Madhya Pradesh High Court
Commissioner Of Income-Tax vs Shri Govindram Seksariya Charity Trust on 5 February, 1987
Equivalent citations: [1987]166ITR580(MP)
JUDGMENT G.G. Sohani, J.
1. As directed by this court, the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion :
"Whether, on the facts and in the circumstances of the case and on the basis of the material available on record, the Tribunal was right in holding that the Income-tax Officer had granted exemption under Section 11 to the assessee-trust after making thorough enquiries about the applicability of Section 13(1) of the Income-tax Act, 1961 ?
2. The material facts giving rise to this reference, briefly, are as follows :
The assessee is a public charitable trust. The assessment years in question are 1973-74, 1975-76, 1976-77 and 1977-78. On a scrutiny of the income-tax record of the assessee for the aforesaid assessment years, the Commissioner of Income-tax found that the debtors of the assessee were persons to whom the provisions of Section 13(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), were applicable and that the income of the assessee would be deemed to have been used for the benefit of those persons, as provided by Section 13(2) of the Act. The learned Commissioner was of the view that the Income-tax Officer had allowed exemption under Section 11 of the Act without examining in detail the applicablity of the provisions of Section 13(1)(c)(ii) of the Act. After giving a show-cause notice under Section 263 of the Act, the Commissioner held that the assessments made by the Income-tax Officer were perfunctory. The Commissioner, therefore, set aside the orders of assessment and the Income-tax Officer was directed to assess afresh in the light of the order passed by the Commissioner.
3. Aggrieved by that order, the assessee preferred an appeal before the Tribunal. The Tribunal held that the Commissioner had not given any finding that the assessee was not entitled to exemption under Section 11 of the Act, that the Income-tax Officer had examined the entire record of the case before proceeding to make assessment and that the Commissioner was not justified in reopening the assessments made by the Income-tax Officer. The Tribunal, accordingly, set aside the order passed by the Commissioner and allowed the appeal. Aggrieved by that order, the Revenue sought a reference, but the application filed by the Revenue in that behalf was rejected. Hence, the Revenue submitted an application under Section 256(2) of the Act which was allowed. That is how the aforesaid question of law has been referred to this court for its opinion.
4. Learned counsel for the Revenue contended that the Tribunal was not justified in coming to the conclusion that the Income-tax Officer had granted exemption to the assessee-trust after applying his mind to the question as to whether the assessee was entitled to claim exemption under Section 11 of the Act read with the provisions of Section 13 of the Act. The contention cannot be upheld. The Tribunal, after examining the record, found that to the audit objections that the assessee was not entitled to the benefit of exemption by virtue of the provisions of Section 13(1) of the Act, the Income-tax Officer had given detailed replies showing that the Income-tax Officer was alive to the relevant provisions of law and the facts before passing orders of assessment. The Commissioner had not found that the order passed by the Income-tax Officer was erroneous inasmuch as the assessee was not entitled to claim exemption under Section 11 of the Act. The finding of the Commissioner was that the Income-tax Officer had not applied his mind to the question as to whether the assessee was or was not entitled to exemption in the light of the provisions of Section 13(1) of the Act. This finding, according to the Tribunal, was not justified in view of the material on record. Learned counsel for the Revenue contended that the order of assessment passed by the Income-tax Officer did not disclose application of mind. However, if from the entire record, the Tribunal found that the Income-tax Officer was alive to the relevant facts and provisions of law before proceeding to frame the assessment, it cannot be held that the Tribunal was not right in holding that the Income-tax Officer had granted exemption after making thorough enquiries about the applicability of Section 13(1) of the Act.
5. For all these reasons, our answer to the question referred to this court is in the affirmative and against the Revenue. In the circumstances of the case, parties shall bear their own costs of this reference.