TMI Blog2011 (5) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... have noticed that the society has been granted registration u/s 12A of the Act and once the registration is granted by the CIT, the Assessing Officer is prohibited from probing further into the objects of the Society, as held by the apex court in ACIT vs. Surat City Zymkhana (300 ITR 214). 3. The CIT(A) erred in holding that the objects of the society are not 'charitable' within the scope of section 2(15) of the Act. They are of an 'educational' nature or in the alternative, for the advancement of object of general public utility and as such, are charitable. 4. The CIT(A) ought to have held that the gross receipts of the society cannot be brought to tax and a deduction has to be given for at least the revenue expenditure incurred by it. 5. The CIT(A) ought to have held that the claim of depreciation of ₹ 3,63,962/- was in order as the cost of the relevant capital assets was not written off to the profit and loss account in the first year as alleged by the Assessing Officer. The CIT(A) also ought to have realised that treating the capital expenditure as application of income is altogether different from allowance of depreciation and does not amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year 1978. The original assessment for the assessment year 2004-05 was completed vide order dated 28.9.2006, passed u/s 143(3) of the IT Act. Subsequently, based on the observations made by the Revenue Audit Party, wherein the revenue audit party has observed that the assessee is not a 'charitable institution' u/s 2(15) of the Act, a notice u/s 148 was issued on 4.3.2009 and in response to the said notice, the assessee initially filed a letter dated 17.3.2009 stating that to the best of their knowledge and bona fide belief, no income has escaped assessment and that the original return filed by them may be treated as return filed in response to the said notice. During the course of reassessment proceedings, the assessee has stated that the reopening of the assessment is only on the basis of 'mere change of opinion' on the part of the Assessing Officer based on the very same set of facts examined in the original assessment and stated that the Assessing Officer cannot reopen the assessment on the basis of the Revenue Audit Party's observations. The Assessing Officer has not agreed with the contentions of the assessee and he observed that the assessee soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid. The Hon'ble Supreme Court in that case observed that reopening of the assessment in view of the factual information given by the internal audit party is valid in law. In the instant case, the CIT(A) has observed that the assessment was reopened on the basis of objection by the revenue audit party, the same can be considered as bringing to the knowledge of the Assessing Officer that certain factual information regarding the claiming in the return of income. Further, the CIT(A) has observed that the activity carried on by the assessee i.e. coaching classes, to the candidates appearing for competitive examinations conducted by govt. cannot be equated with the term 'education' as enumerated u/s 2(15) of the Act. Accordingly, he held that the assessee is not entitled for exemption u/s 10(23C)(iiiad) of the Act. He granted the deduction of depreciation of ₹ 3,01,159/-. However, he observed that an amount of ₹ 10 lakhs had been transferred to the building funds which is a part of the expenses of ₹ 28,60,357/-claimed in respect of coaching activities. As such, the assessee is not entitled to get any benefit of application of such income, as the very ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there has been some escapement of income due to some failure or omission on the part of the assessee to disclose fully and truly all relevant and material facts. Notwithstanding, that there was no omission or failure on the part of the assessee to disclose fully and truly all material facts on the part of the assessee, the Assessing Officer can reopen the assessment, in consequence of information in her possession, subsequent to the first assessment has reason to believe that the income chargeable to tax has escaped assessment. In the present case, as seen from the records, there is no new material which came to the possession of the Assessing Officer after the completion of the original assessment. The reason for reopening the assessment is observation from the revenue audit party, but it was not due to the concealment of any material particulars or any facts by the assessee. Further, the revenue audit party has merely gave an opinion and there being no new fresh material before the Assessing Officer, mere change of opinion cannot form the basis for reopening the assessment as held in the case of Carlton Overseas Pvt. Ltd. vs. ITO and Others (318 ITR 295) (Del.HC). Further, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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