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TMI Blog2015 (5) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... 015. On 20.01.2015, again ld. counsel for the assessee made a similar request for adjournment on the similar ground that Paper Book and written submissions are required to be filed. The appeals were adjourned to 09.04.2015. The appeals were taken up for hearing on 09.04.2015 and again a request was made for adjournment on the ground that arguing counsel has gone abroad for a short visit. On his request, the appeals were adjourned to 30.04.2015 and it was directed that it would be last opportunity to the assessee. 3. The remaining two appeals for assessment years 2010-11 and 2011-12 were also later on taken up together for the purpose of hearing, being the issues common. On 30.04.2014 the ld. counsel for the assessee instead of arguing the appeals on merits, again made a request for adjournment on the ground that the appeal under section 12AA of the Act is fixed on 25.05.2015, therefore, these appeals may be adjourned. The request of assessee was found improper as it has no connection with such appeal. The assessee, till date has not filed any Paper Book or written submissions on which earlier adjournments were sought. The request for adjournment was accordingly rejected. The ld. c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10, it was found that assessee has not used the income for charitable purposes. Therefore, claim under section 11 was disallowed. The facts were same in the assessment year under appeal also. Therefore, the Assessing Officer re-opened the case under section 148 of the Act. During the course of assessment proceedings, the Assessing Officer sent a detailed questionnaire. In response, the assessee submitted its objections. All these facts are duly discussed in the assessment order. The Assessing Officer, thereafter disallowed the claim made by assessee under section 11 of the Act. Further, in this case the assessee has claimed the status of AOP (Trust) in the return of income in this assessment year. However, the same was changed to the status of artificial jurisdictional person relying on the assessment order for assessment year 2009-10. 7. The assessee challenged the assessment order before ld. CIT(Appeals) and raised various objections which were forwarded to the Assessing Officer for his comments. 8. The assessee on ground Nos. 5 & 6 challenged the reopening of the assessment under section 147 of the Income Tax Act. The ld. CIT(Appeals) considering the rival submissions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the realm of subjective satisfaction of A.O. -3 The appellant has further submitted that the higher authorities have mechanically granted an approval for re-opening of assessment without application of mind. While granting approval, it is written as "Yes, it is a fit case for issue of notice u/s. 148." The appellant relied on case of Central India Electricity Supply Co. Ltd. v. ITO 51 DTR 51 DHC, German remedies Ltd. v. DCIT MANU/MH/0861/2005 : 287 ITR 494, CIT v. Suman Waman Chaudhary MANU/MH/1781/2008 : 321 ITR 495 (Bom). I have considered the submissions as noted above. The A.O. has recorded his reasons in details before initiating action u/s. 147 of the IT Act'61. The reasons are duly reproduced in the assessment order which shows that a detailed analysis of the case is made. It is but apparent that the higher authority has gone through the same before approving the case for reassessment. Further from the submission, it is noted that the A.O. has enclosed the details of the case as per annexure-A with the proposal sent to the Addl. CIT. The Addl. CIT has thereafter, duly endorsed the comment that "it is a fit case for issue of notice u/s. 148." I am, therefore, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taken up and to decide as to whether assessee is entitled for the benefit of s. 11 or 12, as the case may be. That will be the second stage. "In this case, a detailed analysis of the facts of the case shows that the appellant is not engaged in charitable activities and, therefore, the claim of exemption u/s. 11 is denied. Therefore, relying on the decision as above, in my opinion, there is no irregularity in the action of the A.O." As regards the issue of tangible material is concerned, it is noted that the A.O. has discussed the reasons in details in the assessment order itself. Further, relying on the case of Rajesh Jhaweri Stock Brokers and Others (supra), in my opinion, there is no error on the part of the A.O. in re-opening the case and, therefore, Ground No. 2 of the appeal is dismissed." 9. On consideration of the submissions of the ld. DR for the revenue and perusal of record, we do not find any merit in ground Nos. 5 & 6 of the appeal of the assessee. 10. The authorities below noted the conduct of the assessee in subsequent assessment year 2009-10 and it was found that assessee was carrying on activities which are not in the nature of 'advancement for any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1992-93. Admittedly, the issue regarding the capital gains arising from the sale of shares pursuant to the agreement dated January 3, 1992, was neither raised nor discussed in the assessment order for the assessment year 1992-93 it is well established in law that the assessments can be reopened on the basis of the information contained in the assessment for subsequent years. The fact that the appeal from the assessment order for the assessment year 1993-94 was pending before the appellate authority was wholly irrelevant for the purpose of reopening the assessment. The notice of reassessment was valid." 13. The facts of the above case clearly show that the Assessing Officer on the basis of finding of fact brought against assessee in subsequent assessment year 2009-10 had reason to believe that income chargeable to tax had escaped assessment. The Assessing Officer, therefore, has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that the income had escaped assessment. The Assessing Officer was, therefore, justified in initiating the proceedings for re-opening of the assessment in the matter. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) Looking into the activity of the assessee trust it was clear that it is in the nature of trade, commerce and doesn't fall within the meaning of the words "The advancement of any other object of General Public Utility" u/s. 2(15) of the IT Act'61. iv) The net profit in this year is 95-84% while the net profit in the case of builders/developers in this trade is generally between 5% 10%. v) The A.O. has also observed that the net surplus generated by the trust reveals that the trust has been earning systematic profits and, therefore, the ratio of the decision in the case of CIT v. Queens Educational Society Haldwani & Sant Paul Sr. Sec. School, Kathgodam delivered by Hon'ble High Court in ITA No. W3 and 104 is applicable. The A.O. also held that in a similar case of CIT v. National Institute of Aeronautical Engineering Educational Society 26 DTK 193, the Hon'ble Uttrakhand High Court upheld the rejection of registration u/s. 12AA by the CIT. vi) It is also observed that similar other development authorities like Haryana Urban Planning and Development Authority, Punjab Urban Planning Development, GMADA etc. are held to be liable to tax. vii) Section 10(20A) ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. 01.04.2009 is also not relevant as even then the activity itself is not for the purpose of advancement of general public utility. 6.1 At this point, it is worthwhile to note that the Hon'ble ITAT Chandigarh in the case of PUDA v. CIT MANU/IG/5009/2006 : 103 TTJ (Chd) 988 has held that "It is a well known fact that in some of the situations the provisions of law are misused in the names of charities. If expanded/broader latitude is extended to the word charity, then there are so many institutions/departments who will try to come under the umbrella of this provision to misuse the provision. Therefore, for the broad development of the nation/society, a strict and positive vigil is required so that the provision can be saved from its misuse in any manner. No activity can be carried on efficiently, properly unless and until it is carried out on business principle but it does not mean that the provision is misused in any manner under the garb of charity and any institution be allowed to become richer and richer under the garb of charity by making it a non tax payable organization. A charitable institution provides services for charitable purposes free of cost and not for a gain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors wherein the hidden cost of these facilities is already included. In the absence of these facilities, normally the purchaser may not invest and the prices may be less. In view of these facts, the assessee's activities not being of charitable nature, the application of registration under s. 12A has been rightly rejected by CIT" 17. The ld. CIT(Appeals) considering the material on record dismissed these grounds of appeal of the assessee. The findings of ld. CIT(Appeals) in the impugned order are reproduced as under: "The facts of the present case is similar to that of PUDA as emanating from the discussion in Para. 5 of the order in case of PUDA (supra). It is worthwhile to note that in the case of' Punjab Urban Planning & Development Authority v. CIT MANU/IG/5009/2006 : 103 TTJ (Chd) 988. It has been argued by the appellant that objects of PUDA are identical to objects of Patiala Urban Planning & Development Authority in which case registration u/s. 12A of the IT Act was accorded by the CIT, Patiala. The Hon'ble ITAT held that the appellant i.e. PUDA in that case, a local authority constituted for planned development of the state, acquiring land at nominal rate and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onduct business in these connected, incidental or ancillary activity is established by the revenue. However, in this case, it is seen that the appellant was acquiring huge chunks of land at nominal price and, thereafter, the same were sold at exorbitantly high prices. The commercial plots were sold through auction evidently to the highest bidder. Levy of fines and penalties implies and element of force to avail monetary benefit. It is also noted from the assessment order that one of the party to the JDA i.e. M/s. Omex Ltd. has not fulfilled the conditions No. (ii) & (in), i.e. providing employment to around 5,000 persons in the core sector and to provide built up area of atleast 2.5 lakh sq.ft. for the IT & Bio-Tech Sector. Thus, the terms of the agreement are also not fulfilled. Further, the claim of charity and exemption solely based on being statutory authority implementing govt. policy is not acceptable. The decision in the case of entertainment society of Goa v. CIT, ITA No. go/PNJ/2012 A.Y. 2009-10 has supported this finding. Looking into the totality of the case, it is amply clear that the appellant is engaged in an activity in the nature of trade, commerce or business Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposition that even if registration is granted under section 12AA of the Act, sufficient safeguards have been given under section 11, 12 and 13 of the Act for assessing income which has not been applied to the purpose of the trust or institution. The ld. DR, therefore, contended that even if assessee has pleaded that there was registration under section 12AA which was later on cancelled by the Ld. Commissioner of Income Tax, still Assessing Officer is empowered to examine the applicability of provisions of Section 11 to 13 at the assessment stage of assessee whether the assessee is entitled for exemption of income under these provisions. 21. We do not find any quarrel with the legal proposition argued by the ld. DR because even if registration is existing under section 12AA in favour of the assessee, still Assessing Officer is empowered to examine the applicability of provisions of Section 11 to 13 at the assessment stage to see whether income is applied by the assessee for charitable purpose to achieve its aims and objects. In the present case, the Assessing Officer on the basis of the finding given in subsequent assessment year 2009-10 and examining the record of this assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer taking the status of artificial jurisdictional person by following the order of the Tribunal in the case of Patiala Improvement Trust. Ground No. 4 of the appeal of the assessee is accordingly, dismissed. 22. Ground No. 1 is general and needs no finding. 23. In the result, appeal of the assessee is dismissed. ITA 675/CHD/2014 (A.Y. 2008-09) 24. This appeal by assessee is directed against the order of ld. CIT(Appeals), Patiala dated 27.06.2010 for assessment year 2008-09. The assessee has raised similar six grounds of appeal as have been noted in assessment year 2007-08. The ld. DR contended that the grounds of appeal and issues are same as have been consideration in assessment year 2007-08. Therefore, following the order for assessment year 2007-08 (supra), we dismiss all the identical six grounds of appeal in this assessment year as well. 25. In the result, appeal of assessee is dismissed. ITA 839/CHD/2014 (A.Y. 2010-11) 26. This appeal by assessee is directed against the order of ld. CIT(Appeals), Patiala dated 30.07.2014 for assessment year 2010-11. The assessee has raised the following five effective grounds of appeal: "1. That the Learned CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA by the CIT valid at the time of assessment; 3. That the CIT(A) has erred in law and on facts in upholding the opinion of the AO that the activities of the appellant are for profit and not charitable despite registration u/s. 12AA in force, ignoring that registration under section 12A is a 'fait accompli' to hold the Assessing Officer back from further probe into the objects of the trust. 4. That the Ld. CIT(A) has erred in law and on facts in upholding the status of Artificial Juridical Person against AOP (Trust) when the appellant is a Statutory body doing sovereign functions unlike private builders and its objectives are of general public utility and in event of dissolution of appellant all the assets vests with the State government. 5. That the Ld. CIT(A) has erred in law in holding that the appellant is not engaged in charitable activities and is involved in the activity in the nature of trade, commerce and business, ignoring that the appellant is carrying out its activities on non-commercial lines with no motive to earn profits, for fulfillment of its aims and objectives which are admittedly charitable in nature. 6. Without prejudice to the above grounds and str ..... X X X X Extracts X X X X X X X X Extracts X X X X
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