2014 (6) TMI 327 - AT - Income Tax

Eligibility for exemption - Approval u/s 10(23C) of the Act could not produce Educational institution Held that - The order of the CIT(A) in granting exemption to the assessee in respect of its income under S.10(23C) of the Act is based on her decision in assessee s own case - during the course of appellate proceedings for that year, the assessee has filed before the CIT(A), copy of the approval obtained by it from the prescribed authority u/s 10(23C) of the Act, and based on such approval, exemption was granted to the assessee for that year - no material has been brought on record to substantiate the contention thus, there was no infirmity in the order of the CIT(A) Decided against Revenue. Validity of reopening of assessment - Proceedings initiated after four years Held that - Assessee contended that reopening could be held to be valid, only if it is found to be for the failure on the part of the assessee to disclose the fully and truly all the material relevant for completion of the assessment - reopening of assessment has been done, as it came to notice from the AIR information that the assessee has acquired RBI Bonds worth Rs.2 crores - But for this reason stated in the notice of reopening of assessment, there is no discussion whatsoever in that regard in the assessment order, much less any addition made in that behalf - there is no new material which has come to the hands of the AO, so as to initiate the proceedings for reopening of the assessment - Relying upon CIT V/s. Kelvinator India Ltd. 2010 (1) TMI 11 - SUPREME COURT OF INDIA - the decision has no application to the facts of the present case thus, the order of the CIT(A) is set aside and reopening of the assessment in the case is neither legal nor valid Decided in favour of Assessee.

Summary

Issues:
1. Validity of reopening of assessment under Section 147.
2. Eligibility for exemption under Section 10(23C) of the Income Tax Act.
3. Legality and validity of the decisions made by the Commissioner of Income-tax(Appeals).

Issue 1: Validity of reopening of assessment under Section 147:
The case involved an educational society's assessment for the year 2005-06, where the Assessing Officer reopened the assessment based on information regarding the acquisition of RBI Bonds worth Rs. 2 crores by the assessee. The legality of the reopening was challenged by the assessee. The Court found that there was no new material to justify the reopening, as the investment in question was duly reflected in the Balance Sheet and matched the details submitted by the appellant. Citing precedents, the Court held that the reopening was invalid and illegal, ultimately allowing the assessee's cross objections.

Issue 2: Eligibility for exemption under Section 10(23C) of the Income Tax Act:
The assessee claimed exemption under Section 10(23C) of the Act, which was initially rejected by the Assessing Officer. However, the Commissioner of Income-tax(Appeals) accepted the claim for exemption under Section 10(23C) for the assessment year 2005-06. The Revenue appealed this decision, contesting the exemption granted. The Court noted that the exemption was based on the approval obtained by the assessee from the prescribed authority, similar to a previous year's decision. As no new material was presented to challenge this, the Court upheld the exemption granted by the CIT(A) and rejected the Revenue's grounds.

Issue 3: Legality and validity of the decisions by the Commissioner of Income-tax(Appeals):
The Revenue filed an appeal against the exemption granted by the CIT(A) under Section 10(23C)(vi) of the Act, while the assessee contested the legality of the assessment reopening. The Court analyzed the grounds raised by the Revenue, finding no material to substantiate the contention that the CIT(A) decisions were on different lines for different years. As there was no infirmity in the CIT(A)'s order, the exemption was upheld. The Court also addressed the assessee's cross-objection, ruling that the reopening of assessment was not legally or validly done, and thus allowed the assessee's grounds in the cross objections.

In conclusion, the appellate tribunal upheld the exemption granted to the assessee under Section 10(23C) of the Income Tax Act, while ruling the reopening of assessment as invalid and illegal. The Revenue's appeal was dismissed, and the assessee's cross objection was allowed.