SHREE SHREE MOHANANANDA SAMAJ SEVA SAMITY,KOLKATA vs. ITO(EXEMPTION)-WARD 1(3), KOLKATA, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA (Before Sri J. Sudhakar Reddy, Accountant Member & Sri S.S. Godara, Judicial Member) I.T.A. No. 1140/Kol/2017 Assessment Year: 2009-10 Shree Shree Mohananda Samaj Seva Samity........................................................................... Appellant [PAN : AADTS 7675 N] Vs. Income Tax Officer (Exemption), Ward- 1(3), Kolkata.…………….........................……....Respondent

Appearances by: Sh. V.N. Dutta, appeared on behalf of the Assessee. Smt. Ranu Biswas, Addl. CIT, appeared on behalf of the Revenue. Date of concluding the hearing : September 17th, 2019 Date of pronouncing the order : October 1st, 2019

ORDER Per J. Sudhakar Reddy, AM :- This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)- 25, Kolkata (‘CIT’ for short) dated 28.02.2017 u/s 250(6) of the Income Tax Act, 1961 (‘the Act’ for short). 2. The assessee is a Society and filed its return of income for the Assessment Year (‘AY’ for short) 2009-10 on 22.09.2009. This return was processed u/s 143(1) of the Act on 13.01.2011. The facts of the assessee’s case are brought out at page 3 para 5 of the order of ld. Assessing Officer (‘AO’ for short) which is extracted for ready reference:

“5. It is found the assessment records for the A.Y. 2011-12 that the assessee is a charitable Society. It is registered u/s 12A of the I.T. Act, 1961 vide no. S-37/W.B.VII of 1979-80 dated 27.02.1980. The main activities of the trust was to establish, hold, maintain, manage, develop, contribute to and support public religious and charitable institution, centers, homes, temples and other institutions for the promotion and advancement of religious and charity and for spiritual Welfare of all mankind. During the previous year, the assessee had head office at Kolkata,Sri Sri Balananda Tirthashram, Puri, Sri Sri Balananda irthashram, Badrinath, Sri Sri Baleshwari Bahawan, Deogarh, Sri Sri Mohananda Eye Hospital, Midnapur, Sri Sri Mohananda Vidyapith,Midnapur, Late Hem Chandra Bandopadhya Databya Chikitsalaya, Shivniwas, Sri Sri Balananda Tirthashram, Vindaban, Sri Sri Balananda Tirthashram, Jamshedpur, Sri Sri Balammda Tirthashram Varanashi.”

2 I.T.A. No. 1140/Kol/2017 Assessment Year: 2009-10 Shree Shree Mohananda Samaj Seva Samity 3. Thereafter, the AO recorded the following reasons for re-opening the assessments:

“It is seen from the record that you had set apart Rs. 7,55,674/- u/s 11(2) of the Act in AY 2003- 04. You were required to apply this set apart fund within AY 2009-10. Records revealed that you have not done so. In that circumstances the amount of Rs. 7,55,674/- was to be treated as income u/s 11(3) of the Act in the AY 2009-10. This was not done in your return of income for AY 2009-10. Therefore the assessment for the AY 2009-10 was re-opened by issuing notice u/s 148 of the Act.” 4. Thereafter, a notice u/s 148 of the Act dated 28.03.2014 was issued re-opening the assessments u/s 147 of the Act. Admittedly, this notice was served by way of affixation.

“I have asked to serve a notice u/s 148 of the Income Tax Act, 1961, under office at the DDIT Exemption, Circle-1, Kolkata to Shree Shree Mohananda Samaj Seva Samity at AE-467, Salt Lake City, Kol- 64, issued by Ld. DDIT (E-1) Circle-1, Kol on 28.03.2014, but unfortunately there were none to receive the same from me, in this condition the said notice was affixed on the main door instead the service the notice on 29.03.2014 at 6:15 pm.” 6. The assessee replied vide letter dated 21.04.2014 protesting against the service of notice as follows:

“The above notice dated 28.03.2014 u/s 148 of the Act for the Assessment Year 2009-10 came to the knowledge of the above trust on 31.03.2014 since the above notice was affixed on outside the office of the above trust. In compliance to the above notice kindly treat the return filed u/s 139 of the Act on 22.09.2009 is the return filed u/s 148 of the Act under protest. The service of the above notice u/s 148 of the Act by affixation is also under protest. You are requested to kindly supplied or served the copy of the “Reasonable Belief' that caused the escaped income within the meaning of section 147 of the Act upon the assessee trust for reopening the assessment for the above assessment year otherwise the whole reassessment proceedings would be void ab initio and opposed to requirement of law.” 7. After this receiving the reasons for re-opening from the AO vide letter dated 12.05.2014 objections were raised by the assessee vide letter dated 03.07.2014. These objections were rejected by the AO vide his letter dated 19.09.2014 only on the issue of objections for serve of notice u/s 148 of the Act. He held that the service by affixation was a valid service.

3 I.T.A. No. 1140/Kol/2017 Assessment Year: 2009-10 Shree Shree Mohananda Samaj Seva Samity 8. The objections raised by the assessee on merits of the reasons recorded for re- opening have not been dealt with by the AO in this letter dated 19.09.2014. We extract these objections on merits for ready reference:

“In respect of the “Reasonable Belief” as supplied to the assessee, it is stated that “It is seen from the record that you had set apart Rs.7,55,674/- u/s 11(2) of the Income Tax Act, 1961 in A.Y.2003-04. You are required to apply this set apart fund within A.Y.2009-10. Records revealed that you have not done so. In that Circumstances the amount of Rs.7,55,674/- was to be treated as income u/s 11(3) of the Income Tax Act,1961 in the A,Y, 2009-10. This was not done so in your return of income for A.Y.2009-10. Therefore the assessment for the A.Y.2009-10 was reopened by issuing notice u/s 148 of the Act.” In this regard it is submitted that all along the assessee filed the return of income audited account and audited report. The assessee has filed the details of statement as required Scheduled I of the return form filed in separate sheet for the A.Y. 2009-10 whereas the assessee had to file the details of amounts accumulated / set apart within the meaning of section 11(2) in the last eleven years, viz., previous years to the current years assessment years and ten preceding assessment years in tabular form. In the fifth column of the said tabular form of the return form filed it was required to file the amounts applied during the year. The copy of the details filed as per tabular form of the “Schedule I” is enclosed here with. On going through the said statement filed as per “Scheduled I” of Column 5& 6 the assessee had utilised (i.e. applied during the year) the excess amount more than the amount available for and in the A.Y. 2005- 06, 2006-07 &2007-08. The balance amount was utilised and taken from the fund available from the A.Y. 2003-04 of Rs.7,55,674/-. The excess amount utilised for the A.Y. 2005-06, 2006- 07 &2007-08 were Rs.5,37,783.52, Rs.78,454/- & Rs.5,72,079/- respectively. The same would be revealed from the column 5 & 6 of the details submitted as per Scheduled 1 of the return form. Same statement as per “Schedule I” filed all along with all return of income in all assessment years and it would be available in the assessment record of the assessee filed before the department. The copy of statement filed for A.Y. 2011-12 is enclosed for your perusal. The statement filed during the assessment proceeding u/s 143 (3) of the Act for A.Y. 2011-12 as per query by the then assessing officer, the copy which is enclosed herewith, it is submitted that as clarified and discussed with the then assessing officer the utilised / application of fund was filled corresponding to the fund of the A.Y. 2005-06,2006- 07,2007-08, 2008-09, 2010- 11 corresponding column to the A.Y. 2006-07, 2007-08, 2008-09, 2009-10,2010-11, 2011-12 respectively, ft was submitted accordingly as discussed and clarified with the then assessing officer. Moreover the department had collected the aggregate amount of Rs. 15,50,000/- before the outcome of the appeal order as outstanding demand raised after completed the assessment u/s 143(3) for A.Y. 2003-04 from the period 4.08.2006 to 12.06.2008. The same were not refunded to the assessee till the 6.01.2010. It was evident from the petition filed by assessee on 6.01.2010 where the assessee has claimed for refund after the CIT (A) had given full relief. The copy of said petition is enclosed where the details of collections by the department were evident. All these records are available in the assessment records of the assessee in the A.Y. 2003-04. It is submitted that the collection of amount of Rs. 15,50,000/- by the department during the period as submitted is effected the function of the trust within the object of the trust as well as tarnished the image of trust. In these views above fact and submission the recording of reason in the “Reasonable Belief’, as supplied, is infructuous, void ab initio and not tenable in law. It is submitted that the assessee had disclosed truly and fully disclosed in the return of income. The reason is based on presumption, surmise and conjecture the reopening of the assessment is opposed to requirement of law and not tenable in law. In view of above fact and submission, it is therefore you are humbly requested that kindly drop the reassessment proceedings. Without prejudice to the above your kind attention is drawn that as per records of the assessment records of the assessee for die A.Y. 2003-04 the department had filed appeal against order of the CIT (A) before the ITAT vide ITA NO 913/Kol/2013 on 23.04.2014 where the CIT

4 I.T.A. No. 1140/Kol/2017 Assessment Year: 2009-10 Shree Shree Mohananda Samaj Seva Samity (A) allowed the exemption claimed u/s 11 of the Act. Without prejudice till the pending of appeal before the ITAT your reason recorded in the “Reasonable Belief’ is contradicting and such action for reopening of the assessment is also bad in law and opposed to requirement of law. Considering all the above fact and submission you are requested kindly drop the above reassessment proceedings since the recording of “Reasonable Belief’ as well as the reason and the service of notice by affixation are opposed to requirement law and not tenable in law.” 9. Non-disposal of these objections on the merits of reasons recorded for re- opening the assessment by the AO prior to completion of the assessment, in our view makes the assessment bad in law. These Objections were also not dealt with separately in the assessment order.

“S. 147/148: It is mandatory for the AO to follow the procedure laid down in GKN Driveshafts 259 ITR 19 (SC) and to pass a separate order to deal with the objections. The disposal of the objections in the assessment order is not sufficient compliance with the procedure. The failure to follow the procedure renders the assumption of jurisdiction by the Assessing Officer ultra vires (Bayer Material Science 382 ITR 333 (Bom) & KSS Petron (Bom) followed).” 11. Respectfully following the same, we hold that the re-opening of assessment is bad in law. Hence, we quash the assessment order on this ground. As we have quashed the re-opening itself, we do not deal with the other grounds raised by the assessee, as it would be an academic exercise.

Kolkata, the 1st October, 2019.

Sd/- Sd/- [S.S. Godara] [J. Sudhakar Reddy] Judicial Member Accountant Member Dated : 01.10.2019 Bidhan

5 I.T.A. No. 1140/Kol/2017 Assessment Year: 2009-10 Shree Shree Mohananda Samaj Seva Samity Copy of the order forwarded to: 1. Shree Shree Mohananda Samaj Seva Samity, AE-467, Salt Lake City, Kolkata- 700 064. 2. Income Tax Officer (Exemption), Ward- 1(3), Kolkata. 3. CIT(A)- 25, Kolkata. (sent through mail) 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. (sent through mail)