Income Tax Appellate Tribunal - Delhi
The Delhi Building & Other Construction ... vs Ito, Trust Ward-1,, New Delhi on 30 September, 2024
1 ITA No. 961/Del/2018
The Delhi Building & Other Construction Workers Welfare
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'G' NEW DELHI
BEFORE SH. PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
AND
SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER
I.T.A. No.961/DEL/2018 (A.Y 2006-07)
The Delhi Building & Other ITO
Construction Workers Welfare Vs. Trust Ward-1,
Board Room No. 2409, Dr.
5, Shamnath Marg, Delhi- SPM Civic Centre,
110054 New Delhi-110002
PAN No. AAAJT1846R
(RESPONDENT)
(APPELLANT)
Assessee by : None
Department Sh. Manish Tiwari, Sr. DR
by:
Date of Hearing 30.09.2024
Date of Pronouncement 30.09.2024
ORDER
PER YOGESH KUMAR U.S., JM
This appeal is filed by the assessee for the Assessment Year 2006-07 against the order of the CIT(A)(A)-36, New Delhi dated 29.07.2016.
2 ITA No. 961/Del/2018
The Delhi Building & Other Construction Workers Welfare
2. The grounds of Appeal are as under:-
" 1. That the Ld. CIT(A) has erred in confirming the assessment order framed by the Assessing Officer u/s 147 r/w section 143(3) of the Income Tax Act.
2. That the Ld. CIT(A) has erred in holding that the proceeding initiated by the Assessing Officer u/s 147 / 148 was legal and was in accordance with due procedure.
3. That the Ld. Assessing Officer has ignored the material fact that the Assessing Officer had not conducted the proceeding in accordance with the judgment of Supreme Court in the case of GKN Drive Shafts Ltd. 259 ITR 19 (SC) and therefore, such proceeding was bad in law.
4. That the Ld. CIT(A) has ignored the material fact that the reasons were supplied by the Assessing Officer to the assessee on 27.03.2014 on which date the assessment proceeding was concluded and the assessment order was framed on 29.03.2014. Thus the principles of natural justice have been violated in this case and therefore the assessment proceeding as well as the assessment order are liable to be set aside.
5. That the Ld. CIT(A) has ignored the material fact that no notice u/s 143(2) had been issued by the Assessing Officer within the prescribed time which is sine qua non for framing the assessment u/s 143(3) of the Act and therefore, the assessment framed by the Assessing Officer was bad-in-law.
6. That the reasons recorded by the Assessing Officer u/s 148 of the Act had not been supplied to the Board during the assessment proceeding and therefore, the assessment framed by the Assessing Officer is bad-in-law being liable to be set aside.
7. That the Ld. CIT(A) has erred in holding that the ITO and DC have concurrent jurisdiction and therefore, there was no requirement to pass an order u/s 127(1) for transferring the case from Trust Circle-4 to Trust Ward-1. Since, ITO Trust Ward-1 had no jurisdiction to frame the assessment and therefore, such an assessment was void ab-initio.3 ITA No. 961/Del/2018
The Delhi Building & Other Construction Workers Welfare
8. That the Ld. CIT(A) has erred in holding that since the Board was not registered u/s 12A/12AA of the Act and therefore, benefit of section 11 & 12 of the Act was not available. Infact, Board is a Govt. Body and is performing the functions of the Govt, and therefore, no registration u/s 12A/12AA is required.
9. That the Ld. Assessing Officer has erred in ignoring the material fact that the appellant Board is neither an AOP nor a Trust, it is "Govt. Body", falls within the ambit of "State" as defined in Article 12 of the Constitution of India and therefore, its income and property are exempt from union taxation under Article 289 of Constitution of India.
10. That the appellant Board does not fall within the ambit of definition of "Person" u/s 2(31) of the Act, hence it could not be treated as an assessee within the meaning of section 2(7) of the Act so as to be liable to be assessed under the Income Tax Act.
11. That the Cess collected by the Board as per the Building & Other Construction Workers Welfare Cess Act 1996 is not an income within the meaning of section 2(24) of the Act and therefore, not chargeable to tax u/s 4 of the Income Tax Act.
12. That the Ld. CIT(A) has erred in treating the surplus of Rs. 8,20,72,681/- as income of the Board. Infact, the said amount was to be kept and to be utilised for the beneficiaries who have overriding title over this amount and therefore, the same cannot be assessed in the hands of Board.
13. That the Ld. CIT(A) has relied upon the order of ITAT in AY 2007-08 and 2008-09, however, assessee had filed an appeal before the Hon'ble High Court who has dismissed the appeal as there was a delay in filing the appeals.
14. That the appellant seeks leave to add, amend, alter, abandon or substitute any of the above grounds during the hearing of the appeal."4 ITA No. 961/Del/2018
The Delhi Building & Other Construction Workers Welfare
3. None appeared for the assessee and the notices issued by the Office of the Tribunal as well as through the Department have also served on the assessee, but the assessee failed to appear and participate in the proceedings. Thus, we deem it fit to decide the Appeal on hearing the Ld. Departmental Representative and verifying the material available on record.
4. Brief facts of the case culled out from the order of the CIT(A) are as under:-
"The facts of the cases are that no return of income for A.Y. 2006-07 was filed by the assessee. On perusal of records, it was further seen that the assessee was not registered u/s. 12A/12AA of the I.T Act for the year under consideration. In view of the same and also on the basis of assessment orders of A.Y. 2007-08 & A.Y. 2008-09, satisfaction was recorded after application of mind and accordingly Notice u/s. 148 of the I.T Act dated 10.07.2012 was issued and duly served on the assessee after getting necessary approvals from the concerned authorities. Thereafter, the assessee filed a return of income in compliance to notice u/s. 148 of the I.T act on 12.09.2012 declaring total income at NIL after claiming application of income as per provisions of Section 11 & 12 of the I.T Act. The assessee submitted that the Board is constituted with the object to regulate employment and condition of service of Building & Other Construction Workers and to provide for their safety, health and welfare measures etc. to generate the revenue for the welfare schemes for the workers he Delhi Building & Other Construction Workers Welfare Board the cess is being collected by the Board under Building & Other Construction Workers Cess Act, 1966. Since the Board is constituted under the Act of Parliament, it is not required to the any return, though under protest it has filed the 5 ITA No. 961/Del/2018 The Delhi Building & Other Construction Workers Welfare return at "NIL" income for the aforesaid A.Y. 2006-07. The Board is granted registration u/s. 12A from AY 2009-10 onwards. The A.O noted that at one end the assessee is submitting that it is not required to file any return and at the other end it had applied and got registration u/s 12A/12AA of the IT Act from A.Y 2009-10. Punjab & Haryana High Court in the case of CIT vs Haryana Building & Other Construction Works Welfare Board, 52 DTR 253 (2011) while dealing with Identical case observed that the activity of the assessee are in the nature that registration w/s. 12AA should be granted. Thus, the contention of the assessee that since the 'Board" is constituted under an Act of the Parliament, it is not required to file any return is a misplaced notion. Being a creature of statute does not give immunity to taxation under any provision of L.T Act unless and until it is specifically exempted under the I.T Act. On being asked as to why the surplus should not be taxed in absence of Registration u/s. 12AA, the assessee asked for reason of reopening.
The assessee was on the same date le. 27.03.2014, provided the reasons for reopening of the assessment proceedings, by hand. The assessee repeated same reasons of not being an assessee & the 'cess' not being an 'income'. The AD found that it is evident from the facts and circumstances of the case and also from the assessment records that the assessee is not registered u/s. 12A/12AA of the IT Act for the year under consideration. As such, the assessee is not eligible for the benefits of section 11 & 12 of the Act. Accordingly, entire surplus of ₹ 8,20,72,681/- was added to the returned income of the assessee.
5. Aggrieved by the assessment order dated 29/03/2024, the assessee preferred an Appeal before the CIT(A). The Ld. CIT(A) vide order dated 29/07/2016, following the order of the Income Tax appellate Tribunal in Assessee's own case for the Assessment Year 2006-07 & 2007-08, dismissed the Appeal filed by the assessee. As against the order of the CIT(A) dated 29/07/2016, the assessee 6 ITA No. 961/Del/2018 The Delhi Building & Other Construction Workers Welfare preferred the present Appeal before this Tribunal on the grounds mentioned above.
7. The Ld. Departmental Representative submitted that the Ld. CIT(A) has followed the order of the Tribunal in Assesses's own case for the Assessment Year 2006-07 and 2007-08, therefore, the assessee cannot find fault with the order of the CIT(A), thus sought for dismissal of the Appeal.
8. We have heard both the Ld. Departmental Representative and perused the material available on record. The Ld. CIT(A) while dismissing the Appeal held as under:-
"Coming to the issue of assessability of the surplus, the relevant issue is whether the assessee was registered u/s. 12A/12AA of the I.T It is observed that firstly the registration has been allowed from A.Y. 2009-10 and it is also seen that during the years A.Y 2007-08 and 2008-09, the appellant has not even utilise the funds for the objectives for which it was established. As observed by the Ld. CIT(A) is order for A.Y. 2007-08 inter alia:
"From the perusal of the Act and Rules it is seen that the appellant is holding the funds as a trust on behalf of the construction workers which is to be used for the welfare of the workers and hence it is obligatory on Its part to file the return and have Its accounts audited. The appellant has Invested the funds in different banks and has not transferred this funds to the Government Exchequer which would have been the case had it been the collecting agency. Further, the appellant has 7 ITA No. 961/Del/2018 The Delhi Building & Other Construction Workers Welfare also taken the loan from the Government of NCT of Delhi of 25 lacs which goes to shows that the Board has the power to borrow and advance loan. All these facts lead to the conclusion that the appellant is a "Board" which has been established under the Delhi Building and Other Construction Workers (Regulation of Employment and Conditions of Service Rules, 2002) which is entrusted to look after the welfare of the construction workers and the funds which are remitted to it by the collecting agency has to be utilized for the welfare of the construction workers. As the appellant does not have any registration u/s. 12AA nor has it utilized the funds for the welfare of the construction workers, the action of the AO in taxing the surplus and treating the assessee as an AOP is justified and the action of the AO is upheld."
8. The assessee went in appeal to the Hon'ble ITAT against the confirmation of the assessment by the Ld. CIT(A). The ITAT has vide its order dated 04.03.2016 dismissed the appeal of the assessee stating that:
"1. In both the appeals, the assessee board has questioned First Appellate Order on several grounds involving the issue as to whether the cess collected by the assessee under the Building & Other Construction Workers (Regulation of Employment) Welfare Cess The Delhi Building & Other Construction Workers Welfare Board Act, 1996 is a tax and not the Income in the hands of the assessee board so as to fall within the ambit of charging provisions.
7..................We, therefore, respectfully following the decisions of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Haryana Building & Other Construction Works Welfare Board (supra) hold that the present appellant is a genuine charitable institution eligible for the grant of registration u/s. 12A of the Act. The contention of the assessee in the present case that it is collecting cess for the welfare of the labour, so, it does not come under the ambit of I.T Act for denial of the exemption u/s.
11/12 of the Act in absence of its registration u/s. 12A/12AA of the Act does not survive. Though, there is no dispute, as 8 ITA No. 961/Del/2018 The Delhi Building & Other Construction Workers Welfare discussed above that the present assessee is very much eligible for getting registered u/s. 12A/12AA of the I.T Act, but in absence of such registration for the AYs under consideration, the authorities below have rightly denied the exemption claimed u/s. 11/12 of the I.T Act. The action of the authorities below in this regard is fully covered by the decision of Hon'ble Punjab & Haryana High Court in the case of Cit vs Haryana Building & Other Construction Work Welfare Board (supra), a similarly placed assessee in the state of Haryana. Since this decision has been given in case of a similarly placed assessee and there is no other direct decision helpful to the assessee or the decision of Hon'ble jurisdictional Delhi High Court in the case of similarly placed assessee, we are bound to follow the above decision of Hon'ble Punjab & Haryana High Court. The issue is thus decided against the assessee as the same by implication does not survive in view of the above cited decision of Hon'ble Punjab & Haryana High Court. The grounds Involving the issue are accordingly rejected."
9. The action of the AO in assessing the income of the assessee u/s 147/148 of the Act has already been upheld in discussion in para 6. Further, respectfully following the decision of Ld. CIT(A) and Hon'ble ITAT for A.Y. 2006-07 and 2007-08, I am of the view that the ground of the appeal regarding the assessability of the surplus of the Board by denying the exemption u/s. 11 in the absence of registration u/s. 12A/12AA is not liable to be allowed and is hereby rejected.
10. In the result, the appeal of the assessee is dismissed."
9. The Ld. CIT(A) has followed the order of the Tribunal for the Assessment Year 2006-07 and 2007-08 and rejected the Appeal of the assessee, considering the fact that the assessee has not appeared and produced any contrary judicial precedents to decide the case in favour of the assessee as the case of the assessee is 9 ITA No. 961/Del/2018 The Delhi Building & Other Construction Workers Welfare covered against the assessee him from the orders of the Tribunal for the Assessment Year 2006-07 and 2007-08, we find no reason to interfere with the findings and the conclusion of the Ld. CIT(A). Thus, we do not find any merit in the Grounds of appeal of the assessee, accordingly, the Appeal of the assessee is dismissed. Order pronounced in the open court on 30th September, 2024.
Sd/- Sd/-
( PRADIP KUMAR KEDIA ) (YOGESH KUMAR U.S.)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 30/09/2024
R.N, Sr. PS*
Copy forwarded to :
1. Appellant
2. Respondent
3. CIT
4. CIT (Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
10 ITA No. 961/Del/2018
The Delhi Building & Other Construction Workers Welfare