2017 (11) TMI 1559 - AT - Income Tax

Revision u/s 263 - allowance of under section 11 or 12 erroneously - Held that - Assessing Officer passed the assessment order only after seeking reply from the assessee. Though the Assessing Officer has not explained the nature of queries and his decision/observation/finding on such queries. We have further noted that the assessee was granted exemption under section 11 or 12 for the assessment years 1990-91, 2007-08, the assessment year 2008-09 and further in the assessment year 2014-15 in all assessment order passed under section 143(3) of the Act. We are of the considered view that the Revenue must follow the principle of consistency when there is no variance of fact. Admittedly there is no change in the constitution of the organisation/trust. Thus, in our view, the order passed by the Assessing Officer is not erroneous. Thus the twin conditions enunciated under section 263 is not fulfilled while revising the order. It is settled law that twin condition must be satisfied while exercising the order under section 263. Thus, in view of the above discussion, we hold that the assessee is not hit by the provision of section 13(1)(b) of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Jurisdiction under section 263 of the Income-tax Act invoked by the Commissioner of Income-tax (Exemption).
2. Interpretation of the provisions of section 11 and section 13(1)(b) of the Income-tax Act, 1961.
3. Application of the decision of the Supreme Court in CIT v. Dawoodi Bohra Jamat [2014] 364 ITR 31 (SC)/ 222 Taxman 228 (Mag).

Issue 1: Jurisdiction under section 263 invoked by the Commissioner:
The appeal challenged the order of the Commissioner of Income-tax (Exemption) dated March 24, 2017, invoking jurisdiction under section 263 of the Income-tax Act. The appellant contended that the Assessing Officer's order was neither erroneous nor prejudicial to the Revenue's interests. The appellant argued that the Assessing Officer conducted a thorough enquiry, issued necessary notices, and made assessments based on one of the possible views. The appellant highlighted previous assessment years where similar exemptions were granted, emphasizing the consistency principle. The Tribunal noted that the registration under section 12A was valid, and the organization's constitution remained unchanged. The Tribunal concluded that the twin conditions for invoking section 263 were not met, setting aside the Commissioner's order.

Issue 2: Interpretation of sections 11 and 13(1)(b) of the Income-tax Act:
The appellant claimed to be a religious charitable trust, not subject to section 13(1)(b) provisions. The appellant cited relevant case laws to support their argument. Conversely, the Revenue argued that the activities primarily benefited a specific community, triggering section 13(1)(b). The Tribunal analyzed the trust's activities, emphasizing the need to determine if the charitable activities benefitted a particular community or served broader societal interests. Reviewing the trust deed and previous assessment details, the Tribunal found that the trust's activities aligned with religious and charitable purposes without exclusive benefit to a specific community. Consequently, the Tribunal held that the trust was not affected by section 13(1)(b), supporting the appellant's position.

Issue 3: Application of the Supreme Court decision in CIT v. Dawoodi Bohra Jamat:
The Revenue relied on the Supreme Court decision in CIT v. Dawoodi Bohra Jamat [2014] 364 ITR 31 (SC) to support their argument. The appellant contended that this decision favored their case, urging consistency in treatment across assessment years. The Tribunal examined the trust's registration, activities, and the nature of benefits provided to ascertain compliance with section 13(1)(b). By comparing previous assessment orders and the trust's objectives, the Tribunal determined that the trust's activities aligned with religious and charitable purposes, serving a broader community interest. Consequently, the Tribunal held that the Supreme Court decision did not impact the trust's eligibility for exemptions under sections 11 and 12, supporting the appellant's stance.

In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner's order and affirming the trust's eligibility for exemptions under sections 11 and 12 of the Income-tax Act.