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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. LALIET KUMAR & DR. M. L. MEENA
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. LALIET KUMAR, JUDICIAL MEMBER AND DR. M. L. MEENA, ACCOUNTANT MEMBER I.T.A. No. 75/Asr/2016 Assessment Year: 2007-08
Shri Vishwa Mitter Sekhri Vs Income Tax Officer Charitable Society, . (Exemption) Amritsar O/s Pehari Gate, Batala. [PAN: AAETS 6776M] (Appellant) (Respendent)
Appellant by Sh. Ashwani Kalia, C. A. Respondent by Smt. Ratinder Kaur, D. R.
Date of Hearing 06.07.2021 Date of 13.07.2021 Pronouncement
ORDER Per Laliet Kumar, J.M. This appeal of the assessee is directed against the order dated 16.10.2015 passed by the Commissioner of Income Tax (Appeals)-2, Amritsar in respect of A.Y. 2007-08.
The assessee has raised the following grounds of appeal:
“1 That on the facts and in circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition made by Assessing Officer for Rs. 10375360/- by opening the case u/s 147 of the Act, without
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considering the Provisions of Income Tax as amended before the finalization of case.
That on the facts and in circumstances of the case the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition made by Assessing Officer for Rs. 10375360/-, although the AO has many technical faults in the assessment made and also have not given reasonable opportunity of being heard. The Worth CIT(A) further erred in confirming the excess of receipt over expenditure as Income from business, if the society does not have any business.
That the Learned CIT(A) has further erred in confirming the above addition of Rs. 10375360/-not considering the claim for exemption u/s 10(23C) and under section 11 of the Act. So, the addition made needs to be deleted.
That the Learned CIT(A) has further erred in confirming the initiation of the penalty proceedings by the AO under Section 271 (1)c) of the Income Tax Act, 1961.
That on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has further erred in confirming the addition made by the Assessing Officer without giving the reasonable opportunity to be heard to the assessee.
That it is prayed that the order of the Assessing Officer and Worthy Commissioner of Income Tax Appeal may be vacated and the original assessment at Rs. NIL under section 143(1) may please be restored.
That the appellant craves, leave to add or amend the grounds of appeal before the appeal is heard or disposed off.”
At the time of argument by the ld. AR and the departmental representative, had addressed the following issues/grounds as the remaining issues were consequential / academic.
1 Whether the reopening made by the assessing officer was valid in the eyes of law or not
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2 Whether the assessee is entitled to the benefit of section 11 and 13 of the income tax Act in the light of the insertion of the proviso to section 12 A of the income tax Act more particularly when the assessee was granted the registration on 25 September 2009, and prior thereto the assessee was a having the approval under section 10(23) of the Act.
3 Whether the case is required to be remanded back to the file of the assessing officer if the answer to the question number 2 is given in affirmative.
Brief facts
That the appellant society had filed its return of income for the assessment year 2007-08 on 31.10.2007 at NIL income claiming the income as exempt u/s 10(23C)(vi) of the Act. 2. That ITO during the course of assessment proceedings for AY 2008-09 came to know that assessee's claim for exemption u/s 10(23C)(vi) was not justified as the approval u/s 10(23C)(vi) was allowed by Worthy CIT Amritsar upto the AY 2006-07 and not for the AY 2007-08 & 2008- 09. 3. That appellant had applied for renewal of exemption u/s 10(23C)(vi) before the Id.CIT on 27.3.2008 for assessment year 2007- 08 onwards . However, Id. CCIT allowed exemption u/s 10(23C)(vi) with effect from assessment year 2009-10 and onwards on the ground that renewal
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application filed was late hence the same could not be allowed for the AY 2007-08. 4. During the year under consideration AY 2007-08, the appellant trust was claiming exemption u/s 10(23C)(vi) approval for which was rejected by the Ld. Chief Commissioner of Income Tax, Amritsar and the total receipts of the trust exceeded Rs. 1 crore. Further, the writ petition filed by appellant challenging the order of Ld. CCIT has been dismissed by Hon'ble P& H High Court in CWP No. 18160 of 2009(0&,M) vide order dated 09.07.2018. 5. After filling the Writ petition, the appellant society has applied for registration u/s 12AA of the Income Tax Act, 1961. The registration of the society was granted at serial no. 4/2009-10 vide order no. CIT- 1/ASR/ITO(Tech)/2009-10/2798 dt. 25.09.2009 by Commissioner of Income Tax, Amritsar from the Assessment Year 2009-10. 6. That AO initiated proceedings u/s 148 vide notice dated 26.3.2014 on the ground that assesee's income was not exempt u/s 10(23C)(vi) as per the order of CIT. The reasons for reopening are as under :
“During the course of the assessment proceedings of Shree Wishwa Mitter Sekhri Charitable Society, Batala for the Asstt. Year 2008-09. The assessing officer has observed that the assessee trust has been claiming tax exemption 10(23C)(vi) without getting any approval from the worth Chief Commissioner of Income tax, Amritsar and also without getting itself registered u/s 12AA of the Income tax Act, 1961 with the Commissioner of Income tax-I, Amritsar. As such the assessee has regularly not been paying tax on the income chargeable to tax.
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During the period relevant to the Asstt. Year 2007-08 the assessee has shown excess of income over expenditure amount to Rs. 10375360/-which was chargeable to tax but assessee has claimed it exempted income u/s 10(23C)(vi) without getting any approval under this section and without getting registration u/s 12AA of the Income tax Act, 1961. The summary of the Income and Expenditure A/c is as under: Total Receipt Rs. 2,66,67,690/- Total expenditure Rs. 1,62,92,330/- Excess of income over expenditure Rs. 1,03,75,360/-
I have, therefore reasons to believe that the income of Rs. 1,03,75,360/- has been escaped assessment.
Keeping in view the above recorded reasons, I propose to kindly allow this office to initiate the proceedings u/s 147 of the Income tax Act, 1961 for the Asstt. Year 2007-08 against Shree Wishwa Mitter Sekhri Charitable Society, Batala. through investigation/scrutiny to assess the escaped income of Rs. 1,03,75,360/- and any other income which subsequently comes to notice during the course of assessment proceedings.”
In response to notice u/s 148 the appellant replied that the return already filed may please be treated as return filed in response to notice u/s 148 and also requested the AO to supply the copy of reasons for reopening of assessment. 8. That Id.A0 further issued notice u/s 142 on 18.2.2015 along with copy of reasons on basis of which proceedings u/s 147 were initiated.
The appellant in response to reasons recorded for reopening of assessment replied to the AO in the reply dated 23/2/2015 , it was categorical mentioned as under:
“Subsequently, the society has applied for registration u/s 12AA of the Income Tax Act, 1961. The registration of the society was
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granted at serial no. 4/2009-10 vide order no. CIT- 1/ASR/ITO(Tech)/2009-10/2798 dt. 25.09.2009 by Worthy Commissioner of Income Tax, Amritsar from the Assessment Year 2009-10 as there was no provisions for condoning the delay and registered the society with retrospective effect. The photocopy of order u/s 12AA has already been filed with our earlier letters.
In the Finance Act, 2014, the section 12A of The Income Tax Act has been amended with effect from 01.10.2014 and inserted the following clauses:
"Provided that where registration has been granted to the trust or institution under section 12AA, then the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year:
Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the said assessment year:
Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA."
The copy of relevant portion of Finance Act, 2014 and the relevant portion of circular containing the Memorandum for explaining the provisions in The Finance Act (No. 2) Bill, 2014 is enclosed herewith.
In the above provisions, it is crystal clear that no action u/s 147 can be taken by the assessing officer in any proceeding assessment year in case of the institution has granted the registration u/s 12AA for any subsequent assessment year only for non registration of such trust or institution for the said assessment year. In the case of the society, the society has granted the registration u/s 12AA of The Income Tax Act, 1961 with effect from A.Y. 2009-10. Therefore, the case can't be reopen u/s 147 for any Assessment
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Year preceding the Assessment Year 2009-10 as the society is an educational institution and also covered u/s 12A.
We like to state here that the Objects and Activities of the society remains the same in this Assessment Year as it was provided for registration of the society u/s 12AA. We also certified that the registration of the society has never been refused or cancelled at any time under section 12AA of The Income Tax Act.
The similar replies were also given on 05.02.2015 but those were on the presumption for the reasons. Although the reasons are same as presumed by the society still is necessary to give the reply after obtaining the actual reasons recorded. Therefore, this reply may please be considered as objections raised by the assessee against the reasons recorded.”
It is the case of the appellant before us, that the objection raised to the initiation of proceedings u/s 147 were not responded by AO and no specific order was passed by AO disposing off objection raised by appellant. 11. In view of the above facts, it was contended before us that the order passed by AO u/s 147 is void abinitio and bad in law since the same has been passed without passing an order specifically dealing with the objections raised by appellant against the reopening of assessment. This has been so held by Hon'ble Supreme Court in the case of GKN Driveshaft's (India) Ltd V ITO 259 ITR 19. Hon'ble Supreme Court has held that the AO has to dispose off the objection of the assessee by passing a speaking order before completing the assessment.
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Further it was submitted that CIT(A) has himself accepted this fact , our attention was drawn to CIT(A) order at page 12 of order:-
"As regards the other arguments of the appellant that no speaking order was given by the AO to the objections made by the assessee against the issue of notice u/s 148, it is observed that the AO had supplied the reasons for reopening the assessment u/s 147 to the assessee on 18.2.2015 along with notice and questionnaire u/s 142(1) of the Act. In response, the assesee objected to the reopening of the assessment u/s 147 vide letter dated 23.2.2015. However, the assessment order does not mention whether the AO replied to the objection of the appellant to reopen the assessment u/s 147 of the Act vide his letter dated 23.2.2015"
In view of the above submissions it was submitted that order u/s 147 framed is void abinitio hence null and void. Being a clear case of violation of law as laid down by Hon'ble Supreme Court in the case cited supra. 14. Per contra DR for the revenue had submitted in the written statement that
“The appellant has also argued that its objections to reopening of assessment have not been considered by the AO by passing speaking order. In this regard, it is submitted that the objections to reopening filed by appellant vide letter dated 05.02.2015 and same objections raised again vide letter dated 23.02.2015 stood rejected by the AO vide letter dated 11.02.2015 and only thereafter the AO had proceeded to pass the assessment order u/s. 147/ 143(3) of the Act
Further, reliance is placed upon the judgment Hon'ble jurisdictional High Court in the case of Sunil Bhaseen vs Commissioner of Income Tax in IT Appeal No. 411 of 2008 (28.11.2008) 18 DTR 0201 (2009) wherein the Hon’ble Jurisdictional High Court while deciding appeal in the favour of Revenue has held that "Contention that the Department was under obligation to dispose of objections of the assessee to the
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initiation of proceedings, by way of separate and independent order was also not tenable in the facts and circumstances of the case-No substantial question of law arises for consideration" (copy of case law enclosed).”
We have heard the rival contention of the parties on the first argument raised by the assessee. It is the case of the assessee that after supplying the reasons, the assessing officer has not passed the order disposing of the objection raised by the assessee. Quite interestingly, in the present case the assessee had filed objection to the reasons on 5.2.2015 and thereafter reiterated the same objection in the subsequent reply dated 23rd February 2015. The above said fact is clear from the reply dated 23rd February 2015 reproduced herein above which clearly mentioned that the assessee had filed the similar reply at the threshold on 5 February 2015. The order of the learned CIT(A), clearly shows that the assessing officer after considering the objections of the assessee had dispose of the objection by reason order dated 11 February 2015. We are herein below reproducing the order of the CIT appeal, wherein at page 13 it was mentioned as under:
“Meanwhile the AO vide letter dated 11-02-2015 after considering the said reply of the
assessee dated 05-02-2015 to the notice u/s 142(1) had informed the assessee that the said
reply is not relevant to the assessment year 2007-08 under consideration. The AO had rightly
informed the assessee with regard to issue of notice u/ s 143(2) of the Act that it was a
settled law that notice u/s 143(2) is issued only after receiving the return filed in response to
the notice u/s 148 of the Act. However no return had been filed by the appellant in response
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to notice u/s 148 of the Act despite the fact that more than 11 months had passed since the
issue of notice u/s 148.
Therefore, the objections to the re-opening of assessment u/s 147 raised by the appellant
vide letter dated 05-02-2015 and the same objections raised again by the appellant vide
letter dated 23-02-2015 to the reopening of assessment u/s 147 stood rejected by the AO
vide letter dated 11-02-2015 and only thereafter the AO had proceeded to pass the
impugned assessment order u/s 147 / 143(3) of the Act. However, the AO had only erred in
not passing a speaking order against the objections raised by the appellant to reopening the
assessment u/s 147 of the Act which he was bound to do in accordance with the said decision of the hon'ble Supreme court of India in the case of GKN Driveshaft (India).”
In the light of the categorical finding by the Commissioner appeal at the time of dealing with the objection and more particularly, when the assessing officer has dispose of the objection of the assessee vide order dated 11 February 2015 and also in the light of the judgement relied upon by the revenue in the case of Sunil Bhaseen vs Commissioner of Income Tax in IT Appeal No. 411 of 2008 (28.11.2008) 18 DTR 0201 (2009), we are of the opinion that the ground raised by the assessee is devoid of merit and the same is liable to be dismissed and we accordingly dismiss the same.
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2nd point charged by the assessee before us was the assesee's case was fully covered by amended provisions of section 12A as reproduced above on account of addition of proviso to section 12A(2). 18. In support of the 2nd point, the appellant had submitted before us that appellant was allowed registration u/s 12AA for the assessment year 2009-10 on 27.3.2009 i.e. much before the amendment brought in section 12A with effect from 1.10.2014. 19. The proviso inserted with effect from 1.10.2014 specifically provides that where the registration has been granted to Trust or Institution u/s 12AA then the proviso of section 11 & 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding aforesaid assessment year for which assessment proceedings are pending before AO as on the date of such registration and objections and activities of such trust or institution remain the same for such preceding year. 20. It was further submitted that the second proviso to sub section (2) of section 12A further provides that no action u/s 147 shall be taken by AO in case of such trust or any institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the said assessment year.
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On the strength of the above said legal provision it was submitted that assessment framed u/s 147 by AO for the assessment year 2007-08 is totally illegal and hence needs to be quashed. 22. Finally, it is submitted that Proviso to section 12A sub section (2) says that no action under section 147 shall be taken by the AO in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non- registration of such trust or institution for the said year. 23. The above proviso talks of section 147 and not section 148.Section 147 provides for the reassessment to be framed consequent to notice u/s 148. This makes it very clear that no assessment u/s 147 could be made even though the notice u/s 148 was already issued. Finally, it was submitted that liberal view of the 2nd proviso to section 12A(2) needs to be taken. He relied upon the following decisions :- Shyam Mandir Committee, Khatushyamji V i) ACIT(2016) 138 DTR 367 (Jp) Trib. Shree Bhanushali Mitra Mandal Trust V ITO(2016) 47 ii) CCH 0197 (Ahd) Trib. SNDP Yogam V ADIT (Exemption) (2017) 186 TTJ 0277 iii) (Coch)
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In response to the argument of the assessee, the ld. DR for the revenue had submitted orally as well as through the written submission had submitted as under :-
“The appellant was taking shelter under the amended provisions of section 12AA of the Act which are effected from 01.10.2014 whereas assessment proceedings were reopened on 26.03.2014 and the notice u/s. 148 was served upon assessee on the same date ie. prior to amended provisions of section 12AA of the Act. The appellant has been granted registration u/s. 12A on 24.09.2009 by the CIT-I Amritsar and no proceedings u/s. 147 of the Act for AY.2007-08 were pending before the AO on the date of such registration i.e 24.09.2009 accordingly the first proviso of said amendment in section 12A of the Act applicable w.e.f 01.10.2014 was not applicable in the case of the appellant.”
We have heard the rival contentions of the parties and perused the material on record. By the finance Act Finance Act, 2014, the section 12A of The Income Tax Act has been amended with effect from 01.10.2014 and inserted the following clauses:
"Provided that where registration has been granted to the trust or institution under section 12AA, then the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year:
Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the said assessment year:
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Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA."
From the reading of the amended proviso, it is abundantly clear that in case the proviso is only applicable to a case where the assessment is pending and thereafter the registration was granted under section 12 AA of The Income Tax Act. In our considered opinion, the reassessment is also an assessment as the assessment order is required to be passed under section 143(3) read with section 148 of the Act.
In the present case, the Total Receipt was Rs. 2,66,67,690/-for the assessment year 2007- 2008 and Excess of income over expenditure was Rs. 1,03,75,360/-, and the assessee was neither having exemption under 10(23) nor was having registration under section 12 AA of the Act. On the basis of the above said notice under section 148 was issued by the assessing officer 26 March 2014.
In our considered opinion, the purpose of insertion of the new proviso in the act was to mitigate the hardship of the society/trust like assessee who were into charitable activities, and on account of some technical reasons, the registration has not been accorded or sought in time. Admittedly the assessee was running the educational institution and was having the requisite approval under section 10(23) for the year prior to
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the year under consideration and the assessee was granted the registration under section 12 A of the Act with effect from 25.9.2009. In the year under consideration, the assessee was neither having registration under section 12 A of the Act nor was having approval under section 10 (23) of the Act. However, the activities of the assessee continued to be charitable and there was no change in activities of the assessee. In our view the assessee, though was registered on 25.9.2009, however the assessee, was entitled to the benefit of section 11, 12 and 13 of the income tax Act for the assessment year 2007-08 under consideration in terms of the proviso to section 12 A of The Income Tax Act. For the above said purposes we may rely upon the decision of the coordinate bench in the matter of SHYAM MANDIR COMMITTEE, Jaipur v. ACIT, Sikar (supra) wherein one of the member(namely Judicial member) was a party, in the said decision it was held as under:
“5.1. For the purpose of adjudicating the additional ground, it is necessary to reproduce section 12A of the IT Act, which provides as under :- “ 12A. Conditions for applicability of sections 11 & 12. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely :- (a) The person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1 st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA. Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution, - (i) From the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the
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person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) From the 1 st day of the financial year in which the application is made, if the Commissioner is not so satisfied. Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1 st day of June, 2007. (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1 st day of June, 2007 in the prescribed form and manner to the Commissioner and such trust or institution is registered under section 12AA. (b) Where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. (2) Where an application has been made on or after the 1 st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made.” The Finance Act No. 2 of 2014 has inserted the proviso to sub-section (2) of section 12A with effect from 1.10.2014. We are reproducing herein below sub- section (2) of section 12A first proviso, second proviso and third proviso for the sake of clarity. [Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year. Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.]” A bare reading of the proviso clearly provides that if at the time of grant of registration under section 12A the assessment proceedings are pending before AO and the object and activities of the Trust remain the same for such preceding assessment years, then the benefit of registration for sections 11 & 12 are required to be given to the Trust on the income derived from the property held under the Trust. In the present case as mentioned herein above, the appellant has filed application for grant of registration 16.03.2009 and the registration was directed to be granted by the order of the Tribunal with effect from 1.4.2008. The return of income was processed under section 143(1) on 13.3.2010 .The assessment order was passed on 26.12.2011 under section 143(3) read with section 147 of the IT Act and. Thus when the order was passed by the Tribunal on 28.01.2010 the assessment proceedings were pending before the AO. Therefore, the benefit of registration is
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required to be given for the preceding assessment years i.e. 2007-08. The ld. Counsel for the assessee relied upon the judgment of ITAT in ITA No. 503 to 506 & 569/Coch/2014 in the matter of SNDP Yogam vs. The ADIT (Exemption) wherein in para 7, 7.1 and 7.2 it has been held as under :- 7. We have carefully considered the rival submissions, perused the relevant materials on record and the case law on which the learned AR had placed strong reliance. The primary issue for our consideration is whether the CIT (A) is justified in confirming the AO’s action, for all the assessment years under consideration, in assessing the entire incomes of the assessee from all the institutions at the maximum marginal rate. In this context, it is appropriate to refer the amendment to section 12A(2) of the Act and its proviso. For ready reference the same is reproduced below : (Section 12A(2) & its proviso)
“[(2) Where an application has been made on or after the 1 st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year ITA No. 651/JP/2013 Shree Shyam Mandir Committee vs. ACIT immediately following the financial year in which such application is made:] [Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year. Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the said assessment year:
Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.]” We have gone through the provisions of the Act and have also gone through the record. In our view, the proviso to sub-section (2) of section 12A has retrospective application and has been inserted in the Act to remove the hardship of the charitable trusts/institutions. Admittedly, in the present case when the registration was granted on 05.03.2010 with effect from 01.04.2008, the assessment proceedings for 2007-08 were pending before the AO. Therefore, the assessee cannot be treated as Association of Persons and is required to be treated as Registered Trust under section 12A of the IT Act. We find no reason to disagree with the judgment passed by the coordinate Bench (supra) where the coordinate bench has given the benefit of registration of the trust for the A.Y. 2006-07 though the application for registration was granted on 29.07.2013.
Respectfully following the judgment of the coordinate bench, we are of the view that the assessee before us is also required to be treated as Registered Trust for the A.Y. 2007-08 de hors the direction issued by the Tribunal to grant the registration with effect from 1.4.2008, in the light of new amendment referred herein above and also in view of the judgment of coordinate bench. We may like
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to add that though the Tribunal vide order dated 28.1.2010 has directed to grant the registration from 1.4.2008, in our view when there is a conflict between the order passed by the Tribunal and the subsequent legislature which is beneficial in nature, the subsequent legislature and the benefit flowing from the subsequent legislature should be given to the assessee. It is none of the party’s case that the assessment proceedings have reached to the finality and, therefore, in view of the change in law, the beneficial legislation should be applied to the benefit of the assessee. Even otherwise, in the matter of Howrah Municipal Corporation & Ors. v. Ganges Rope Co. Ltd. & Ors., (2004) 1 SCC 663 it has been held by the Hon’ble Supreme Court that if there is a change in law during the pendency of the appeal, the change in law should be made applicable and should be applied to the pending appeals. In the present case the appeal is pending before the Tribunal for the year 2007-08 and there is a change in law with effect from 1.10.2014. Therefore, the benefit which are available to the assessee on account of insertion are required to be extended or passed on to the assessee. We, therefore, hold that the assessee is entitled to benefit under section 11 & 12 for the A.Y. 2007-08 on account of the fact that the assessment proceedings are pending. In view thereof, now we will deal with the reopening under section 147/148 of the IT Act.”
In the light of the above said discussion we are of the opinion that, the benefit of section 11 and 13 of the income tax Act considering the assessee as charitable institution should be accorded. In the result the 2nd ground raised by the assessee is liable to be allowed.
As we have held that the assessee is entitled to the benefit of the section 11 and 13 of the Income Tax Act for the AY 2007-08, therefore we deem it appropriate to remand the matter to the file of the assessing officer with the direction to the assessee to produce the books of account before the assessing officer. The assessing officer is directed to give the benefit of section 11 and 13 to the assessee in accordance with law and complete the assessment. Needless to say, the assessee shall be entitle to
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opportunity of hearing and further shall be entitle to file the documents, as may be advised during the assessment proceedings. 31. As we are remanding back the matter to the file of the assessing officer, therefore all the other grounds have become academic, therefore we had not decided the same.
In the result the appeal of the assessee is partly allowed. 32.
Order pronounced in the open court on 13.07.2021
Sd/- Sd/- (Dr. M. L. Meena) (Laliet Kumar) Accountant Member Judicial Member
Dated: 13.07.2021 GP/Sr. Ps. Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.