TaxTMI 
TaxTMI 
2024 (9) TMI 877
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome Tax Act, is a registered Charitable Society, having obtained registration under Section 12AA of the Act as a charitable institution. It is stated to be an assessee on the rolls of the 3rd respondent. The petitioner has filed its return with respect to the assessment year 2009-10, declaring total income as NIL, claiming the benefit of exemption under Section 11 of the Act. The petitioner had been accumulating funds under the provisions of Section 11(3A) for the purchase of landed property for pursuing its objects as a charitable trust. By Ext.P1, the petitioner applied with the Deputy Commissioner of Income Tax (Exemption) - the 3rd respondent herein, pointing out that though it had filed an application in Form No.10 dated 30.12.1999, regarding the accumulation of Rs.50 lakhs for construction of buildings etc., insofar as the entire landed properties of the trust were already sold on 22.05.2008, there cannot be any construction and so much so that, the amount of Rs.50 lakhs is utilized for the purchase of certain landed property. It was prayed that permission may be granted for the application of the accumulated amounts for the above purpose. 3. The department has initiated s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase, the accumulated income should have been utilized before 31/03/2009. In Form No.10B enclosed with the Return of Income for AY 2009-10, it was stated that the amount accumulated was for construction of building. However, the entire landed property of the trust was sold during the FY 2008-09 relevant to AY 2009-10 and it had been impossible to construct the building. The trust utilized the accumulated income of Rs.50 lakhs for purchase of land. According to s.11(3A) of the IT Act, when the income accumulated could not be spent for the specific purposes for which it was accumulated but utilized with permission of the AO for any other charitable or religious purposes in conformity with the object of the trust, an application should be made to the AO specifying such purposes. However, the assessee utilized the accumulated income of Rs.50 lakhs for purchase of land, which was other than specific purposes earmarked in Form No.10, without permission of the AO which is violation of s.11(3A) of the IT Act. The application for seeking permission u/s 11(3A) for purchase of land had been submitted only on 18/09/09 ie., after expiry of the maximum period of accumulation. However, no permis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....47 cannot be accepted. 7. It is challenging Ext.P10 order issued by the 3rd respondent that the captioned writ petition has been filed. 8. A statement has been filed on behalf of the respondents by the learned Standing Counsel. In the statement, it is pointed out that the notice was issued from the office of the 3rd respondent on 30.03.2016 itself and therefore, within the prescribed period of six years, that the petitioner violated the conditions for accumulation of income and therefore, notice under the Act is issued in the matter, that the petitioner did not alert the assessing authority about the permission to change the utilization of the accumulated amounts. It is further pointed out in the statement that the case at hand is not one of review, and therefore, the assessment proceedings initiated are perfectly legal. 9. I have heard Sri. Kuryan Thomas, the learned counsel for the petitioner and Sri. Jose Joseph, the learned Standing Counsel for the respondents herein. 10. Sri. Kuryan Thomas, learned counsel for the petitioner, contends that the proceedings initiated are barred by limitation, insofar as the assessment steps were taken by issuing the notice at Ext.P2, beyond ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....argeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year:" Thus, firstly, the officer sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed on 30.03.2016. Almost four years back, all the above details were furnished before the assessing authority. Further, a perusal of the notice at Ext.P2 would make it clear that, even the department has noticed the above discrepancy, and that is why Ext.P2 was issued pursuant to a scrutiny assessment. In such circumstances, it cannot be said that the petitioner herein withheld certain information from the department. When that be the position, the department cannot be expected to have recourse to the extended period of six years for issuing the notice under Section 149. 16. The second issue for consideration in this writ petition is as to whether the notice issued at Ext.P5 can be considered as a case of "mere change of opinion on the part of the assessing authority". In this connection, the Apex Court in Commissioner of Income Tax v. Kelvinator of India [(2010) 2 SCC 723], while considering the scope of reassessment under the provisions of the Income Tax Act has found as under; "5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987 reopening could be done under the above two conditions an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see. Later, notice was issued for reassessment, proposing to withdraw the deduction granted. Considering the above circumstances, the Court held as under; "It is undisputed position before us, that a query was raised on the very issue of reopening during regular assessment proceedings. The parties have responded to it and the assessment order dated January 30, 2018, makes no reference to the above issue at all. However, once a query has been raised by the Assessing Officer during the assessment proceedings and the assessee has responded to that query, it would necessarily follow, as held by our court that the Assessing Officer has accepted the petitioner's/ assessee's submissions, so as to not deal with that issue in the assessment order" 18. Again, in G K N Sinter Metals Ltd. v. Ramapriya Raghav [(2015) 371 ITR 225], the Bombay High Court considered an identical situation, where the department took the stand that in the original assessment proceedings, there were no discussions on the point so that the subsequent steps can be stated as a case of change of opinion, finding as under; "10. According to the Revenue, it could only be when the assessment order contains a di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ht to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the Assessing Officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings." However, the above principles were applied to the facts of the said case as the apex court concluded the issue, in the following lines: "13. However, a bare perusal of notice dated March 9, 2004 which was issued in the original assessment proceedings under section 143 makes it clear that the point on which the reassessment proceedings were initiated, was well considered in the original proceedings. In fact, the very basis of issuing the show-cause notice dated March 9, 2004 was that ....