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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri A. Mohan Alankamony & Shri S.S. Godara
Per S. S. Godara, J.M.
These two assessee’s appeals for A.Y 2012-13 arise against the CIT (A)-XI, Hyderabad’s orders, both dated 8.6.2015 passed in case Nos.06 &07/CC-1/CIT(A)-XI/14-15 involving proceedings u/s 143(3) and 143(3) r.w.s. 147 of the Income Tax Act, 1961, in short “the Act”.
Heard both the parties. Case filed perused.
The assessee’s identical substantive ground that both the lower authorities have erred in law and on facts in declining it section 10(23)(C) exemption in the course of assessment (s) as upheld in the CIT (A) following detailed lower appellate discussion: “02.0 The appellant is a registered society engaged in imparting education in the field of running Engineering College and Medical college. It filed its returns of Income ~ for assessment years under consideration claiming Page 1 of 6
exemption u/s 10(23C) of the ~ Tax Act and admitting income of Rs.Nil. A search and seizure operation u/s 132 was conducted on the group of MI5 JB Educational Society and M/s Joginpally BR Educational Society as well as on the residences of some of the office bearers of the Society on 10-9-2009, During the search and seizure assessment proceedings, the DGIT(Inv), Hyderabad had rescinded the approval LJ/s 10(23C)(vi) and the appellant had challenged the same before Hon'ble High Court of Andhra Pradesh and the Hon'ble High Court had dismissed the Writ Petition filed by the appellant. Accordingly, the assessments were completed as AOP by denying the claim of exemption. After completion of the search assessments the CIT(Central), Hyderabad had cancelled the registration granted u/s 12AA and the appellant challenged the same before Hon'ble ITAT and the ITAT had dismissed the appeal filed by the appellant. As the DGIT(Inv), Hyderabad had rescinded appellant's exemption u/s 10(23C) and the CLT(Central) had cancelled the registration granted u/s 12AA(3), a notice u/s 148 was issued to the appellant and in response to the same, the appellant filed a letter requesting to treat the original return as filed in response to the notice u/s 148. The Assessing Officer assessed the income of the appellant in the status of AOP. Accordingly! the surplus of Rs.l,51,12,795/_ and Rs.2,58,81,884/- shown in the Income and Expenditure Statement for AYs 2011-12 and 2012-13 respectively had been disallowed by the Assessing Officer. 03.0 Aggrieved with the above assessments the appellant has filed the present appeals and has taken the following grounds of appeal: Common Grounds in AYs 2011-12 & 2012-l3
1. The Assessing Officer erred on facts of the case.
2. The AO did not consider the application made by the assessee In Form No.56D filed on 1-10-2012 for securing registration u/s 10(23C)(vi) of the Act.
3. The assessment u/s 143(3) r.w.s,147 is bad in law since the order was passed without drspos1ng of the assessee's application in Form No.56D.
4. The Assessing Officer erred from the point of equity by passing the Assessing Officer without disposing the application.
5. Any other ground at the time of hearing, 04.0 In response to the notice of hearing Issued by this office, Sri R.V.Chalam, CA appeared and the case was discussed with him. 05.0 During the course of appellate proceedings, the appellant has submitted that it had filed Form No.56D for grant of registration thereof u/s 10(23C)(Vi). It was further submitted that in the absence of decision 011 this matter, the taxability or otherwise of the excess of income over expenditure cannot be determined. 05.1 Decision The assessment order and the submissions of the appellant have been carefully considered. Taxation is a norm and exemption is an exceptional treatment which can be given only when requisite conditions of law are satisfied. The approval u/s 10(23C)(vi) of the IT Act is one of them. Admittedly the appellant did not have the approval for assessment years under consideration, There is nothing In law to suggest that exemption should be granted simply because application has been made for the approval. The appellant's plea that the assessment should not be made before disposal of application for grant of registration u/s l0(23C)(vi) of the I.T Act is flawed because the application had been made before Chief Commissioner of Income tax and not before the Assessing Officer. In this connection, it is also relevant to note that approval u/s l0(23C) of the Act had been granted in the past but had to be withdrawn in the light of the adverse evidence found during the search. There Is no infirmity in the Assessing Officer's order that the appellant had earned income and is not eligible for exemption. There is no option but to pay tax. In view of the above, the Assessing Officer's action in treating the appellant as an AOP is upheld for both the assessment years under consideration”.
Mr. Rao, vehemently argued that both the learned lower authorities ought not to have declined this taxpayer impugned exemption relief without awaiting the final status of Form 56D applications filed before the Chief Commissioner of Income Tax on 30.09.2012 (pages 192 onwards in paper book). Page 3 of 6 He therefore, seeks to restore the impugned exemption issue back to the lower authorities so as to await the final outcome of the assessee’s foregoing application.
We find no force in assessee’s foregoing arguments with able assistance coming from revenue side represented by learned CIT-(DR) Shri Y.V.S.T. Sai. This is for the reason that although the assessee has claimed to have filed the foregoing 56D application before the CCIT seeking section 10(23)(C)(vi) approval and to have been existed and set up solely for the purpose of carrying out educational activities, the very issue appears to have arisen earlier as well wherein the DGIT (Inv.) order dated 16.12.2011 had withdrawn the very relief after recording findings on facts that the taxpayer had not carried out educational activities. We note from a perusal of pages 99 to 107 in Paper Book itself that the departmental authorities had found the assessee to have collected capitation fee without even accounting it in the books. It is further made it clear that all these facts had saw light of the day only because the department had carried out section 132 search operation on 10.09.2009 at assessee’s premises which resulted in seizure of various incriminating documents finally culminating cancellation/withdrawal of its section 10(23)(C) approval w.e.f. A.Y 2000-01.
Mr. Sai, next takes to the pages 135 to 137 of the paper book that hon'ble jurisdictional high court’s order in assessee’s writ petition 9071/12 (preferred against the foregoing DGIT (Inv.) order) has also upheld the same. Mr. Rama Rao had at this stage sought to buttress the point that their Lordships order dated 17.7.2013 had granted assessee liberty to prosecute the registration application as per law. We find no merit in assessee’s instant plea as well since the hon'ble jurisdictional high court had passed the following order:
“However, it is stated in the writ petition that against the order of assessment, appeals are pending. However, learned counsel for the respondents Mr. J.V. Prasad, says that the appeals were dismissed. There is no document to show that the appeals are dismissed. Therefore, we are of the view that in the event the appeals are pending and if they are allowed, then the question of fresh registration may be considered by the authority concerned in accordance with law”
Mr. Rama Rao, fails to indicate the fact that the assessee’s appeals if at all, preferred against the assessment (s) are pending and allowed or not. We thus treat it as a fit case to reject all the assessee’s contentions in the light of the lordship above extracted directions. We accordingly conclude that the assessee’s alleged fresh registration application dated 30.09.2012 merely seeks to “continue” the earlier section 10(23)(C) approval benefit which stood withdrawn as affirmed hon'ble jurisdictional high court hardly leaving behind any scope for further consideration. The CIT (A) orders under challenge in both these appeals are upheld accordingly.
These assessee’s twin appeals are dismissed in above terms. A copy of the order be placed in the respective case files.
In the result, assessee’s appeals are dismissed.
Order pronounced in the Open Court on 22nd February, 2022.