2018 (4) TMI 1063 - AT - Income Tax

Reopening of assessment - non obtaining of the requisite prior permission u/s 151 - donations as capital receipt - Held that - Neither the orders of the authorities below had mentioned about the prior approval u/s 151 having been obtained or not before reopening of the concluded assessment u/s 147 nor the assessee could obtain the said information under RTI Act,2005 and it is quite strange that the assessee is making allegations against the Revenue without any evidence on record. It is not disclosed by the assessee from where the assessee got the information as to the non obtaining of the requisite prior permission u/s 151 by the AO from the relevant authority. The assessee is alleging that revenue has not obtained the necessary requisite permissions u/s 151 and onus is on the assessee to bring some evidence to justify its allegations. The assessee is also contemplating at this stage that its donations were capital receipt and hence could not be brought to tax. These contentions are raised for the first time before the tribunal. The details of the said donation as to its nature is not emanating from the records. The assessee has to bring on record sufficient evidences to prove that these receipts are capital donations and that the same is not chargeable to tax within the provisions of the 1961 Act. The assessee is not registered u/s 12A. The onus is on the assessee to prove its contentions. This matter is required to be set aside and restored to the file of learned CIT-A for re-determination of all the issues afresh on merits including additional grounds of appeal raised by the assessee before the tribunal. - Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Reopening of assessment under Section 148.
2. Non-filing of return of income.
3. Verification of cash deposit and applicability of Section 148.
4. Declaration of cash deposits as income before notice issuance.
5. Disallowance of expenditure due to lack of registration under Section 12A.
6. Issuance of notice under Section 148 without prior approval as required under Section 151.
7. Jurisdiction of the Assessing Officer.
8. Treatment of donations as capital receipts.

Issue-wise Detailed Analysis:

1. Reopening of Assessment under Section 148:
The assessee challenged the reopening of the assessment under Section 148, arguing that the Commissioner of Income Tax (Appeals) erred in confirming the reopening without cogent reasons. The Tribunal observed that the reopening was based on the AIR information indicating that the assessee had deposited cash of ?34,68,000 in a savings bank account, leading the AO to believe that the income had escaped assessment. The Tribunal upheld the reopening, citing relevant case laws that supported the AO's formation of belief based on AIR information.

2. Non-filing of Return of Income:
The assessee contended that the reopening was incorrect as the return of income had been filed on 31.10.2005, contrary to the AO's belief that no return was filed. The Tribunal noted that the assessee had indeed filed the return, but this fact did not invalidate the reopening since the AO had reasons to believe income had escaped assessment based on the cash deposits.

3. Verification of Cash Deposit and Applicability of Section 148:
The assessee argued that the reason for reopening, i.e., verification of cash deposits, did not attract the provisions of Section 148. The Tribunal, however, found that the AO had sufficient reason to believe that income had escaped assessment based on the cash deposits, and thus, the reopening was justified.

4. Declaration of Cash Deposits as Income before Notice Issuance:
The assessee claimed that the cash deposits of ?34,68,000 had been declared as income before the issuance of the notice under Section 148. The Tribunal did not find this argument sufficient to invalidate the reopening, as the AO's belief of escaped income was based on the information available at the time of reopening.

5. Disallowance of Expenditure due to Lack of Registration under Section 12A:
The assessee's expenditure of ?67,48,467 was disallowed on the grounds that the trust was not registered under Section 12A, thus not eligible for exemption under Section 11. The Tribunal upheld the disallowance, noting that the primary condition for availing exemption was not met, and the AO had rightly disallowed the expenses.

6. Issuance of Notice under Section 148 without Prior Approval as Required under Section 151:
The assessee raised additional grounds, arguing that the notice under Section 148 was issued without obtaining prior approval as required under Section 151. The Tribunal found no evidence in the assessment order or from the records obtained under RTI to support the claim that prior approval was not obtained. The onus was on the assessee to prove this contention, which was not met.

7. Jurisdiction of the Assessing Officer:
The assessee contended that the AO who issued the notice under Section 148 did not have jurisdiction over the assessee. The Tribunal did not find sufficient grounds to quash the notice based on jurisdictional issues, as the matter required further examination.

8. Treatment of Donations as Capital Receipts:
The assessee argued that the donation of ?79,73,282 was a capital receipt and should not be taxed, even without registration under Section 12A. The Tribunal noted that this contention was raised for the first time before the Tribunal and required further examination. The Tribunal directed the CIT(A) to re-examine this issue afresh.

Conclusion:
The Tribunal set aside the entire matter to the file of the CIT(A) for fresh adjudication on all issues, including the additional grounds raised by the assessee. The CIT(A) was directed to provide a proper opportunity for the assessee to present evidence and arguments, and to decide the matter on merits in accordance with the law. The appeal was allowed for statistical purposes.

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