out activities as per objectives of M/s. Compassion International which is religious. It is noticed that M/s. The Gate of Hope Charitable Trust had received funds during the AYs. 2010 The said M/s. The Gate of Hope Charitable Trust, it appears thus carrying out religious activities as against its charitable objects....\" 3. Findings of the AO & Basis of forming reason to believe and details of escapement of income It is seen from the Return of Income filed for the AY 2011 assessee had admitted a gross receipts of Rs. 99,40,812/ fund received from M/s. Caruna Bal Vikas. The Statutory Audit had observed that the assessee trust had incurred expenses towards the Religious activities as per the directions of M/s.Caruna Bal Vikas. It is pertinent to mention here that though the trust is registered as a Charitable Trust under Section 12AA of the Act, it had carried out re towards the religious activity. Therefore, the expenses claimed as application of income towards charitable activity has to be disallowed and brought to tax. 4. Applicability of the provisions of section 147/ 1 case: In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s 147 is reason to b which has been recorded above (refer paragraphs). ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::23 :: 02.01.2001. The assessee is also granted approval u/s.80G vide order in DIT(E) No.2039(58)/00-01 dated 18.07.2011. The assessee Trust filed the return of income for A.Y.2011-12 on 06-07-2011 admitting NIL income and the same was processed u/s.143(1) on 17-07-2012. During the year under consideration the assessee had admitted a gross receipts of Rs. 99,40, and claimed an amount of Rs. 1,10,58,707/- under Section 11 of the Income 2. Brief details of information received: An information had been received from the DCIT(Exemptions), Chennai, vide letter in No.DCIT(E)/Information/2016-17 dated 02-02-2017, that M/s. The Gate of Hope Charitable Trust, had received funds during the FY 2010- M/s. Caruna Bala Vikas, a society registered u/s. 12AA of the Income Tax Act to carry out the projects viz., (a)Ayanavaram Child Development Centre, avaram, Chennai and (b) Chengalpatu Child Development Centre, Chengelpet. However, the assessee, M/s. The Gate of Hope Charitable Trust had carried out the religious activities as against its charitable objects. The of the information is as under: \"M/s. Caruna Bal Vikas, is a society registered under Section 12AA of the Income Tax Act and assessed in this office. The assessee society, M/s. Caruna Bal Vikas was referred to Special Audit u/s. 142(2A) of the Act for the AY 2013-14. During the course of Special Audit, it is seen that M/s. Compassion International is transferring funds to M/s. Caruna Bal Vikas, the funds are given to many channel partners to carry out religious activities. As directed by M/s.Compassion International and M/s. Caruna Bal Vikas, the entire funds are to be used by the chanel partners for the purpose of carrying out activities as per objectives of M/s. Compassion International which is religious. It is noticed that M/s. The Gate of Hope Charitable Trust had received funds during the AYs. 2010-11 to 2014-15. The said M/s. The Gate of Hope Charitable Trust, it appears thus carrying out religious activities as against its charitable objects....\" 3. Findings of the AO & Basis of forming reason to believe and details capement of income It is seen from the Return of Income filed for the AY 2011-12, that the assessee had admitted a gross receipts of Rs. 99,40,812/-, which includes the fund received from M/s. Caruna Bal Vikas. The Statutory Audit had observed essee trust had incurred expenses towards the Religious activities as per the directions of M/s.Caruna Bal Vikas. It is pertinent to mention here that though the trust is registered as a Charitable Trust under Section 12AA of the Act, it had carried out religious activity and incurred the expenditure towards the religious activity. Therefore, the expenses claimed as application of income towards charitable activity has to be disallowed and brought to tax. 4. Applicability of the provisions of section 147/ 151 to the facts of the In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s 147 is reason to b which has been recorded above (refer paragraphs). ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust 02.01.2001. The assessee is also granted approval u/s.80G vide order in d 18.07.2011. The assessee Trust filed the 2011 admitting NIL income and the 2012. During the year under consideration the assessee had admitted a gross receipts of Rs. 99,40,812/- under Section 11 of the Income An information had been received from the DCIT(Exemptions), Chennai, vide 2017, that M/s. The -11 from M/s. Caruna Bala Vikas, a society registered u/s. 12AA of the Income Tax Act to carry out the projects viz., (a)Ayanavaram Child Development Centre, avaram, Chennai and (b) Chengalpatu Child Development Centre, Chengelpet. However, the assessee, M/s. The Gate of Hope Charitable Trust had carried out the religious activities as against its charitable objects. The \"M/s. Caruna Bal Vikas, is a society registered under Section 12AA of the Income Tax Act and assessed in this office. The assessee society, M/s. Caruna Bal Vikas was referred to Special Audit u/s. 142(2A) of the course of Special Audit, it is seen that M/s. Compassion International is transferring funds to M/s. Caruna Bal Vikas, the funds are given to many channel partners to carry out religious activities. As directed by M/s.Compassion na Bal Vikas, the entire funds are to be used by the chanel partners for the purpose of carrying out activities as per objectives of M/s. Compassion International which is religious. It is noticed that M/s. The Gate of Hope Charitable Trust had received The said M/s. The Gate of Hope Charitable Trust, it appears thus carrying out religious activities as against its charitable objects....\" 3. Findings of the AO & Basis of forming reason to believe and details 12, that the , which includes the fund received from M/s. Caruna Bal Vikas. The Statutory Audit had observed essee trust had incurred expenses towards the Religious activities as per the directions of M/s.Caruna Bal Vikas. It is pertinent to mention here that though the trust is registered as a Charitable Trust under Section 12AA of ligious activity and incurred the expenditure towards the religious activity. Therefore, the expenses claimed as application of income towards charitable activity has to be disallowed and brought to tax. 51 to the facts of the In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s 147 is reason to believe It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration deemed to be a case where income chargeable escaped assessment. In view of the above, I have reasons to believe that income chargeable to tax has escaped assessment for A.Y.2011 the Income tax Act, 1961. In this case, more than four years have lapsed the end of assessment year under consideration. Therefore, necessary approval may please be accorded for reopening of the case for the AY 2011 12 under Section 147 of the Act and to issue notice u/s 148 of the Act. 23. Following the legal position of above, we accordingly proceed to test the above recorded reasons for AY 2011-12 as to whether opening jurisdiction can be discerned from perusal of the recorded by the AO. It is observed that, the Para 1 contains the general information & background facts concerning the assessee’s case for AY 2011-12. The relevant paras to be examined are Paras 2 & 3. It is observed that, in Para No.2, the AO takes note of th he received from the DCIT(E), Chennai dated 02.02.2017 wherein the said DCIT(E) observed that, the assessee Trust had received funds from M/s.Caruna Bal Vikas (hereinafter referred to as ‘M/s.CBV‘) to carry out projects at “Ayanavaram C “Chengalpattu Child Development Centre” DCIT(E) of the donor, the accounts of M/s CBV was referred for Special Audit and that it was gathered that transferring funds to M/s. ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::24 :: It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(40) of the Act was made and the return of income was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration deemed to be a case where income chargeable to tax has In view of the above, I have reasons to believe that income chargeable to tax has escaped assessment for A.Y.2011-12, within the meaning of Sec.147 of the Income tax Act, 1961. In this case, more than four years have lapsed the end of assessment year under consideration. Therefore, necessary approval may please be accorded for reopening of the case for the AY 2011 12 under Section 147 of the Act and to issue notice u/s 148 of the Act. Following the legal position of law, as laid down in Paras above, we accordingly proceed to test the above recorded reasons for AY 12 as to whether the condition precedent necessary to usurp the re opening jurisdiction can be discerned from perusal of the It is observed that, the Para 1 contains the general information & background facts concerning the assessee’s case for AY 12. The relevant paras to be examined are Paras 2 & 3. It is observed that, in Para No.2, the AO takes note of the information which he received from the DCIT(E), Chennai dated 02.02.2017 wherein the said DCIT(E) observed that, the assessee Trust had received funds from M/s.Caruna Bal Vikas (hereinafter referred to as ‘M/s.CBV‘) to carry out “Ayanavaram Child Development Centre” at Chennai as well as “Chengalpattu Child Development Centre”, Chengalpattu. According to the DCIT(E) of the donor, the accounts of M/s CBV was referred for Special Audit and that it was gathered that M/s. Compassion International transferring funds to M/s. CBV, which in turn is giving the funds to many ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust It is pertinent to mention here that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s of income was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year to tax has In view of the above, I have reasons to believe that income chargeable to tax 12, within the meaning of Sec.147 of the Income tax Act, 1961. In this case, more than four years have lapsed from the end of assessment year under consideration. Therefore, necessary approval may please be accorded for reopening of the case for the AY 2011- Paras 7 to 12 above, we accordingly proceed to test the above recorded reasons for AY the condition precedent necessary to usurp the re- above reasons It is observed that, the Para 1 contains the general information & background facts concerning the assessee’s case for AY 12. The relevant paras to be examined are Paras 2 & 3. It is e information which he received from the DCIT(E), Chennai dated 02.02.2017 wherein the said DCIT(E) observed that, the assessee Trust had received funds from M/s.Caruna Bal Vikas (hereinafter referred to as ‘M/s.CBV‘) to carry out at Chennai as well as , Chengalpattu. According to the DCIT(E) of the donor, the accounts of M/s CBV was referred for Special M/s. Compassion International is the funds to many channel partners to carry out religious activities M/s CBV thus is noted to have suspected that the funds received by the assessee Trust would have been against its charitable objects. The AO in Para 3 is noted to have given his findings for forming purported chargeable to tax had escaped assessment. The AO is noted to have simply accepted the aforesaid letter of DCIT(E) of M/s CBV as gospel truth and relying on same, the AO straightaway observed that, the trust had incurred expenses tow directions of M/s. CBV and therefore such expenses was to be disallowed. 24. Thereafter, in Para No.4, the AO is noted to have observed that, there was no scrutiny assessment u/s.143(3) of the Act and therefore, the only requirement of law before re the Act was that the AO should have reason to believe escapement of income. And thereafter, in the last para, he states that he has reason to believe that income chargeable to tax for A assessment for which he has to take necessary approvals since the re opening of the case is beyond four years from the end of the relevant assessment year. However, the copy produced before us by the Department doesn’t show any endor authority. Since, at present, we are not looking into the legality of the re ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::25 :: channel partners to carry out religious activities. The DCIT(E) of the donor M/s CBV thus is noted to have suspected that the funds received by the assessee Trust would have been used to carry out religious activities against its charitable objects. The AO in Para 3 is noted to have given his findings for forming purported “reasons to believe” chargeable to tax had escaped assessment. The AO is noted to have simply accepted the aforesaid letter of DCIT(E) of M/s CBV as gospel truth and relying on same, the AO straightaway observed that, the trust had incurred expenses towards the Religious activities as per the CBV and therefore such expenses was to be disallowed. Thereafter, in Para No.4, the AO is noted to have observed that, there was no scrutiny assessment u/s.143(3) of the Act and therefore, e only requirement of law before re-opening the assessment u/s.147 of the Act was that the AO should have reason to believe escapement of income. And thereafter, in the last para, he states that he has reason to believe that income chargeable to tax for AY 2011-12 has escaped assessment for which he has to take necessary approvals since the re opening of the case is beyond four years from the end of the relevant assessment year. However, the copy produced before us by the Department doesn’t show any endorsement/approval of the competent authority. Since, at present, we are not looking into the legality of the re ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust . The DCIT(E) of the donor M/s CBV thus is noted to have suspected that the funds received by the out religious activities against its charitable objects. The AO in Para 3 is noted to have given his “reasons to believe” that income chargeable to tax had escaped assessment. The AO is noted to have simply accepted the aforesaid letter of DCIT(E) of M/s CBV as gospel truth and relying on same, the AO straightaway observed that, the assessee ards the Religious activities as per the CBV and therefore such expenses was to be disallowed. Thereafter, in Para No.4, the AO is noted to have observed that, there was no scrutiny assessment u/s.143(3) of the Act and therefore, opening the assessment u/s.147 of the Act was that the AO should have reason to believe escapement of income. And thereafter, in the last para, he states that he has reason to 12 has escaped assessment for which he has to take necessary approvals since the re- opening of the case is beyond four years from the end of the relevant assessment year. However, the copy produced before us by the sement/approval of the competent authority. Since, at present, we are not looking into the legality of the re- opening for want of approval by the CIT(E) for which the records are required to be summoned, we leave this legal issue open. 25. Again, we note that, the reasons recorded by the AO were scanty and vague lacking any tangible material or evidence. We first take note of the fact, as discernible from the recorded reasons that, the DCIT(E) of M/s CBV had conducted special audit for AY 2013 unable to countenance the AO’s observation that, in this special audit, the auditor would have adduced material or evidence that the donations given by M/s CBV to the assessee Trust in AY 2011 purposes. This material only on borrowed satisfaction of mind. 26. Further, it is noted that, the purported report of an auditor received in the case of donor (not the assessee) has been take The AO is noted to have not made any preliminary enquiry himself or applied his own mind to the said report, before recording the reasons for reopening the assessment. The AO has himself observed that, the funds received from M/s CBV by development centers and there is no allegation levelled in the recorded reasons that these child development these child development ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::26 :: opening for want of approval by the CIT(E) for which the records are required to be summoned, we leave this legal issue open. that, the reasons recorded by the AO were scanty and vague lacking any tangible material or evidence. We first take note of the fact, as discernible from the recorded reasons that, the DCIT(E) of M/s CBV had conducted special audit for AY 2013-14. Accordi unable to countenance the AO’s observation that, in this special audit, the auditor would have adduced material or evidence that the donations given by M/s CBV to the assessee Trust in AY 2011-12 was also for religious purposes. This material fact alone shows that the reasons were recorded borrowed satisfaction without AO’s own independent application Further, it is noted that, the purported report of an auditor received in the case of donor (not the assessee) has been taken as gospel truth. The AO is noted to have not made any preliminary enquiry himself or applied his own mind to the said report, before recording the reasons for reopening the assessment. The AO has himself observed that, the funds received from M/s CBV by the assessee were utilized by the latter at child and there is no allegation levelled in the recorded reasons that these child development centers are only a façade or that, in these child development centers, the assessee is conducting ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust opening for want of approval by the CIT(E) for which the records are that, the reasons recorded by the AO were scanty and vague lacking any tangible material or evidence. We first take note of the fact, as discernible from the recorded reasons that, the DCIT(E) of 14. Accordingly, we are unable to countenance the AO’s observation that, in this special audit, the auditor would have adduced material or evidence that the donations given 12 was also for religious fact alone shows that the reasons were recorded without AO’s own independent application Further, it is noted that, the purported report of an auditor received n as gospel truth. The AO is noted to have not made any preliminary enquiry himself or applied his own mind to the said report, before recording the reasons for reopening the assessment. The AO has himself observed that, the funds the assessee were utilized by the latter at child and there is no allegation levelled in the recorded are only a façade or that, in , the assessee is conducting any activities for a particular religion or caste in violation of Section 13(1)(a) of the Act. Only because, the special auditor of M/s CBV found that M/s CBV was receiving funds from M/s Compassion International, which was existing for religious purposes, it cannot be presumed that the further utilization of funds in India was also for religious purposes. If that be so, it was incumbent upon the AO record through the recorded reasons basis which any prudent pers could arrive at a reasonable belief that, the funds received from the donor by the assessee which were meant to be utilized for its charitable objects, had been diverted for purposes. However, it is noted in the above extracted recorded reasons. Nowhere in the body of the reasons recorded, the AO or Special Auditor has stated to have alleged as to how or in which manner was the funds given to assessee has been used for advancement, support or propagation of a particular religion and its tenets. The reasons recorded on this aspect is noted to lack specifics but is vague and general in nature. 27. Moreover, as already noted (supra), the benefit of exemption under Section 11 is also available to both charitable & religious trusts and that only when a Trust is for “ particular religion, then it may fall under the mischief of Section 13(1)(a) which provides that nothing contai ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::27 :: for a particular religion or caste in violation of Section 13(1)(a) of the Act. Only because, the special auditor of M/s CBV found that M/s CBV was receiving funds from M/s Compassion International, which was existing , it cannot be presumed that the further utilization of funds in India was also for religious purposes. If that be so, it was incumbent upon the AO at least bring some material or evidence on record through the recorded reasons basis which any prudent pers could arrive at a reasonable belief that, the funds received from the donor by the assessee which were meant to be utilized for its charitable objects, had been diverted for propagation of any particular religio purposes. However, it is noted that, there is no such whisper or allegation in the above extracted recorded reasons. Nowhere in the body of the reasons recorded, the AO or Special Auditor has stated to have alleged as to how or in which manner was the funds given to assessee has been sed for advancement, support or propagation of a particular religion and its tenets. The reasons recorded on this aspect is noted to lack specifics but is vague and general in nature. Moreover, as already noted (supra), the benefit of exemption under Section 11 is also available to both charitable & religious trusts and that only when a Trust is for “the promotion and aiding” of the work of a particular religion, then it may fall under the mischief of Section 13(1)(a) which provides that nothing contained in Section 11 shall operate to ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust for a particular religion or caste in violation of Section 13(1)(a) of the Act. Only because, the special auditor of M/s CBV found that M/s CBV was receiving funds from M/s Compassion International, which was existing , it cannot be presumed that the further utilization of funds in India was also for religious purposes. If that be so, it was bring some material or evidence on record through the recorded reasons basis which any prudent person could arrive at a reasonable belief that, the funds received from the donor by the assessee which were meant to be utilized for its charitable objects, any particular religion/religious that, there is no such whisper or allegation in the above extracted recorded reasons. Nowhere in the body of the reasons recorded, the AO or Special Auditor has stated to have alleged as to how or in which manner was the funds given to assessee has been sed for advancement, support or propagation of a particular religion and its tenets. The reasons recorded on this aspect is noted to lack specifics Moreover, as already noted (supra), the benefit of exemption under Section 11 is also available to both charitable & religious trusts and that ” of the work of a particular religion, then it may fall under the mischief of Section 13(1)(a) ned in Section 11 shall operate to exempt “any part of income private religious purpose. However, as noted from reading of the recorded by AO, it is noted that there is no whisper/allegation neither in the information nor in the reasons recorded, to link assessee with any particular religious activities. 28. We further note from perusal of Para No.3 of the reasons recorded that the AO has taken note of the contents of the RoI, filed by the assessee for AY 2011-12 and observes that assessee has shown gross receipts of Rs.99,40,812/ Audit [may be Special Auditin the case of M/s CBV incurred expenses for religious purpose, which has to be disall ex-facie evident that, the AO has not carried out any such enquiry or collected any material to form a belief that assessee had incurred expenses for religious activities, rather, the AO has simply acted on receipt of the information from the D M/s CBV for AY 2013-14, [not even the relevant year i.e. AY 2011 that assessee Trust had received funds from M/s.CBV and concluded that the expenses must have been incurred for religious activities, which is disallowable. Such a conclusion is noted to be based purely on suspicion and surmise, because, evidently the AO has not made any enquiry and collected relevant material to transform his suspicion to belief that there was in fact an escapement of income. ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::28 :: any part of income” from the property held under a Trust for private religious purpose. However, as noted from reading of the by AO, it is noted that there is no whisper/allegation neither in information nor in the reasons recorded, to link assessee with any particular religious activities. We further note from perusal of Para No.3 of the reasons recorded that the AO has taken note of the contents of the RoI, filed by the 12 and observes that assessee has shown gross receipts of Rs.99,40,812/- and then notes the observation of Statutory may be Special Auditin the case of M/s CBV] that assessee had incurred expenses for religious purpose, which has to be disall facie evident that, the AO has not carried out any such enquiry or collected any material to form a belief that assessee had incurred expenses for religious activities, rather, the AO has simply acted on receipt of the information from the DCIT(E) pursuant to special 14, [not even the relevant year i.e. AY 2011 that assessee Trust had received funds from M/s.CBV and concluded that the expenses must have been incurred for religious activities, which is able. Such a conclusion is noted to be based purely on suspicion and surmise, because, evidently the AO has not made any and collected relevant material to transform his suspicion to belief that there was in fact an escapement of income. ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust ” from the property held under a Trust for private religious purpose. However, as noted from reading of the reasons by AO, it is noted that there is no whisper/allegation neither in information nor in the reasons recorded, to link assessee with any We further note from perusal of Para No.3 of the reasons recorded that the AO has taken note of the contents of the RoI, filed by the 12 and observes that assessee has shown gross- and then notes the observation of Statutory ] that assessee had incurred expenses for religious purpose, which has to be disallowed. It is facie evident that, the AO has not carried out any such enquiry or collected any material to form a belief that assessee had incurred expenses for religious activities, rather, the AO has simply acted on CIT(E) pursuant to special-audit of 14, [not even the relevant year i.e. AY 2011-12] that assessee Trust had received funds from M/s.CBV and concluded that the expenses must have been incurred for religious activities, which is able. Such a conclusion is noted to be based purely on suspicion and surmise, because, evidently the AO has not made any reasonable and collected relevant material to transform his suspicion to belief 29. For the above reasons, we therefore hold that, the AO did not satisfy the requisite requirement of law to validly reopen the assessment and therefore, it is held to be bad in law.As held above, the AO had taken the information of Special Audit of donor, M/ 2013-14 as gospel truth and has reopened the assessment based on borrowed satisfaction, without independently applying his mind to the information and forming his own view, which is found absent in this case. According to us, the information given by the DCIT(E) can at best trigger “reason to suspect” and not “reason to believe” escapement of income and that, in the absence of any tangible material or enquiry as discussed (supra), respectfully applying the propositions of law laid while deciding the appeal of AY 2010 to hold that the reopening of the assessment in law and we thus quash the impugned reopening proceedings and consequential reassessment. is thus allowed. 30. Overall, therefore, the appeals of the assessee Order pronounced on the Sd/- (जगदीश) (JAGADISH) लेखासद\f/ACCOUNTANT MEMBER ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::29 :: For the above reasons, we therefore hold that, the AO did not satisfy the requisite requirement of law to validly reopen the assessment and therefore, it is held to be bad in law.As held above, the AO had taken the information of Special Audit of donor, M/s CBV and that too for AY 14 as gospel truth and has reopened the assessment based on borrowed satisfaction, without independently applying his mind to the information and forming his own view, which is found absent in this case. information given by the DCIT(E) can at best trigger “reason to suspect” and not “reason to believe” escapement of income and that, in the absence of any tangible material or enquiry as discussed respectfully applying the propositions of law laid while deciding the appeal of AY 2010-11, we have no other alternative but to hold that the reopening of the assessment for AY 2011 quash the impugned reopening proceedings and consequential reassessment. The appeal of the assessee for AY 20 therefore, the appeals of the assessee are allowed. Order pronounced on the 05th day of March, 2025, in Chennai. Sd/ /ACCOUNTANT MEMBER (एबीटी. (ABY T. VARKEY \u0001याियकसद\bय/JUDICIAL MEMBER ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust For the above reasons, we therefore hold that, the AO did not satisfy the requisite requirement of law to validly reopen the assessment and therefore, it is held to be bad in law.As held above, the AO had taken s CBV and that too for AY 14 as gospel truth and has reopened the assessment based on borrowed satisfaction, without independently applying his mind to the information and forming his own view, which is found absent in this case. information given by the DCIT(E) can at best trigger “reason to suspect” and not “reason to believe” escapement of income and that, in the absence of any tangible material or enquiry as discussed respectfully applying the propositions of law laid down (supra) , we have no other alternative but for AY 2011-12 is also bad quash the impugned reopening proceedings and the assessee for AY 2011-12, allowed. , in Chennai. Sd/- . वक ) ABY T. VARKEY) /JUDICIAL MEMBER चे\u0003ई/Chennai, \u0005दनांक/Dated: 05th March, 20 TLN, Sr.PS आदेशक\r\u000eितिलिपअ\u0014ेिषत/Copy to 1. अपीलाथ\u0010/Appellant 2. \u0011\u0012थ\u0010/Respondent 3. आयकरआयु\u0018/CIT, Chennai / Madurai / Salem / 4. िवभागीय\u0011ितिनिध/DR 5. गाड फाईल/GF ITA No.1372 & 2006/Chny/2024 (AYs 20 The Gate of Hope Charitable Trust ::30 :: , 2025. Copy to: , Chennai / Madurai / Salem / Coimbatore. ITA No.1372 & 2006/Chny/2024 2010-11 & 2011-12) The Gate of Hope Charitable Trust Coimbatore. "