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TMI Blog2023 (8) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... ), National Faceless Appeal Centre, Delhi [hereinafter referred to as "NFAC''] dated 18.11.2022 for the assessment year 2010-11 wherein the assessee has raised following grounds of appeal. "1. That the learned CIT-'A' has erred in holding that the application seeking registration was moved on 19.01.2016 & registration under Section 12AA was granted on 08.07.2016 by CIT Exemption & as the assessment was completed before date of Registration the assessee was not entitled to benefit of proviso to Section 12AA The said finding is illegal & unjustified. The assessee was entitled to the benefit to Section 11 & Section 12AA in view of the facts & position of Law. 2. That the learned CIT-'A' has erred in holding that Assessing Officer was justified in making addition of surplus of Rs. 22,97,578/- to the income of assessee in status of A. O. P. and charging tax at Maximum Marginal Rate. The said finding is illegal & unjustified. The assessee was not liable for payment of any tax on surplus as he was entitled to benefit of Section 11 read with Section 12AA of the Income Tax Act. 3. That the learned CIT-'A' was not justified in ignoring the binding judgement of the Juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision on Grounds of appeal and Reasons thereof: In this appeal, as many as 6 Grounds were raised. Ground no. 1 has not been pressed in the written submission as reproduced in Para no. 4 above and is, therefore, dismissed. Ground no. 5 challenges in non granting of TDS credit. Since this is a matter of verification the Ld. AO is directed to do the same and allow further credit for TDS, if admissible, as per provisions of Income Tax Law and related Rules while giving effect to this Appeal Order. Thus, Ground no. 5, is partly allowed. Ground no.2,3& 4 challenge the action of Ld. A.O., in and non giving the benefit of Section 11 and 12 as the appellant failed to produce copy of Registration 12AA of the Act, taxing the surplus and assessing it as AOP respectively. Ground no. 6 challenges the levy of interest u/s 234 of the Act. This being consequential in nature, Ground no. 6 is worth dismissal, and is dismissed. 5.1. to 5.1.9…………. 5.1.10 However, it is found that in the present case the important facts are that the assessment year for the year under consideration i.e. A.Y. 2010-11 was complete on 2-03-2016 when the registration u/s 12AA was not granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot;). 3. Although the assessee trust, since past many years was registered under Section 12AA, however, such certificate during the course of reassessment proceeding was not traceable. Accordingly benefit of Section 11 was denied by Id. AO, vide order dated 30.09.2017. 4. Against the order of Id. AO, assessee trust preferred appeal before National Faceless Appeal Center ("NFAC"). The said appeal was filed, within stipulated time period i.e. on 16.11.2017. 5. In the interregnum, assessee trust again applied for registration under Section 12AA, which was granted by Id. CIT(E), on 27.10.2018, with effect from AY 19- 20. 6. Before NFAC, it was submitted that since the assessee trust, before the order being passed by NFAC, in the first appellate proceeding, for caption assessment year, had been granted fresh registration under Section 12AA, benefit of such exemption should be given even for the captioned assessment year. 7. However, such appeal of assessee trust was dismissed by NFAC, vide order dated 18.11.2022, denying the benefit of Section 11 to the assessee trust. 8. Chronological of event are tabulated below:- Particular Date CIT(A) order Page Date of ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of assessee trust for the relevant previous year was pending before NFAC. 13. It is settled proposition that first appellate proceeding are an extension of the assessment proceeding. This is for the reason that first appellate authority, being NFAC, in the present case, has co-terminus powers with that of the Assessing Officer. What AO can do, Id. CIT(A) can definitely do. 14. Accordingly, even though the registration had not being granted till the time of passing of the order by Id. AO, but the same was granted before passing the order by NFAC, in the first appellate proceedings. Resultingly, NFAC should have given the benefit of Section 11 to the assessee trust by considering it to be registered under Section 12AA. 15. The aforementioned legal position was submitted before the NFAC during the first appellate proceedings; however, those were simply rejected by NFAC by stating as under at Page 17 of its order: " 5.1.10 However, it is found that in the present case the important facts are that the Assessment for the year under consideration I.e., A.Y. 2010-11 was complete on 22.03.2016 when the registration u/s 12AA was not granted to the appellant trust. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dir Committee [2018] 400 ITR 466 (Raj In view of the above, the assessee trust should be allowed the benefit of Section 11, as having already been grated registration under Section 12AA." 2.4 The ld. AR of the assessee further relied upon the following case laws. • CIT vs. Shree Shyam Mandir Committee ITA No. 234 of 2016 dated 23.10.2017 (Raj. H.C.) • Akhil Bhartiya Shree Khandal Vipra Mahasabha vs. ITO ITA No. 345/JP/2018 dated 07.01.2019. • SNDP Yogam vs. Asst. Director of Income Tax in ITA No. 503 to 506 and 569/Coch/2014 dated 01.03.2016. • Shree Khathu Shyam Jangid Brahman Dharamshala vs. ITO ITA No. 1845/Del/2020 dated 08.07.2022. 2.5. Per contra, the ld. DR supported the orders of the lower authorities and relied upon following the case laws:- • Bharatpur Royal Family Religious & Ceremonial Trust Moti Mahal vs. CIT (2021) 130 taxmann.com 406 (Jaipur Trib.) • Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan vs. CIT(E) (2022) 138 taxmann.com 197 (SC) • CIT(E) vs. Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan (2020) 113 taxmann.com 334 (Allhabad H.C.) • U.P. Forest Corporation vs. DCIT (2007) 165 Taxman 533 (SC) &bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer. Accordingly, the order of Hon'ble Allahabad High Court is distinguishable on this account. 1.6. Reliance is placed on the following judicial pronouncements: 1.5.1. V.M. Salgaocar & Bros. (P) Ltd. and ors. v. CIT [2000] 160 CTR (SC) 225. "10. Different considerations apply when a special leave petition under article 136 of the Constitution is simply dismissed by saying 'dismissed' and an appeal provided under article 133 is dismissed also with the words 'the appeal is dismissed". In the former case it has been laid by this court that when special leave petition is dismissed this court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. But what the court means is that it does not consider it to be a fit case for exercise of its jurisdiction under article 136 of the Constitution. That certainly could not be so when appeal is dismissed though by a non-speaking order. Here the doctrine of merger applies. In that case, the Supreme Court upholds the decision of the High Court or of the Tribunal from which the appeal is provided under clause (3) of article 133, This doctrine of merger does not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted. In Union of India v. All India Services Pensioners Association. this Court has given reasons, for dismissing the Special Leave Petition. When such reasons are given, the decision becomes one which attracts Article 141 of the Constitution which provides that the law declared by the Supreme Court shall be binding on all the courts within the territory of India. It, therefore, follows that when no reason is given, but a Special Leave Petition is dismissed simliciter, it cannot be said that there has been a declaration of law by this Court under Article 141 of the Constitution." 2. The judicial position emerges as under: 2.1. Decision of the jurisdictional High Court in favour of the Assessee- CIT v. Shree Shyam Mandir Committee [2018] 400 ITR 466 (Raj) 2.2. Decision of the Hon'ble Allahabad High Court against the Asssessee- CIT (E) v. Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan [2020] 422 ITR 468 (Allahabad) 2.3. In such a scenario the order of the jurisdictional High Court would prevail and would be binding on the Hon'ble ITAT, Jaipur Bench. 2.4. It is also submitted that as per our research the Department has not filed any SLP against the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/2014. 5. Bhagawan Shree Mahayogi Lakshmamma Educational Society, Adoni v. ITO [2022] 193 ITD 591 (Hyderabad-Trib.) 5.1. It is submitted that decision of Hon'ble ITAT, Hyderabad Bench-D, was delivered by the Bench consisting of Shree Vijay Pal Rao (JM) and Shree Lakshmi Prasad Sahu (AM). 5.2. Shree Vijay Pal Rao (JM) while sitting at Jaipur Benches, under jurisdiction of Hon'ble Rajasthan High Court, while delivering judgment in the case of Akhil Bhartiya Shree Khandal Vipra Mahasaba v. ITO (Supra) have followed the jurisdictional High Court decision delivered in the case of Shreee Shyam Mandir Committee (Supra).'' 2.7. We have heard the rival contention and perused material available on record. Brief facts of the case are that the AO during the course of assessment proceedings noticed that the assessee has not filed any return of income for the year under consideration and as per information available with the Department, the society had received interest and rent of Rs.19,27,637/-. It is also noted that return of income was filed by the assessee trust on 17-04-2017 in response to notice issued u/s 148 of the Act. Thereafter notices u/s 143(2) and 142(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97,578/- and that too in status of AOP at maximum marginal rate is sustainable in the facts of the case and in law. The Action of the AO is, therefore, confirmed and Ground No. 2,3 & 4 is thus dismissed.'' After having meticulously gone through the submissions of both the parties and case laws relied on (supra), it is noted that at the time of passing of the order by AO on 30-0-2017, the assessee trust was not granted fresh registration u/s 12AA of the Act, however, the same was granted on 27-10-2018 i.e. before the order passed by NFAC, Delhi. In the present case, the registration u/s 12AA was granted on 27- 10-2018 to the assessee trust. At such time, the appeal of assessee trust for the relevant previous year was pending before the NFAC. It is also noteworthy to mention that even though the registration was not granted till the time of passing of the order by the AO yet the same was granted before passing the order by NFAC, in the first appellate proceedings. Resultantly, the NFAC should have given the benefit of Section 11 to the assessee trust by considering it to be registered u/s 12AA of the Act but the ld. CIT(A), NFAC dismissed the appeal of the assessee trust by confirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a case where a trust or institution has been granted registration under section 12AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the registration under section 12AA for the said assessment year. 8.5 However, the above benefits would not be available in the case of any trust or institution which at any time had applied for registration and the same was refused under section 12AA of the Inco ..... 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