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DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTIONS) -II Versus SHADAN EDUCATIONAL SOCIETY

2015 (11) TMI 797 - ITAT HYDERABAD

Rectification of mistake - whether violation of the provisions of section 13 are to be examined by the Assessing Officer while considering the exemption under section 11? Held that:- The powers of rectification under section 154 are restricted and as rightly pointed out by the Commissioner of Income-tax (Appeals), issues which require detailed examination and analysis cannot be undertaken under section 154 of the Act. We are of the opinion that action of the Assessing Officer in restoring the or .....

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t in which the statements were given do indicate that the trustee has stated that the cars were utilised for the objects of the society, more particularly for transporting the dignitaries of Medical Council of India and others to the premises of the assessee-society, i.e., various colleges. In view of the clear statement of the managing trustee, we do not see any personal usage of the cars of the society. The fact that the Assessing Officer did not quantify any amount of personal use also indica .....

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section 154, having allowed the exemption consequent to the orders of the Income-tax Appellate Tribunal. In view of this, we do not find any merit in the Revenue's appeals - Decided against assessee. - I. T. A. Nos. 355 and 356 /Hyd/ 2014 (assessment years 2001-02 and 2003-04). - Dated:- 19-6-2015 - B. RAMAKOTAIAH (Accountant Member) and SAKTIJIT DEY (Judicial Member) M. Ravindra Sai for the appellant. Mohd. Afzal, authorised representative, for the respondent. ORDER The order of the Bench was d .....

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. The assessee was granted registration under section 12A with effect from June 18, 1985. Consequent to search and seizure operations on October 27, 2006 and on the report of the authorities that the assessee has violated provisions of section 13 of the Act, the learned Commissioner of Income-tax (Central), Hyderabad has cancelled the registration under section 12AA(3) vide order dated November 6, 2008. This matter was the subject-matter of appeal before the Income-tax Appellate Tribunal and the .....

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d out various so called violations of section 13 and in the impugned years also came to the conclusion that registration under section 12 was cancelled, therefore the assessee was not entitled for exemption under section 11 of the Act. He accordingly brought to tax the entire amount claimed as exemption by the assessee in the impugned assessment years. He however, did not quantify the amount pertaining to violation of the provisions of section 13 in the order. The learned Commissioner of Income- .....

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t to the order of the Income-tax Appellate Tribunal dated November 21, 2012 holding that since the Income-tax Appellate Tribunal restored the registration under section 12A, the assessee is eligible for exemption under section 11 of the Act. He determined the total income at nil and granted exemption to the assessee under section 11. However, the very same Assessing Officer by a notice under section 154 dated March 27, 2013 proposed that the above orders dated November 21, 2012 were erroneously .....

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amount as was done under section 143(3). 3. The assessee contested before the learned Commissioner of Income-tax (Appeals) holding that there were neither violations of section 13 during the impugned assessment years nor the Assessing Officer has quantified any amount for the so called violations listed out by him and further the matter was already decided by the Commissioner of Income-tax (Appeals) in his appellate orders under section 143(3). Therefore, the Assessing Officer cannot modify the .....

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ue, the learned Commissioner of Income-tax (Appeals) did not approve the modification orders by stating as under : "5.1 I have considered the facts on record and the submissions of the authorised representative. A perusal of the assessment order dated December 31, 2008 shows that while the Assessing Officer did discuss both the issues, viz., use of the appellant's vehicles for the personal use of the Chairman and his family and the purchase of property using the appellant's funds in .....

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tion under section 12AA(3). It is also noteworthy that the Commissioner of Income-tax (Appeals) went on to observe that since the Income-tax Appellate Tribunal, Hyderabad had already adjudicated the issue related to the exemption and since the Assessing Officer had to give effect to the order of the Income-tax Appellate Tribunal, no separate finding was required to be given in respect of the claim of exemption. In other words, the Commissioner of Income-tax (Appeals) did not consider it fit to a .....

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d examination of facts and circumstances in the light of the legal provisions. Therefore, the Assessing Officer having impliedly held in his modification orders dated November 21, 2012 that the appellant had not violated section 13, it cannot be said that this was a mistake apparent from record open to rectification under section 154." 4. The Revenue is aggrieved and raised various grounds, inter alia, contending that the learned Commissioner of Income-tax (Appeals) was not justified in hol .....

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unal in its correct perspective as he was supposed to examine the violations of section13 while granting exemption. While admitting that the Income-tax Appellate Tribunal has cancelled the order of the Commissioner of Income-tax cancelling the registration, he referred to the order of the Income-tax Appellate Tribunal to submit that the Income-tax Appellate Tribunal specifically observed that violation of the provisions of section 13 are to be examined by the Assessing Officer while considering .....

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the exemption without considering the violation of the provisions of section 13, the Assessing Officer was only following the directions of the Income-tax Appellate Tribunal and modified the orders under section 154. He justified the orders of the Assessing Officer. 6. Learned counsel in reply, made two propositions. One that the Assessing Officer was correct in allowing the exemption in the consequential order as registration was restored to the assessee by the order of the Income-tax Appellate .....

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the consequential orders passed by the Assessing Officer. Second proposition is on the merits of the so called violations under section 13 of the Act. It was submitted that nowhere in the statements recorded from the managing trustee there was any personal usage of cars, which have been listed for these impugned assessment years. The assessee-society has indeed owned many cars which were used for the objects of the society and no vehicles were used for the personal benefit of the trustees. He re .....

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d that they are secretary and trustee of the assessee-society and the properties though held in their names were recorded in the books of account of the assessee, invested out of the funds of the assessee and subsequently, when these were sold, the capital gains were also offered in the returns of the assessee which was also accepted by the Assessing Officer. In view of this, there are no violations of section 13 and therefore, even on merits, the orders cannot be modified under the provisions o .....

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section 154 in restoring the order under section 143(3) which was also the subject- matter of appeal before the Commissioner of Income-tax (Appeals) earlier. The powers of rectification under section 154 are restricted and as rightly pointed out by the Commissioner of Income-tax (Appeals), issues which require detailed examination and analysis cannot be undertaken under section 154 of the Act. We are of the opinion that action of the Assessing Officer in restoring the order of the Assessing Off .....

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s were given do indicate that the trustee has stated that the cars were utilised for the objects of the society, more particularly for transporting the dignitaries of Medical Council of India and others to the premises of the assessee-society, i.e., various colleges. In view of the clear statement of the managing trustee, we do not see any personal usage of the cars of the society. The fact that the Assessing Officer did not quantify any amount of personal use also indicate that the Assessing Of .....

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roperties were held in the name of the individuals as the properties are purchased in the Jubilee Hills Co-operative Society for establishing schools/colleges for the objects of the society. Being a co-operative society, the members' names were included rather than the assessee's name and the fact that the properties were shown in the books of account and funds were utilised from the society were also established before the authorities in earlier years. It is also on record that the so c .....

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o violation of section 13 in the impugned years. This fact was also established by the order of the Commissioner of Income-tax (Appeals) dated November 10, 2009, wherein the learned Commissioner of Income-tax (Appeals) has given a finding as under in para 4.1 : "4.1 I have gone through the issue and the submission of the appellant. I find that the denial of exemption under section 11 by the Assessing Officer actually emanated from the cancellation of registration under section 12AA(3) by th .....

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