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Income Tax Appellate Tribunal, DELHI BENCH “F+SMC”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-40, New Delhi dated 05/07/2018 for the Assessment Year 2012-13. 2. The assessee has raised the following grounds of appeal:- “1. (a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not quashing the impugned reassessment order passed by Ld. AO u/s 147 and that too without assuming jurisdiction as per law and without complying with mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961. 1(b) That having regard to the facts and circumstances of the case, Ld. C1T(A) has erred in law and on facts in not quashing the impugned reassessment order passed by Ld. AO and that too without providing the copy of „reason‟ recorded and not seeking & disposing objections of the assessee with respect to reopening of the assessment and further erred in not complying with the procedure laid down by Hon‟ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO, (2003) 259 ITR 19. 1(c) That in any case and in any view of the matter, action of Ld. CIT(A) in not quashing the impugned reassessment order passed by Ld. AO u/s 147, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual grounds. Page | 1 All India Motor Transport Congress Vs. ITO (Exemption), (Assessment Year: 2012-13)
2. (a)That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.28,56,000/- on account of life membership fees by treating it as revenue receipt, more so when it was in the nature of capital receipt and impugned addition has been made by recording incorrect facts and findings and without observing the principles of 2(b) That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs.28,56,000/- on account of life membership fees, is bad in law and against the facts and circumstances of the case, more so when this issue has already been examined and accepted in earlier assessment years as well as in the year under consideration during the course of assessment proceedings u/s 143(3).
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B and 234D of Income Tax Act, 1961.”
The brief facts of the case is that the Assessee is a company having aim and objectives of promotion of interest of the persons engaged in the business of motor transport by eliminating unfair competition. It is registered u/s 12A of the Act. It filed its return of income on 26.09.2012 declaring Nil income. The assessment was completed at the same income u/s 143(3) of the Act on 18.03.2015. The case of the Assessee was reopened u/s 148 of the Act by issue of notice dated 19.07.2016. On the perusal of the balancesheet the ld AO noted that the Assessee has received Life Membership Fees of Rs. 28,56,000/- which was not included in the income of the Assessee as it is directly credited to the balancesheet as capital receipt.
The ld AR submitted that Life Membership Fees is paid by the members once in the life time and therefore, it is not voluntarily donation. Thus, it was contested that it is a capital receipt. The ld AO considered the explanation of the Assessee and held that life membership fees is not voluntary contribution and therefore, it is not also come with any specific direction and therefore, it is chargeable to tax. He held that it is not a capital receipt and also not a corpus donation. Thus, he made the addition of Rs. 2856000/- to the income of the Assessee and assessed the Assessee u/s 143(3) of the Act read with section 147 of the Act. The Assessee All India Motor Transport Congress Vs. ITO (Exemption), (Assessment Year: 2012-13) challenged the same before the ld CIT(A) who dismissed the appeal of the Assessee and therefore the Assessee is in appeal before us.
The ld AR firstly submitted that the ld AO proceeded to reassess the income of the Assessee without providing copy of the reasons recorded for reopening of the assessment. Therefore, the assessment is bad in law. He further, stated that the assumption of jurisdiction u/s 147 by the ld AO is devoid of any merit as there is no fresh tangible material‟‟ come into the possession of the ld AO for reopening of the assessment. He submitted that it is on the perusal of the same material reopening is carried out. He submitted that the issue is squarely covered in favour of the Assessee by the series of decisions. He further submitted that the reassessment proceedings are initiated on the basis of mere „change of opinion‟. He stated that assessment has been framed u/s 143(3) of the Act. Therefore, the ld AO has applied his mind to the above facts. He further submitted that reopening is made on the basis of „audit objection‟ which is not permissible. On the merits he submitted that the issue is squarely covered in favour of the Assessee by 32 ITR (T) 152 wherein, Life Membership Fees is considered as corpus donation. In view of this, he submitted that the issue is squarely covered in favour of the Assessee on merits too.
The ld DR relied upon the orders of the lower authorities.
We have carefully considered the rival contentions as well as perused the orders of the lower authorities. Admittedly in this case the original assessment was passed u/s 143(3) of the Act on 18.03.2015. At the time of original assessment, Assessee submitted details as required by the ld AO. The complete books of accounts were produced which was examined on test check basis. On that basis the ld AO held that Assessee has fulfilled the conditions laid down in section 11 to 13 of the Act. He also computed the income of the Assessee. Subsequently, the notice u/s 148 of the Act was issued to the Assessee on 19.07.2016 wherein, notice itself is stated that the income of Rs. 2856000/- is assessable for the above year. The original assessment was passed on 18.03.2015 whereas, the reopening was made on 19.07.2016. As per the reasons recorded, there is no reference of any tangible material coming into the possession of the ld AO for reopening. The Page | 3