TaxTMI 
TaxTMI 
2022 (1) TMI 74
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.... processed under section 143(1) of the Act. The case of the assessee was selected under scrutiny and statutory notices were duly issued and served upon the assessee and assessment under section 143(3) was framed vide order dated 02.05.2013. Thereafter, a search operation under section 132(1) of the Act was conducted on M/s. D.Y. Patil Group (Shri Vijay D. Patil, Smt. Shivani Patil, Pd. Dr. D.Y. Patil University) on 27.07.2016. Thereafter, a satisfaction note under section 153C of the Act was received with relevant evidences and panchnama from AO of the searched persons on 12.09.2018 and accordingly after recording satisfaction by the AO of the assessee a notice under section 153C of the Act was issued and served upon the assessee trust for A.Y. 2011-12 to 2014-15 on 14.09.2018. The assessee is a trust registered under section 12A with DIT(E) dated 28.09.01. The assessee trust is incorporated with main object of promoting, motivating, developing sports, imparting sports knowledge and fitness awareness by establishing coaching/training classes, participating and conducting tournaments in India and abroad. The assessee complied with the notice issued under section 153C by filing retur....
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.... under section 11 of the income Tax Act, 1961." In this case, the Hon'ble Bombay High Court decided the aforesaid substantial question of law in favour of the assessee by holding as under: " 5. Now coming to question No. 3, the point which arises for consideration is : whether excess of expenditure in the earlier years can be adjusted against the income of the subsequent year and whether such adjustment should be treated as application of income in subsequent year for charitable purposes? It was argued on behalf of the Department that expenditure incurred in the earlier years cannot be met out of the income of the subsequent year and that utilization of such income for meeting the expenditure of earlier years would not amount to application of income for charitable or religious purposes. In the present case, the Assessing Officer did not allow carry forward of the excess of expenditure to be set off against the surplus of the subsequent years on the ground that in the case of a Charitable Trust, their income was assessable under selfcontained code mentioned in section 11 to section 13 of the Income-tax Act and that the income of the Charitable Trust was not as....
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.... senior counsel appearing on behalf of the applicant/appellant is correct. Therefore, we have heard him on the aforesaid question of law ae well But did not find any merit therein." In the case of CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal reported in 211 ITR 293, Hon'ble High Court of Gujarat had decided that : "There is nothing In the language of s. 11(1}(a) to indicate that the expenditure incurred in the earlier year cannot be met out of the income of the subsequent year and utilization of such income for meeting the expenditure of the earlier year, would not amount to such income being applied for charitable or religious purposes. That apart income derived from trust property has to be determined on commercial principles and if commercial principles for determining the income are applied, it is but natural that the adjustment of the expenses incurred by the trust for charitable and religious purposes in the earlier year against income earned by the trust in the subsequent year will have to be regarded as application of income of the trust for charitable and religious purposes in the subsequent year in which such adjustment has been made ....
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....98 and CIT vs. Shri Plot Swetamber Murti Pujak Jain Mandal (1994) 119 CTR (Guj) 144 : (1995) 211 ITR (Guj) 293 : TC 23R.1228 respectively, both Rajasthan High Court and Gujarat High Court have answered the questions in favour of the assessee and against the Revenue. 6. Following the aforesaid decisions of Rajasthan and Gujarat High Courts, we answer the second question referred to us in favour of the assessee and against the Revenue." In the case of Gonvindu Naicker Estate vs. ACIT reported in 248 ITR 368, Hon'ble High Court of Madras had decided that :- "The expenditure, if incurred in an earlier year is adjusted against the income of a later year, it has to be held that the trust had incurred expenditure on religious and charitable purposes from the income of the subsequent year, even though the actual expenditure was in the earlier years, if in the books of account of the trust such earlier expenditure had been set off against the income of the subsequent year. The expenditure that can be so adjusted can only be expenditure on religious and charitable purposes and no other." In the case of OTC Exchange of India vs. ADIT reported in ITA No.....
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....t order in the case of CIT vs. Institute of Banking Personnel Selection (IBPS) [2003] 131 Taxman 386 (Bombay), Hon'ble Supreme Court order in the case of DIT vs. Society for Applied Microwave Electronic Engineering & Research [2019] 106 taxmann.com 204 (SC), Hon'ble Supreme Court order in the case of CIT(Exemption) vs. Subros Educational Society [2018] 96 taxmann.com 652 (SC), Hon'ble Mumbai ITAT order in the case of Income Tax Officer (Exemptions) vs. Anjuman I-Islams Tibba College & Hospital Public ITA No. 4002/Mum/2017 and Hon'ble Mumbai ITAT order in the case of Income Tax Officer (Exemptions) vs. Garware Charitable Trust ITA. No. 5345/Mum/2016 and the Ld. CIT(A) has passed this order after following some of these decisions and allowed the appeal of the assessee. The Ld. A.R. submitted that in view of the issue being covered by the above decisions, the appeal of the assessee may be allowed. 6. The Ld. D.R., on the other hand, relied on the grounds of appeal. 7. After hearing both the parties and perusing the material on record, we find that the issue of carry forward losses and setting off against the subsequent years surplus is squarely covered by the dec....
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....00/- to M/s. D.Y. Patil Hospital and Research Centre, Navi Mumbai. The assessee submitted that he has given a specific direction for utilization of donation of Rs. 20,00,000/- towards corpus of M/s. D.Y. Patil Hospital and Research Centre, Navi Mumbai. Therefore, in view of the said separate direction in writing from the donor for utilization of donation, the same can not be treated as general donation. However, the AO rejected the contention of the assessee and added Rs. 20,00,000/- to the income of the assessee. 12. The Ld. CIT(A) allowed the appeal of the assessee by holding that the assessment for A.Y. 2013-14 was already completed vide order dated 07.12.2015 passed under section 143(3) of the Act and thus on the date of search on D.Y. Patil Group on 27.07.2016 the assessment was unabated. The Ld. CIT(A) observed that any addition in an unabated assessment can not be made in absence of incriminating material found during the search. The Ld. CIT(A) observed and held as under: "9.3.1. I have considered the submissions of the Appellant, the contentions of the AO in the assessment order and the other materials available on record on these Grounds of Appeal. 9.3....
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.... 9.3.5. A perusal of the assessment order clearly reveals that the contention of the Appellant is true that the impugned addition was made solely on the basis of statement of Shri Rai recorded during the course of assessment proceedings. Hence, the evidence is not even a statement recorded during the course of search. In fact, there is no discussion in the assessment order about any specific incriminating material, which have been found during the course of search operation so as to support a view that the said amount was paid as usage charges of the stadium of the assessee Trust. 9.3.6. In the present case at hand, I have noted that the assessment for the AY under reference was already completed u/s 143(3) on 07.12.2015. The date of search in the D.Y. Patil group is 27.07.2016, thereby making it an unabated assessment, as on the date of search. Accordingly, as on the date of search, the assessment year under consideration was unabated and not pending before the AO. Since, the proceedings for A.Y. 2013-14 had not abated and the assessment for the said assessment year already stood completed, the contention of the assessee is that the AO was empowered only to make add....
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....o option but to assess or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. On this issue the Special Bench of Hon'ble Mumbai ITAT in the case of All Cargo Global Logistics Ltd vs DCIT (supra), has also observed as under:- "58. Thus, question No.1 before us is answered as under: a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately; b) In other cases, in addition to the income that has already been assessed, the assessment u/s 153A will be made on the basis of incriminating material, which in the context of relevant provisions means - (i) books of account, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search." It has bee....
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....ed in the course of the proceedings u/s 132 of the Act establish that the reliefs granted under the finalized assessment/reassessment were contrary to the facts unearthed during the course of search operation. In the case referred, supra, the Hon'ble Bombay High Court has upheld the following observations of Hon'ble ITAT:- "i. On a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initiation of the proceedings under Section 153A, it is only the assessment / reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the assessments/reassessments already finalized for those assessment years covered under Section 153A of the Act. ii. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/ reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pendin....
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....te of search/requisition. Section 153A(2) provides that when the assessment made under Section 153A(1) is annulled, the assessment or reassessment that stood abated shall stand revived. 10. Thus on a plain reading of Section 153A of the Income-tax Act, it becomes clear that on initiation of proceedings under Section 153A, it is only the assessment/reassessment proceedings that are pending on the date of conducting search under Section 132 or making requisition under Section 132A of the Act stand abated and not the assessment/reassessments already finalized for those assessment years covered under Section 153A of the Act. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalized assessment/reassessment shall not abate. It is only because, the finalized assessments/reassessments do not abate, the appeal, revision or rectification pending against finalized assessments/reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings lender Section 153A, the ....
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.... attained finality, unless the material gathered during the course of the search proceedings establishes something contrary to it. If there is nothing on record to suggest that any incriminating material was unearthed during the search, the AO, while passing order U/s. 153A r.w.s. 143(3) cannot disturb the original assessment order passed U/s. 143(3) of the Act. 9.3.17. ........................... .................................... ............................. ................................... .................................. It is noted that the Department had filed a Special Leave Petition in S.L.P (C) No- 34554 of 2015 before the Hon'ble Apex Court against the above judgment of the Delhi High Court, which has since been dismissed. The relevant extracts reported in 380ITR (st) 64-Ed is as follows: "Their Lordships Madan B.Lokur and S.A. Bobde JJ dismissed the Department's special leave petition against the judgment dated July 06,2015 of the Delhi High Court in I. T.A No 369 of 2015, whereby the High Court held that no substantial question of law arose since there was a factual finding, that no incrimina....