9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (12) TMI 1567 - AT - Income TaxCancellation of registration u/s.12AA(3) - violation of provisions of section 13(d)(i) by investing in shares of cooperative banks and also by making certain advances and deposits not permitted u/s.11(5) - assessment u/s.153C - Held that - The assessee has never challenged for non issue of notice u/s.153C either before the Assessing Officer or before the CIT(A). Since after the search took place at the residence of Shri M.N. Navale, the assessee had voluntarily filed its return of income on 0401-2007 and has revised the same on 13-08-2007 stating that the same is filed in response to notice u/s.153C, a statement made by the Ld. Departmental Representative at the Bar and not controverted by the Ld. Counsel for the assessee, therefore, we find no merit in the additional ground raised by the assessee on this issue. Further, we do not find any prejudice that has been caused to the assessee for non issue of notice u/s.153C when he has filed the revised return stating that the same has been filed in response to notice u/s.153C. In this view of the matter, the first additional ground raised by the assessee is dismissed. Jurisdiction of the Assessing Officer - Held that - Notice u/s.143(2) was issued to the assessee on 31-03-2007. The assessee filed return of income for the year under consideration along with the returns for other years covered u/s.153C on 13-08-2007. Thereafter notice u/s.143(2) was issued to the assessee on 30-06-2008 which was duly served on the assessee on 01-07-2008. Further notice u/s.142(1) for the A.Y.2006-07 was issued on 07-09-2007. Notice u/s.143(2) was issued on 11-10-2007. The assessment order was passed on 07-08-2008. Till the completion of the assessment, the assessee had never raised the issue of jurisdiction of the Assessing Officer. Therefore, in view of the clear provisions of section 124(3), the assessee now cannot call in question the jurisdiction of the Assessing Officer. The various decisions relied on by the Ld. Counsel for the assessee are distinguishable and are not at all applicable to the facts of the present case. In view of the above discussion, the additional ground No.2 filed by the assessee is dismissed. Denial of exemption of entire income for contravention of provisions of section 13(1)(c) and 13(1)(d) - Held that - Whenever there is violation of section 11(5) and 13(1)(d) of the I.T. Act, exemption cannot be withdrawn for the entire income and income which is the subject matter of violation only can be brought to tax. Calculation of fair rent of the property - Held that - In the instant case the assessee had filed certain details before the CIT(A) for calculation of fair rent of the property which has been ignored by him. Under these circumstances and in the interest of justice, we deem it proper to restore this issue to the file of the CIT(A) with a direction to adjudicate this issue in the light of facts and submissions made and the additional evidences filed before him. The CIT(A) shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. Assessee has not violated the provisions of section 13(1)(d) by investing in shares of cooperative banks from which it had taken loans. Disallowance u/s.40(a)(ia) can be made where the income is assessable under the head profits and gains from business and profession and it cannot be made since assessee s income is assessed/assessable under the head income from other sources . Disallowance u/s.40A(3) - Held that - We deem it proper to restore this issue to the file of the AO with a direction to verify the payments made to different persons. In case there is no payment exceeding ₹ 20,000/- at a time to any of the parties as stated by the Ld. Counsel for the assessee at the Bar, then provisions of section 40A(3) cannot be invoked. The Assessing Officer shall accordingly decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Disallowance u/s.36(1)(va) on account of delayed payment of PF - Held that - We restore this issue to the file of the AO with the direction to verify the details of payment made to the Government treasury. In case the deposit has been made prior to the date of filing of the return, then in that case no disallowance is called for. The Assessing Officer shall decide the issue as per facts and law after giving due opportunity of being heard to the assessee. Disallowance of prior period expenses - Held that - We deem it proper to restore the issue to the file of the Assessing Officer with a direction to decide the issue afresh in the light of the decisions cited above. Needless to say the Assessing Officer shall give due opportunity of being heard to the assessee and decide the issue as per law
List of Issues:
1. Validity of assessment order under Section 153C. 2. Jurisdiction of the Assessing Officer. 3. Denial of exemption under Section 11. 4. Addition of ?22,45,06,500 on account of donations. 5. Contravention of Section 13(1)(d) due to investment in shares of cooperative banks. 6. Contravention of Section 13(1)(d) due to investment in shares of public limited companies. 7. Treatment of donations received towards corpus as revenue income. 8. Disallowance of ?2,50,000 on account of donations paid. 9. Disallowance under Sections 40(a)(ia), 40A(3), and 36(1)(va). 10. Treatment of revenue expenditure as capital expenditure. 11. Disallowance of prior period expenses. Detailed Analysis: 1. Validity of Assessment Order under Section 153C: The assessee argued that the assessment should have been completed under Section 153C, but no notice was issued under this section. The Tribunal dismissed this ground, noting the assessee filed the return voluntarily before the satisfaction note was recorded, and no prejudice was caused by the non-issuance of notice under Section 153C. 2. Jurisdiction of the Assessing Officer: The assessee challenged the jurisdiction of the Assessing Officer, claiming the case was not properly transferred. The Tribunal dismissed this ground, stating the assessee did not raise the issue of jurisdiction before the Assessing Officer or CIT(A) and filed the return voluntarily with the officer who passed the assessment order. 3. Denial of Exemption under Section 11: The CIT(A) denied exemption under Section 11 due to the cancellation of registration under Section 12AA(3). The Tribunal held that since the ITAT had restored the registration, exemption under Section 11 could not be denied for want of registration. 4. Addition of ?22,45,06,500 on Account of Donations: The Assessing Officer added ?22,45,06,500 as undisclosed income from donations for admissions. The Tribunal found no evidence of the assessee collecting donations for admissions, noting the absence of corroborative evidence from students or parents and the lack of complaints. The Tribunal set aside the addition, stating the documents seized did not conclusively prove the collection of donations. 5. Contravention of Section 13(1)(d) due to Investment in Shares of Cooperative Banks: The CIT(A) held the assessee violated Section 13(1)(d) by investing in shares of cooperative banks. The Tribunal found the investments were a precondition for availing loans and not an investment as normally understood. Following the decision of the Hon’ble Bombay High Court in CIT vs. Dr. V.K. Patil Foundation, the Tribunal held there was no violation of Section 13(1)(d). 6. Contravention of Section 13(1)(d) due to Investment in Shares of Public Limited Companies: The CIT(A) held the assessee violated Section 13(1)(d) by investing in shares of public limited companies. The Tribunal, following its earlier decision in the assessee’s case for A.Y. 1999-2000, held that there cannot be wholesale denial of exemption under Section 11. The Tribunal directed the Assessing Officer to tax only the dividend income from these shares. 7. Treatment of Donations Received towards Corpus as Revenue Income: The assessee admitted there was no letter from donors to support the claim that donations were received towards the corpus. The Tribunal upheld the CIT(A)’s decision to treat these donations as revenue income. 8. Disallowance of ?2,50,000 on Account of Donations Paid: The assessee argued this ground was not taken before CIT(A) and should be admitted. The Tribunal admitted the ground and directed the Assessing Officer to re-examine the issue in light of the CBDT Circular No. 1132 and the CIT(A)’s order for earlier years. 9. Disallowance under Sections 40(a)(ia), 40A(3), and 36(1)(va): - Section 40(a)(ia): The Tribunal, following the decision of the Hon’ble Bombay High Court in Bombay Stock Exchange Ltd. vs. DDIT (E), held that Section 40(a)(ia) does not apply to charitable institutions and set aside the disallowance. - Section 40A(3): The Tribunal restored this issue to the Assessing Officer for verification, directing that no disallowance should be made if no payment exceeded ?20,000. - Section 36(1)(va): The Tribunal restored this issue to the Assessing Officer to verify if the payments were made before the due date of filing the return. 10. Treatment of Revenue Expenditure as Capital Expenditure: The Tribunal found some items treated as capital expenditure by the special auditor were revenue in nature. The issue was restored to the Assessing Officer for re-examination. 11. Disallowance of Prior Period Expenses: The Tribunal restored this issue to the Assessing Officer for re-examination, noting that as long as the expenses are otherwise allowable, it does not matter if they are claimed in A.Y. 2006-07. Conclusion: The Tribunal allowed the appeal partly, setting aside certain additions and disallowances and restoring some issues to the Assessing Officer for re-examination. The Tribunal upheld the CIT(A)’s decision on treating donations as revenue income and dismissed the grounds challenging the jurisdiction and validity of the assessment order.
|
