TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1135
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....trust in view of the provisions of section 11 of the Income Tax Act, 1961. The status of the assessee trust should have been granted as registered trust but while deciding the issue the learned Commissioner of Income Tax (A)-3, Nagpur has not considered the same. ii) The genuine registered trust is all the while in existence. iii) The activities of the appellant trust are carried out in accordance to its objectives. iv) The learned CIT(A) - 3 did not considered the wrongful and unlawful denial of exemption u/s. 11 of the IT. Act, 1961 by the learned Assessing Officer because no property or income of the appellant trust is appropriated to enure benefits to the persons detailed in section 13(3) as per the provision of section 13(1)(c) or because the investment of the funds of the appellant are not made in contravention of the provisions of section 13(1)(d) of the Act. v) Audit reports of the trust for A.Y. 2006-07 to 2009-10 were duly obtained and were available, vi) The assessee may be allowed to raise any ground/additional ground during the course of appeal proceedings." 2. Brief facts of the case are that assessee trust is registered u/s. 12A of IT. Act 1961. It is thus....
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....tion made by the AO on substantive basis has been confirmed in the case of Shri Vasantrao Gopalrao Ghonge in the order referred supra." 6. The counsel of appellant before us has made submission which is reproduced hereunder: "A) Trust is holding registration under Bombay Charitable Trust Act 1950 vide Registration No. E-330 (Wardha) dated 25/04/2006. (P. 1) B) Trust is holding Registration u/s. 12A of IT. Act 1961 dated 21/11/2006 with effect from 01/04/2006. Its Registration No. is 31/59-06-07. It is not disturbed and is valid as on date. (P. 2) C) In the course of search no evidence was found to show any violation of provisions of sec. 13 of IT. Act 1961. It is not so alleged even in assessment order. D) Regular Financial Statements/Books of account are prepared and Audited Financial Statements are submitted before Statutory Authorities being Income Tax and Charity Commissioner. (P. 3-10) E) Transactions as recorded in financial statements are accepted and infact income is determined considering the transaction as are available in financial statement. F) Receipts and expenditure in financial statement is as per objectives of Charitable Trust. G) Shri Vasant Ghonge ....
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.... exemption u/s. 11 before the date of search at premises of Shri Vasantrao Ghonge on 28/01/2011. The appellant trust has submitted regular returns of income year after year and audited financial statements have been submitted along with income tax returns as well as with various statutory authorities like Charity Commissioner. Perusal of assessment order indicates that the transaction as per income and expenditure account have not been faulted and income has been determined on the basis of transaction as recorded in financial statement of trust. It is not alleged in the case of appellant that Shri Vasantrao Ghonge has taken any benefit from the appellant trust. It is noted that the trust is continuing its activity since Asstt. Year 2007-08 and has been submitting regular returns of income much before the date of search. Appellant has maintained regular books of account and obtained audited financial statements as well statutory audit reports for eligibility of its income being exempt u/s. 11 of IT. Act 1961. The appellant trust is holding registration u/s. 12A of IT. Act 1961 since 01/04/2006 and same is subsisting till date. Even after search conducted at the premises of Shri Vasa....
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....nds raised in both the appeals are similar. Grounds of appeal for Asstt. Year 2007-08 are as under: "i) The learned Commissioner of Income Tax (Appeals)-3, Nagpur has not considered the status of the appellant as registered charitable trust in view of the provisions of section 11 of the Income Tax Act, 1961. The status of the appellant trust should have been granted as registered trust but while deciding the issue the learned Commissioner of Income Tax(A)-3, Nagpur has not considered the same. ii) The genuine registered trust is all the while in existence. iii) The activities of the appellant trust are carried out in accordance to its objectives. iv) the learned CIT(A) - 3 did not considered the wrongful and unlawful denial of exemption u/s. 11 of the IT. Act, 1961 by the learned Assessing Officer because no property or income of the appellant trust is appropriated to enure benefits to the persons detailed in section 13(3) as per the provision of section 13(1)(c) or because the investment of the funds of the appellant are not made in contravention of the provisions of section 13(1)(d) of the Act. v) Audit reports of the trust for A.Y. 2006-07 to 2009-10 were duly obtained....
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....ao Gopalrao Ghonge and the appellant is not a trust in the real sense. The receipts of the trust found during the search action u/s. 132 of the IT. Act were attributed to Shri Vasantrao Gopalrao Ghonge and the same has been brought to tax by assessing in the hands of the Shri Vasantrao Gopalrao Ghonge, in the individual case. Since the AO has made additions in the assessment order u/s. 143(3) in the case of Bhaktavatsal Sadguru Yogiraj Vasantrao Gopalrao Ghonge Maharaj Nyas on protective basis, the same are ordered to be deleted considering that the same addition made by the AO on substantive basis has been confirmed in the case of Shri Vasantrao Gopalrao Ghonge in the order referred supra." Similar order is passed by Learned CIT(A) in Asstt. Year 2008-09. 17. The counsel of appellant before us has made common submission which is reproduced hereunder: "A) Various observations on merits of trust being not valid by A.O. & CIT(A) are unjustified. B) Reliance on Gist of submission for Asstt. Year 2011-12 to submit that trust is valid trust and its income is exempt u/s. 11 in view of appellant having registration u/s. 12A of IT. Act 1961. C) Trust has submitted regular return u/....
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....dy reference. "Question No. 35: If there is substantive addition as well as protective addition in the case of same appellant for different assessment year, how will that be covered? Similarly if there is substantive addition in case of one appellant and protective addition on same issue in the case of another appellant, how will that be covered under Vivad-se-Viash was? Answer: If the substantive addition is eligible to be covered under Vivad se Vishwas, then on settlement of dispute related to substantive addition AO shall pass rectification order deleting the protective addition relating to the same issue in the case of the appellant or in the case of another appellant." 21. In view of Circular of CBDT referred to hereinabove issue as to merits of grant of benefit of exemption u/s. 11 of IT. Act 1961 and protective assessment has become academic in nature. In view of above we do not engage in adjudicating various grounds of appeal as raised in the appeal filed by appellant being of academic nature except for holding that appellant is a valid charitable institution as held in appeal for Asstt. Year 2011-12. 22. The addition made by A.O. on protective basis is already delete....
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....nder: "A) Hon'ble CIT (Central), Nagpur passed order u/s. 263 setting aside assessment framed u/s. 143(3) r.w.s. 153C to make fresh assessment as A.O. has failed to compute taxable income on commercial principles by invoking provision of Chapter IV (sec. 28 to 44) under the head Income from Business/Profession. (Para 4.4 of order u/s. 263) B) In the case of assessee notice u/s. 153C was issued pursuance to action u/s. 132(1) on Late Shri Vasantrao Ghonge on 28/01/2011. A.O. framed assessment of Late Shri Vasantrao Ghonge and assessee trust on same date 18/03/2013 for various assessment years of block period. C) Assessee trust is registered u/s. 12A. (P-103) A.O. has not allowed exemption u/s. 11 and determined income at Rs. 3,64,340/- & Rs. 11,21,508/- for Asstt. Years 2009-10 & 2010-11 respectively on the basis of audited financial statement of assessee trust keeping in mind commercial principles. A.O. concluded that net income computed at the hands of assessee trust is liable to be assessed at the hands of Late Shri Vasantrao Ghonge on substantive basis and same income is assessable at the hands of assessee trust on protective basis. He therefore framed assessment at ....
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....sp; [Reported at 74 ITR 0011 (Del.)] I) A.O. has determined income of assessee trust in following assessment years on commercial principles after allowing expenditure incurred by trust while framing assessment u/s. 143(3) r.w.s. 153C on 18/03/2013. II) Asstt. Years Income Determined 2007-08 17,44,570 (P- 6 to 11) 2008-09 9,12,290 (P- 12 to 17) 2009-10 3,64,340 2010-11 11,21,510 Hon'ble CIT (Central), Nagpur has exercised jurisdiction u/s. 263 in respect to Asstt. Years 2009-10 & 2010-11. Revenue has accepted action of A.O. in Asstt. Years 2007-08 & 2008-09. CIT (Central) having accepted orders of A.O. for Asstt. Year 2007-08 and 2008-09 on similar basis being income determined on commercial principles could not have concluded that for Asstt. Years 2009-10 and 2010-11 income is not determined on commercial principles. On above factual position, order passed u/s. 263 by Hon'ble CIT (Central), Nagpur is unjustified and unsustainable. Reliance on i) Hon'ble High Court of Judicature at Bombay, Nagpur Bench, Nagpur in ITA No. 37 of 2019 in the case of M/s. Eureka Medicare Pvt. Ltd. dated 15/01/2021 J) Assessment of Late Shri Vasantrao Ghonge- Asstt. Y....
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....at any incriminating evidence has been found in respect to claim of expenditure in the income and expenditure account. Neither in the order u/s. 263 there is any mention as to incriminating material found in respect to expenditure incurred and claimed by Trust. 28. The appeal of appellant is heard along with appeals in the case of appellant for assessment years 2007-08, 2008-09 and 2011-12. It is seen from the appeals for the above mentioned assessment years that A.O. has framed assessment in the case of appellant trust for all the five assessment years on the same date i.e. on 18/03/2013. The assessment orders passed in the case of appellant for Asstt. Years 2007-08 to 2011-12 are similarly worded except variation in quantum of receipts and expenditures as per income and expenditure account as shown in the financial statement of the respective assessment years. The learned CIT, Central has passed order u/s. 263 in respect to Asstt. Years 2009-10 and 2010-11 even though assessment orders for other assessment years were available with him in which no fault has been found in the assessment framed. Similar claim of expenditure in preceding and subsequent year has achieved finality be....
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....larification on provisions of Direct Tax Vivad se Vishwas Bill 2020, Answer to Question No. 35 it has been clarified that on settlement of dispute relate to substantive addition A.O. shall pass rectification order deleting protective addition. In view of discussion made hereinabove the order passed by A.O. in no manner of consideration can be considered as erroneous or prejudicial to the interest of revenue. The order passed by A.O. not being erroneous or prejudicial to the interest of revenue Learned CIT Central ought not to have set aside the assessment framed u/s. 143 r.w.s. 153C in case of appellant by his order u/s. 263 dated 17/03/2015. 31. Considering the facts and circumstances in the case of appellant and considering the evidence on record and discussion made hereinabove we hold that order passed by CIT u/s. 263 of IT. Act 1961 for A.Y. 2009-10 & 2010-11 is not in accordance with law. We are in agreement with various submissions of appellant noted in this order at para 25. Respectfully following judicial precedents discussed in submission of appellant. We are of the view that order passed u/s. 263 is bad in law. In view of above the order passed by CIT u/s. 263 of IT. Act....