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TMI Blog2023 (12) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... tel Owners Association [ 2000 (12) TMI 99 - SUPREME COURT] and various High Courts . Moti Ram Gopi Chand Charitable Trust, Sakal Relief Fund [ 2013 (12) TMI 609 - ALLAHABAD HIGH COURT] . We, accordingly, have no hesitation in holding that the entire process of reassessment that has been initiated by the Department holds no water and is without any legal basis whatsoever. We quash the notice issued under Section 148 - Decided in favour of assessee. - Hon ble Justice Siddhartha Varma And Hon ble Justice Shekhar B. Saraf For the Petitioner : Mr. Ashish Bansal, Advocate, Mr. Ashish Raj Shukla, Advocate For the Respondent : Mr. Gaurav Mahajan, Advocate, Mr. Manu Ghildyal, Advocate, Mr. Praveen Kumar, Advocate ORDER 1. Heard learned counsel for the petitioner and learned Standing Counsel for the Income Tax Department. 2. The writ petition has been filed seeking the following reliefs: a. stay the effect and operation and implementation of the notice dated 31.03.2021 relating to assessment year 2013-14 issued by the respondent no. 2 under Section 148 of the Income Tax Act on the petitioner; b. stay the effect and operation and implementation of the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observing as under: Shri Ashutosh Dixit, AR attended the assessment proceedings from time to time and filed written submission/explanation. Books of account, bills, vouchers, etc. produced were put to test check and the case was discussed with him. 2. The assessee is a society registered under societies Act with Registrar of Society U.P. vide certificate No. 1398/2005-06 dated 14.02.2006 which was renewed for a period of 5 years with effect from 14.02.2011. The assessee society was granted registration u/s 12A of the Act, by the Ld. Commissioner of Income Tax, Kanpur vide order dated 25.09.2008. 3. The assessee society is running educational institutions. The total receipt during the year has been shown by the assessee at Rs. 8,80,22,040/- against which application for of fund towards charitable purposes is Rs. 7,93,25,060/- after submitting Form No.10 which is 85%. 6. Notice dated 31.03.2021 under section 148, after 4 years from the end of the relevant assessment year, was issued upon the petitioner. Reasons recorded for initiation of 147 proceedings against the petitioner [which was provided to the petitioner alongwith the letter dated 15.02.2022 issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was required to be disallowed and taxed as per the provisions of I.T. Act, 1961. 5. Basis of forming reason to believe and details of escapement of income: From the above discussion, it is clear that there is an escapement of income to the tune of Rs. Rs. 1,58,86,689/- for A.Y. 2013-14. 6. Applicability of the provisions of section 147/151 of the Income Tax Act, 1961 to the facts of the case: Provisions of section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax escaped assessment. In view of the above, on the basis of information available on record I have reason to believe that the income of Rs. Rs. 1,58,86,689/- chargeable to tax has escaped assessment within the meaning of section 147 of the IT Act, 1961 on account of interest income. Therefore, necessary approval to issue notice u/s 148 is being obtained separately from Commissioner of Income Tax (Exemption), Lucknow as per the provisions of section 151 of the IT Act. 7. The petitioner filed his objection to the initiation of reassessment proceedings proceedings on the following grounds: a) No escape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied under Form No. 10 for permission to accumulate as provided in section 11(2). The assessee has pleaded that as per the law, the delay is being generally condoned. But one has to provide the reasons for such a delay and apply for condonation of delay in a reasonable time period before due date specified u/s. 139(1) of the Act. It abundantly clear from the wordings of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the A.O particulars required under rule 17 in Form No. 10 of the Act. Contentions of the petitioner 10. The contentions of the petitioner is that the Assessing Officer has acted in haste and passed a non-speaking order on March 2, 2022 disposing of the objections raised by the petitioner. The petitioner further submitted that not only the assessment order dated March 19, 2022 is completely silent upon the applicability of the first proviso to Section 147 of the Act, the entire exercise of reassessment is only a change of opinion on the issue of availability of exemption under Section 11 of the Act by the Assessing Officer, that had been granted by the Assessing Officer while passing the regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate specified under sub-section (1) of Section 139 for furnishing the return of income for the previous year: Provided that in computing the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded.] Rule 17 (1)- The option to be exercised in accordance with the provisions of the explanation to sub-section (1) of section 11 of the Act in respect of income of any previous year relevant to the assessment year beginning on or after the 1st day of April, 2016 shall be in Form No. 9A and shall be furnished before the expiry of the time allowed under sub-section (1) of section 139 of the Act for furnishing the return of income of the relevant assessment year. 14. One may rely upon the judgment of this Court in CIT Vs. Moti Ram Gopi Chand Charitable Trust, reported in (2014) 360 ITR 598 (Alld.), that specifically dealt with the issue at hand. The relevant paragraphs are provided below: 8. In Nagpur Hotel Owners Association s case (supra) the Supreme Court held that the notice of accumulation must be giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules 17 of the Rules and the Form-10 of the Act is required to be present before Assessing Officer at the time of assessment proceedings. The relevant paragraph is provided below: 6. It is abundantly clear from the wordings of sub-section (2) of Section 11 that it is mandatory for the person claiming the benefit of Section 11 to intimate to the assessing authority the particulars required, under Rule 17 in Form No.10 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Proceedings. Therefore, the fact situation being different, the observations therein cannot be applied to the present facts. In fact, we note that the Apex Court in the above case has observed that for the purposes of excluding an income of the trust from the net of taxation, the intimation in Form 10 has to be filed with the Assessing Officer before he completes the Assessment. In fact, it is the context of the above finding of the Apex Court, that it observed that Form 10 has to be filed before completion of Assessment Proceedings. In fact, the Delhi High Court in the case of Association of Corporation and Apex Societies of Handlooms (supra) has also relied upon and so understood the decisions of the Apex Court in Nagpur Hotel Owners Association (supra). Therefore, we do not find any merit in the reservations expressed by Mr. Singh, learned Counsel for the Revenue on the applicability of the Supreme Court order in case of Nagpur Hotel Owners Association (supra) to the present facts. 14. In the above view, the question as proposed stands concluded against the Revenue by the decision of the Apex Court in Nagpur Hotel Owners Association (supra) and the decision of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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