TMI Blog2011 (1) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... ted:- 24-1-2011 - Ms. Harsha Devani and H.B. Antani, JJ. J.P. Shah and Manish J. Shah for the Petitioner. M.R. Bhatt and Mrs. Mauna M. Bhatt for the Respondent. JUDGMENT Ms. Harsha Devani, J. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 29.3.2010 issued by the respondent under section 148 of the Income Tax Act, 1961 (the Act) reopening the assessment of the petitioner for the assessment year 2006-07. 2. The petitioner, an Agricultural Produce Market Committee, has been granted registration under section 12AA of the Income Tax Act, 1961 by the Commissioner of Income Tax as an institution carrying out charitable activities. The petitioner submitted a return of income for the assessment year 2006-07 in the status of "Association of Persons" showing income of Rs. 74,57,427/- and claiming deduction of Rs. 77,40,212/- (Rs. 32,40,212/- + Rs. 45,00,000/-) and thus, showing loss of Rs. 2,82,785/-. Pursuant to notice issued under section 142(1) of the Act, the petitioner by a reply filed in July 2008, stated that its activities were previously exempt under section 10(20) of the Act (before its amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party, in the case of the petitioner, no trust deed had been executed and registered setting out its objectives, trustees etc. and that the petitioner had not been registered with the Charity Commissioner and that the property of the petitioner is also not held under the petitioner-Trust. That even if the petitioner had obtained registration under section 12AA of the Act as an institution carrying out charitable activities, the petitioner is not entitled to the status of a "Trust" carrying out the charitable activities since the petitioner is conducting the business as "Association of Persons" and not as a "Trust". That the exemption/deduction under section 11 of the Act are meant for income derived from the property under trust and that in view of the observations of the revenue audit party, the assessee was not eligible to exemption to the tune of Rs. 77,40,212/- for the year under reference and that, since the Assessing Officer had not disallowed the exemption while finalizing the assessment under section 143(3) of the Act, the income to the aforesaid extent had escaped assessment. 4. Inviting attention to the order made under section 143(3) of the Act as well as to the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averments made in the affidavit in-reply, to submit that in the original assessment under section 143(3) of the Act, there is no discussion worth the name with regard to the subject matter for which the impugned notice has been issued. It was submitted that in the reasons recorded, it has been clearly recorded that no trust deed has been executed and registered in terms of the Bombay Public Trust Act, setting out its objectives, trustees, etc., nor was the petitioner registered with the Charity Commissioner. Since, these aspects have not been deliberated or debated in the original order, there is no question of change of opinion, as is sought to be contended on behalf of the petitioner. It was submitted that in the circumstances, the reopening of the assessment which is within a period of four years from the end of the relevant assessment year is valid and as such, there is no warrant for any intervention by this Court. 7. In the background of the aforesaid facts and contentions, it may be germane to refer to the reasons recorded which read as under: "The assessee has filed his return of income for A.Y. 2006-07 showing the total income of Rs. 2,82,785/-. The assessment u/s 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and addresses of the trustees and/or managers should be furnished. The CIT has to examine the objects of creation as well as an empirical study of the past activities of the applicant. The CIT has to examine that it is really a charitable trust or institution eligible for registration. The Court further held that once the registration under section 12A(a) of the Act is granted, the Income Tax Officer is not justified in refusing the benefit which would, otherwise, accrue under the registration." 9. In the case of Asstt. CIT v. Surat City Gymkhana, [2008] 300 ITR 214/170 Taxman 612, the Supreme Court was called upon to deal with the question as to whether on the facts and circumstances of the said case, Income Tax Appellate Tribunal was justified in law in holding that registration under section 12A was a fait accompli to hold the Assessing Officer back from further probe into the objects of the trust. On a perusal of the judgment of the Gujarat High Court in the case of Hiralal Bhagwati (supra) the Supreme Court held that the question stands concluded by the said judgment, which has attained finality since the revenue did not challenge the decision in the said case. 10. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to the conditions for applicability of sections 11 and 12 as provided in section 12A of the Act. Therefore, once the procedure is complete as provided under sub-section (1) of section 12AA of the Act and a certificate is issued granting registration to the Trust or Institution, it is apparent that the same is a document evidencing satisfaction about: (1) genuineness of the activities of the trust or Institution, and (2) about the objects of the Trust or Institution. While framing the assessment order, it is not open to the Assessing Officer to ignore the certificate of registration granted under section 12AA of the Act by the Director of Income Tax (Exemption). 12. In the facts of the present case, the Assessing Officer while framing the original assessment under section 143(3) of the Act, has, taken into consideration the certificate granted by the Commissioner of Income Tax under section 12AA of the Act, and has found that the petitioner carries on charitable activities. In the return of income filed by it, the petitioner had specifically claimed deduction of Rs. 32,40,212/- and Rs. 45,00,000/- totalling to Rs. 77,40,212/- as a Charitable Trust registered under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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