Loading judgment…
Facts
The assessee trust appealed against reassessment orders for assessment years 2014-15, 2015-16, 2017-18, and 2018-19. The appeals concerned the validity of reassessment proceedings, including issues of limitation, proper reasons for reopening, and whether the trust's activities qualified for exemption under Section 11.
Held
The Tribunal held that the reassessment notices were invalid as they were issued beyond the permissible time limit, and in one instance, while scrutiny assessment proceedings were still pending. Additionally, the Tribunal found that the sale of books and uniforms was incidental to the trust's main educational objects and thus eligible for exemption.
Key Issues
Whether reassessment proceedings under Section 147/148 were validly initiated considering limitation periods and pending scrutiny assessments. Whether the income generated from selling books and uniforms was incidental to charitable objects and eligible for exemption under Section 11.
Sections Cited
147, 148, 143(3), 143(2), 139(5), 11, 2(15)
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
These four appeals filed by the assessee are directed against the orders all dated 05.04.2024 passed by the Id. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment years 2014-15, 2015-16, 2017-18 and 2018-19. 2. Since, the issues raised in these appeals are similar based on the same identical facts, with the consent of both the parties, we proceed to hear all the appeals together and pass consolidated order for the sake of convenience.
First, we shall take appeal in ITA No. 1667/Chny/2024 - AY 2014- 15 for adjudication.
Ground No. 1(1.1 & 1.2) raised by the assessee is general in nature and requires no adjudication.
Ground No. 2 (2.1 to 2.5) raised by the assessee in challenging the action of the Id. CIT(A) in not considering the submissions of the assessee in respect of validity of reassessment order passed under section 147 r.w.s. 144B of the Income Tax Act, 2961 ["Act” in short] in the facts and circumstances of the case.
The Id. AR Shri G. Baskar, Advocate submits that the reopening of scrutiny assessment is barred by limitation under first proviso to section 147 of the Act. He submits that the assessee filed the return of income declaring NIL income by claiming exemption under section 11 of the Act and the Assessing Officer completed the scrutiny assessment vide order dated 03.12.2016 passed under section 143(3) of the Act accepting the returned income. He argued that the order of the reassessment is firstly illegal as no action shall be taken under section 147 of the Act after the expiry of four years from the end of the relevant assessment year. He submits that the end of the relevant assessment year is 31.03.2015 and notice under section 148 of the Act was issued on 31.03.2021. He argued vehemently that the notice under section 148 of the Act issued is beyond four years and hit by first proviso to section 147 of the Act. He submits that the Assessing Officer, in the original assessment proceedings, after considering the books of accounts and other details including the issues raised in the notice under section 148 of the Act, completed the assessment by accepting the returned income without making any addition. He argued that the assessee disclosed fully and truly all material facts necessary for assessment for the said assessment year vide submissions dated 20.06.2016 in response to the notice under section 142(1) of the Act dated 02.06.2016. He argued that since all the material facts necessary for assessment have been disclosed during the original assessment proceedings and the reopening on the same set of fact is barred by limitation in terms of first proviso to section 147 of the Act.
The Id. AR secondly submits that the reassessment order passed by the Assessing Officer is also not maintainable as the Assessing Officer failed to furnish the copy of actual reasons recorded during the course of reassessment proceedings. He drew our attention to page 89 of the paper book and submits that the Assessing Officer, vide notice dated 22.06.2021 under section 143(2) r.w.s. 147 of the Act furnished only issues as per the reasons recorded for reopening stating that “to invoke provisions of section 2(15) of the Act and to deny exemption under section 11 of the Act”. Further, he referred to page 93 of the paper book and submits that the assessee filed objections to the said reasons on 07.07.2021, which were disposed of by the Assessing Officer vide order dated 10.12.2021, placed at page 98 of the paper book. He argued that the Id. DR provided a copy of reasons recorded during the course of hearing, which is different from the reasons provided in the notice under section 143(2) r.w.s. 147 of the Act. He argued vehemently that failing to provide a copy of actual reasons recorded depriving the assessee to object to the same during the reassessment proceedings. He submits that such action of the Assessing Officer is against the law laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO in 259 ITR 19(SC). Further, he drew our attention to para 1.1 of the reassessment order, wherein, the Assessing Officer has consciously provided gist of the reasons recorded rather than actual reasons. He placed reliance on the order of Mumbai Benches of the ITAT in the case of Tata International Ltd. v. DCIT [2012] 23 taxmann.com 18 (Mumbai) and submits that the reassessment completed without furnishing the reasons actually recorded by the Assessing Officer is not sustainable under the law as the Assessing officer is duty bound to supply the same within reasonable time as held by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO (supra). He argued that the actual copy submitted by the Id. DR during the course of hearing before the Tribunal would not make good of the legality sufficient for reopening of the assessment. He argued that since the Assessing Officer furnished with mere gist of the reasons claiming them to be actual reasons recorded, the same is illegal making the order of reassessment, is liable to be quashed.
Further, thirdly, Shri Baskar submits that the reassessment is illegal for the reason that the Assessing Officer has reopened the assessment only on the basis of “change of opinion” to review his earlier order of scrutiny assessment. He drew our attention to page 71 of the paper book, notice dated 02.06.2016 issued under section 142(1) of the Act and submits that the Assessing officer called for several details as evident in point at 11, 12, 13 and 17. He submits that the assessee filed detailed response on 20.06.2016 including the objects constituted with main limbs of charitable purpose specified under section 2(15) of the Act and referred to page 71 and 75 of the paper book. He submits that the assessee also furnished details of its income and expenses, receipts and payments stating that the said income was out of sale of belt, books fees, books and uniforms from IADAV, Unit II, 1 and stitching fees and referred to page 114 of the paper book. Further, he drew our attention to page 111 of the paper book showing accumulated sum of ₹.1,61,00,000/- under section 11(2) of the Act along with Form 10A belatedly seeking condonation under section 119(2)(b) of the Act before the Id. CIT(E). The Id. CIT(E) condoned the said delay in filing Form 10A vide his order dated 30.11.2016 and referred to page 82 of the paper book. He vehemently argued that the Assessing Officer, considering all the details, accepted the returned income and formed an opinion that the assessee was eligible for claiming exemption under section 11 of the Act during scrutiny assessment. He further argued that after considering the assessee's submissions and books of account, reopening of the assessment for denying of exemption is mere “change of opinion