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Facts
The assessee, a charitable trust, filed its return declaring Nil income for AY 2015-16. The AO completed assessment u/s 143(3) making additions on account of corpus donations. Subsequently, the AO reopened the assessment u/s 147 after four years, citing non-disclosure of material facts. The CIT(A) upheld the reassessment.
Held
The Tribunal held that the reassessment proceedings were initiated based on relevant material facts and that it was not a change of opinion. The explanation to Section 147 was considered relevant. However, the Tribunal set aside the order of the CIT(A) and restored the matter back to the CIT(A) for fresh decision on merits, directing proper consideration of objections and providing an opportunity of hearing.
Key Issues
Whether the reopening of assessment u/s 147 after four years was valid and not based on a change of opinion, and if proper opportunity of hearing and consideration of objections were given.
Sections Cited
143(3), 12AA, 11(1)(d), 2(15), 147, 11(2), 154, 144B, 11(1)(a)
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 06.12.2023 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] pertaining to Assessment Year (“AY”) 2015-16.
Briefly stated, the facts of the case are that the assessee is a charitable trust engaged in religious activities running prayer center in the name and style of “Ashirwad Prayer Centre”. It is registered under the Bombay Public Trust Act, 1950 and also u/s 12AA of the Income Tax Act, 1961 (the “Act”). For AY 2015-16, the assessee filed its return of income on 08.09.2015 declaring total income of Rs. Nil. The Ld. Assessing Officer (“AO”) completed the assessment u/s 143(3) of the Act on 29.12.2017 determining the assessed income at Rs.1,16,19,900/- making addition on account of corpus donations u/s 11(1)(d) of the Act by observing that the activities of the assessee trust are not charitable as per the provisions of section 2(15) of the Act. On appeal against such assessment order passed u/s 143(3) of the Act, the Ld. CIT(A) vide his order dated 06-12-2023 allowed the appeal of the assessee holding that the assessee has to be given the benefit of section 11 of the Act. Thereafter, on 28.03.2021 the case of the assessee was reopened after the expiry of 4 years from the end of the relevant AY 2015-16 by issue of a notice dated 28.03.2021 for the reason that “the assessee has not fully and truly disclosed the following material facts necessary for this assessment for the year under consideration : a) Incorrect deduction/benefit of set apart to the extent of 15% u/s 11(1)(a) of Rs.1,11,62,696/-; b) Incorrect deduction of capital expenditure as application of income amounting to Rs.21,16,058/- and c) Incorrect deduction/benefit of accumulation u/s 11(2) of Rs.70,00,000/-.” The assessee filed its objections to reopening on 24.12.2021 stating that : (a) since four years from the end of the relevant assessment year have expired, no action could be taken u/s. 147; (b) the reasons recorded does not give “the material facts not disclosed”; (c) All material facts had indeed been disclosed fully and truly; (d) the legal presumption that all material facts had been duly considered at the time of assessment is applicable in this case; and (e) re-assessment would involve change of opinion, which is not permitted. The said objections raised by the assessee were rejected by the Ld. AO vide his order dated 18.02.2022. The assessee thereafter filed submission (letter) before the Ld. AO on 21.12.2022 bringing to his notice that the objections of the assessee has neither been dealt with nor disposed of. The Ld. AO, however, ignoring the said letter of the assessee passed the order re-assessing the income of the assessee u/s 147 r.w.s. 144B of the Act on 30.03.2022 making an addition of Rs.2,02,78,754/-, to the total income of Rs. Nil declared by the assessee for the reason that the activities of the assessee trust are not as per the provisions of section 2(15) of the Act and hence exemption claimed by the assessee are disallowed.
Aggrieved, the assessee went into the appeal before the Ld. CIT(A)/NFAC challenging the validity of re-assessment who upheld the action of the Ld. AO by observing as under :
“4. Decision:- Ground No.1 to 6: These grounds are directed against re-opening of the assessment u/s 147 r.w.s. 144B of the Act. The appellant has contended that he had made full and complete disclosure of income during the original assessment proceedings, the re-opening is time barred by limitation since more than four year had expired for re-opening the assessment. Further, the appellant has stated that the Ld. AO had already passed an order u/s 154 whereby rectification of total income to Rs. 1,86,20,170/- was already done being a mistake apparent from the record. The same as resulted in a change of opinion of the Ld. AO. The appellant has also submitted that the Ld. AO has not disposed off the specific objections against re-opening u/s 147 as mandated by law. The submissions of the appellant and the assessment order has been perused. It is seen that the Ld. AO has re-opened the assessment based on relevant specific material facts available before him. It is seen that the assessment has been re-opened based on the fact that since the appellant was denied the benefit of section 11 of the Act during the course of assessment u/s 143(3), the total disallowances amounting to Rs.2,02,78,754/- had to be made by the Ld. AO since the same were allowed u/s 11(1)(a) and 11(2) of the Act. The re-opening based on order passed u/s 154 is valid and as per law. Here the kind attention invited to Explanation 2(c) section 147. The same is reproduced as below:- "......Explanation.2. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- 1. Where an assessment has been made, but- 1. Income chargeable to tax has been under assessed, or 2. Such income has been assessed at too low a rate, or 3. Such income has been made the subject of excessive relief under this Act; or 4. Excessive loss or depreciation allowance or any other allowance under this Act has been computed:] Hence it cannot be said that the there has been change of opinion in respect of the decision in respect of re-opening of the assessment u/s 147 of the Act. The appellant has not brought on record any evidence to support his contentions in respect of non-disposal of objections by the Ld. AO, lack of opportunity given to him of being heard and non furnishing of draft assessment order u/s 144B(1)(xvi) of the Act. The Ld. AO has clearly mentioned all the facts in his assessment order and details regarding the submission made by the appellant in his order. Hence, the contention of the appellant are found to be not correct. In view of the above, the ground of appeal nos. 1 to 6 are dismissed.”
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal :
1. The Order of the learned Commissioner of Income tax (Appeals) is bad in law, and contrary to the facts of the case and evidence on record.
2. The learned Commissioner of Income tax (Appeals) erred in passing his Appellate Order upholding the Order under Section 147 passed by the learned Assessing Officer, assessing Rs. 2.02.78.754 as income which has escaped assessment, by invoking the proviso to Section 2(15) and thereby disallowing the following: Capital expenses allowable under Section 11(1)(a) Rs. 21,16,058 15% deductible under Section 11(1)(a) Rs.1,11,62,696 Amount accumulated under Section 11(2) Rs.70,00,000 Rs.2,02,78,754 even while, in the Appeal against the Order of Assessment under Section 143(3), passed by him shortly before the passing of the Order under Appeal, he himself had held categorically- "The invocation of the section 2(15) is based on an incorrect presumption. the appellant is involved in charitable work. The appellant is not to be treated as religious but as a charitable trust and hence has to be given the benefits of the section 11 of the Act 3. The learned Commissioner of Income tax (Appeals) erred in passing his Appellate Order upholding the Order under Section 147 passed by the learned Assessing Officer, assessing Rs. 2,02,78,754 as income which has escaped assessment, by invoking the proviso to Section 2(15), even while, in the Appeals against the Orders of Assessment under Section 143(3)/147, in respect of assessment years 2013-14, 2014-15, 2016-17 and 2017-18 passed by him on the same day as the date of the Order under Appeal, he had held categorically, "AO was not correct in invocating the proviso to section 2(15) of the Act".
4. The learned Commissioner of Income tax (Appeals) erred in passing an Order under Section 147, by initiating the proceedings under the said Section in violation of the first proviso to the said Section, on 28 March 2021. i.e. after the expiry of 4 years from the end of the relevant assessment year, an assessment under Section 143(3) having been made on 29 December 2017 for assessment year 2015- 16.
The learned Commissioner of Income tax (Appeals) erred in passing an Order under Section 147- (a) by changing his opinion on matters already considered in the Order of Assessment under Section 143(3) as well as in the subsequent Order of Rectification under Section 154: (b) without disposing the objection specifically raised during the reassessment proceeding; and (c) without affording the appellant an opportunity of being heard.
6. The Appellant craves leave to add, to alter or amend all or any of the grounds of appeal.”
5. The Ld. AR reiterated the contentions raised by the assessee before the Ld. CIT(A) as regards its challenge to the validity of reassessment proceedings. He further submitted that for the same AY 2015-16, in the appeal against the assessment order u/s 143(3) of the Act dated 29.12.2017, the Ld. CIT(A) has himself categorically held that the Ld. AO has invoked the provisions of section 2(15) based on incorrect presumption and that the assessee is not to be treated as religious but as the charitable trust as it is involved in charitable work and hence it has to be given the benefits of section 11 of the Act. The Ld. AR brought to our attention that the Ld. CIT(A) has passed the said appellate order in section 143(3) proceedings also on 06.12.2023 which is the same date on which he has passed the impugned order (pages 1 to 18 of the paper book refers). Similarly, in the appeal(s) before him against the assessment order(s) passed u/s 143(3)/147 for preceding AYs 2013-14 and 2014-15 as well as for subsequent AYs 2016-17 and 2017-18, the Ld. CIT(A) vide his order(s) for all the above AYs dated again dated 06.12.2023 categorically held that the Ld. AO was not correct in invoking the proviso to section 2(15) of the Act (pages 1 to 156 of the paper book refers). The Ld. AR also raised another contention that the assessment u/s 143(3) for AY 2015-16 having been made on 29.12.2017, the initiation of reassessment proceedings on 28.03.2021 by the Ld. AO, are in violation of the first proviso to section 147 of the Act as the assessment has been reopened after the expiry of four years from the end of the relevant AY 2015-16. He submitted that the Ld. AO as well as the Ld. CIT(A) has not considered and disposed of the objection(s) to reopening of the assessment filed by the assessee and not afforded the assessee with an adequate opportunity of hearing and has incorrectly observed that the assessee has not brought on record any evidence in support of its contentions in respect of non-disposal of the objections. All these facts clearly establishes that it is a mere change of opinion both by the Ld. and the Ld. CIT(A) as well. He, therefore, prayed that the order of the Ld. CIT(A) be set aside and the impugned addition should be deleted.
The Ld. DR, on the other hand, supported the order of the Ld. AO/CIT(A).
We have heard the Ld. Representatives of the parties and perused the material available on record. The facts of the case are not in dispute. The Ld. AO has reopened the assessment invoking the provisions of section 2(15) of the Act and the said action of the Ld. AO has been confirmed by the Ld. CIT(A). Although various grounds of appeal have been raised by the assessee before us, the main grievance of the Ld. Counsel of the assessee is that the Ld. CIT(A) has erred in upholding the validity of reopening of the assessment specifically in the light of the fact that he himself for the same AY 2015-16 as well as preceding AYs 2013-14, 2014- 15 and subsequent AYs 2016-17 and 2017-18, in his appellate order(s) passed in the original assessment for the said AYs, has allowed the claim of the assessee holding it to be eligible for the benefits of section 11 of the Act being a charitable trust vide separate order(s) all dated 06.12.2023 which is also the date on which the impugned order has been passed by the Ld. CIT(A). The Ld. CIT(A) has dismissed the appeal of the assessee for the reasons already reproduced in the preceding paragraphs. We, therefore, find some force in the arguments advanced by the Ld. AR. There are inconsistent views taken by the Ld. CIT(A) involving the impugned issue. Perusal of the impugned order of the Ld. CIT(A) also reveals that the Ld. CIT(A) has not passed a speaking order dealing with all the contentions raised by the assessee in various grounds of appeal filed before him. The Ld. CIT(A) concluded the proceedings before him upholding the action of the Ld. AO observing that the assessment was reopened by him based on relevant specific material facts available and further observing that since the assessee was denied the benefit of section 11 during the course of assessment u/s 143(3) of the Act, the total disallowances amounting to Rs.2,02,78,754/- made by the Ld. AO under the reassessment done by him is valid and as per law. The Ld. CIT(A)’s in his impugned order has stated that the assessee has failed to brought on record any evidence to support his contention in respect of non-disposal of objections by the Ld. AO, lack of opportunity given to him of being heard to the assessee and non- furnishing of draft assessment order u/s 144B of the Act. In our humble view, we find this observation of the Ld. CIT(A) cryptic and not valid as the burden of proof in such a case would lie upon the Revenue and not on the assessee as the assessee cannot be expected to prove his claim otherwise.
8. We also find that the Co-ordinate Bench of the Tribunal in the appeal filed by the Revenue for AY 2014-15 in & 225/PUN/2024, vide its order dated 16.05.2025 has set aside the matter to the file of the Ld. CIT(A) for denovo consideration with respect to the nature of the activities carried out the assessee; whether charitable or not in the light of judgment of the Hon'ble Supreme Court in the case of ACIT Vs. Ahmedabad Urban Development Authority [143 Taxman.com 278 (SC)].
Considering the totality of the facts and circumstances of the case enumerated above, we deem it fit and proper and in the interest of justice, to set aside the impugned order of the Ld. CIT(A)/NFAC and restore the matter back to his file with a direction to decide the issue afresh on merits by passing a speaking order on each of the grounds of appeal raised by the assessee before him specifically taking into consideration the objections to reopening proceedings raised by the assessee, as per fact and law, after providing reasonable opportunity of being heard to the parties. The assessee is also directed to substantiate its case by filing the requisite supporting documents/evidence as may be required/called upon, without seeking adjournment under any pretext unless for sufficient cause, failing which the Ld. CIT(A) shall be at liberty to pass appropriate order as per law. We direct and order accordingly. The grounds raised by the assessee are therefore allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 20th June, 2025.