TaxTMI 
TaxTMI 
2011 (3) TMI 569
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....nd in law, the Ld. CIT(A) has erred in holding that res judicata is not applicable to IT proceedings and the Assessing Officer could ignore the orders for earlier years and could reopen assessment of subsequent assessment years on the basis of audit objection. 6. On facts and in law, the Ld. CIT(A) has erred in failing to decide the ground concerning non-service of valid notice u/s 148 in accordance with section 282 of the Income-tax Act, 1961. 3. Brief facts of the case are that returns of income for assessment years 2003-04 and 2004-05 were filed on 30.3.2005 (just after 1 and half months of order u/s 143(3) for assessment year 2002-03) declaring nil income after claiming exemption u/s 10(23C)(iiiab). These were accepted u/s 143(1)(a) and no notice u/s 143(2) was issued within the stipulated period. Notices u/s 148 have been issued in December, 2006. During the course of reassessment proceeding, the assessee challenged the reopening of the proceeding and reversal of the stand of the Department taken in assessment year 2002-03. This was the first objection of the assessee regarding validity of reassessment proceeding that notices u/s 148 were not served properly which in its....
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.... before ld CIT(A). Reliance was placed on the following judgments:- (a) ACIT v. Vision Inc. reported in 130 TTJ 696. (b) CIT v. Mani Kakkar reported in 18 DTR 145 (Del.). (c) CIT v. Rajesh Kumar Sharma reported in 311 ITR 235 (Del.). 5. As against this, Ld DR of the revenue supported the orders of the authorities below. 6. We have heard the rival submissions and have gone through the material available on record and the judgments cited by the Ld. AR of the assessee. We find that the objection of the assessee regarding improper service of notice issued by the Assessing Officer u/s 148 is on the basis that the signature of the recipient of the notice is not of any authorized person but the fact as noted by the Assessing Officer is that the notice was duly received by the authorized person of the assessee because such authorized person has written letter to the Assessing Officer in both the years asking the Assessing Officer to consider the return filed by the assessee on 30.3.2005 as a return furnished in response to the notice issued by the Assessing Officer u/s 148 of the Act. No defect has been pointed out by the Ld. AR of the assessee this noting of the Assessing O....
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....nt case, we have seen that an authorized person of the assessee was in fact in receipt of the notice issued by the Assessing Officer u/s 148 of the Act in both the years in the present case and on the basis of such notice, he has requested the Assessing Officer in both the years to consider the return of income filed by the assessee on 30.3.2005 as return filed by the assessee in response to notice u/s 148 of the Act. Because of this difference in fact, this Tribunal decision is of no help to the assessee in the present case. 8. The second decision cited by the Ld. AR of the assessee is the decision of Hon'ble Delhi High Court rendered in the case of CIT v. Mani Kakkar (supra). In that case, it has been noticed by the Hon'ble High Court of Delhi in para No. 3 of the judgment that factual position is that no notice whatsoever was served on the assessee prior to the reopening of the assessment proceedings. The facts in the present case are different because we have already noted that in the present case, notice in question for both the years was duly received by the authorized person of the assessee and action was taken by him on such notices and therefore, this judgment of Hon'bl....
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.... because it is due to change of opinion. Regarding this claim of change of opinion, it is submitted before us that status of assessee society is in all earlier years, it was accepted that the assessee's society and all educational institutions run by it are a single entity and exemption was allowed u/s 10(23C)(iiiab) and for one year i.e. assessment year 2002-03, the assessment was u/s 143(3). Hence, in the present two years, the stand of the revenue to treat the assessee society separately and each educational institution separately is nothing but change of opinion and therefore, reopening is not valid. 12. Regarding this aspect, it is noted by the Ld. CIT(A) on page No. 5 of the impugned combined order for both the years that the returns of the assessee have been processed u/s 143(1)(a) of the IT Act up to assessment year 2001-02 and hence, the Department did not have the opportunity to examine the claim of the assessee whether its income was exempt and whether all the conditions required for giving exemption were fulfilled. Regarding assessment year 2002-03, it is noted by the Ld. CIT(A) on page No. 6 of the impugned order that the Assessing Officer has allowed exemption to t....
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....he income and expenditure account of that particular school or college and not in the income and expenditure account of the society. It is further noted that the income of the society is from membership fees and donation only and no grant is received by it from the Govt. Thereafter, it is again noted by the Assessing Officer that Jat MHA Sr. Secondary School, Jat Education Society and CRM Public School, Rohtak are three institutions (out of total seven institutions) which are not getting any grant from the Govt. It is held by the Assessing Officer that because of this reason, these three institutions are not covered by the provisions of section 10(23C)(iiiab) of the Income-tax Act, 1961 as these are not wholly and substantially financed by the Govt. It is also noted by the Assessing Officer that the gross receipt of these three institutions exceed Rs. 1 crore and the same is not approved by the CCIT as required u/s 10(23C)(vi) of the Act. The Assessing Officer held that their income is not exempt in the absence of approval of CCIT. The Assessing Officer also held that it is clear that only a few units of the assessee were being substantially financed by the Govt. and income of othe....
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....ction 10(23C)(iiiad) are applicable. It is also submitted that capital expenditure cannot be disallowed and in support of this, reliance was placed on the judgment of Hon'ble Punjab & Haryana High Court rendered in the case of Pine Grow Charitable Trust v. Union of India as reported in 230 CTR 477. 17. As against this, Ld. DR of the revenue supported the orders of the authorities below. 18. We have heard the rival submissions and have gone through the material available on record and the judgments cited by the Ld. AR of the assessee. Regarding this submission of the assessee that the assessee is eligible for exemption u/s 10(23C)(iiiab) , we would like to reproduce the provisions of section 10(23C)(iiiab) which is as under:- "Any income received by any person on behalf of Any university or other educational institution existing solely for educational purposes and not for purposes of profit and which is wholly or substantially financed by the Govt.; or" 19. From the provisions of section 10(23C)(iiiab) as reproduced above, it is seen that we have to examine the position on the basis of individual institution and not with respect to an assessee society having several educ....
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....l/3rd of the total expenditure approximately. Regarding the other three institutions, there is no grant from the Govt. and for each of the year, the Assessing Officer has considered the aggregate gross receipts of these three institutions in each year and since the same was more than Rs. 1 crore in each year taken three institutions together, it was held by the Assessing Officer that exempted is not available to the assessee with regard to these three institutions because the assessee has not obtained the statutory approval of CCIT as required u/s 10(23C)(vi) of the Act. Now, the question is as to whether these institutions are covered by sub-clause (iiiad) of clause (23C) of section 10. As per the same, any income received by any person on behalf of any university or other educational institution existing wholly for educational purposes and not for purposes of profit if the aggregate annual receipt of such university or educational institution do not exceed the amount of annual receipt as may be prescribed is exempt. The amount of Rs. 1 crore has been prescribed as per rule 2(BC). As per the provisions of this sub-clause (iiiad) of clause (23C) of section 10, we are of the conside....