SOCIETY FOR TRAINING AND RESEARCH ON PANCHAYATS AND RURAL DEVELOPMENT, KALYANI,KOLKATA vs. ACIT, CIRCLE-41, NADIA, NADIA

IN THE INCOME TAX APPELLATE TRIBUNAL “D”, BENCH KOLKATA BEFORE SHRI S.S.VISWANETHRA RAVI, JM & DR. A.L.SAINI, AM आयकर अपील सं./ITA No.161/Kol/2015 (�नधा�रण वष� /Assessment Year:2010-2011) Society For Training and Vs. ACIT-Circle, Kurchipota Research on Panchayats Lane, Krishna Nagar, Nadia and Rural development, kalyani Nadia, West Bengal. ICMARD building, 6th Floor, Block -14/2, CIT Scheme VIII (M), Bidhan Nagar, Kolkata-700067 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AADTS2844P .. (अपीलाथ� /Appellant) (��यथ� / Respondent) Assessee by : Shri Anjan Kumar Bandyopadhyay Revenue by : Shri Tanuj Negi , JCIT सुनवाई क� तार�ख / Date of Hearing : 28/10/2016 घोषणा क� तार�ख/Date of Pronouncement 23/11/2016 आदेश / O R D E R Per Dr. Arjun Lal Saini, AM: The captioned appeal filed by the Assessee, pertaining to the assessment year 2010-2011, is directed against an order passed by ld. Commissioner of Income Tax (Appeals)-XXXVI, Kolkata in Appeal No.229/CIT(A)-XXXVI/Kol/ACIT,Cir/Nadia/2013-14 dated 29.10.2014, which in turn arises out of an order passed by the Assessing Officer (AO) Under Section 143(3) of the Income Tax Act 1961, (in short the ‘Act’), dated 22/03/2013. 2. The brief facts qua the assessee are that the assessee filed its return of Income on 29/03/2010 declaring total income NIL. The assessee`s case was selected for scrutiny U/s 143(3) of the Act and the Assessing Officer completed the assessment by making addition of Rs. 38,21,630. During

2 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development

the course of assessment it was found by the Assessing Officer that the

Society had claimed deduction on the entire income of Rs. 38,21,631/- but

assessee failed to produce any documentary evidence in support of the

claim. Hence, the total income is liable to pay tax as non-specified AOP.

Assessee did not appear before the Assessing Officer and did not submit

the explanations/documents before the AO, therefore the AO framed the

assessment U/s 144 of the Act.

filed an appeal before the ld CIT(A), who has also confirmed the action of

the Assessing Officer observing the followings:

“5.0 Appellant`s submission and facts available on record is carefully considered. Assessment record was called for and verified. On verification of assessment record, it is seen that, AO had repeatedly called for the evidence based on which the assessee had treated its income as exempt. In fact before making addition a show cause notice was issued to the assessee by AO, for treating its entire income as taxable. During the appellate stage, assessee claims to have made an application u/s 12A addressed to Assessing Officer, on 27th March,2003. However, no evidence of making such application has been produced either during assessment or appellate proceeding. In any case as has been clearly laid down in section 12A itself, such application has to be made before Commissioner of Income Tax and not AO. Thus, there is no evidence, available on record of the assessee having made an application to Commissioner U/s 12A or Commissioner granting registration after due examination u/s 12AA of the IT Act. In the absence of such registration, provisions of section 11 & 12 will not apply in relation to income of assessee institution. Therefore, AO had correctly treated status of assessee as AOP and treated entire income as taxable. 6.0 In the result appeal is dismissed.”

Therefore, ld CIT (A) held that the assessee did not make an application

U/s 12A before the Commissioner of IncomeTax. However, the assessee

made an application before the AO but the AO is not an authority to grant

3 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development

registration U/s 12AA of the Act. Therefore, the ld. CIT(A) had confirmed

the action of the Assessing Officer. Not being satisfied with the order of

the ld CIT(A), the assessee is in further appeal before us and has taken

the following grounds of appeal:

“1.The order of the ld Commissioner of Income Tax (Appeals) xxxvi Kolkata to the extent that he has confirmed the addition of Rs. 38,21,630/- is contrary to law and facts of the case. 2.The ld.Commissioner (Appeals) ought to have found that the addition of Rs.38,21,630/- includes interest of Rs. 3730424/- on funds mainly received from Central Govt. for utilization for the purpose of Government projects. 3.The Appellant had filed an application in form 10A on 27th March for registration as Charitable Trust U/s 12A of the Income Tax Act 1961 and all the assessment orders passed by the Assessing Officer except for the Assessment year 2010-2011, had allowed exemption of interest income and thereby application for registration was approved defacto. 4.The ld. Commissioner (Appeals) ought to have found the Asstt Commissioner of Income Tax Circle-Nadia had ignored all the documents including acknowledgement copy of Form 10A on record. 5.Under the above facts and circumstances of the case, the impugned order is not based on factual position and therefore there cannot be any demand of Tax and Interest aggregating Rs.17,00,473/-. For that, the impugned order is liable to be set aside. 6.For these and other reasons which may be urged at the time of hearing, the appeal may be allowed and justice rendered.”

of appeal but at the time of hearing the main grievance of the assessee

has been confined to the issue that Assessee had applied for registration

U/s 12A (a) to get the society registered under Charitable Trust U/s 12AA

of the Income Tax Act 1961.The Department allowed exemption in

4 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development previous years by sending intimation U/s 143(1) of the I.T. Act. The

Assessing officer came to know in Assessment Year 2010-11 that

Assessee ( Society) had not made an application U/s 12A(a) of the Act,

and it is not registered till date under section 12AA of the Act. Therefore,

the Assessing Officer denied exemption in Assessment Year 2010-11.

Therefore, the issue before us is that whether the Assessee (Society)

is treated as registered U/s 12AA of the Income Tax Act, 1961 or

Not?

4.1 Before us, the Ld. AR for the Assessee has submitted that object of

the society is to meet the various needs of training and research related to

Panchayat and Rural Panchayats Development/Panchyat Raj

Institutions/Provide support to the department, the Directorate the West

Bengal State Rural Development Agencies/the PRIS/Extension of

Training Centre District Training Centre/work for Rashtraya Gram Swaraj

Yojona and World bank supported ISGP projects, etc.

The Assessee ( Society) had applied before the ACIT/ITO,WD –(3) on dated 27th March,2003. After filing of Form No. 10A the assessee visited

concerned department for more than one time but failed to obtain

registration certificate. However, the Assessing officer allowed exemption

to the assessee ( Society) in all previous years but denied the exemption

for A.Y.2010-11. The Assessing Officer came to know in the Assessment

Year 2010-11 that the Assessee ( Society) had applied for registration U/s

12A of the Act but till date it did not get registration certificate U/s 12AA of

5 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development

the Act. This was the reason the Assessing Officer denied the exemption

in the A.Y 2010-11.

The ld AR for the assessee has further submitted that the Assessee

(Society) has been getting exemption since Assessment Year 2005-06.

The assessee society got the intimation U/s 143(1) of the I. T.Act for the

assessment years 2005-06, 06-07,07-08,08-09 and 09-10. The Assessing

officer disputed the exemption and denied the exemption only in

A.Y.2010-11. The ld AR further stated the assessee(Society) also got the

exemption for Assessment Years 2011-12 & 2012-13 by way of receiving

the intimation U/s 143(1) of the I.T. Act, therefore it would be treated that

the deemed registration of the Assessee (Society) had already taken

place. To support his arguments the ld AR drew our attention towards the

Hon`ble Supreme Court judgment in the case of CIT,Kanpur &Ors Vs.

Society for the Promn.of Edn, Civil Appeal No.1478 of 2016, wherein the

Hon`ble Supreme Court observed as follows:

“3.the short issue is with regard to the deemed registration of an application under section 12AA of the Income Tax Act. The High Court has taken the view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision. 4. The Learned Additional Solicitor General appearing for the appellants, has raised an apprehension that in the case of the respondent, since the date of application was of 24.02.2003, at the worst, the same would operate only after six months from the date of application. 5.We see no basis for such an apprehension since that is the only logical sense in which the judgment could be understood. Therefore, in order to disabuse any apprehension, we make it clear that the registration of the application under section 12AA of the Income Tax Act in the case of the respondent shall take effect from 24.08.2003.”

6 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development The ld.AR for the assessee explained us that the above mentioned

judgment of Hon`ble Supreme Court is squarely applicable to the

assessee under consideration, therefore the assessee is entitled for

exemption, as if the assessee is a registered trust under section 12AA of

the Income Tax Act.

4.2 On the other hand the Ld. Departmental Representative (DR) for

the Revenue has vehemently submitted that the assessee under

consideration had made an application U/s 12A (a) of the Income Tax Act

only before the Income Tax Officer. In order to get registered under

charitable trust ( U/s 12AA ), the assessee should make an application

before the concerned Income Tax Authority. The Concerned Income Tax

Authorities are Principal Commissioner of Income Tax or Commissioner of

Income Tax. The assessee made an application before the Income Tax

officer , who is not a prescribed authority to register the charitable trust.

Hence it would be treated that no any application had been made by the

assessee to get registered as a charitable trust till date. For example

appeal against an order passed by the Assessing Officer U/s 143(3) can

be made by the Assessee before the jurisdictional Commissioner of

Income Tax (Appeals) but if the assessee files the said appeal before the

Chief Commissioner of Income Tax, then it would be treated that no any

appeal has been filed by the assessee, because as per the provisions of

the Act, the Chief commissioner of Income Tax, is not an authority to hear

the appeal against the order passed by the Assessing Officer U/s 143(3)

of the Act. In this case the assessee can not take the shelter/make

7 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development excuse that deemed registration concept as held by the Hon`ble Supreme

Court in the case cited (supra) would be applicable to him. Had the

assessee made an application U/s 12A (a) of the Act before the Principal

Commissioner of Income Tax or Commissioner of Income Tax, then the

case of Hon`ble Supreme Court cited (supra) would have been applicable

to the assessee under consideration.

The ld DR for the Revenue has also pointed out that the assessee had

not produced any evidence (of making such application U/s 12A(a)) either

before Assessing Officer or before CIT (Appeals). The application U/s

12A(a) acknowledged ( Stamped by AO) by the Assessing officer has

been produced by the assessee first time before us, therefore it is an

additional evidence. The application U/s 12A (a) was neither produced

before AO nor before CIT (Appeals). Therefore, the ld DR has defended

the order passed by the ld CIT(A) on three counts: 1) The application U/s

12A(a) had not been made by the Assessee before the prescribed

authority, that is, Principal Commissioner of Income Tax or Commissioner

of Income Tax, therefore the assessee is not entitled to take the benefit of

deemed registration as per the principle laid down by Hon`ble Supreme

Court, in the case cited (Supra). 2) The application U/s 12A(a) was neither

produced before Assessing Officer nor before CIT(A). 3) Intimation U/s

143(1) is not an assessment order. In previous years the department sent

only intimation U/s 143(1) of the Act, where the Assessing officer does not

get opportunity to verify the records of the assessee in detail.

8 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development 4.3 Having heard rival submissions, perused the material available on

record, we are of the view that there is merit in the submissions of the ld

DR for the revenue, as the propositions canvassed by the Ld DR are

supported by the facts explained by him, as cited above.

As ld DR explained that in order to get registered under charitable trust (

U/s 12A ), the assessee should make an application before the concerned

Income Tax Authority. The Concerned Income Tax Authorities are

Principal Commissioner of Income Tax or Commissioner of income Tax.

The Assessee under consideration filed an application before the

Assessing Officer who is not an authority to register the assessee under

charitable trust. In order to take the benefit of the judgment of Hon`ble

Supreme Court, cited supra, at least an application U/s 12A (a) should be

made before the prescribed Income Tax authority. Therefore, the

judgment of the Hon`ble Supreme court, cited supra by the ld AR for the

assessee does not apply to the facts under consideration.

Besides, the application U/s 12A(a) was neither produced before

Assessing Officer nor before CIT(A), therefore we may view this to

send/remit the case back to Assessing Officer to examine the application.

We think that it will not serve any purpose to remit the case back to

Assessing Officer because it is very much apparent on the face of

application U/s 12A(a) that it was submitted by the assessee only to the

Income Tax Officer who is not an authority to register the trust U/s 12AA

of the Act. The application was received/ stamped by the Income Tax

Officer and it is very much clear from the Xerox copy of the application

9 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development

submitted by the assessee before us. Therefore it would be treated that

no application has been made by the assessee to the prescribed Income

Tax authorities.

At this juncture we reproduce here the relevant portion of section 12A(a)

and Section 12 AA of the Act as follows:

“Section 12A [Conditions for applicability of sections 11 and 12]

(1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:— (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Principal Commissioner or Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA………………………………………………..”

SECTION 12AA :Procedure for registration

(1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1)] of section 12A, shall— (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he— (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution,and a copy of such order shall be sent to the applicant”

It is very much clear from the above cited section 12A and 12AA of the

Income Tax Act that in order to get the benefit of deemed registration as

explained by the Hon`ble Supreme Court in the case cited supra, at least

the assessee must file an application U/s 12A(a) before the Principal

Commissioner of Income Tax or Commissioner of Income Tax.

10 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development We also reiterate the stand taken by the ld AR for the assessee that the

department had given exemption to the assessee, as if assessee is a

registered trust, and the assessee`s income was exempted by the

department for the Assessment Years 2005-06,06-07,07-08,08-09,09-

10,11-12 and 12-13 as per the Intimation U/s 143(1) of the I.T. Act. The

Intimation U/s 143(1) is not an assessment order and the Assessing

Officer does not get opportunity to examine the records of the assessee,

therefore the plea of the assessee is not accepted because here the

assessment had been completed by the deparment U/s 143(1) which is

only intimation not an assessment order. In case of an intimation U/s

143(1) the Assessing Officer does not get opportunity to examine the

records of the assessee, therefore the arguments of the ld AR that the

Department had already provided exemptions in earlier years and

subsequent years, are not acceptable. Moreover, the Hon`ble Supreme

Court case cited above is applicable only where an assessee makes an

application U/s 12A(a) and the Department does not respond within six

months then it would be treated that the registration has taken place. It

does not apply to section 143 (1) of the Act where the department sends

intimation without doing proper scrutiny of the records of the assessee.

Hence intimation U/s 143(1) is not an assessment order and not an

application U/s 12A(a) of the Act therefore Hon`ble Supreme Court case

law cited supra, does not apply to the facts under consideration.

Based on the above cited factual position, we are of the view that

Assessee under consideration did not make an application U/s 12A(a) of

11 ITA No.161/Kol/2015 Society for Training & Research on Panchayats & Rural Development the Act before the prescribed Income Tax Authority and intimation U/s

143(1) is not an assessment order ( because AO does not get opportunity

to ask the assessee to produce before him applications/explanations etc)

and judgment of the Hon`ble Supreme Court cited by the assessee does

not apply to section 143(1) of the Act, hence we do not hesitate to confirm

the order passed by the ld.CIT(A).

4.4 In the result, the appeal filed by the assessee is dismissed.

Order pronounced in the open court on this 23/11/2016.

Sd/- Sd/- (S.S.VISWANETHRA RAVI) (DR. A.L.SAINI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक Dated 23/11/2016 आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant-Society For Training & Research on Panchayats and Rural Development 2. ��यथ� / The Respondent.-ACIT, Circle, Nadia 3. आयकर आयु�त(अपील) / The CIT(A), Kolkata. 4. आयकर आयु�त / CIT �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, कोलकाता / DR, ITAT, Kolkata 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Asstt. Registrar) आयकर अपील�य अ�धकरण, कोलकाता / ITAT, Kolkata