SHRI MAHAVEER CHARITABLE TRUST ,ALLAHABAD vs. ITO(EXEMPTION), ALLAHABAD

BECAUSE the proceedings under Section 143(3) and 263 have been exhausted / arrived conclusion, hence adjudicating of appeal for original assessment order dated 30.03.2016 passed under Section 143(3) will start a series of legal fracas and procrastination of justice for the appellant resulting in unnecessary harassment for the appellant financially and otherwise.

BECAUSE the order appealed against is contrary to the facts, law, principles of natural justice and against the binding precedence and decisions of hon'ble high courts and tribunal.

BECAUSE the addition so sustained by the CIT(A) in the impugned appellate order deserves to be set-aside and the return income disclosed by the appellant is liable to be sustained.

The appellant reserves the right to alter, amend or take any fresh ground before Your Honour at the time of the hearing of this Appeal.”

The facts of the case are, that the assessee is a Charitable Trust registered under section 12AA of the Income Tax Act, 1961. It filed its return of income for the year under consideration on 30.03.2015, declaring returned income at rupees Nil after claiming exemption under sections 11 and 12 of the Act. The case was taken up for scrutiny and the ld. AO completed the scrutiny assessment under section 143(3) at a total income of rupees Nil. However, the donations of Rs.1,97,69,650/-. were treated as anonymous donations and therefore, were brought to tax under section 115BBC of the Income Tax Act, 1961.

Being aggrieved by the said assessment order, the assessee filed an appeal before the ld. CIT(A) on 11.06.2016. However, before the ld. CIT(A) could examine the issue, the ld. CIT (Exemption) revised the assessment order under section 263 of the Act, holding it to be erroneous and prejudicial to the interest of Revenue and he directed the ld. AO to make fresh assessment, by setting aside the assessment order dated 30.03.2016. This order under section 263 of the Act was passed on 28.02.2018.

Dr. Pawan Jaiswal and Sh. Ajit Kumar, Advocates (hereinafter referred to as the ld. ARs) appearing on behalf of the assessee pointed out that the appeal before the ld. CIT(A) had been filed on 11.06.2016 against the order under section 143(3) dated 30.03.2016. However, on 28.02.2018, the ld. CIT (Exemption) had passed an order under section 263 setting aside the order under section 143(3) for fresh assessment. An appeal was filed against this decision of the ld. CIT (Exemption) before the Hon’ble ITAT. However, before this appeal could be A.Y. 2013-14 Sh. Mahaveer Charitable Trust decided, the assessment order under section 143(3) r.w.s. 263 was passed by the ld. AO on 28.12.2018 and the assessee filed an appeal against this assessment order on 29.01.2019 before the ld. CIT(A). On 3.08.2021, the ITAT set aside the order passed by the ld. CIT (Exemption). Thereafter, the ld. CIT (A) allowed the appeal of the assessee against the order passed under section 143(3) r.w.s. 263 by observing that since the proceedings under section 263 had been set aside by the ITAT, the subsequent assessment order could not survive. Subsequently, the ld. CIT(E) issued a notice to the assessee on 23.02.2024 for reopening the matter under section 263, but being satisfied with the response of the assessee, he closed the proceedings on 27.03.2024. The ld. ARs submitted before us, that the Hon’ble Supreme Court in the case of CIT vs. Alagendran Finance Limited, vide their order dated 27.07.2007, had observed that when an order of assessment is reopened, the previous assessment would be held to be set aside and the whole proceedings would start afresh. In the present matter, the assessment order dated 30.03.2016 had been set aside by the then CIT(E) and thereafter no assessment order existed after 28.02.2018 when the order under section 263 was passed by the then ld. CIT (Exemption). It was further submitted that the subject matter of the appeal against the assessment order under section 143(3) dated 30.03.2016 and order dated 28.12.2018 under section 143(3) r.w.s. 263 that were made before the ld. CIT(A) were the same in verbatim and the latter order had been allowed by the ld. CIT(A), vide his order dated 10.01.2024. It was, therefore, submitted that once an issue had been decided by an appellate authority, the same could not be addressed again by an authority parallel in jurisdiction and office. Our attention was invited to the meaning of the word, “set aside” as illustrative in the oxford dictionary, which defined it as, “declare a legal decision or process to be invalid”. Thus, after the order of the ld. CIT (Exemption) dated 28.02.2018, the assessment order dated 30.03.2016 automatically became invalid and the same could not be re-visited for fresh assessment, as held by the Hon’ble Supreme Court in the case of CIT vs. Alagendran Finance Limited. Our attention was also invited to the provisions of section 263 and it was pointed out that in the instant case, the ld. CIT (Exemption) had exercised the option of, A.Y. 2013-14 Sh. Mahaveer Charitable Trust “cancelling the assessment and directing a fresh assessment”. Thereby, he had eroded the existence of the assessment order dated 30.03.2016. Thus, no assessment order existed for the year under consideration and the appeal filed against the original assessment order automatically became redundant, which had been grossly ignored by the ld. CIT(A), while passing the impugned order dated 28.09.2024. It was further submitted that though the assessee had filed an appeal against the original assessment order dated 30.03.2016 passed under section 143(3), the same had become an unfruitful exercise after the passing of the order dated 28.02.2018 under section 263 by the ld. CIT (Exemption). Subsequently, the ld. CIT (Exemption’s) order had been set aside by the ITAT and had been dropped by the ld. CIT (Exemption). The ld. CIT(A) hearing the appeal against the order under section 143(3) r.w.s. 263 had also allowed the appeal of the assessee holding the same to be invalid on account of the fact that the order under section 263 had ceased to survive. Thus, it was prayed that the confirmation of addition of Rs. 1,97,69,650/- by the ld. CIT(A), vide his order dated 28.09.2024 deserves to be deleted by the Tribunal and the submissions of the assessee that appeal proceedings against the order passed under section 143(3) dated 30.03.2016, had been rendered infructuous, deserved to be upheld.

On the other hand, Sh. A.K. Singh, Sr. DR (hereinafter referred to as the ld. DR) invited our attention to the orders passed by the ld. CIT (Exemption) under section 263 on 28.02.2018 and pointed out that the order had been held to be erroneous and prejudicial to the interest of Revenue because the assessment had not been completed in accordance with the provisions of section 13(7) of the Income Tax Act, 1961. Furthermore, the ld. CIT (Exemption) had been of the opinion that the AO had failed to make proper enquiries to ascertain the possible nexus between the society and its donors, which could attract the provisions of section 68 of the Income Tax Act, 1961. The ld. CIT (Exemption) had further observed that even though the anonymous donations amounting to Rs. 1,97,69,650/- had been charged to tax under section 115BBC, the interest under section 234A and 234B had not been charged. The ld. Sr. DR pointed out that this order under section 263 6 A.Y. 2013-14 Sh. Mahaveer Charitable Trust was challenged by the assessee before the Tribunal and the Tribunal had set aside the matter back to the file of the ld. CIT (Exemption) as it was of the opinion that the ld. CIT (Exemption) had not provided proper opportunities to the assessee. The ld. Sr. DR pointed out that once the order under section 263 ceased to be operative on account of the orders of the ITAT dated 3.08.2021, then the assessment order subsequently passed under section 143(3) r.w.s. 263 on 28.12.2018 stood automatically vacated and the assessment order dated 30.03.2016, that had earlier been cancelled, stood automatically revived. Therefore, he argued that the ld. CIT(A) was perfectly justified in allowing the appeals of the assessee against the order under section 143(3) r.w.s. 263, but he submitted that that appeal had been allowed not on the merits, but on account of the fact that the foundation of the said order, which was the order under section 263, had itself ceased to exist. Moreover, since the ld. CIT (Exemption) had subsequently decided not to proceed with the matter under section 263, those proceedings remained closed. But all these would not affect the appeal of the assessee against the original order under section under section 143(3), because no decision on merits had been taken with regard to the decision of the ld. AO, to bring anonymous donations to tax under the provisions of section 115BBC. It was that issue and that issue alone which was the subject matter of consideration before the ld. CIT(A) and it was submitted that the assessee had not furnished any evidence to controvert the findings of the ld. AO regarding the donations to it being anonymous. Accordingly, it was submitted that the ld. CIT(A) had recorded in his order that the entire submissions of the assessee had been on this technical issue which have been raised before the Tribunal also, and the ld. CIT(A) had dealt with this issue in great detail while finding it to be of no merit. But he had recorded that the assessee had not made any submission in respect of the grounds of appeal

However, he had not pronounced any order on the merits of the additions made by the ld. AO in that assessment. Therefore, the arguments advanced by the assessee, that once the matter had been decided by a CIT(A) on 10.01.2024 in its favour, the same could not be decided against it by another CIT(A) on the facts of the case, are without merit. The ld. CIT(A) hearing the appeal against the original assessment had complete jurisdiction to hear the appeal on the merits of the issue. However, it appears that the assessee has not submitted any arguments on the merits before the ld. CIT(A). Therefore, there is no infirmity in the orders of the ld. CIT(A), where he states that the assessee has not furnished any evidence in support of the grounds of appeal. Accordingly, ground nos. 1 to 8 of the assessee’s appeal are dismissed. In ground nos. 9 and 10, the assessee has submitted that the orders appealed against are contrary to the fact, law and against the principles of natural justice and against the binding precedence of various Hon’ble High Courts and Tribunals. It has also been prayed that the said order deserves to be set aside and the returned income disclosed by the assessee is 8