JT. COMMISSIONER OF INCOME TAX (OSD) (EXEMPTIONS) CIRCLE,, PUNE vs. S. M. BATHA EDUCATION TRUST,, SATARA

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.

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:

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.

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

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 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.