TaxTMI 
TaxTMI 
2011 (1) TMI 1048
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.... thus, showing loss of Rs. 2,82,785/-. Pursuant to notice issued under section 142(1) of the Act, the petitioner by a reply filed in July 2008, stated that its activities were previously exempt under section 10(20) of the Act (before its amendment by Finance Act, 2002 with effect from 1.4.2003) as local authority because of its object of "advancement of any other object of the general public utility". It was also stated that the Commissioner of Income Tax had granted registration under section 12AA of the Act and that its activities are covered under section 2(15) of the Act defining "charitable purpose" and that the registration granted under section 12AA was in order and as such there was no question of rejecting the petitioner's claim of being assessed under sections 11 to 13 of the Act. The Assessing officer framed assessment under section 143(3) of the Act vide order dated 31.7.2008 wherein he referred to the above referred letter and recorded in paragraph 2 thereof that, "The assessee carries on charitable activities registered under 12A of the I.T. Act, 1961", and computed the total income giving the specific deduction of Rs. 32,40,212/- and Rs. 45,00,000/-, totalling to Rs.....
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....sallowed the exemption while finalizing the assessment under section 143(3) of the Act, the income to the aforesaid extent had escaped assessment. 4. Inviting attention to the order made under section 143(3) of the Act as well as to the notice issued under section 142(1) of the Act, it was pointed out that the petitioner had specifically claimed deduction of Rs.32,40,212/- and 45,00,000/- totalling 77,40,212/- as charitable trust registered under section 12AA of the Act by the Commissioner. The Assessing Officer had thereafter issued notice, in response to which the petitioner had given explanation as to what were its activities, what were its objectives, the rules of the institution, the fact of registration by the Commissioner under section 12AA of the Act, that its activities were covered under the definition of charitable purpose under section 2(15) of the Act and that, it is, therefore, entitled to be assessed as a Trust and to the above deductions. That on considering the elaborate reply, the Assessing Officer, after due application of mind, had passed the order under section 143(3) of the Act allowing the deductions in question. It was urged that in the circumstances, the....
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....round of the aforesaid facts and contentions, it may be germane to refer to the reasons recorded which read as under: "The assessee has filed his return of income for A.Y. 2006-07 showing the total income of Rs. 2,82,785/-. The assessment u/s 143(3) of I.T. Act finalized on 31.7.2008 accepting the returned income. From the assessment order, it is observed that the assessee was allowed the following deductions / exemption u/s 11 & 11(2) of I.T. Act: (i) Amount accumulated or set apart/finally set apart for application to Charitable or religious purpose (max. 15% of the income of the trust) Rs. 32,40,212/- (ii) Amount accumulated or set apart for specified purposes as per section 11(2) Rs. 45,00,000/- Total : Rs. 77,40,212/- The Revenue Audit Party has observed that in the case of the assessee, no trust deed has been executed and registered setting out its objectives, the property of the assessee is also not held under assessee-Trust. In the light of the above, even if the assessee has obtained registration u/s 12AA of I.T. Act as an institution carrying out charitabl....
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....perusal of the judgment of the Gujarat High Court in the case of Hiralal Bhagwati (supra) the Supreme Court held that the question stands concluded by the said judgment, which has attained finality since the revenue did not challenge the decision in the said case. 10. This High Court in the case of Ahmedabad Urban Development Authority (supra), has held thus: "9. Section 12AA of the Act lays down the procedure for registration in relation to the conditions for applicability of sections 11 & 12 as provided in section 12A of the Act. Therefore, once the procedure is complete as provided in sub-section (1) of section 12AA of the Act and a Certificate is issued granting registration to the Trust or Institution it is apparent that the same is a document evidencing satisfaction about : (1) genuineness of the activities of the Trust or institution, (2) about the objects of the Trust or Institution. Section 12A of the Act stipulates that provisions of sections 11 & 12 shall not apply in relation to income of a Trust or an Institution unless conditions stipulated therein are fulfilled. Thus granting of registration under section 12AA of the Act denotes, as per legislative scheme, that....
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.... the Act, and has found that the petitioner carries on charitable activities. In the return of income filed by it, the petitioner had specifically claimed deduction of Rs. 32,40,212/- and Rs. 45,00,000/- totalling to Rs. 77,40,212/- as a Charitable Trust registered under section 12AA of the Act by the Commissioner of Income Tax. During the course of assessment proceedings the Assessing Officer had issued notice pursuant to which the petitioner had given its reply explaining as to why it was entitled to the said deductions. The Assessing Officer after considering the explanation given by the petitioner had passed a scrutiny assessment order under section 143(3) of the Act specifically allowing the above deductions. From the reasons recorded, it is evident that the Assessing Officer has not recorded any independent opinion regarding income having escaped assessment for the reasons stated therein. The sole ground for reopening the assessment appears to be the observations of the Revenue Audit Party that the assessee is not eligible for exemption to the tune of Rs. 77,40,212/- for the year under reference since, the Assessing Officer has not disallowed the exemption while finalizing th....