TaxTMI 
TaxTMI 
2023 (4) TMI 1406
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....s involved in the assessment order considering the facts and circumstances of the case. 5 The CIT(Appeals) erred in holding that the AO has not followed the 1st Proviso of the Section 143(3) of the Act. The CIT(Appeals) has not considered the fact that the Assessee is not only an approved Educational Institution u/s 10(23C) of the Act but also a registered trust u/s 12A or 12AA of the Act. It has also filed Audit reports in Form 10B (to be furnished by a charitable or religious trust or institution that has been registered u/s 12A), Form 10BB (Audit report under section 10(23C) of the Act) and the Form 3CD. The afore-mentioned facts were also brought under the order of the CIT(A). The assessee is claiming exemptions available to both 10(23C)(vi) and 12A registered entities and moreover the assessee is also availing the benefits provided to entities registered under 12A/12AA such as exemption of Corpus fund donations etc., Further, at para 21 of the impugned order of the AO, the Assessing officer also referred to the Section 11 of the Act, as under: "21. The above mentioned amount of Rs. 12,49,08,600 which has been received but not accounted for in the books of Navodaya Medi....
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....tice u/s 148 of the Act, the assessee requested the AO vide letter dated 31.5.2016 to treat the original return of income filed on 29.9.2009 as return of income filed in response to notice u/s 148 of the Act. The AO completed the assessment u/s 143(3) r.w.s. 147 of the Act determining total income at Rs. 15,48,20,850/-. 3. Against this assessee went in appeal before ld. CIT(A) challenging the issue with regard to reopening of the assessment and also merit of addition made by AO. The assessee also raised additional grounds before ld. CIT(A) vide letter dated 16.2.2022 as follows:- "The appellant prays that the Assessment order passed under section 143(3) r.w.s. 147 of the Act may please be treated as voidab- initio as the same is passed without considering the provisions of First Proviso to section 143(3) of the Act. The Learned AO has erred in passing the assessment order without giving effect to the provisions of section 10(23C) of the Act, as the assessee is an educational institution which has filed the return u/s 139(4C) of the Act." 3.1. The ld. CIT(A) admitted the additional ground and called for the remand report from the AO, which reads as follows:- "Additional Ground....
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.... or u/s 11 of the I.T. Act, 1961 on this amount of Rs. 12,49,08,600/-. Therefore, the entire unaccounted receipts of Rs. 12,49,08,600/- is proposed to be brought to tax as the income of the Navodaya Education Trust for the. AY- 2009-10. In response - Reply filed by the assessee vide letter dated 2.12.2016 Penultimate Paragraph: Your good selves have stated that our trust is not eligible to claim for exemption u/s 10(230riv) of the act, therefore the entire unaccounted receipt of Rs. 12,49,08,600/- is proposed to be brought to tax as the income, in this regards we wish to state that when we have not received such donation at all the claiming of any such exemption-does notarise." Accordingly, the Assessing Officer at para no. 21 / page no.12 of the Assessment Order u1s 143(3) r.w.s 147 dated: 30112/2016 has made a clear-mention above the eligibility of exemption u/s 10(23C)(iv) or 11 of the act, as under: "21. The above-mentioned amount of Rs. 12,49,08,600/- which has been received but not accounted for in the books of Navodaya Medical College could not have been applied for the purpose of education. Therefore, the Navodaya Education Trust is not eligible for exemption u/s ....
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....at no order shall be made by the Assessing Officer without giving effect to the provisions of Section 10 unless the Assessing Officer has intimated to the competent authority about the contraventions of the said provisions by the assessee and the. approval granted by the Competent Authority has been withdrawn or notification issued for rescinded of the said trust or institution. 4. It is hereby bought to the notice that as per records available, the assessee trust has been granted approval under sub-clause (vi) of clause (23C) of Section of the I. T. Act, 1961 by the Chief Commissioner of Income-tax, Hubli vide order in Lr.F.No. CCCIT-HBL/10(23C)(4/16/2009-09 dated 13/02/2009 i.e. Wef Asst. Year 100910. in light of the above discussion and plain reading of the contents of the Section 143(3) the assessment should have, been completed as per first proviso to section 143(3) of the I T Act in the assessee case for the Asst. Year-2009-10, as the assessee appears to have satisfied the conditions of the provision as detailed above." 3.4. The copy of remand report dated 6.7.2022 was forwarded to the assessee vide notice dated 8.7.2022 for filing the rejoinder. The assessee filed his rej....
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.... the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment: Provided that in the case of a- (a) research association referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (d) institution referred to in clause (23B) of section 10; (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub sec (via) of clause (23C) of section 10, which is required to furnish the return of income under sub-section (4C) of section 139, no....
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....oval granted to such trust or institution or notification issued in respect of such trust or institution has been withdrawn or rescinded." On a plain reading of the provisions above, it can be observed that the Assessee Trust being an entity registered u/s 10(23C)(vi) of the Act, the First Proviso to. section 143(3) of the Act is applicable in the given case. As per the First Proviso to section 1430) of the Act, in case of an Assessee who is registered/ recognised / approved u/s 10(23C) of the Act and is required to file a. return of income u/s 139.(4C) of the Act, it is pertinent to the Learned AO to give effect to provisions of section 10 while passing the assessment order u/s 143(3) of the Act. However, it may be observed that while passing the assessment order u/s 143(3) r.w.s. 147 of the Act, the Learned AO has grossly erred in not following, the relevant proviso to section 143(3) of the Act. As the act of omission by the Learned AO in not following the provisions of section 143(3)- of the Act, we believe that the entire assessment order itself is bad in law. We would like to draw Your Honors attention to Para 21 on page 12 of the Assessment order dated 30th December 201....
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....from appropriate authority for denial of exemption u/s 10(23C) of the Act is absolutely Further, the Assistant Director of Income. Tax (Inv.), Ballari (the Investigating Dicer) in the course of the Search Proceedings cancelled the approval u/s 10(23C) of the Act for the period from AY 2010-11 to AY 2016- 17. The approval u/s 10(23C) was not cancelled by the investigating officer for AY 2009-10 and that the same is in force and valid for the said year. Thus, the Learned AO was bound. to pass the assessment order by giving effect to provisions of section 10(23C) to the amount added to the income for the year as additional income over and above the regular income reported by the. Assessee the return of income filed. The Investigating Officer, who has carried out the Search and also prepared the Appraisal Report being mindful of the facts of the case for the subject year, did not initiate for cancellation of the approval for the AF 2009-10. It is based on the report and recommendation of the said officer that the case was taken up for re-assessment for subject year. If the Investigating officer believed that there was violation of such provisions, then the order- u/s 10(23C) of the....
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....as under: "In light of the above discussion and plain reading of the contents of the Section 143(3) the assessment should have been completed as per first proviso to section 143(3) of the IT Act in the assessee case for the Asst.Year-2009-10". 3.7 The report therefore concludes that the assessment in this case should have been Completed as per the-provisions of first proviso to section 143(3) of the I T Act, which has manifestly not been done. 3.8 While the AO has further observed that provisions of first proviso to section.143(3) of the Act have not been followed in this case, however, the remand report is silent on the effect of third proviso to section 143(3) of the Act which became effective from Assessment Year 2009-10 and which states as under: - "Provided also that notwithstanding anything contained in the. first and the second provisos, no effect shall be given by the Assessing Officer to the provisions of clause (23C) of section 10 in the case of a trust or institution for a previous year, if the Provisions of the first proviso to clause (15) of section. 2 become applicable in the case of such person in such previous year, whether or not the approval granted to such ....
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....he aggregate value of the receipts from the activities refer to therein is twenty-five lakh rupees or less in the previous year; " From the above, it may be observed that the proviso to section 2(15) deals with a case where a Trust- is involved in advancement of any other object of general public utility. In the instant case, the Trust is not involved in carrying out any other object of general, public utility The Trust has been involved in rendering charitable activity, in the, field of education alone for the subject year. In the assessment order passed under section 143(3) r.w.s. 147 of the Act also nowhere it- has been held that the Trust is involved in- carrying out any other object of general public utility. Further, it has been held that the activity of advancement of any other object of general public utility shall involve carrying on of any activity in the nature of trade, commerce or business. Hence, in absence of any activity of trade, commerce or business, the Trust shall not be covered by the First Proviso to section. 2(15) of the Ad. Basically, the First Proviso to section. 2(15) of the Act deals with instances where a Trust is involved in preying out- trade, comm....
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....m this, the ld. CIT(A) relied on judgements of various courts wherein held as under: * In the case of Malco Vidyalaya Matriculation Higher Secondary School v. Chief Commissioner of Income-taxi" 0191 103 taxmann.com 104 (Madras), the Hon'ble High Court of Madras held that where assessee, running a higher secondary school, claimed exemption under section 10(23C)(vi), in view of fact that assessee was not carrying on any other activity apart from imparting education and, moreover, surplus generated had been utilised for school development purposes, claim so raised by assessee was to be allowed. * In the case, of Shaheed Udham Singh Educational Society v. Income-tax Officer (Exemptions), Jalandhar[2019] 107 taxmann.com 282 (Amritsar - Trib.), Amritsar Bench of ITAT has held that where assessee-society was engaged in imparting education as a learning centre of a University i.e. PTU, since object of assessee was charitable in nature within meaning of section 2(15), a part of semester fee paid by PTU to assessee could not be regarded as commission: and, assessee'' claim for exemption under section 10(23C)(iiiad) in respect of amount so received, was.-to be allowed. * In ....
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....ed their return of income u/s 139(4C) of the Act. The additions have been made in the assessment order on account of anonymous donation and unaccounted donation on the ground that these are not eligible for exemption u/s 10(23C)(vi) / section 11 of the Act. But these additions are made without following the appropriate procedure for denial of benefit u/s 10(23C) of the Act. The available exemptions could have been denied only with the approval of the Prescribed Authority by way of cancellation of recognition u/s 10(23C) of the Act, the way it was done for AY 2010-11 to AY 2016-17. The act of the AO in not following the prescribed procedures and denial of exemption u/s 1.0(23C) of the. Act suo motu without obtaining approval from concerned higher authorities is ultra-vires the provisions and procedures laid down under the Act. AO, in the remand report dated 06.07.2022, has already agreed that the assessment in this case should have been completed as per first proviso to section 143(3) of the I T Act and this has not been done. 3.14 In view of the aforesaid discussion, the ld. CIT(A) observed that it was evident that the AO has not followed the provisions of section 143(3) in framin....
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....nks fit, or may direct the (Assessing) Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). When the assessee produced the material before the Commissioner of Income Tax (Appeals), the Commissioner, in exercise of power under Section 250(4) of the Act, directed the Assessing Officer to submit the Remand Report. The relevant extract of the remand report reads as under: "Addition as long term capital gain Rs. 2,94,26,600/- (point 7) The assessee's argument in this regard are acceptable. Addition as income from other sources - Foreign Travel- Rs. 1,12,475/-( Point 11) The assessee has filed certificate issued by the Director of M/s Classic Coffee & Spices (P) Ltd., wherein it is stated that Sri. D.M. Purnesh, Director was requested to represent the Company and attend Specialty Coffee Association of America's Trade Show and Conference at 3oston, U.S.A. in April 2003. Further, it is stated that the expenditure of Rs. 1,12,475/-has been pasted under the head of account 'business promotion expenses of the company. The argument of the assessee in this regard may be accepted. On addition of Rs. 84,61,055/ The assessee's....
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....laims the loss to be carried forward. Under section 139(4) of the Act any person who has not furnished return within the time allowed to him under sub-section (1), or within time allowed under a notice issued under sub-section (1) of section 142 of the Act, may furnish the return for any previous year at any time before expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier. Now under the relevant provisions, the assessee seeks the help from sub-section (4C) of section 139 of th Act, which reads as follows:- "Section 139(4C) Every- a) [scientific research association] referred to in clause (21) of section 10; b) news agency referred to in clause (22B) of section 10; c) association or institution referred to in clause (23A) of section 10; d) institution referred to in clause (23B) of section 10; e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in [sub-clause (iiiad) or] sub-clause (vi) or any hospital or other medical institution referred to in [sub-clause (iiiae) or] sub-clause (vi....
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....rpose, we have to see the original assessment order passed u/s 143(3) of the Act on 18.11.2011, which is reproduced herein below: 6.2 There was no claim of the assessee u/s 10(23C)(vi) of the Act. The assessee's claim is only u/s 11 of the Act. This assessment order has been reached finality and the assessee never pursued the claim of section 10(23C) of the Act. However, the same claim made by assessee by way of additional ground before ld. CIT(A). U/s 139(4C) of the Act every educational institution referred in sub-section (iiiad) or sub-section (vi) of section 10(23C) of the Act whose total income, without giving effect to the provisions of section 10 of the Act, exceeds the maximum amount which is not chargeable to income tax, shall furnish the return of income. As seen from th assessment order passed u/s 143(3) of the Act, the assessee not at all claimed the deduction u/s 10(23C) of the Act by showing that the assessee has filed the return u/s 139(4C) of the Act, however, by way of additional ground, the same has been claimed by assessee before ld. CIT(A). At this point, it is pertinent to mention that reopening of an assessment u/s 147 r.w.s. 148 of the Act would be taken up ....
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....n by the Court. Secondly, the admission must be clear, unequivocal, unconditional and unambiguous so that there may not be necessity for the Court to wait determination of other question. Thirdly, the admission must be taken as a whole unless the part of the claim which the Court proposes to allow on admission is severable from other parts of the plaintiff's claim. Reliance was placed upon Himani Alloys Ltd. Vs. Tata Steel Ltd. in Civil Appeal No.5077 of 2011 dated 5.7.2011, whereby the Hon'ble Supreme Court held that for purpose of Order XII Rule 6, admission should be categorical by holding as follows. "It should be a conscious and deliberate act of the party making it, showing an intention to be bound by it". It was further held that the Court has to exercise its judicial discretion keeping in mind that a judgement of admission is a judgement without trial which permanently denies any remedy to the defendant, by way of an appeal on merits. "Therefore, unless the admission is clear, unambiguous and unconditional, the discretion of the Court should not be exercised." Further, it was held in the case of CIT Vs. Syed Jafer & Sons (194 ITR 645) (SC) that a provision granting the righ....