9911796707
TMI Blog2022 (12) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessment for the AY 2005-06, 2006-07 and 2007-08 the latter value of Rs.33.50 crores had been adopted which resulted in allowing for AY 2005-06 onwards. Thus, the excess depreciation allowed for AY 2008-09 comes to Rs.2,56,18,018/-. Further, in the return of income for the AY 2007-08, the amount shown in the balance sheet as on 31.3.2007 under the head "General Fund" was Rs.19,61,70,315/-. However, in the Return of income for the AY 2008-09, the opening balance under the same head as on 01.04.2007 was shown as Rs.20,42,41,259/- resulting in an overnight increase of Rs.80,70,944/-. Since income chargeable to tax amounting to Rs.3,36,88,962/- has escaped assessment within the meaning of section 147 of the Act, the notice u/s 148 of the Act was issued." 3. In the assessment year 2009-10, the reason recorded is as follows: "The WDV of the assets as on 31.03.2004 stood at Rs.10.57 crores. The assessee has not challenged the assessment order. However, for the AY 2005-06, the WDV of the assets as on 1.4.2005, was shown as Rs.33.50 Crores. While completing the assessment for the AY 2005-06, 2006-07 and 2007-08 the latter value of Rs.33.50 crores had been adopted which resulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pening balance of relevant year under general fund was different, hence, the assessee's books and computation of income for the relevant year did not truly and fully disclose the correct facts. The action of the assessing officer in issuing the notice under section 148 of the Act was in order. The case laws relied upon by the assessee are not relevant and do not come to its help. Hence, the Ld. D.R. stated that the ground raised by the assessee was dismissed by Ld. CIT(A). 7. We have heard the rival submissions and perused the materials available on record. We have carefully gone through the reasons recorded for reopening of assessment for the assessment years 2008-09 & 2009-10. As seen from the reasons recorded by AO for reopening the assessment, there was no allegation by AO that there was any failure on the part of the assessee to disclose fully or truly all material facts necessary for the assessment. It is also noted that assessment for the assessment year 2008-09 has been originally completed u/s 143(3) of the Act vide order dated 3.12.2010. Similarly, the assessment for 2009-10 has been completed vide assessment order passed u/s 143(3) of the Act dated 23.12.2011. At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the knowledge of the AO subsequent to the completion of the original assessment. A re-assessment which is commenced on the basis of return of income and documents, which are already part of records is not valid and cannot be sustained. It is thus clear that the starting point of the reassessment proceedings now initiated as is evident from the assessment order is the return of income filed originally. The AO had no new or additional material based on which he could form a reason to believe that income had escaped assessment. The AO on a relook at the return, accounts and documents which were available with him from the time when original return was filed and it was on the basis of this financial statements that the original assessment of the firm was completed. Hence, the reassessment proceedings are based only a mere change in the opinion. Where accounts had been furnished by assessee when called upon and thereafter assessment was completed under section 143(3), subsequently on a mere re-look of said accounts earlier furnished by assessee, it is not permissible under section 147 of the Act to reopen assessment of assessee on ground that income has escaped assessment. This view h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment is completed under section 143(3) of the Act, there is a presumption that the AO has completed the assessment after due application of mind. The Ld. A.R. referred the decision of the Delhi High court in CIT Vs. Kelvinator Of India Ltd (256 ITR I)(Del) wherein held as follows:- "An order of assessment can be passed either in terms of subsection (1) of section 143 or sub-section (3) of section 143. When a regular order of assessment is passed in terms of the said sub-section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed, if it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong doing." 9.5 The Ld. A.R. further referred the decision of Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable on record. In this case, the original assessment has been completed u/s 143(3) of the Act on 27.3.20123. Later, it was found that there was a difference between opening and closing balance of the general fund amounting to Rs.64.22 lakhs, which has not been verified in the assessment order made u/s 143(3) of the Act. For that reason, the AO has reopened the assessment by issuing notice u/s 148 of the Act and added back the difference of Rs.64.22 lakhs in general fund which had been claimed by assessee as corpus donation. In our opinion, all the material already available on record at the time of completion of original assessment on 27.3.2013 and there was no material to come to the conclusion that income escaped assessment. In our opinion, as held by the Hon'ble Supreme Court in the case of CIT Vs. Kelvinator of India Ltd. reported in 320 ITR 561, wherein held as under: "3. To answer the above question, we need to note the changes undergone by section 147 of the Income-tax Act, 1961 (for short, "The Act"). Prior to the Direct Tax Laws (Amendment) Act, 1987, section 147 reads as under: "147. Income escaping assessment. -If- (a) The Income-tax Officer has reason to belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as the relevant assessment year)." 11.1 In our opinion, since there was no material brought on record by to come to the conclusion that income escaped assessment while recording the reasons for reopening of assessment and it is only a change of opinion, accordingly by placing above judgement of Hon'ble Supreme Court, we quash the assessment for the assessment year 2010-11 also. A.Y. 2013-14: 12. Ground No.2 in this appeal ITA No.91/Coch/2022 is as follows:- 2. "The appellant had claimed before the Assessing Of f icer that the amount that can be accumulated and carried forward should be ascertained at 15% of gross receipts of the appellant for the year. The Assessing officer is not justified in netting of the application towards object of the trust from the gross receipts and reckoning the amount to be accumulated and carried forward at only 15% of such net surplus. The issue regarding the quantum of accumulation and carry forward is already settled by the CBDT vide circular No.5P (LXX-6) dated 19.06.1968 and the Commissioner of Income Tax (Appeals) should have known that the CBDT circular is binding on the Assessing officer. The Assessing Officer should have also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the coordinate bench in the case of Divine Trust, Chalakudy Vs. PCIT in 245/Coch/2015 dated 22.1.2016, wherein held as under:- "10 We have heard the rival submissions and perused the material on record. The solitary issue that arises for our consideration is whether 15% of the accumulation permitted u/s 11(1)(a) of the Act is to be calculated on the gross income or on the net income. On a plain reading of section 11(1)(a) of the Act, it can be seen that 85% of the income of the trust to be applied for charitable/religious purposes and upto15% is permitted for accumulation in order to avail full exemption. There is no condition stated/s 11(1 )(a) of the act to invest the 15% accumulated income in the modes specified as per section 11(5) of the Act. Section 11(2) of the Act is for giving relief to unapplied income which is short of 85% with a condition of keeping such surplus in the specified mode as per section 11(5) of the Act. This is to be done after giving notice to the AO by the assessee in Form No.10 of the Income Tax Rules. The issue, in the instance case is whether at the first stage of accumulation of 15% surplus u/s 11(1 )(a) the calculation is made on the gross inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led a declaration u/s 11(2) or not, is entitled to deduction of certain income from its total income of the previous year. The income so exempt is the income which is applied by the charitable or religious trust to its charitable or religious purposes in India. If the entire income is so applied, the entire income would be exempted. If the entire income is not applied but some income is accumulated by such a trust, then also u/s 11(1)(a) such accumulated income to the extent of 25% of the total income (or Rs. 10,000/-, whichever is higher) would be exempted from income tax. Section 11(2) in turn provides that the restriction which is specified in cl(a) of sub section(1) as regards accumulation shall not apply if the assessee gives notice as prescribed u/s11(2)(a) and invest the amount accumulated in Govt securities as per section11(2) (b). The restriction specified in cl.(a) of sub section(1) is clearly the restriction of 25% of the accumulated income (or Rs 10,000/-, whichever is higher) being exempt. If more than 25% (or Rs.10,000), is tobe exempted then the assessee has to comply with the conditions prescribed u/s 11(2)." v. CIT & Another vs ALN Rao Charitable Trust 216 ITR 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by the decision of Hon'ble Karnataka High Court in the case of DIT Vs. Sri Ramakrishna Seva Ashram 357 ITR 731, wherein held as under: "Held, dismissing the appeal, that the documents furnished by the assessee to the Department, particularly, a report regarding Swamy Vivekananda Integrated Rural Health Centre and Shree Sharadadevi Eye Hospital and Research Centre (Units of Sri Ramakrishna Sevashrama) made it clear that the centres were started in the year 1992 with due registration and had been working since then for the welfare of needy people and the first project of it was leprosy eradication project. Likewise, they had 14 projects, which were started in rural areas. The contributions received were kept in fixed deposit. It showed that the intention of the assessee was to treat these contributions as corpus and the income derived from the corpus was used for carrying on the activities. The assessee was entitled to renewal of registration and also entitled costs." 18.1 Same view was taken by the coordinate bench in the case of DCIT (Exemptions) Vs. Chinmaya Mission Educational & Charitable Trust, Greater Cochin, Ernakulam in ITA No.330/Coch/2016 dated 5.10.2017. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an. Hence, the contention of the assessee is not acceptable by him. The Hon'ble Supreme Court in the case of Subros Educational Society had dismissed the SLP without deciding the questions raised on this issue. Moreover, in that case the Hon'ble Supreme Court has admitted the Department's review petition before it. Further, amendment brought by Finance Act, 2021 has prohibited carry forward of deficit. In view of this, Ld. CIT (A) has decided that the ground raised by the assessee against assessee. 23. The Ld. D.R. relied on the order of Ld. CIT(A) 24. We have heard the rival submissions and perused the materials available on record. The Hon'ble Supreme Court in the case of CIT(Exemption) Vs. Subros Educational Society reported 303 CTR 1(SC) has decided the similar issue, wherein held as follows:- "Any excess expenditure incurred by trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking section 11". 24.1 In view of the above, we allow the ground taken by the assessee. 25. In the result, the appeals filed by the assessee in ITA Nos.88, 89 & 90/Coch/2022 are allowed and ITA No.91/Coch/2022 is partly ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
