Professional Documents
Culture Documents
PAN : AAAAH2904B
.......अपीलाथ / Appellant
बनाम / V/s.
…… यथ / Respondent
आदे श / ORDER
24.03.2016, which in turns arises from the order passed by the A.O
under Sec. 147 of the Income-tax Act, 1961 (in short ‘the Act’) dated
appeal:
“1. On the facts and circumstances of the case and in law, the ld
CIT(A) has erred in upholding the action of the ld AO in initiating
reassessment proceeding without having any tangible material in his
possession for making 'reason to believe' for such alleged escapement
of income of Rs.54,17,572/- by misapprehending the applicability of
85% utilization for claiming exemption u/s. 10(23C)(iiiad), which is
based on opinion of 'audit party' based on audit scrutiny of income
tax return.
2. On the facts and circumstances of the case and in law, the ld CIT(A)
has erred in upholding the reassessment made by the ld AO, without
disposing off the objections raised against the reasons recorded by
way of speaking order, the reassessment is vitiated in law and is liable
to be quashed.
3. On the facts and circumstances of the case and in law, the Id CIT(A)
has erred in sustaining the addition of Rs.54,17,572/- on mere
presumption that the assessee's objectives are not solely for
educational purposes and denied the exemption u/s.10(23C)(iiiad),
more so, the ld AO himself admitted that the alleged non-educational
objectives, in fact were not pursued in the AY07-08, as held in
Geetanjali Education Society (2014) 267 CTR 369 (Kar).
3
Holy Heart Educational Society Vs. DCIT-1(1)
ITA No. 187/RPR/2016
4. On the facts and circumstances of the case and in law, the ld CIT(A)
has erred in sustaining the addition of Rs.54,17,572/- on mere
presumption that the assessee's objectives are not solely for
educational purposes and denied the exemption u/s.10(23C)(iiiad),
more so, in absence of any allegation that the assessee-society had
carried on for the purposes of profit, as held in Queen's Educational
Society (2015) (SC)."
by the assesee society was processed as such u/s. 143(1) of the Act.
Subsequently, the case of the assessee was reopened by the A.O for
the reasons, viz. (i). that as the assessee society had not applied 85%
of the Act; and (ii). that as the assessee society had filed an application
therefore, its income for the year under consideration i.e. A.Y.2007-08
belief that the income of the assessee society chargeable to tax had
escaped assessment, thus, reopened its case u/s.147 of the Act. For
4
Holy Heart Educational Society Vs. DCIT-1(1)
ITA No. 187/RPR/2016
the basis of which the case of the assessee society was reopened are
The Assessee is a charitable Society and has filed its return of income for the A.Y.
2007-08 on 31.03.2008 and the same was processed u/s 143(1) at nil income. In
the consolidated income & expenditure account filed along with Return of income,
Rs.54,17,572/- was shown as excess of income over expenditure but no tax was
paid on the above income. Computation of income as mentioned in the return was
also not enclosed therewith. Further the society has not applied 85% of its gross
income as required by the income tax act, therefore exemption u/s.10(23C)(iiiad)
will also not be allowable. Moreover, it had filed application u/s 12A of I.T. Act,
1961 on 28th Nov.2007 in the prescribed format for seeking registration. The
approval u/s 12A was granted on 11.04.2008 w.e.f. 01.04.2007 i.e. from A.Y. 2008-
09 onwards. Hence, the income for the A.Y. 2007-08 will not be exempted and tax
would be leviable on the above income. Failure to do so resulted in
underassessment of income to the tune of Rs. 5417572/- with consequential short
levy of tax of Rs.1767453/- along with interest.
In view of the, I have reason to believe that the assessee had income to the tune of
Rs.54,17,572/- which escaped assessment during the F.Yr.2006-07 relevant to
A.yr.2007-08. Hence, I deem it a fit case for issuing notice u/s.148 of the Income
tax Act, 1961.
Submitted. Sd/-
DCIT-1(1)”
2.2. Thereafter, the A.O vide his order passed u/s.147 dated
Rs.54,17,572/-.
5. At the very outset of the hearing of the appeal the Ld. Authorized
Representative (for short ‘AR’) for the assessee assailed the validity of
the jurisdiction that was assumed by the A.O under Section 147 of the
had wrongly observed that as the assessee had failed to apply 85% of
its gross income, therefore, it was not entitled for exemption under
Sec. 10(23C)(iiiad) of the Act. It was submitted by the ld. AR that there
very basis for reopening of the assessee’s case u/s 147 was blatantly
jurisdiction by the AO being devoid and bereft of any force of law was
the A.O had further wrongly observed that as the assessee had filed
the said observation of the A.O was totally uncalled for in context of
consideration. It was the claim of the Ld. AR that as the assessee had
in its return of income for the year under consideration i.e. A.Y.2007-
forming the very basis for taking recourse to proceedings u/s. 147 was
claim of the Ld. AR that as both the reasons forming the basis for
authorities.
parties, perused the orders of the lower authorities and the material
that have been pressed into service by them to drive home their
respective contentions.
of the assessee society was reopened by the AO u/s.147 of the Act for
two fold reasons, viz. (i) that as the assessee society had not applied
of the Act; and (ii) that as the assessee society had filed an application
therefore, its income for the year under consideration i.e. A.Y.2007-08
the present case before us, we are unable to comprehend the very
dispel all doubts we herein cull out the provisions of Sec. 10(23C)(iiad)
obligation cast upon an assessee to apply 85% of its gross income for
10. Ostensibly the second reason forming the very basis for
reopening of the case of the assessee also does not stand on a better
exemption on the said count during the year under consideration i.e.
also referred to claim for exemption u/s.11(1)(a) of the Act of Rs. Nil.
However, as the assessee had not claimed any part of its income as
exempt under Sec. 11(1)(a) of the Act, therefore, there could have been
no basis for the AO to arrive at a bonafide belief that the income of the
i.e wrong claim of exemption u/s 11(1)(a) of the Act. On the basis of
Order pronounced under rule 34(4) of ITAT Rules, 1963 on 17th day of
October, 2022.
Sd/- Sd/-
ARUN KHODPIA RAVISH SOOD
(ACCOUNTANT MEMBER) (JUDICIAL MEMBER)
रायपुर/ RAIPUR ; दनांक / Dated : 17th October, 2022
**SB
// True Copy //
नजी स चव / Private Secretary
आयकर अपील य अ धकरण, रायपुर / ITAT, Raipur.