9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 1874 - HC - Income TaxPower and jurisdiction to withdraw the approval granted u/s 10(23C)(vi) - validity of show cause notice that it was not signed by the competent authority - Held that - It is settled proposition of law that the notice issued by the authority other than the prescribed authority is not valid and consequential order passed by the ld. CIT(E) is without jurisdiction. The show cause notice confers the jurisdiction to proceed and to pass the order. In case the notice itself is not valid then the jurisdiction assumed by the prescribed authority based on the invalid notice become invalid and consequential order passed by the authority is invalid and void abinitio for want of jurisdiction. Further, invalid show cause notice vitiates the proceeding and consequential order. Hence, we are of the considered opinion that the impugned order passed by the ld. CIT(E) is invalid and liable to quash on this ground. Even on merits, the trip which was conducted was an educational trip and only the Director was picked up. In that view of the matter, no substantial question of law arises.
Issues Involved:
1. Validity of the show cause notice not signed by the competent authority. 2. Non-compliance with the conditions mentioned in the approval order under Section 10(23C)(vi) of the IT Act. 3. Investment of funds not in the modes specified under Section 11(5) of the IT Act. 4. Provision of undue benefit to specified persons under Section 13(3) of the IT Act. 5. Requirement of show cause notice under the 13th proviso to Section 10(23C). 6. Authority of ITO(Hq.)/AC/DC(Hq.) to issue notices on behalf of CIT(E). Detailed Analysis: 1. Validity of the Show Cause Notice: The tribunal observed that the show cause notice dated 08.07.2016 was signed by the DCIT (Hqr.) and not by the CIT(E). The 13th proviso to Section 10(23C)(vi) mandates that the satisfaction of the prescribed authority, i.e., CIT(E), is a pre-condition for issuing a show cause notice. The language and tenor of the notice indicated that it was issued as per the directions of the CIT(E) but did not reflect the CIT(E)'s satisfaction. The tribunal cited precedents where notices not signed by the competent authority were deemed invalid, thus rendering the subsequent proceedings and orders void ab initio. 2. Non-compliance with Approval Conditions: The appellant argued that the assessee violated condition No.2 of the approval granted under Section 10(23C)(vi), which prohibits investing or depositing funds in modes other than those specified under Section 11(5). The tribunal, however, found that the show cause notice itself was invalid, which undermined the basis for any further proceedings or findings on this issue. 3. Investment of Funds: The tribunal noted that the assessee had made advances to various entities, which were neither aligned with the society's objects nor in the prescribed modes under Section 11(5). However, the tribunal's primary focus was on the invalidity of the show cause notice, which precluded a detailed examination of this issue. 4. Provision of Undue Benefit: The appellant contended that the assessee provided undue benefits to specified persons under Section 13(3). Again, the tribunal's decision hinged on the invalidity of the show cause notice, rendering any further analysis on this point moot. 5. Requirement of Show Cause Notice: The appellant argued that there was no requirement for a show cause notice under the 13th proviso to Section 10(23C). The tribunal disagreed, emphasizing that the prescribed authority's satisfaction and the issuance of a valid show cause notice are mandatory pre-conditions for initiating proceedings to withdraw approval. 6. Authority to Issue Notices: The tribunal clarified that while ITO(Hq.)/AC/DC(Hq.) can act on behalf of CIT(E), the satisfaction and decision to issue a show cause notice must come from the CIT(E) himself. The tribunal found that the notice in question did not reflect the CIT(E)'s satisfaction, thus invalidating the proceedings. Conclusion: The tribunal concluded that the impugned order passed by the CIT(E) was invalid due to the invalidity of the show cause notice. The tribunal also noted that the educational trip conducted by the assessee did not provide undue benefits to the Director, thus no substantial question of law arose. Consequently, the appeal was dismissed.
|
