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Income Tax Appellate Tribunal, ‘B’ BENCH, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
Consolidated Appeals (3)
ORDER
PER SHRI PARTHA SARATHI CHAUDHURY, JM
This bunch of appeals preferred by the Revenue and the corresponding Cross Objections by the assessee emanates from separate orders of the ld. CIT(A)-10 dated 02-08-2018 for A.Y. 2011-12, dated 11-02-2020 for A.Y. 2016- 17 and dated 06-03-2020 for A.Y. 2017-18 respectively as per the grounds of appeal on record.
2 ITA 1752 of 2018, 23 & 64 of 2021 S.M. Batha Education trust A.Y. 2011-12, 2016-17 * 2017-18 2. Both the parties conceded that the facts and circumstances and the issues involved in all these appeals and cross objections are absolutely identical and similar and having heard the submissions of both the parties, all these cases are heard and disposed of by this consolidated order.
At the outset, the ld. D.R submitted that in this case, the ld. CIT (Exemption) Pune, has started proceedings for withdrawal of registration granted to the assessee u/s 12AA of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). In evidence thereof, the ld. D.R submitted copies of letter dated 16-09-2022 from the CIT (Exemption) Pune. The ld. D.R also submitted that the factual report in respect of the assessee trust which has been forwarded to him from the Office of Dy. CIT (Exemption) Pune. From these documents, it is evident that the Revenue has started proceedings for withdrawal of registration granted u/s 12AA of the Act to the assessee-trust. In fact, it is seen that the Department has issued a show cause notice to the assessee but the assessee has not complied with the said show cause notice which is evident from letter dated 08-09-2022 written to the assessee-trust by the CIT(Exemption)‟s office, Pune. Therefore, the ld. D.R submitted that till time the fact is not clear as to whether the assessee-trust shall remain registered u/s 12AA of the Act or not the hearing may be postponed.
That on perusal of the document on record, we observe at page 66 of the Paper book which is a copy of CIT(Exemption)‟s order giving approval to the assessee u/s 12AA of the Act while giving effect to the Pune Tribunal‟s order dated 15-04-2009. In the said order of the ld. CIT(Exemption) Pune, dated -9-12-2020 order u/s 12AA read with rule XVIIA of the I.T. Rules wherein it has been observed that the Tribunal in the case of the assessee has held to grant registration by observing as follows:
3 ITA 1752 of 2018, 23 & 64 of 2021 S.M. Batha Education trust A.Y. 2011-12, 2016-17 * 2017-18 “With the benefit of the guidance of the Special Bench decision in the case of Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Padmarth Dham Trust ( Vs. CIT Dehradun (111 ITD 175) which is a binding judicial precedent for us and with which we are in most respectful agreement, we uphold the grievance of the assessee. Ld. CIT, instead of asking the assessee to file another application for registration and thus disregarding the time limit for deciding on assessee‟s application for registration u/s 12AA, ought to have held that the assessee is anyway entitled to be registered u/s 12AA as assessee‟s application has not been rejected within six months. Once the assessee is deemed to have been granted registration in response to application dated 20th September 2005, ld. CIT clearly erred in rejecting, on merits his application dated 28th March 2007. The assessee is accordingly held to be entitled to registration in terms of application dated 20th September 2005.
5. Accordingly, respectfully following the directions of the Hon‟ble ITT „B‟ Bench, Pune, vide order dated 15-04-2009 in the registration u/s 12AA of the Act is hereby granted to the applicant from the F.Y. 2005-06 (A.Y. 2006-07) i.e. the financial year in which original application was made.”
Thereafter, at para 5 the ld. CIT (Exemption) has granted registration u/s 12AA of the Act to the assessee from A.Y. 2006-07 onwards. Therefore, undisputedly as on date, the assessee trust is enjoying the registration u/s 12AA of the Act granted by the Department. Now, the Department is also contemplating for withdrawal of such registration granted to the assessee. We are of the considered view therefore, in respect of A.Y. 2016-17 and 2017-18 the matter should be remanded to the file of the ld. A.O to re-adjudicate the case and determine the position of the assessee-trust vis-à-vis the applicability of section 11 of the Act. Whether the assessee will be entitled for exemption u/s 11 of the Act has to be re-visited by the ld. A.O after detailed factual verification. Meanwhile, the status of the assessee would be also clear regarding proceedings of withdrawal of registration u/s 12AA of the Act granted to the assessee by the Department. In view thereof for A.Y. 2016-17 and 2017- 18 we set aside the order of the ld. CIT(A) and remand the matter to the file of the ld. A.O for re-adjudication as per law while complying with the principles of natural justice as observed hereinabove. In the result, grounds of appeal for A.Y. 2016-17 and 217-18 are allowed for statistical purposes.
In the result, appeal filed by the Department for A.Y. 2016-17 and 2017- 18 are allowed for statistical purposes.
4 ITA 1752 of 2018, 23 & 64 of 2021 S.M. Batha Education trust A.Y. 2011-12, 2016-17 * 2017-18 7. The corresponding Cross Objections preferred by the assessee for A.Y. 2016-17 and 2017-18 are also remanded back to the file of the ld. A.O. In the result, the Cross objections filed by the assessee for A.Y. 2016-17 and 2017-18 are allowed for statistical purposes.
That, for A.Y. 2011-12, it is the case of the assessee that the regular assessment order u/s 143(3) of the Act was passed on 20-1-2014. Thereafter, notice u/s 148 of the Act was issued on 06-06-2016. The assessee had also filed return of income in response to the said notice u/s 148filed on 08-07-2016. Thereafter, the assessee had requested the Department to furnish copies of reasons recorded for re-opening by letter dated 08-07-2016. A copy of reasons was communicated to the assessee by the ld. A.O on 04-11-2016. That, after receiving the reasons for reopening the assessee had raised objections and filed the said objections before the ld. A.O on 07-12-2016. It is the grievance of the assessee that the ld. A.O without disposing the objections regarding proceedings initiated u/s 148 of the Act has passed the final assessment order u/s 143(3) read with section 147, dated 21-12-2016. Admittedly, in this case, the original return of income was filed by the assessee on 24-1-2012 and the return of income in response to notice u/s 148 was filed by the assessee on 08- 07-2016. The assessee after being communicated with the reasons for re- opening has raised objection before the ld. A.O who being a quasi-judicial authority had to deal with those objections raised by the assessee and should have passed an order either accepting or rejecting those objections and then should have gone ahead with making the final assessment order. But in this case for A.Y. 2011-12, the ld. A.O without dealing with the objections raised by the assessee has completed final assessment on 21-12-2016. The law has been laid down by the Hon‟ble Supreme Court in the case GKN Driveshafts
5 ITA 1752 of 2018, 23 & 64 of 2021 S.M. Batha Education trust A.Y. 2011-12, 2016-17 * 2017-18 (India) Ltd. vs. ITO (2003) 259 ITR 19 (SC) in this regard. The Hon‟ble Apex Court held as follows:
“In GKN Driveshafts (I) Ltd. (supra), the Hon‟ble Apex Court has held that when a notice u/s 148 of the Income-tax Act is issued, the proper course of action for the noticee is to file return and if he desires to seek reasons for issuing notice, the A.O is bound to furnish reasons within a reasonable time. On receipt of the reasons, the noticee is entitled to file objections to the issuance of notice and the A.O is bound to dispose of the same by passing a speaking order.”
In another decision on identical facts, the Hon‟ble Bombay High Court in the case of Bayer Material Science Pvt. Ltd. Vs. Dy. CIT & others (2016) 382 ITR 333 (Bom) observed and held as follows:
“In the present case, we find that the draft assessment order was passed on March 30, 2015 without having disposed of the petitioner‟s objections to the reasons recorded in support of the impugned notice. The reasons were supplied to the petitioner only on March 19, 2015 and the petitioner had filed the objections to the same on March 25, 2015. This passing of the daft assessment order without having disposed of the objections is in defiance of the Supreme Court‟s decision in GKN Driveshafts (India) Ltd. (supra). Thus, the draft assessment order dated March 30, 2015 is not sustainable being without jurisdiction. This for the reason that it has been passed without disposing of the objections filed by the petitioner to the reasons recorded in support of their impugned notice. Accordingly, we set aside the draft assessment order dated March 30, 2015. We are not dealing with the validity of the reasons in support of the impugned notice in the present facts as the time limit to pass the assessment order as provided under fourth proviso to sub-section (2) of section 153 of the Act has already expired when the petition was filed.”
In the aforestated decision, the Hon‟ble Jurisdictional High Court has placed reliance on the Hon‟ble Supreme Court decision in the case of Driveshafts (India) Ltd. (supra) and has observed that when the objections have been raised by the assessee, the A.O is duty bound to dispose off those objections and if he passes the assessment order without disposing off the objections raised by the assessee then in such a case it has to be held that the A.O has passed the assessment without jurisdiction.
Reverting to the facts of the present case, admittedly, the assessee had filed the original return of income on which the regular assessment was completed. Thereafter, reopening proceedings were initiated u/s 147/148 of 6 ITA 1752 of 2018, 23 & 64 of 2021 S.M. Batha Education trust A.Y. 2011-12, 2016-17 * 2017-18 the Act and notice u/s 148 was issued to the assessee on 06-06-2016. The assessee had filed return of income in response to such notice on 08-07-2016. The reasons for reopening was also furnished to the assessee by the department. The assessee raised objections regarding the reopening but the ld. A.O without disposing of these objections directly proceeded to pass final assessment order. Taking guidance from the aforestated decision of Hon‟ble Supreme Court (supra) and the decision of Hon‟ble Bombay High Court (supra), we are of the considered view that when the A.O has passed final assessment order u/s 143(3) read with section 147 of the Act without disposing of the objections raised by the assessee in such scenario the final assessment order passed by the ld. A.O suffers from lack of jurisdiction and is void abinitio and therefore all the proceedings falling thereafter do not have any legal basis for their sustainability. In view thereof, both the appeal of the revenue as well as cross objection of the assessee for A.Y. 2011-12 are dismissed as infructuous.
In the combined result, appeals of the Revenue and C.O of the assessee for A.Y. 2016-17 and 2017-18 are allowed for statistical purposes and the appeal of the revenue and the cross objection of the assessee for A.Y. 2011-12 are dismissed as infructuous.
Order pronounced in the open Court on this 16th November 2022.