2011 (2) TMI 1569 - AT - Income Tax

Summary

Issues Involved:
1. Validity of re-assessment proceedings.
2. Service of notice u/s 148.
3. Change of opinion.
4. Exemption u/s 10(23C)(iiiab) and 10(23C)(iiiad).

Summary:

1. Validity of Re-assessment Proceedings:
The assessee challenged the re-assessment proceedings on the grounds that the notices u/s 148 were not properly served and that the reopening was based on a change of opinion. The Tribunal found that the objections raised by the assessee were not valid as the notices were duly received by an authorized person of the assessee and action was taken on such notices. The Tribunal also held that the reopening was not due to a change of opinion as there was no scrutiny assessment till assessment year 2001-02, and remedial action was being taken for assessment year 2002-03.

2. Service of Notice u/s 148:
The assessee contended that the notices u/s 148 were not properly served as the signature on the acknowledgment was not of an authorized person. The Tribunal rejected this argument, noting that the authorized person of the assessee had received the notices and requested the Assessing Officer to consider the returns already filed as responses to the notices. The Tribunal concluded that the service of notice is not dependent on the signature but on the actual receipt by an authorized person.

3. Change of Opinion:
The assessee argued that the reopening was based on a change of opinion as the status of the assessee society and its educational institutions was accepted in earlier years. The Tribunal found that there was no change of opinion as there was no scrutiny assessment till assessment year 2001-02, and the Department was not precluded from taking a correct view in subsequent years.

4. Exemption u/s 10(23C)(iiiab) and 10(23C)(iiiad):
The assessee claimed exemption u/s 10(23C)(iiiab) for its educational institutions. The Assessing Officer held that the institutions were not wholly and substantially financed by the Government and their gross receipts exceeded Rs. 1 crore, thus not eligible for exemption. The Tribunal held that the gross receipts of each educational institution should be considered separately for exemption u/s 10(23C)(iiiad). Since the annual gross receipts of each institution were below Rs. 1 crore, the income of these institutions was exempt under sub-clause (iiiad) of clause (23C) of section 10. The requirement of approval of CCIT under sub-clause (vi) of clause (23C) was not applicable as the institutions were covered by sub-clause (iiiad).

Conclusion:
The Tribunal partly allowed the appeals of the assessee, holding that the income of the educational institutions was exempt under sub-clause (iiiad) of clause (23C) of section 10.