“Section 11(5)(ii)”
The decision most relied on for Section 11(5)(ii) is Dy. CIT v. Zuari Estate Development and Investment Co. Ltd. (373 ITR 661), cited in 61 judgments on BharatTax.
Leading authorities on Section 11(5)(ii)
Reopening of assessment beyond four years under Section 147 requires strict satisfaction of conditions precedent, including fresh tangible material, and cannot be based on a mere change of opinion from the original assessment. Further, debatable or interpretational issues cannot be adjusted during processing under Section 143(1).
Charging fees, even when having regard to the economic status of beneficiaries, is permissible for the sustenance of charitable activities, provided it is necessary for operation and running expenses and does not amount to carrying on trade or commerce. This applies even after the introduction of the proviso to Section 2(15) of the Income Tax Act, 1961.
Once an Assessing Officer forms a reason to believe that income has escaped assessment and issues a notice under section 148, they can assess or reassess income related to other issues not originally included in the reasons recorded.
An order passed by the CIT under Section 12A of the Income Tax Act is quasi-judicial. Until October 1, 2004, there was no express provision in the Act for the CIT to cancel a registration certificate once granted.
The proviso to section 2(15) should not be invoked to deny exemption to a sports organization if its activities are not predominantly in the nature of trade, commerce, or business.
The income of a society for mutual benefits of its members is exempt from tax, as demonstrated in this case concerning a cooperative bank.
A reassessment order is invalid if the Assessing Officer initiates proceedings based on an alleged transaction but makes no addition to income in respect of that specific transaction in the final assessment order. The reassessment order must be based on actual findings, not merely on initial suspicions that are not substantiated.
