COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. GANDHINAGAR URBAN DEVELOPMENT AUTHORITY

This Tax Appeal is at the instance of the Revenue and the same is filed under Section 260A of the Income Tax  Act,  1961 (for  short  ‘the  Act’)  against  the  order dated   31.07.2020   passed   by   the   Income   Tax   Appellate Tribunal,   “A”   Bench,   Ahmedabad   in   ITA   No.1560/Ahd/2017 for A.Y.2009­10. 2. Following substantial question of law is raised in this appeal : “Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in holding the   re­assessment   proceedings   to   be   wrong   and   void   ab initio without appreciating that assessment was validly reopened on the basis of information and after recording proper reasons?”

The   assessee   is   a   Trust   engaged   in   the   urban development   activity   as   per   the   Government   Regulations and its income is exempted under Section 11 of the Act, 1961. Therefore, the assessee­Trust for the A.Y.2009­10 filed return of income declaring total income of Rs.NIL on 30th  September, 2009. The Assessing Officer completed the   assessment   under   Section   143(3)   of   the   Act,   1961 accepting the returned income.

An   assessment   order   dated   09.09.2011   was   passed wherein, it is mentioned by the Assessing Officer that “After discussion and from the data made available during the   course   of   hearing   nothing   adverse   has   been   found. Assessment is made on the returned income.” During the course   of   assessment   proceedings   all   the   information called for under Section 142(1) of the Act, 1961 relating to the important activities, income, plaint, exempt under Section  11(2)  of the  Act, 1961  etc.  were  submitted   as well as books of accounts along with bills and vouchers were   produced   before   the   Assessing   Officer   for verification.

Notice dated 28th  March, 2014 under Section 148 of the Act, 1961 was issued by recording reasons that the assesse earned income by rendering service for fee or consideration, hence, the activities of the assessee cannot be treated as charitable activities resulting into denial of exemption under Section 11 of the Act, 1961 in view of the provisions of Section 2(15) read with Section 13(8) of the Act, 1961. 6. The Assessing Officer in the assessement order dated 16.03.2015 passed under Section 143 read with Section 147 of the Act, 1961 disallowed the claim of the assessee for exemption under Section 11(1)(2) of the   Act,   1961   and   made   an   addition   of Rs.3,88,53,890/­ and also disallowed the claim under Section 11(1)(a)

The assessee thereafter, being aggrieved by the re­assessment   order   preferred   an   appeal   before   the CIT (Appeals). The assessee raised the legal ground and challenged the Notice under Section 148 of the Act, 1961 for re­opening the assessment along with the   other   grounds   raised   on   merits   before   the   CIT (Appeals).

The   CIT   (Appeals)   by   order   dated   27th  April,   2017 decided the legal ground regarding the validity of re­ opening in favour of the assessee and held the assessment to   be   null   and   void  ab­initio.   The   CIT   (Appeals), however, on merits held that the assessee is not entitled to exemption under Section 11 of the Act, 1961. 9. The Revenue being aggrieved by the order passed by the   CIT   (Appeals)   preferred   ITA   No.1560/Ahd/2017. The assessee   also   preferred   Cross­Objections   belatedly   for denial   of   the   exemption   under   Section   11   of   the   Act, 1961. 10. The Tribunal after considering the facts of the case to the effect that the assessee is a statutory body set up   by   the   Government   of   Gujarat   for   the   purpose   of developing the Gandhinagar urban area in controlled and disciplined  manner  under  the  Gujarat  Town  Planning   and Urban Development Act, 1976. The income of the assessee mainly grants from the Government which are utilized for development   of   various   public   welfare   projects.   The Tribunal   dismissed   the   Appeal   filed   by   the   Revenue confirming the order passed by the CIT (Appeals) on the legal ground that Notice under Section 148 of the Act, 1961 could not have been issued as the Assessing Officer has simply gone through the record already available to him on the basis of which scrutiny assessment was framed under Section 143(3) of the Act, 1961. The Tribunal has considered   that   there   is   no   change   in   the   facts   and circumstances nor new things/effect was derived or came to   the   notice   of   the   Assessing   Officer   and   therefore, merely   on   the   basis   of   the   change   of   opinion,   the assessment could not be re­opened. The Tribunal has also taken note of the fact that the Assessing Officer himself has recorded the findings in the original assessment that after discussion and from the data made available from the course of hearing nothing adverse was found and all the  information  called   during  the course   of assessment was provided by the assessee. The assessee also submitted books   of   accounts   supported   by   bills   and   vouchers   for verification. The Tribunal has also found that even in the reasons recorded in the Notice under Section 148 of the Act, 1961 there is no mention of any adverse fact so as to re­open the original assessment nor any information or   fresh   evidence   was   in   possession   of   the   Assessing Officer. The Tribunal therefore, came to the conclusion that the assessment was re­opened merely on the basis of the same set of facts which were available on record. The Tribunal   accordingly,   confirmed   the   findings   of   CIT (Appeals)   that   action   of   the   Assessing   Officer   in   re­ opening the assessment was wrong and null and void.

We have considered the facts of the case as well as the concurrent findings arrived at by both CIT (Appeals) and   the   Tribunal   for   quashing   and   setting   aside   the Assessment Order on the ground that Notice under Section 148 of the Act, 1961 was issued without jurisdiction and therefore, action of the Assessing Officer re­opening the assessment was wrong and null and void. From the facts on record   it   emerges   that   the   assessee   furnished   all   the information called under Section 142(1) of the Act, 1961 at the time of original assessment under Section 143(3) of   the   Act,   1961   and   there   is   no   tangible   material available on record with the Assessing Officer to re­open the   assessment.   In   such   circumstances,   both   the   CIT (Appeals) and the Tribunal have rightly held that action of the Assessing Officer in re­opening the assessment was not correct.

In   view   of   the   foregoing   reasons,   there   is   no infirmity in the impugned order passed by the Tribunal requiring any interference. No question of law much less any   substantial   question   of   law   can   be   said     to   have arisen   from   the   impugned   order   of   the   Tribunal.   The Appeal   therefore,   lack   merits   and   is   accordingly, dismissed. (VIKRAM NATH, CJ) (BHARGAV D. KARIA, J) PALAK