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2022 (7) TMI 1135
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.... 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 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 f....
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....onge 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." 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....
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....n No. E-330 dated 25/04/2006. Trust is registered u/s. 12A of IT. Act 1961 by order of Commissioner of Income Tax-2, Nagpur at Sr. No. 31/59/0607. The appellant trust has submitted regular returns claiming 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 exe....
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.... 12. These appeals by appellant are against order of learned Commissioner of Income Tax (Appeals)-3, Nagpur for Asstt. Year 2007-08 & 2008-09 dated 24/11/2016 in Appeal Nos. CIT(A)-3/252 & 253/2013-14. The grounds 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 provi....
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.... CIT(A) in his appellate order for Asstt. Year 2007-08 has held as under: "11. I have considered the appellant's submission, remand report of the AO and assessment order passed by the AO. It is seen that the appellant trust has been formed by Shri Vasantrao 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....
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....A.O. shall pass rectification order deleting protective addition. In the case of appellant CIT(A) has already ordered deletion of protective addition made at hands of appellant. Thus no further action is required. The answer to question No. 35 of CBDT Circular referred to hereinabove is reproduced for ready 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. I....
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.... 263 is bad in law as order passed by A.O. in the case of assessee was neither erroneous nor prejudicial to the interest of revenue. It is submitted that the exercise of power u/s. 263 by CIT, Central is without jurisdiction and order passed u/s. 263 deserves to be cancelled. The appellant has made submission in the course of appellate proceedings and same are as under: "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 & 201....
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.... sec. 28 to 44D are inapplicable for determining income in the case of Charitable Institutions holding registration u/s. 12A of I.T. Act 1961. Order passed u/s. 263 holding that provisions of sec. 28 to 44D not having been applied by A.O. make order of A.O. to be erroneous is unjustified and unsustainable. Reliance on: i) ITAT order in ITA Nos. 2733, 2734/Del/2018 in the case of United Educational Society vide order dated 28/06/2019. [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 deter....
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....e to claim tax exemption in the name of trust. A.O. has concluded that as substantive addition has been made at the hands of Shri Vasantrao Ghonge trustee of trust in respect to income determined in the case of trust is being assessed on protective basis in hands of trust. Various expenditure incurred and shown in income and expenditure account has been allowed without inviting any adverse observation. It is noted that income has been determined in the case of assessee pursuance to return filed in response to notice issued u/s. 153C of IT. Act 1961. In the assessment order it is not found that 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. Th....
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....ault with allowability of same expenditure in the case of Shri Vasantrao Ghonge where income has been determined on substantive basis even though case of Shri Vasantrao Ghonge was under his charge. It is also noted that the income determined on substantive basis in the case of Shri Vasantrao Ghonge has been settled under Vivad se Vishwas Scheme by Shri Vasantrao Ghonge for Asstt. Years 2009-10 and 2010-11 and form No. 5 has been issued in the case of Shri Vasantrao Ghonge for Asstt. Years 2009-10 and 2010-11 on 25/11/2020 which is placed on record. The CBDT Circular No. 7 dated 04/03/2020 issued clarification 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 cas....