Income Tax Appellate Tribunal - Delhi
M.R. Education Society,, Faridabad vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'E': NEW DELHI) BEFORE SHRI R.P.YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA No.5075 /DEL/ 2012 (Assessment Year: 2005-2006) DCIT Vs. M.R. Education Society, Cent, Circle 5E / 1A, B.P., NIT Faridabad Faridabad Vs. PAN: AAATM9177E Appellant Respondent ITA No. 5076 / DEL / 2012 (Assessment Year : 2006-07) DCIT Vs. M.R. Education Society, Cent, Circle 5E / 1A, B.P., NIT Faridabad Faridabad PAN:AAATM9177E Appellant Respondent ITA No. 5077 / DEL / 2012 (Assessment Year : 2007-08) DCIT Vs. M.R. Education Society, Cent, Circle 5E / 1A, B.P., NIT Faridabad Faridabad PAN:AAATM9177E Appellant Respondent ASSESSEE BY : Shri Ashwani Taneja, Advt. REVENUE BY : Shri Avdhesh Kr. Mishra, DR ORDER
PER BENCH:
Out of the present three appeals, two are quantum appeals filed at the instance of revenue against the separate orders of even date i.e. 24.7.2012 passed by Ld. CIT (A) in Assessment Year 2005-06 and 2006-07, the assessment in these years were made u/s 147 read with Section 143(3) on 31. 12.2010. ITA No. 5077 is a penalty appeal filed by the revenue against the order of Ld. CIT (A) dated 26.7.2012. The Assessing Officer has passed te penalty order U/S 271(1) (C) of the Income Tax Act on 30.3.2012 in Assessment Year 2007-08. Since the common issues are involved therefore we heard the appeals together and deem it appropriate to dispose of them by this common order.
First we take ITA No. 5075, the grievance of the revenue is that Ld. CIT (A) has erred in deleting the additions of Rs. 40,50,850/- and Rs. 39,50,621/- .
3. The brief facts of the case are that assessee is a trust running various educational institutions. It was enjoying of the registration U/S 12 A A (2) of the Income Tax Act. A search U/S 132 of the Income Tax Act, 1961 was conducted on 4th of August, 2005 at the official premises of the assessee trust as well as the residential premises of the trustee. The Assessee had filed the return and declared nil income. An assessment order was passed U/S 153(A) read with Section 143(3) of the Income Tax Act on 28th December, 2007, whereby income of the assessee was determined at Rs. 2,50,000/-. The assessee challenged this assessment order before Ld. First Appellate Authority, and after giving effect to the order of CIT (A) income of the Assessee was reduce to nil vide order dated 24.12.2009. The Ld. Commissioner has passed an order U/S 12 A A (3) on 28.12.2010 and canceled the registration of the assessee. This order was challenged before the ITAT, and ultimately the registration has been granted to the assessee.
4. The Assessing Officer has made two additions ; (a) sum of Rs. 40,50,850/- received by the assessee as a corpus donation, (b) income over expenditure amounting to Rs. 39,50,621/-. These additions have been made solely for the reason that assessee is not registered U/S 12 A, therefore, it cannot claim the benefit of section 11 and 12 of the IT Act. Donations received by the assessee has been treated as income. Similarly income over expenditure has also been treated as income of the assessee. On appeal Ld. CIT (A) has deleted both the additions by observing that registration U/S 12 A A has been granted to the assessee and, therefore, the profit or the receipts received by the assessee and applied for the objects of the society cannot be treated as its income. The finding of the Ld. CIT (A) in Assessment Year 2005-06 reads as under :
" I have considered the impugned assessment order as well as the submissions of the assessee. During the appeal hearing, it transpires that the assesseee-trust had appealed again before the Hon'ble ITAT against the order of the CIT, Central, Ludhiana dated 23.12.2010 cancelling the registration effective from 1.10.2004. The assessee provided a copy of order dated 25.05.2012 of the Hon'ble ITAT, Delhi Bench 'E', New Delhi. The relevant extract from the consolidated order for A.Y. 2006-07 and A.Y. 2007-08 which deals with the granting of registration u/s 12AA to the assessee trust by setting aside the order of the CIT, Central, Ludhiana, is reproduced below (ITA No. 793/Del/2011):-
We have heard both the sides in detail. The registration of the assessee which was granted on 27.03.2001 was cancelled by the order dated 30.01.2008. This cancellation was based on the three additions made to the income of the assessee for A.Y. 2005-06 and 2006-07. The first addition was in respect of unaccounted cash found and seized from the residence of trustees of assessee. In the quantum appeal, we have dismissed the revenue's appeal by confirming the relief granted to assessee, therefore, this ground for cancellation no more survive before us. Secondly, the unaccounted payment of Rs. 8 lacs made to M/s R.K.Engineering Works has also been deleted and no appeal has been filed against the deletion of the addition. Therefore, in our considered view, this ground also does not survive. The third ground of unexplained cash transfer entry has been also decided in favor of the assessee. Therefore, all the issues on which registration was cancelled did not survive. The assessee has been granted registration again on 30.11.2008 although it was made effective from A.Y. 2008-09. The CIT has found the trust and its activities as genuine and the objectives have been found charitable. These objectives were found charitable at the time of initial registration. The additions made to the income of Trust have been deleted in the quantum appeal. Nothing survives which can be made basis for denial registration. Therefore, in our considered view, there is nothing on record on which the assessee can be denied the continuation of the registration.
The registration of the assessee trust was cancelled vide order u/s 12AA(3) dated 23.12.2010, by restoring the earlier order dated 31.1.2008 made effective from 1.10.2004. Now the Hon'ble ITAT has held that there was nothing on record on the basis of which the registration could be continued to be denied to the assessee-trust as the impugned additions made stood deleted. Reference has been drawn to order dated 30.11.2008 of CIT granting registration to the assessee trust, though made effective from A.Y. 2008-09. In other words, the CIT, Central Ludhiana had afterwards considered the activities of the trust as genuine and the objectives as charitable while granting the registration w.e.f. A.Y. 2008-09. A copy of the said order is placed on record, from which it is evident that the date of order of the CIT (C) Ludhiana granting the registration is dated 12.6.2008, and not 30.11.2008 as mentioned in the order of the Hon'ble ITAT. Therefore, respectfully following the decision of the Hon'ble ITAT, the appeal of the assessee in Ground no. 4 and 5 is allowed."
5. Before us Ld. DR was unable to controvert that the issues are not covered by the orders of the ITAT passed in the assessee own case as referred by the Ld. CIT (A). The Learned Counsel for the assessee on the other hand placed on record the copy of the tribunal's order passed in A.Y. 2006-07 and 2007-08.
6. On due consideration of the facts and circumstances, we are of the opinion that assessee has been granted registration U/S 12AA therefore, its income has to be computed by giving benefit of Section 11 and 12. Section 11 of the Income Tax Act provides that subject to Section 60 to 63 the income derived from property held under trust wholly for charitable or religious purpose, to the extent to which such income is applied to such purpose in India; and where any such income is accumulated or set a part for application to such purpose in India to the extent to which the income so accumulated or set a part is not in access of 15% of the income from such property; shall not be included in the total income of the previous year of the person who received such income. The assessee has fulfilled the conditions provided in Section 11 and 12 of the Income Tax Act. There was no dispute about these proposition even by the Assessing Officer the grievance of the Assessing Officer was that once registration was withdrawn, then , it cannot claim the benefit of Section 11 and 12, otherwise in the regular assessment also the income of the assessee was determined at nil.
7. On due consideration of facts and circumstances and the order of the CIT (A) we do not see any reason to interfere in the finding of Ld. First Appellate Authority (extracted supra) which is based upon ITATs order.
8. ITA No. 5076, in this year, the grievance of the revenue is that Ld. CIT(A) has erred in deleting the addition of Rs. 1,78,01, 645/-. This amount was received as a corpus donation. The assessing officer has made the addition on the ground that assessee is not having registration U/S 12AA of the Income Tax Act the Ld. CIT (A) has deleted the addition by observing as under:
"I have considered the impugned assessment order as well as the submissions of the assessee. During the appeal hearing, it transpires that the assesseee-trust had appealed again before the Hon'ble ITAT against the order of the CIT, Central, Ludhiana dated 23.12.2010 cancelling the registration effective from 1.10.2004. The assessee provided a copy of order dated 25.05.2012 of the Hon'ble ITAT, Delhi Bench 'E' , New Delhi. The relevant extract from the consolidated order for A.Y. 2006-07 and A.Y. 2007-08 which deals with the granting of registration u/s 12AA to the assessee trust by setting aside the order of the CIT, Central, Ludhiana, is reproduced below (ITA No. 793/Del/2011):-
We have heard both the sides in detail. The registration of the assessee which was granted on 27.03.2001 was cancelled by the order dated 30.02.2008. This cancellation was based on the three additions made to the income of the assessee for A.Y. 2005-06 and 2006-07. The first addition was in respect of unaccounted cash found and seized from the residence of trustees of assessee. In the quantum appeal, we have dismissed the revenue's appeal by confirming the relief granted to assessee, therefore, this ground for cancellation no more survive before us. Secondly, the unaccounted payment of Rs. 8 lacs made to M/s R.K. Engineering Works has also been deleted and no appeal has been filed against the deletion of the addition. Therefore, in our considered view, this ground also does not survive. The third ground of unexplained cash transfer entry has been also decided in favor of the assessee. Therefore, all the issues on which registration was cancelled did not survive. The assessee has been granted registration again on 30.11.2008 although it was made effective from A.Y. 2008-09. The CIT has found the trust and its activities as genuine and the objectives have been found charitable. These objectives were found charitable at the time of initial registration. The additions made to the income of Trust have been deleted in the quantum appeal. Nothing survives which can be made basis for denial registration. Therefore, in our considered view, there is nothing on record on which the assessee can be denied the continuation of the registration.
The registration of the assessee trust was cancelled vide order u/s 12AA(3) dated 23.12. 2010, by restoring the earlier order dated 31.1.2008 made effective from 1.10.2004. Now the Hon'ble ITAT has held that there was nothing on record on the basis of which the registration could be continued to be denied to the assessee-trust as the impugned additions made stood deleted. Reference has been drawn to order dated 30.11.2008 of CIT granting registration to the assessee trust, though made effective from A.Y. 2008-09. In other words, the CIT, Central Ludhina had afterwards considered the activities of the trust as genuine and the objectives as charitable while granting the registration w.e.f. A.Y. 2008-09. A copy of the said order is placed on record, from which it is evident that the date of order of the CIT (C) Ludhiana granting the registration is dated 12.6.2008, and not 30.11.2008 as mentioned in the order of the Hon'ble ITAT. Therefore, respectfully following the decision of the Hon'ble ITAT, the appeal of the assessee in Ground no. 4 and 5 is allowed."
9. On due consideration of the finding of Ld. CIT (A), we are of the view that it is based on the order of the ITAT and it is similar to that of A.Y. 2005-06. Taking into consideration the facts and circumstances, we do not find any reason to interfere in this finding.
10. ITA No. 5077, in this appeal grievance of the revenue is that Ld. CIT(A) has deleted the penalty imposed u/s 271(1)(C) of the Income Tax Act, 1961.
11. The penalty has been deleted on the ground that quantum addition stands deleted Sub Section III of section 271 (1)(C) provide the computation of penalty. It contemplate that in cases referred to clause (C) in addition to tax, if any payable by an assessee, a sum which shall not be less than but which shall not exceed three times, the amount of tax sought to be evaded by reason of concealment of particular of his income. Thus, what an assessee has to pay by way of penalty is an amount equivalent to the tax sought to be evaded or 3 times of the tax sought to be evaded. Once additions are deleted, then there is no amount on which assessee can be said that to have evaded the tax and, therefore, there cannot be any penalty. Ld. CIT (A) has observed that additions are deleted, the penalty can not prevail. We do not find any reason to interfere in the order of Ld. CIT (A), In the result all the three appeals are dismissed.
Order pronounced in the Open Court on 30.04.2013.
Sd/- Sd/-
(T.S.Kapoor) (R.P.Yadav)
Accountant Member Judicial Member
Dated the30th day of April, 2012
B.Rukhaiyar
Copy forwarded to
Appellant
Respondent
CIT
CIT (A)
CIT (ITAT), New Delhi
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ITA. N0s.5075/Del/2012,
ITA.NO.5076/Del/2012
ITA.NO.5077/Del/2012