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Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee under section 253 of the Income-tax Act (the Act) is directed against the order of ld. CIT(E) dated 24.03.2017 for Assessment Year (AY) 2012-13. The assessee has raised the following grounds of appeal: (1) On the facts and circumstances and in law the learned CIT(E) grossly erred in invoking jurisdiction under S 263 of the Income Tax Act, 1961 when the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue. (2) On the facts and circumstances and in law the learned CIT(E) misinterpreted the basic fact that the assessee is a purely religious Trust and was entitled to exemption u/s 11 of the Income Tax Act, 1961 and that the provisions of section 13(1)(b) of the Income Tax Act, 1961 are not applicable at all. - M/s Imaan Foundation
(3) On the facts and circumstances and in law the learned CIT(E) misinterpreted the decision of the Supreme Court in CIT vs. Dawoodi Bohra Jamat (2014) 364 ITR 31/222 Taxman 228 (Mag)/43. Thus overlooking the fact that this is a debatable issue in which section 263 of the Income Tax Act, 1961 cannot be invoked. 2. Brief facts of the case are that the assessee is AOP/Trust claims to be a charitable organization and engaged in establishing, running and conducting Deeni Madresses in Mumbai or in India for advancement of knowledge of Shiajefery Theology of Islam. The assessee is a registered charitable organization registered with charity Commissioner Bombay and was having registration u/s 12A dated 16.09.1998. The assessee filed return of income for relevant AY on 27.09.2012 declaring total income of Rs. 1,40,444/-.
Assessment was completed on 20.02.2015 u/s 143(3) of the Act, accepting the return of income filed by the assessee. Subsequently, the assessment order passed u/s 143(3) dated 20.02.2015 was revised by ld. CIT(E) under section 263 of the Act dated 24.03.2017. The ld. CIT(A) set-aside the assessment order holding that the order passed by AO is erroneous and so far prejudicial to the interest of revenue. The AO allowed exemption u/s 11, though the assessee-trust was hit by the provision of section 13(1)(b) of the Act. The Ld CIT (E) directed the AO to make the assessment afresh after giving opportunity to the assessee. Aggrieved by the order of ld. CIT (E), the assessee has filed the present appeal before the Tribunal.
We have heard the ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the Revenue and perused the 2 M/s Imaan Foundation material available on record. The ld. AR of the assessee argued that AO while framing assessment order made full-fledged enquiry. The AO issued notice dated 28.07.2014 u/s 143(2) and 142(1) of the Act requiring the details of object of the Trust/Institution, nature of activities carried during the year along with copy of Trust-deed, Registration Certificate, Certificate u/s 80G, Certificate of Charity Commissioner, Income and Expenditure Account. The assessee furnished all the details required by AO. The AO after fully satisfying passed the order of assessment. The AO raised the necessary queries after satisfying himself passed the order under section 143(3). The order is neither erroneous nor prejudicial to the interest of Revenue. The assessing officer passed the order which is based on one of the possible view. It was argued that assessment order for AY 2007-08 was passed under section 143(3) on 09.04.2009 and the assessee was granted exemption. Again for AY 2008-09 assessment orders was passed under section 143(3) on 12.05.210 and the assessee was granted similar relief.
Further again for AY 2014-15 the similar exemption was granted to the assessee in the assessment order passed under section 143(3) on 29.07.2016.
The ld AR for the assessee placed the copy of the reply filed before assessing officer during assessment proceedings and the order dated 12.05.2010 passed under section 143(3) of the Act. Similar queries were raised during the assessment for AY 1990-91, after proper evaluation of fact M/s Imaan Foundation and the reply furnished by assessee. The assessee was treated as charitable organization.
The ld. AR of the assessee further argued that assessee is a religious charitable Institution and not hit by the provision of section 13(1)(b) of the Act. In support of his submission, the ld. AR of the assessee relied upon the decision of Hon’ble Delhi High Court in CIT vs. DLF Ltd. [2013] 350 ITR 555 (Del) and ONGC vs. DCIT (104 TTJ 900). The ld. AR of the assessee submitted that the ld. CIT(E) has gone on wrong premises holding that assessee is a charitable Trust. However, the assessee is a religious charitable Trust.
On the other hand, the ld. DR for the Revenue strongly supported the order of ld. CIT(E). The ld. DR for the Revenue submitted that activity of the assessee is mainly for the benefit of the particular community and thus the provisions of section 13(1)(b) are attracted, thus, the exemption under section 11&12 are not available to the assessee. Moreover, the order of ld CIT(E) relied upon the decision of Hon’ble Apex Court in CIT vs. Dawoodi Bohara Jamat [2014] 43 taxmann.com 243 (SC). The ld. DR for the Revenue argued that the decision of Hon’ble Supreme Court is squarely applicable on the facts of the present case. In the rejoinder argument, the ld. AR of the assessee argued that the decision relied by ld. CIT(E) and ld. DR is rather favors the assessee. The revenue must follow the principal of ITA No.3168/M/2017- M/s Imaan Foundation consistency and should not treat the assessee indifferently for different assessment year.
We have considered the rival submission of the parties and have gone through the orders of authorities below. It is not in dispute that assessee is a registered organization registered with the Charity Commissioner Bombay.
The assessee is also having registration u/s 12A of the Act which is still valid. The registration of assessee has not withdrawn/cancelled. The assessee was granted benefit of section 11 & 12 in the assessment order passed u/s 143(3) for AY 1990-91, dated 09.04.2009 , AY 2007-08 under section 143(3), for AY 2008-09 under section 143(3) dated 12.05.2010 and again for AY 2014-15 passed under section 143(3) on 29.07.2016. There is no change in the constitution of the assessee/organization. The Hon’ble Apex Court in case of CIT vs. Dawoodi Bhora Jamat (2014) 43 Taxmann.com 243 held that where the Trust formed with both the religious and charitable object in term of section 13(1)(b) , its claim for registration u/s 12AA can be denied only in case when object are carried out for the benefit of a particular religious community or caste. The assessee is claiming to be the purely religious Trust and argued by ld. AR of the assessee. The activity of the assessee is not disputed. The assessee in its reply dated 08.08.2016 for show-cause notice issued u/s 263 contended that assessee is a purely religious Trust. The AO while passing assessment order M/s Imaan Foundation for AY 1990-91 concluded that “close scrutiny, it was found that entire sum 42,95,589/- has been spent on the religious purpose inconformity with religious object of the Trust. These expenses are fully supported by bills/vouchers and they are duly audited by the Auditors”. We have perused the Trust-deed dated 23rd October 1981, the Trust was 7. created for charitable and religious purpose of this Shia community of India.
The Hon’ble Apex Court in Dawoodi Bhora Jamat (supra) held that the Trust which is registered with composite object i.e. charitable and religious would not be expelled out of the purview of section 13(1)(b) per se the section requires it is to be established that such charitable purpose is not for the benefit of particular religious community or caste. That is to say, it needs to be examined whether such religious charitable activities carried by the Trust, only benefits certain particular religious community or class or serve across the communities and for society at large.
We have seen that during the assessment proceeding for AY 2012-13, the AO vide notice u/s 143(2) dated 28.07.2014 required the assessee to furnish the copy of Trust-deed, Income & Expenditure Account, Balance-sheet of Trustees, details corpus and non-corpus donation receipt, details of Administrative Expenses and detailed of expenses incurred on object of the Trust with specification in cash or non-cash and other details related with utilization of income exercised in earlier years and during the year. The AO M/s Imaan Foundation passed the assessment order on 20.02.2015. The AO passed the assessment order only after seeking reply from the assessee. Though, the AO has not explained the nature of queries and his decision/observation/finding on such queries. We have further noted that the assessee was granted exemption u/s 11 or 12 for AYs 1990-91, 2007-08, AY 2008-09 and further in AY 2014-15 in all assessment order passed u/s 143(3) of the Act. We are of the considered view that the Revenue must follow the principle of consistency when there is no variance of fact. Admittedly there is no change in the constitution of the Organization/Trust. Thus, in our view, the order passed by AO is not erroneous. Thus the twin conditions enunciated under section 263 is not fulfilled while revising the order. It is settled law that twin condition must be satisfied while exercising the order u/s 263. Thus, in view of the above discussion, we hold that the assessee is not hit by the provision of section 13(1)(b) of the Act. With the above observation, the grounds of appeal
raised by assessee are allowed, the order passed by ld CIT(E) is set- aside.
9. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 15th day of September 2017. Sd/- Sd/-/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER Mumbai; Dated 15/09/2017 S.K.PS Copy of the Order forwarded to :
1. The Appellant ITA No.3168/M/2017- M/s Imaan Foundation