DEPUTY COMMISSIONER OF INCOME TAX, VIJAYAWADA vs. VDM CHARITABLE TRRUST, ELURU

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ITA 277/VIZ/2018Status: DisposedITAT Visakhapatnam23 April 2019AY 2009-106 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the Section 263 order was quashed by the ITAT, the consequential order under Section 143(3) r.w.s. 263 was also cancelled. Consequently, the reopening of assessment under Section 147 was infructuous, and the AO lacked jurisdiction.

What were the facts?

The revenue filed an appeal against the CIT(A)'s order which allowed the assessee's appeal. The CIT(A) held that the AO had no jurisdiction to pass an order under Section 143(3) r.w.s. 147 after the ITAT had quashed the earlier Section 263 order.

What were the issues?

Whether the Assessing Officer had the jurisdiction to reopen the assessment under Section 147 when the basis for reopening (the Section 263 order) was quashed by the ITAT.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 263,Section 147,Section 11,Section 13

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH

For Respondent: Smt Suman Malik, DR, Shri G.V.N.Hari, AR
Hearing: 15.04.2019

Heard together (2 matters)

I.T.A.No.277/Viz/2018
CO No.14/Viz/2018

Read from the judgment's own cause title. This page is filed under one of them.

आदेश /O R D E R

PER D.S. SUNDER SINGH, Accountant Member: Delay: The revenue has filed the appeal with the delay of 9 days. The AO filed condonation petition requesting for condoning the delay, stating that due to transfers of the officers and staff in the charge, the due date for filing appeal has missed from the attention of the AO and the appeal could not be filed in time and there was no intentional delay. After hearing both the parties, the delay in filing the appeal is condoned.

2.

This appeal is filed by the revenue against the order of the Ld.Commissioner of Income Tax (Appeals) [CIT(A)]-2, Guntur, vide Appeal No.343/2016-17 dated 08.03.2018. Cross Objections are filed by the assessee in support of the order of the order of the Ld.CIT(A) for the Assessment Year (A.Y.) 2009-10.

3.

In this case, the assessee filed it’s return of income on 30.09.2009 declaring Nil income. The assessment was originally completed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) by an order dated 14.12.2009, accepting the return of income filed by the assessee. Subsequently, the CIT has called for the records and taken up the case for revision u/s 263 and

3 I.T.A. No.277/Viz/2018 and CO No.14/Viz/2018 M/s VDM Charitable Trust, Eluru

held that the assessment order passed u/s 143(3) dated 14.12.2009 was erroneous and prejudicial to the interest of the revenue by an order dated 21.02.2012 and accordingly set aside the order with a direction to redo the assessment after giving opportunity to the assessee. One of the reasons for holding the assessment as erroneous and prejudicial to the interest of the revenue was inspection charges of Rs.90,53,902/- incurred by the assessee and claimed as allowable expenditure. The Ld.CIT was of the view that the AO has not properly verified the nature of expenses and directed the AO to make further enquiries and examine whether the expenditure was incurred for charitable purposes or for making gratuitous payments in violation of section 13 of the Act.

4.

Against the order u/s 263, the assessee filed appeal before ITAT and the ITAT, Visakhapatnam Bench in its order No.195/Viz/2012 dated 07.10.2016 quashed the order passed u/s 263 and restored the assessment order passed u/s 143(3) originally. Meanwhile, the AO has given effect to the order of the 263 and passed the consequential order u/s 143(3) r.w.s. 263 of the Act by an order dated 31.03.2013. The revenue audit has taken up the order passed u/s 143(3) r.w.s. 263 dated 31.03.2013 and raised an

4 I.T.A. No.277/Viz/2018 and CO No.14/Viz/2018 M/s VDM Charitable Trust, Eluru

objection stating that while giving effect to the order passed u/s 263, the AO committed mistake in computation of income and viewed that the disallowance of inspection charges of Rs.90,53,902/- needs to be brought to tax instead of allowing exemption u/s 11 of the Act. On the basis of audit objection made in consequential order passed u/s 143 r.w.s. 263, the AO reopened the assessment u/s 147 and accordingly passed order u/s 143(3) r.w.s. 147 of the Act by an order dated 14.12.2016 and raised the tax demand of Rs. 53,99,474/-.

5.

Against the assessment order passed on 14.12.2016, the assessee went on appeal before the Ld.CIT(A)-2, Guntur and the Ld.CIT(A) held that, since, the ITAT has quashed the order u/s 263 vide its order 195/Viz/2012 dated 07.10.2016, thus the AO has no jurisdiction to pass the order u/s 143(3) dated 14.12.2016. Accordingly allowed the appeal of the assessee.

6.

Against the order of the Ld.CIT(A), the revenue has filed appeal before this Tribunal.

7.

We have heard both the parties and perused the material placed on record. In the instant case, the Ld.CIT has passed an order u/s 263 setting aside the assessment order passed u/s 143(3) dated 14.12.2009. The said

5 I.T.A. No.277/Viz/2018 and CO No.14/Viz/2018 M/s VDM Charitable Trust, Eluru

order u/s 263 was quashed by the ITAT in its order vide I.T.A. No.195/Viz/2012 dated 07.10.2016. Therefore, the order passed u/s 143(3) r.w.s. 263 dated 31/03/2013 also stands cancelled and there is no valid order in existence. Since the order u/s 143(3) becomes infructuous, there is no case for short computation of income and consequently no case for reopening the assessment holding that there was escapement of income. Hence, the order u/s 143(3) r.w.s. 147 becomes infructuous. Therefore, we hold that the Ld.CIT(A) has rightly held that the AO has no jurisdiction to pass order u/s 143(3) dated 14.12.2016. Accordingly, we decline to interfere with the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Cross Objection No.14/Viz/2018 8. Delay : The assessee has filed the cross objections with a delay of 47 days. No condonation petition was filed for condoning the delay, hence the cross objections of the assessee are dismissed in limine.

9.

In the result, appeal of the revenue as well as the cross objection of the assessee are dismissed.

6 I.T.A. No.277/Viz/2018 and CO No.14/Viz/2018 M/s VDM Charitable Trust, Eluru

Order pronounced in the open court on 23rd April, 2019.

Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर धसंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER नवशधखधपटणम /Visakhapatnam नििधंक /Dated : 23.04.2019 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. रधजस्व/ The Revenue – Dy.Commissioner of Income Tax (Exemptions), Vijayawada 2. निर्धाऩरती/ The Assessee- M/s V.D.M.Charitable Trust, Bishop’s House, Xavier Nagar, Eluru 3. The Commissioner of Income Tax (Exemptions), Hyderabad 4. The Commissioner of Income-Tax (Appeals)-2, Guntur 5. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, तिशाखािटणम /DR, ITAT, Visakhapatnam 6.गार्डफ़ाईि / Guard file आदेशािुसार / BY ORDER // True Copy //

Sr. Private Secretary ITAT, Visakhapatnam

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