TaxTMI 
TaxTMI 
2025 (5) TMI 513
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....ls were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA No. 39/JP/2025 may be taken as a lead case for discussions. Before moving towards the facts of the case we would like to mention that the assessee in this appeal has raised the following grounds; ITA no. 39/JP/2025 1. The impugned order u/s 147/148 rws 144B dated 21.03.2022, as well as the action taken u/s 147/148 and notices are bad in law, illegal, invalid, void-ab-intio on facts of the case, for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act, and also barred by limitation and various other reasons and hence the same may kindly be quashed. 2. Rs. 28,50,637/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 28,50,637/- made by the ld. AO by denying the claim/exemption u/s 10(23C)(iiiad) for which the assessee is or was entitled, also erred in not considering the material available on record in their true perspective and sense. Hence the claim so denied or....
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....x has escaped assessment. Therefore, there were reasons to believe that the Assessee has not disclosed fully and truly all material facts necessary for his assessment for that Assessment year. After recording satisfaction "reasons to believe" and obtaining the prior approval of the competent authority, notice u/s 148 of the Act was issued on 24/03/2021. In the instant case, the record reveals that the assessee has received an interest income of Rs. 26,94,361/- during the year, however, the assessee has not filed return of income for the year under consideration. Therefore, an assessee by issuance of notice u/s. 148 was required to file the ITR within a month of receipt of the notice. In response, the Assessee filed its return of income on 23.04.2021. Thereafter statutory notices were issued to the assessee. Ld. AO noted that the assessee filed a return of income declaring nil income after claiming exemption u/s. 10. During the year, the assessee is in receipt of Income from other sources of Rs 28,50,637/- and the same was claimed exempt u/s. 10 of the Act. By virtue of section 139(4C) every educational institution referred to in sub-clause (ad) or sub-clause (vi) of Section 10(23C)....
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....stipulated time permitted under section 139(1) of the Income Tax Act, 1961. The assessee's trust was granted registration u/s. 12AA of the Act vide Reg.No.CIT Exemption, Jaipur/12AA/2018-19/A/10496 only on 19.02.2019. Thus, ld. AO noted that no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under section (1) of Section 139. Since the return of income for the Assessment Year 2013-14 filed by the assessee after due date i.e., on 30/03/2019, the exemption claimed under section 10 amounting Rs. 28,50,537/- was not considered as allowable. Based on that contention ld. AO prepared the draft assessment order and sent to the assessee to show cause why the assessment should not be completed based on those observations vide show cause dated 12.03.2022. In response thereto, the assessee reiterated the submissions made earlier. The same is not considered for the facts discussed in the order and accordingly ld. AO made disallowance of Rs. 28,50,637/-. 5. Aggrieved from the order of the National Faceless Assessment Center, assessee preferred an appeal before the ld. CIT(A). Apropos to the gr....
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.... IT Act, 1961. No such deduction shall be allowed to him unless he furnishes a return of it's income for such assessment year on or before the due date specified under section (1) of Section 139. Hence, the appeal is hereby disallowed. Further, it is also pertinent to mention that the appellant will be eligible to claim the said deduction if it files a valid return of income for the relevant year after getting the necessary approval from the competent authority under the provision of section 119(2) of the IT Act, 1961. 6. Resultantly, the appeal of the appellant is dismissed. 6. Feeling dissatisfied with the above order of the ld. CIT(A), the assessee preferred the present appeal. In support of the grounds so raised by the assessee, ld. AR of the assessee, has filed the written submissions which reads as follows; "The brief facts of the case are that the assessee is a Society registered under the Raj. Society Act on dt.11.03.2008. Vide Reg. Certificate No. 99/Jhalawar/2007-08 dt.11.03.2008 (PB3-14 ) and Society is having main objects of to general public utility, for the purpose of education training and other advancement of object of general public utility....
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.... this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1). The ld. AO asked to the assessee to furnish the copy of trust deed and copy of certification of registration u/s. 12A and /or 10(23C) and to explain why the claim of exemption should not be denied as assessee has not filed the return of income within the due date as stipulated u/s. 139(1) of the Act. In response thereto the assessee file reply on dt. on 27.12.2021(PB23-24), by stating that "the society was formed for execution of memorandum of agreement between the President of India, The governor/administrator of the State Rajasthan and as Industrial partner for "upgradation of government Industrial Training Institute (ITI) Jhalawar under "Public Private Partnership: (PPP). We further inform that a certain fund was given to IMC by Central Govt. as Interest free loan for obtaining the purpose of the aforesaid PPP Scheme, IMC made the FDR of the amount received from the Govt. and interest earned on it was utilized for the objects of the society. During the year under consideration, the assessee society is eligible for exemption u/s. 10(23C)(iiiad) of the ....
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....ncome because S. 147 provides that If the Assessing Officer has reason to believe that an income chargeable to tax has escaped assessment for any assessment year, here the assessee has not escaped any income because the assessee admittedly an educational institute and the receipts is below Rs. 1.00 crore receipts or income is exempt to that extent and after filling the return the income comes Nil. Only due to not filling the return being the income below taxable or nil or exempt it cannot be said that there was escapement of income, Which shows that there was no escapement of income by the assessee,. Hence if there is neither the escapement of income by the assessee nor proved then the notice issued u/s 148 is invalid. However the ld. CIT(A) has not denied our these submissions and not speak any word. 2. Reason to believe and not reason to suspect: 2.1 It is further submitted that even under the amended law by the finance act 1989 the condition precedent or words, which continues right since inception till date, are "reason to believe" and not "reason to suspect". The word "believe" has to be understood in contradistinction of suspicion or opinion. Belief indicate....
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....O in this behalf was not a speaking order which could not be sustained. In view of legal infirmity in the notice under Section 147/148 and laconic order of AO while rejecting objections Assessee the consequential assessment Orders were liable to be annulled.(para16). In the case of Abrar Ahmed Qasami v/s ITO Ward 46(5) in ITA 3177/Del/2017 dt. 01.06.2018 it has been held that "7. After considering rival submissions, I am of the view that reopening of the assessment is bad in law. The A.O. merely noted in the reasons that since there is an information available on ITD System of the Department that assessee has made cash deposits of Rs. 14,75,000/- in his Bank Account, therefore, income chargeable to tax has escaped assessment. The ITAT, Delhi Bench in the case of Shri Arvind Yadav (supra) considering the identical facts held that the deposit in the bank account per se cannot be the income of the assessee. This is a mere suspicion of the A.O. based on incorrect fact that income chargeable to tax has escaped assessment and accordingly, quashed the reopening of the assessment. The findings of the Tribunal in para 8 of the Order are reproduced as under : "8. In this ca....
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.... or deduction can be made, for this kindly refer following decisions: (a) In the case of CIT vs. Shri Ram Singh 306 ITR 0343 (Raj.) he Hon'ble High Court Of Rajasthan Held that It is only when, in proceedings under s. 147 the AO assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then only, in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under s. 147. To put it in other words, if in the course of proceedings under s. 147, the AO were to come to conclusion, that any income chargeable to tax, which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the AO entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the AO may find to have escaped assessment, and which may come to his notice subsequently, in the course o....
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....h may be assessed or reassessed as well as any other income chargeable to tax which has escaped assessment and which comes to the notice of the AO subsequently in the course of proceedings under this section. Explanation 3 makes it clear that the AO may assess or reassess the income in respect of issue which has escaped assessment, if such issue comes to his notice in the course of proceedings under this section even though said issue did not find mention in the reasons recorded and the notice issued under s. 148. Since there was confusion prevailing with regard to the powers of the AO to assess or reassess on the issues for which no reasons were recorded, Expln. 3 came to be inserted as clarificatory. Now, after the insertion of Expln. 3, the position is that the AO may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under s. 147 though the reasons for such issue were not included in the reasons recorded in the notice under s. 148(2) on the basis of which he had initiated proceedings under s. 147.-Vipan Khanna vs. CIT (2002) 175 CTR (P&H) 335 : (2002) 255 ITR 220 (P&H) and Travancore Cements Ltd. vs. Asstt. CIT ....
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....sions, the Tribunal was right in holding that the AO had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive. (d) In the case of CIT vs. Dr. Devendra Gupta 336 ITR 0059(Raj): held Reassessment-Scope-Addition in respect of items other than the one on which notice in given-Income alleged to have escaped assessment in reasons recorded not having been actually found to. (e) Also refer AVG Construction Pvt. Ltd v/s ITO Ward 6(2) Jaipur in ITA no. 90/Jp/2020 dt. 02.09.2021 under the same facts and circumstances copy is enclosed. (f) Recently the Hon'ble ITAT Jaipur Bench in the case of Shri Shambhu Dayal Saraf v/s IT in ITA No. 558/Jp/2013 dt 02.07.2018 58 TW 355(Jp), has also held the same view copy of order is enclosed (g) Also refer latest decision of this Hon'ble ITAT in the case of Pappu Qureshi v/s ITO in ITA No. 314//Jp/2019 dt. 28.04.2020 Sec. 292B is no applicable: S. 292B could not be invoked to correct a foundational/substantial error as it was meant so as to meet jurisdictional r....
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....osited money with NIL-It was further seen that said company is a specified person of assessee-According to Assessing Officer, assessee is hit by Section 13(1)(c)(ii) and Section 13(1)(d) for such reason assessment was reopened under Section 147-Assessing Officer observed that from impugned documents it was seen that assessee had deposited sums with N and both these companies are specified persons of assessee-Therefore, Assessing Officer held that these amounts are to be taxed separately at Maximum Marginal Rate in terms of proviso to Section 164(2)- Total amount was treated as income by invoking Section 13(1)(b) read with Section 11(5)-Amount said to have received as donation was added back to income of assessee under Section 69A-CIT(A) affirmed view taken by Assessing Officer except for granting partial relief such as with regard to claim for carry forward of depreciation etc-Tribunal after taking note of factual position, more particularly, that addition which was made in reassessment proceedings having been deleted by CIT(A) reassessment on heads which were not part of reasons recorded for reopening assessment is not sustainable-Held, in case of GKN Driveshafts (India) Ltd. Vers....
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....ssessee made into his bank account-In other words, Assessing Officer did not make any addition for which assessment was reopened-In case of Ranbaxy Laboratories Limited Vs. CIT (ITA. No. 148/2008) Delhi High Court held that if Assessing Officer does not make any addition on primary ground on basis of which proceedings under Section 147 were initiated he cannot make other additions-Ratio of decision of Delhi High Court squarely applies to facts of case since Assessing Officer did not make any addition for which reopening was made-Assessing Officer made various other additions other than addition for which assessment was reopened-In view of above, respectfully following above decision of jurisdictional High Court, reassessment order passed by Assessing Officer under Section 143(3) read with Section 147 is bad in law-Assessee's grounds allowed. Prayer: Thus in view of the above facts, circumstances and the legal position of law the proceedings so initiated and assessment so passed may kindly be quashed. 4. The ld. AO has denied the exemption u/s 10(23C)(iiiad) only on the reasons that the assessee has not filed the ITR in the stipulated time limit u/s 139(i). Only on....
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....ed that if the return has not been filed u/s 139, the claim of exemption shall be denied u/s 10(23C)(iiiad). Both the lower authorities have failed to read and understood the provisions of law and without considering in their true perspective and sense has denied the exemption and proceeded on misinterpretation. Thus the addition as well as action u/s 147/148 both are invalid, illegal void-ab-intio and liable to be quashed. 5.3 Further the institute on the basis of provisions of Sec. 10(23C)(iiiad) has not filled the ITR and under impression that the receipts/income below the limit. However when the notice u/s 148 has come to the notice of the assessee it filed its ROI income and Audit report which are a valid return rather accepted by the ld. AO. Hence for the same institute must not be punished. 6. However it is also settled legal position of law that if an assessee has not filed his ROI and filed ROI and not shown any claim or deduction in the ROI filed and claim the same during the course of assessment proceedings even although during the course of appellate proceedings. The Hon'ble courts has allowed the same by stating that if the assessee is entitled for an....
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....e ld. AO in the entire order has stated that the assessee has not filed ITR and other allegation. Kindly also refer our reply filled to the ld. AO as part of our WS before your honor. 6.3 Further if there was any procedure default for non-filing the ITR, for that there many other penalties or provision has been given and in Sec. 10(23C)(iiiad) it has not been provided anywhere that if an assessee has not filed ITR the exemption shall be denied. * In the case of Additional Director of Income Tax (Exemption) v/s Manav Bharati Child Institute & Child Psychology 20 SOT 517(Del) held that though filing of Form No. 10 in respect of accumulation of Income of surplus income is mandatory to claim exemption u/s 11 and 12, the same can be filed at any time during the pendency of assessment proceeding and benefit of accumulation of income cannot be denied. * In the case of Haryana Welfare Board v/s CIT 83 CCH 268(P&H) it has been held that information in form 10 was required to be furnished at any time before the finalization of the assessment proceedings. * In the case of Association of Corporation & Apex Societies of Handlooms v/s ADIT 351 ITR 287....
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.... form which was available with assessee before assessment was completed. In such a case, appeal being a continuation of the original proceedings, the appellate authority has the power to accept the audit report and direct the Assessing Officer to re-do the assessment 6.4. In the case of CIT vs. Lucknow Public Educational Society318 ITR 0223 (All HC) it has been held that Charitable trust-Exemption under s. 11-Effect of non-availability of exemption under s. 10(23C) vis-a-vis filing of return- Assessee, a registered society, filed original return claiming exemption under s. 10(23C)-Later, when it was known that it was not eligible for exemption under s. 10(23C), filed a revised return claiming exemption under s. 11 along with supporting documents like audit report-AO treated the revised return as non est, as original return has been filed after due date and completed assessment on the basis of original return denying exemption under s. 11-Not justified-AO himself had passed the order under s. 143(3) in respect of the original return- AO was aware that the assessee was entitled to exemption under s. 11, if not under s. 10(23C)-Department should not take advantage of the igno....
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.... to provide clarity in this regard, it is proposed to further amend section 12A so as to provide for further condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Act. These amendments are clarificatory in nature. These amendments will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent years Circular No.02/2018 dated 15.02.2018 containing "Explanatory Notes to the Provisions of the Finance Act, 2017" on insertion of clause (ba) in Sub section (1) of section 12A is quoted as under: "the entities registered under section 12AA are required to file return of income under sub-section (4A) of section 139 of the Income-tax Act, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. Amendment to section 12A of the Income-tax has been made so as to provide for additional condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within ....
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....at such condition was not there in existing clause (b) of section 12A. Had such condition being there in clause (b) itself, then there was no need to insert a further clause (ba) by the Legislature for denying benefit of section 11 & 12 in case return is not filed in time as per provision of section 139 (4A). We are also not in agreement with the contention of the Ld. DR that this amendment is clarificatory in nature. As rightly pointed out by the Ld. Counsel that this amendment has been made by the Finance Act, 2017 effective from A.Y. 2018-19, meaning thereby that this clause has not been made applicable even for the A.Y. 2017-18, the return of which were still to be filed. Thus, the Legislature has thought fit to make this amendment applicable from next assessment years onwards and not even to the current A.Y. 2017-18. While interpreting the amendment made by the Finance Act No. 2 of 2014 whereby section 11 (6) was inserted so as to exclude such assets while computing depreciation in respect of which deduction has been allowed as an application of income u/s 11. In view of the above, we hold that AO was not justified in denying the benefit of the exemption u/s ....
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.... Copy of WS to CIT(A) 9-18 8. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee provision of section 10(23C(iiiad) is applicable and when there is no income taxable there is no requirement to file income tax return as the income on educational activities do not form part of total income. The ld. AO vide reasons recorded intend to tax income but has disallowed the claim of expenditure and thus once on reasons recorded no addition is made based on the decision of Ramsingh (Supra) by our High Court the order is required to be quashed even on that count. 9. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). Ld. DR stated that no benefit be given if the assessee do not file the ITR. 10. In the rejoinder the ld. AR of the assessee submitted that once the income is exempt under the provision of the Act and it does form part of total income and requirement to file the ITR was not made applicable for the year under consideration. 11. We have heard the rival contentions and perused the material ....
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....of income within the due date as stipulated u/s. 139(1) of the Act. Ld. AO noted that since the assessee is registered u/s. 12AA of the Act w.e.f. 19.02.2019 the benefit of 10(23C(iiiad) cannot be given and thereby the he disallowed the claim of income not chargeable to tax u/s. 10 was denied. As the dispute is relates to the provision of section 10(23C)(iiiad) it would be relevant to go through the provision of the Act which reads as under: (23C) any income received by any person on behalf of- (i) the Prime Minister's National Relief Fund or the Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES FUND); or (ii) the Prime Minister's Fund (Promotion of Folk Art); or (iii) the Prime Minister's Aid to Students Fund; or (iiia) the National Foundation for Communal Harmony; or (iiiaa) the Swachh Bharat Kosh, set up by the Central Government; or (iiiaaa) the Clean Ganga Fund, set up by the Central Government; or xxxxx xxxxx xxxx (iiiad) any university or other educational institution existing solely for educational purposes and not for purposes of profit if....
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....nstitution or trade union or body or authority or Board or Trust or Commission or infrastructure debt fund or Mutual Fund or securitisation trust or venture capital company or venture capital fund is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1). Thus, the law as applicable to the assessee says that if the receipt exceeds Rupee one crore and income after giving effect to the provision of section 10(23C(iiiad) the income exceeds the maximum amount which is not chargeable to tax then the present assessee has to file the ITR for the year under consideration. Our above view is also support from the following judicial precedents ; CIT v. Children's Education Society [2013] 34 taxmann.com 285/358 ITR 373 (Karnataka)Section 10(23C) of the Income-tax Act, 1961 - Charitable/....
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.... FDRs was an additional income of society and cannot be considered to be part of annual receipt of the school. It was held that the assessee was eligible for exemption under section 10(23C)(iiiad) of the Act as annual school receipts did not exceed 1 crore." Pawan Hans Swami Uma Bharti Mission v. ACIT [2013] 29 taxmann.com 223/140 ITD 429 (Delhi - Trib.) Section 10(23C) of the Income-tax Act, 1961 - Educational Institutions - Annual receipts - Assessment year 2006-07 -Whether in terms of provisions of section 10(23C)(iiiad), annual receipts of school or university may be taken into consideration and not total income of society running that school or university - Held, yes [Para 8] [In favour of assessee]. Therefore, in the present facts and circumstances of the case and following the judicial precedents cited supra, we are of the considered opinion that the ld.CIT(A) has erred in confirming the denial of exemption u/s. 10(23C)(iiiad) of the Act to the assessee for the impugned assessment year and hence we are setting aside the order of the ld.CIT(A) by allowing the ground no 2 raised by the assessee. Ground no. 1 challenges the re-opening of the case of the ....
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....s to file ITR under section 148 5. Admittedly, the assessee-appellant is a trust. When the department noticed that the assessee-appellant had not disclosed fully and truly all material facts necessary for assessment, on 24.03.2021, the department issued notices to the assessee, u/s 148 of the Act. Said notices were issued as the assessee was found to have not filed any returns of income for the said two assessment years, and in respect of the abovesaid two amounts of income. Returns are filed in response to notices under sec. 148 6. Admittedly, in response to the notices u/s 148 of the Act, the assessee was required to file ITR within a month of the receipt of the notices, but, in the view of the Assessing Officer. Same were filed on 23.04.2021 to comply with direction about the prescribed period. That is how, the department issued notices u/s 143(2) of the Act, which were followed by notices u/s 142(1) of the Act seeking certain information/documents, but the assessee did not furnish any response to the said notices. Again, the Assessing Officer provided opportunity to the assessee to furnish reply. Thereafter, the Assessing Officer prepared draft assessment orde....
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....ction 10 of the Act. Discussion 11. Sub-clause (iiiad) of clause (23C) of section 10 of the Act, as in force, during relevant period, provided that in computing the total income of previous year of any person, any income falling in the said clause shall not be included, where the aggregate annual receipt of any university or other educational institution existing solely for educational purpose and not for purpose of profit, did not exceed the limit of Rs. 1 Cr. Was the assessee required to file Return of Income under any provision other than under section 148? 12. As regards, the contention raised on behalf of the assessee-appellant that the assessee-appellant was not required to file any Income Tax Return, sub-section (4C) of Section 139 of the Act provides that every university or other educational institution referred to in sub clause (iiiad) of Clause (23C) of section 10 of the Act shall furnish return of such income of the previous year, if the total income of the said university or educational institution is assessable, without giving effect to the provisions of Section 10, and exceeds the maximum amount, which is not chargeable to income tax. Sub-section (4C) ....