TaxTMI 
TaxTMI 
2002 (6) TMI 153
X X X X Extracts X X X X
X X X X Extracts X X X X
....under section 142(1) requiring assessee to file return for assessment year 1997-98 was issued by ITO, Azamgarh on 31-7-1997. The assessee filed returns of income on 31-3-1999. Notices under section 148 were issued by the ITO, Azamgarh. The return of loss for the assessment year 1997-98 was above Rs. 10 lakhs. The case records were transferred by the Income-tax Officer to Joint Commissioner of Income-tax (Asstt.) Special Range, Varanasi on the ground that the correct jurisdiction over the case lies with the Joint Commissioner of Income-tax (Asstt.) Special Range, Varanasi. The case records were received by the Joint Commissioner of Income-tax (Asstt.) Special Range, Varanasi (hereinafter referred to as 'the Assessing Officer') on 7th July, 1999. 3. The Assessing Officer issued notices under sections 143(2) and 142(1) of the Income-tax Act dated 18-1-2000 along with a detailed enquiry letter for each year separately. In response to these notices, Sri A.C. Srivastava, Advocate along with Sri P.R. Maurya, Office Supdt. and Sri R.P. Srivastava, Incharge of Accounts Section of the assessee attended from time to time. The Assessing Officer noted that the status was shown by the assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 24.28 Lakhs 1994-95 43.70 Lakhs 1995-96 74.42 Lakhs 1997-98 87.88 Lakhs From the surplus shown by the assessee after claiming depreciation the Assessing Officer came to the conclusion that the assessee-society is existing for profit and there is no element of charity or an act of benevolence. The Assessing Officer came to the conclusion that the assessee-society is running the show purely on commercial basis and only to evade legitimate incidence of tax. The Assessing Officer has also mentioned in paragraph 6(viii) that there is a systematic attempt to siphon out funds of the society i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der section 10(22) on the ground that the assessee-society does not solely exist for educational purposes and it is operating purely for profit motive. The assessee has claimed exemption under section 11 of the Income-tax Act also. The Assessing Officer, as mentioned in paragraph 7(1) of the assessment order, held that registration certificate dated 10-3-1978 issued by the Commissioner of Income-tax, Allahabad is in the name of some other society with a similar name. The same has been issued in the name of "Children Care and Educational Development Society" and not in the name of the assessee-society. On this score, the Assessing Officer denied the deduction under section 11 of the Income-tax Act to the assessee-society. Ultimately, the Assessing Officer came to the conclusion that the assessee-society is not carrying on any charitable activity and is running the business of schools and hostels etc. and the assessee is not entitled to deduction under section 11 of the Income-tax Act. The Assessing Officer also held that the society is not existing solely for educational purposes but for the personal profit of the management in the garb of society. The Assessing Officer denied exem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a), there was no need to pass second order of assessment under section 143(3) on 29-3-2000 as no further notices under section 143(2) were issued after making first assessment on 29-3-2000. 7A. According to the ld. counsel for the assessee processing of return under section 143(1)(a) on 29th March, 2002 and sending of intimation under section 143(1)(a) is different from order under section 143(3) dated 29-3-2002, the second order of assessment. No notice under section 143(2) was issued after 29-3-2002. Hence, after issuing of notice under section 143(2), the Assessing Officer is debarred from processing the return under section 143(1)(a). 7B. The ld. Standing Counsel stated that notice under section 143(2) was issued prior to passing of assessment order under section 143(3) on 29-3-2002. Intimation under section 143(1)(a) has been signed on 29-3-2000. No second notice under section 143(2) is required after intimation under section 143(1)(a) because notice under section 143(2) has already been issued. According to the ld. Standing Counsel, there is no illegality in sending intimation under section 143(1)(a) and assessment order under section 143(3) on the same date on 29-3-2002. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and should not be a mere pretence. The ld. counsel also referred to certain decisions of the Hon'ble Supreme Court. According to the ld. counsel the basis for issuing notices under section 148 of the Act was that the assessee has been running school, an "institution" and earning income from, such institution and making investment in purchase of buses and buildings. According to the ld. counsel, the income of the school is exempt under section 10(22) of the Income-tax Act and, therefore, on this basis it could not be said that any income has escaped assessment. 10. The ld. counsel for the assessee further argued that the issue and service of valid notice is sine qua non of the proceeding under section 148. It is argued by the ld. counsel that in the case of the assessee-society notices for the assessment years 1993-94, 1994-95 and 1995-96 had not been validly issued. According to the ld. counsel, notices dated 1-8-1997 have been addressed to M/s. Manager, All India Children Care and Welfare Society, Railway Station, Azamgarh for the assessment year 1993-94, Manager, All India Children Care and Welfare Society for assessment year 1994-95 and Manager, All India Children Care and Wel....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not belong to either the Manager or member of the society or any employee of the society. According to the ld. counsel since the notices have not been served in accordance with the provisions of laws, the assessments are void ab initio. 12. With reference to these preliminary objections raised by the ld. counsel for the assessee, learned standing counsel of the department Sri Shambhu Chopra, Advocate, argued that although the department could not produce the jurisdiction order, the assessee could not have raised this objection for the first time before the Tribunal in view of the decision of the Allahabad High Court in the case of Hindustan Transport Co. v. IAC [1991] 189 ITR 326. According to the ld. standing counsel of the department that if a question arises whether the Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Director General or the Commissioner and no person shall be entitled to call in question the jurisdiction of the Assessing Officer where he has made a return under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with the notice under section 142(1) or 143(2) or afte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the ld. counsel for the assessee that the issue regarding jurisdiction of the Assessing Officer has been raised before the ld. CIT(A) through written submissions. It was further contended that the issue of jurisdiction cannot be raised after the proceedings have been initiated by the Assessing Officer having jurisdiction in terms of an order passed under section 120 read with sub-section (1) or sub-section (2) of section 124. It is argued by the ld. counsel that in the present case no such order has been passed by the ld. CIT, Varanasi after the charge was created in June, 1997 and the issue of jurisdiction could very well be raised by the assessee at any stage. It is argued by the ld. counsel that in the absence of any order having been passed by the CIT, Varanasi, the decision of the Hon'ble Allahabad High Court in the case of Hindustan Transport Co. relied upon by the revenue is not applicable. According to the ld. counsel since no order regarding jurisdiction has been passed, the assessment orders dated 29-3-2000 are non-est. 14. As regards the issue of notice under section 147 of the Income-tax Act for the assessment years 1993-94, 1994-95 and 1995-96, it is argued by the ld.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the provisions of section 147 with effect from 1-4-1989, the Assessing Officer can issue notice under section 148 if he is satisfied that income has escaped assessment, even if the information relating to such escapement is all along on the record. 1. Rakesh Aggarwal v. Asstt. CIT [1997] 225 ITR 496 (Delhi), 2. Stock Exchange v. Asstt. CIT [1997] 227 ITR 906 (Guj.), 3. Smt. Shashi Jain v. ITO [1997] 228 ITR 682 (All.), 4. Praful Chunilal Patelv. M.J. Makwana, Asstt. CIT [1999] 236 ITR 832 (Guj.). 15A. The ld. Standing Counsel for the Department referred to the reasons recorded by the Assessing Officer for the issue of notice under section 148. The ld. Standing Counsel then referred to paras 6(ix) and 6(xi) of the assessment order to show that the assessee has made investment in land and building. As regards the name of the society, the ld. Standing Counsel stated that no objection was raised before the Assessing Officer and the CIT(A) about the name of the society mentioned on the body of the notices issued under section 148 of the Act. It is argued by the ld. Standing Counsel of the department that the reasons mentioned by the Assessing Officer for the issue of notice, gav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Power Co. Ltd. v. CIT [1998] 229 ITR 383. According to the Ld. Counsel, the entire surplus revealed by Income and Expenditure Accounts for all the four years represented "income of the Educational Institution existing solely for educational purposes" and not for the purposes of "profit" and specifically exempt under section 10(22) of the Income-tax Act, The Ld. Counsel placed reliance on the decision of the Orissa High Court in the case of Secondary Board of Education. The entire income was from the Schools run by the assessee and only nominal receipts were on account of rent realised from the inmates of Working Women Hostel, which has been constructed long back with the financial assistance provided by the Central Government. Whatever was the surplus, the same had been utilised in acquisition of fixed assets etc. and the assets so created were only for educational purposes and not for any other purpose. Therefore, the assessee is entitled to exemption under section 10(22) of the Income-tax Act. According to the Learned Counsel, so long as the income is applied or even ear-marked to be applied for educational purposes only, it cannot be said that it has been existing for purposes o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to show that utilisation of fund was for educational purposes only which it has failed to discharge. According to the Ld. Standing Counsel, the assessee-society stood disqualified in its claim for exemption under section 10(22) and, there is no infirmity in the order passed by the Assessing Officer. The Ld. Standing Counsel also referred to the decision of the Hon'ble Supreme Court in the case of Aditanar Educational Institution and argued that if the profit is incidental then the claim under section 10(22) is not adversely affected but if it is a matter of course, then it has to be held that the institution existed for the purpose of profit and exemption cannot be allowed. The Ld. Standing Counsel also placed reliance on the decision of the ITAT., Allahabad Bench in the case of Asstt. CIT v. Bal Bharati Nursery School [2002] 82 ITD 71 and relied on various paras from the said judgment. 19. Replying to the arguments of the Standing Counsel of the Department, the Ld. Counsel for the assessee stated that the decision of the Madras High Court in the case of Rao Bahadur AKD Dharmaraja Education Charity Trust has no application to the case of the assessee because in that case only a sm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e objects are for educational purposes except 2-3 objects that relate to setting of children hospital, hostel for working women and old age home. The Ld. Counsel for the assessee also referred to the order of the ITAT in the case of City Montessory School [IT Appeal No. 1680 (All.) of 1994, dated 31-1-1996] in which the "document on social, moral and spiritual values in education" as brought out by National Council of Educational Research and Training (NCERT) and document brought out by Planning Commission were referred. According to the Ld. Counsel if the objects of the assessee-society are examined in the context of social, moral and spiritual values in education brought out by NCERT and document brought out by Planning Commission, then all the objects of the society are for educational purposes. As regards Working Women hostel, no such activity was carried on by the assessee-society at its own and certainly not in the years under appeal. Way back in the year 1981, such a hostel was constructed with the aid of the Government which is a source of income now and rent is charged from the inmates which formed part of the Income and Expenditure Account under the head "Building rent". ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le consideration also meets the requirement of payment on this score in view of the said provision. It is stated that during the course of assessment proceedings, copies of the sale deeds were made available and with regard to payments made over and above the figure mentioned in the sale deed, it was stated that the said payments were made in part and according to the availability of means. It is stated that the relevant receipts of the payees were duly shown at the assessment stage. An affidavit under section 10 of the Income-tax (Appellate Tribunal) Rules, 1963 was also filed duly sworn by Sri P.R. Maurya, the person who has appeared before the Assessing Officer till the case was finally discussed on 13-32000. 25. The Ld. Standing Counsel of the Department, Sri Shambhu Chopra argued that the finding given by the Assessing Officer with regard to siphoning of funds could not be considered as unreasonable and faulty. He referred to the decision of the Hon'ble Supreme Court in the case of McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 and also the decision of the Hon'ble Supreme Court in the case of Workmen Associated Rubber Industry Ltd. v. Associated Rubber Industry Ltd. [1986] 157....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to my knowledge and belief". It is argued by the Ld. Counsel that in order to make his counter worthy of admission, he should have clearly stated in his affidavit as to how much or which part of the statement in the affidavit is based on his belief and the basis for entertaining the belief should also have been clearly stated. Since the affidavit did not satisfy these requirements, it has no meaning or value. The Ld. Counsel placed reliance on following decisions: 1. Dipendra Nath Sarkar v. State of Bihar AIR 1962 Pat. 101, 2. Pritam Singh v. Ranjit Singh AIR 1972 Raj. 59, 3. A.K.K. Nambiar v. Union of India AIR 1970 S.C. 652. 28. It is argued by the Ld. Standing Counsel that Order XIX Rule 3 of the Code of Civil Procedure does not prescribe at all anywhere that those paragraphs of the affidavit which are based on knowledge and those paragraphs which are based on belief must be clearly set out in the verification clause. Order XIX Rule 3 of Civil Procedure Code is totally silent in this respect. It is nowhere laid down in Order XIX Rule 3 that each and every para of the affidavit must be ascribed to either knowledge or belief in the verification clause. According to the Ld. St....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection regarding backdating of audit report in Form No. 10B is concerned, the said objection is also not valid, no time limit is laid down for filing the audit report in the Income-tax Act though the time limit is prescribed under the Rule. But the Rules cannot lay down what has not been provided in the Act itself. 31. The Ld. Standing Counsel of the Department relied on the order of the Assessing Officer and also referred to the decision of the Hon'ble Bombay High Court in the case of Director of Income-tax v. Malad Jain Yuvak Mandal Medical Relief Centre [2001] 250 ITR 488. He stated that the provisions of section 139(4A) are mandatory for the appellant to file the return and the assessee cannot claim benefit under section 11 of the Income-tax Act because return of income was not filed under section 139(1). 32. The Ld. Counsel for the assessee in reply stated that case of Malad Jain Yuvak Mandal Medical Relief Centre has no bearing on the admissibility of the claim for exemption under section 11 and the ratio laid down in that case is not applicable to the facts of the case of the assessee. 33. We have considered the facts of the case, rival submissions and the material on rec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pecial order or, and subject to such conditions, restrictions or limitations as may be specified therein, empower the Director General or Chief Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the Assessing Officer under this Act in respect of any special area or persons or classes of persons or incomes or classes of incomes or cases or classes of cases, shall be exercised or performed by a Joint Commissioner. Under section 127 of the Income-tax Act, Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him to any other Assessing Officer or Assessing Officers also subordinate to him. 35. It is clear from the above-mentioned provisions that the C.B.D.T. under section 12D of the Act may issue directions to Income-tax Authorities and after issue of such directions, the concerned Income-tax Authorities shall exercise such powers and functions which are assigned to them under the Act. The CBDT may also authorise any Incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., Varanasi after the returns of the assessee were received on the ground that the return of loss for the assessment year 1997-98 was of Rs. 10 Lakhs and the assessment records were transferred by the ITO, Azamgarh to Joint CIT, Varanasi on 7th July, 1999 but no order of the CIT conferring jurisdiction on the Joint CIT, Varanasi over the case of the assessee under section 124 or under section 127 has been produced before us. The Ld. Counsel for the assessee stated that under section 127 before the case is transferred from one place to another, the assessee is entitled to opportunity of hearing by the CIT and only after recording the reasons and after giving opportunity of hearing, the Commissioner can transfer the jurisdiction from one Assessing Officer to another Assessing Officer on different place. But in the case of the assessee since no opportunity of hearing was given, it seems that no order under section 127 was passed. Whatever may be the position, the Ld. Standing Counsel of the Department has not been able to produce any jurisdiction order of the CIT, Varanasi to show that the Joint CIT, Varanasi exercised jurisdiction over the case of the assessee. It is, therefore, clear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 127, the Joint CIT, Varanasi is not competent to exercise jurisdiction over the case of the assessee. 37. It is argued by the Ld. Standing Counsel that in view of the provisions of sub-section (2) of section 124, where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the Chief Commissioner or the Commissioner. The Ld. Standing Counsel referred to sub-section (3) of section 124 and argued that no person shall be entitled to call in question the jurisdiction of the Assessing Officer where he has made a return under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier. Where he has made no such return, after the expiry of the time allowed by the notice under sub-section (1) of section 142 or under section 148 for the making of the return or by the notice under the first proviso to section 144 to show-cause by the assessment should not be completed to the best of the judgment of the Assessing Of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eeding is a nullity when the authority taking it has no power or seisin over the case. It is also clear from the ratio laid down in this case that if an authority passes an assessment order without jurisdiction, such an order passed by the authority due to lack of jurisdiction is a nullity. We are, therefore, of the considered opinion that since there is no jurisdiction order under section 124 or 127 conferring jurisdiction over the case of the assessee to the Joint CIT, Varanasi, the assessment order passed by him is a nullity and the preliminary objection is allowed in favour of the assessee and against the department. 40. The second preliminary issue raised by the Ld. Counsel for the assessee is that the reasons for issue of notice under section 148 dated 1-8-1997 for assessment years 1993-94, 1994-95 and 1995-96 do not meet the requirement of law. The assessee's counsel's arguments have been mentioned in paragraphs 14 and 9. The Assessing Officer has recorded the following reasons for issue of notice under section 148 of the Act: "1-8-1997: ... It has come to my notice that the assessee runs an Institution in the name of All India Children Care Welfare Society, Azamgarh and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of the belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for re-opening the assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote or far-fetched, which would warrant the formation of the belief relating to the escapement of the income of the assessee from assessment. 43. In the case of the assessee, it is clear that the Assessing Officer has not mentioned any facts and figures to show that there was escapement of income. The Assessing Officer has not given any facts to show how much income was earned and whether the income earned by the assessee-society was above taxable limit. The Assessi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the amended section 147(a). In the case of Rakesh Aggarwal Hon'ble Delhi High Court held that the condition for issuing notice is that the Assessing Officer has reasons to believe that the income has escaped assessment though the escapement of income may not be due to failure of the assessee to make full and true disclosure. The Assessing Officer must have reasons to believe on the basis of some facts and figures available on record though the assessee might not have failed to disclose fully and truly all-material facts. As already discussed, the Assessing Officer has not mentioned any facts and figures on the basis of which he acquired the belief that income has escaped assessment. Therefore, it cannot be said that the Assessing Officer has reason to believe that income has escaped assessment. It was only his imagination that income has escaped assessment because no facts and figures have been mentioned to justify the reasons to believe before issue of notice under section 148. Therefore, the case of Rakesh Aggarwal is not helpful to the Revenue. 47. The Department's Standing Counsel has relied on the decision of Hon'ble Gujarat High Court in the case of Stock Exchange. In this ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....notice under section 148 of the Income-tax Act. The Assessing Officer was aware that some educational institute is being run therefore, the Assessing Officer should have given reasons about it in the notice under section 148 of the Income-tax Act that the income of Institution is either mis-used or used for other than educational purposes. The reasons about construction of building or purchase of buses are wrong as the same were stated to be used for educational purposes only. There should be a reasonable nexus in between reasonable belief and escapement of income in order to proceed under section 147/148 of the Income-tax Act. The notices for all the three years were issued on the basis of imagination, presumptions and assumptions by the Assessing Officer which is not justified. The notices under section 148 are, therefore, void ab-initio. This issue is decided in favour of the assessee and against the revenue. 49. The third preliminary issue raised by the Ld. Counsel for the assessee is that the notices under section 148 of the Act have not been properly issued and served. According to the Ld. Counsel for the assessee, the name of the assessee-society has not been properly menti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....It was in Hindi and we have mentioned its translation in para 40 of the order. Accordingly, notice under section 148 was also issued by the Assessing Officer in the name of "M/s. Manager, All India Children Care & Welfare Society, Railway Station, Azamgarh". The correct name of the appellant is "All India Children Care & Educational Development Society, Azamgarh". Therefore, the Assessing Officer has committed error in writing the correct name of the assessee in the, order dated 1st August, 1997 for issuing notice under section 148 of the Income-tax Act as well as in the reasons for the same and lastly notice under section 148 was issued in the wrong name. The same cannot be considered as mistake in the notice. The Assessing Officer in fact has issued notice under section 148 on the basis of the reasons recorded on 1st August, 1997 but the same was never in the name of the assessee. The Assessing Officer, accordingly, never intended to record reasons for issuing notice under section 148 in the name of the assessee. We may also refer here that it is one of the condition necessary before proceeding under section 148 that the Assessing Officer in addition to recording reasons for his ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3-2000 Order is passed under section 143(3) Sd. Joint CIT." The recording of entries on 29-3-2000 shows that the Assessing Officer has processed the return of income under section 143(1) and has also passed assessment order under section 143(3) on the same date. The word "assessment" has been defined in section 2(8) of the Income-tax Act, 1961 as under: "(8) 'Assessment includes reassessment'" Section 2(40) defines "regular assessment" as under: (40) "regular assessment" means the assessment made sub-section (3) of section 143 or section 144." Both these definitions under sections 2(8) and 2(40) have to be read together. In the case of the assessee, only definition of regular assessment under section 2(40) is relevant. In that sub-section "regular assessment" has been defined as assessment made under section 143(3) or section 144. The provisions of the Act relating to assessment have been amended with effect from 1-4-1989 by Taxation Laws (Amendment) Act. Now under section 143(1) where a return has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f return. Under section 143(1) only if any tax or interest is found due on the basis of such return or refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee. But if no tax or interest is payable to the assessee or no refund is due on the basis of such return, then the acknowledgement of return shall be deemed to be intimation under sub-section (1) of section 143. If any intimation is required to be sent, then such intimation can be sent only within a period of two years because no intimation can be sent after the expiry of two years from the assessment year in which income was first assessable. Sub-section (1) of section 143, therefore, lays down only the procedure for sending the intimation and does not lay down procedure of regular assessment as defined in section 2(40) of the Income-tax Act because for the purpose of regular assessment under section 143(3) or 144, the Assessing Officer will have to issue notice under section 143(2) after the return is filed, but no such notice is required to be sent if an intimation is sent to the assessee. Such intimation is deemed to be a notice of demand u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and failure to take steps under section 143(2) will not render the Assessing Officer powerless to initiate the reassessment proceedings." The provisions of sub-section (1) and sub-section (2) of section 143 are totally independent and deal with different situation. The decision of the Hon'ble Allahabad High Court in the case of Pradeep Kumar Har Saran Lal clearly maintained the distinction between intimation under section 143(1) and assessment under section 143(3). The Assessing Officer has issued notice under section 143(2) only for the purpose of making regular assessment under section 143(3) and not for the purpose of sending intimation under section 143(1). Therefore, processing the return under section 143(1) on 29-3-2000 does not act as a bar to make the assessment under section 143(3) which is regular assessment and for the purposes of making assessment, the Assessing Officer has issued notices under section 143(2) of the Income-tax Act. 55-56. In the case of Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT [2000] 246 ITR 173 (Delhi). The Hon'ble High Court held as under: "The intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, held that the assessee is not entitled to any deduction or exemption under section 11 of the Income-tax Act, but the reason given by the Assessing Officer is that the returns of income have been submitted by the assessee after issue of notice under section 148. According to the Assessing Officer since the assessee has not filed returns of income in accordance with the provisions of section 139(4A), the assessee is not entitled to benefit of section 11 of Income-tax Act as the provisions of section 148 are not for the benefit of the assessee, but the same are for the benefit of the Revenue. The Assessing Officer also held that the assessee is not carrying on any charitable activity and is running the business of school and hospital. He, therefore, denied exemption to the society under section 11 of the Income-tax Act. 60. Though the assessee-society claimed under section 11 of the Income-tax Act in the return of income filed on 31-3-1999 for the assessment years 1993-94,1994-95,1995-96 and 1997-98, but during the course of assessment-proceedings, the assessee also claimed deduction under section 10(22) of the Income-tax Act. The Assessing Officer examined the surplus of income o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(xiv) at page 8 held that there is much scope for misappropriating the funds for personal gain of management in the garb of society. As the assessee has not made claim of exemption under section 10(22) in the return of income filed on 31-3-1999, but the claim for exemption under section 10(22) was made during the course of assessment proceedings, the Assessing Officer considered that the claim is an afterthought. However, the Assessing Officer came to the conclusion that both the conditions mentioned in section 10(22) are missing. In other words, according to the Assessing Officer, the assessee-society was not existing solely for educational purposes but it was existing for the purposes of profit. Hence the Assessing Officer denied exemption under section 10(22) of the Income-tax Act, 1961. 61. We have considered the facts of the case, rival submissions and the material on record. During the course of hearing, we also asked the assessee to furnish income and expenditure statements of all the three schools run by it and the assessee-society has furnished details of income and expenditure of all the three schools. The surplus of income over expenditure as mentioned by the Assessing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has further submitted later on that the assessee has added Medical and Pharmacy Colleges. Therefore, the assessee was running only educational institutions. The ld. Counsel for the assessee in his first paper book has filed the copies of the papers relating to granting affiliation, certificates issued by the various Boards mentioned above giving recognition to the educational institutions of the assessee. The ld. Counsel for the assessee also filed in the Paper Book the copy of the sanction letter dated 23-3-1992 by the Ministry of Human Resources Development for granting aid under various schemes during the relevant financial year to the educational institution. As stated above, the copies of all the income and expenditure statements of the school was furnished. This was filed giving bifurcation for all the schools. Copy of the consolidated receipt and payment account was also furnished in the paper book along with other details with regard to receipt and payment of the different educational institutions as directed by the Bench. The ld. Counsel for the assessee also on the direction of the Bench has filed the receipt and payment account of Girls Hostel and for vocational educat....