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TMI Blog2016 (11) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(22) came to be omitted and substituted by Section 10(23C)(vi). It is the case of the petitioner Board that even under the said amended provisions, the petitioner Board was having an exemption till Assessment Year 2002-03. It has also been stated by the petitioner that the assesseee has got jurisdiction under Section 12AA of the Act w.e.f. 1.4.1999. However, on account of this change in the statute, all trusts who claimed exemption under Section 10(23C) of the Act from Assessment Year 2003-04 were compulsorily excepted to submit their return of income under Section 139(1) of the Act and in response to that, the petitioner Board had to start filing of a return from Assessment Year 2003-04 which the initial year for the petitioner Board. In the body of petition, the petitioner has submitted a detailed chart with respect to their assessment position right from 2003-04 onwards which reads as under : A.Y. Assessment position Remarks for exemption under Section 11 2003-04 Assessed u/s. 143(3) Exemption granted in scrutiny assessment under section 143(3) in this initial year. No reopening under section 147/148 of the Act. 2004-05 Assessed u/s. 143(3) Exemption granted in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of Section 147 of the Act for the Assessment Year 2007-08 and it is in this context, since the process is sought to be undertaken, the petitioner has challenged the said action of reopening on the premise stated in the petition. 2.3 From the record it appears that upon receipt of the notice under Section 148 of the Act dated 25.5.2010, on 27.6.2010 the petitioner has submitted the reply wherein, it has been indicated that return in respect to that year under consideration has already been submitted on 31.10.2007 and the same be treated as return of income filed in response to the notice in question. On 2.8.2010, under this communication received by the petitioner on 5.8.2010, the reasons which have been recorded are supplied which read as under : "It is seen that the institution is registered u/s.12AA of the Income-tax Act,1961. Registration u/s 12AA of the IT Act, does not assign an organization or institution the status of a 'Trust' because registration can be granted to any institution whose objects are charitable. Therefore, if an institution is registered u/s 12AA of the IT Act, exemption available to a trust u/s 11(1)(a) of the Act is not available to an ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner Board are business activity and therefore, not amenable for exemption. On the basis of this premise, the authority has chosen to reopen the assessment for Assessment Year 2007-08. 4. In this context, learned counsel, Mr.R.K.Patel for the petitioner has submitted and contended that the action of reopening of assessment impugned in the petition is patently bad in law which results in undue hardships and harassment. It is also contended by learned counsel that reasons which are recorded are not valid reasons and based upon such invalid reasons, the authority has assumed jurisdiction which is not permission in law. It is also submitted that the material which is tried to be relied upon to form a belief has no rational connection nor having any live link for formation of said belief and therefore, in view of settled position of law, learned counsel submitted that the authority may not be allowed to permit to reopen the assessment. It was also submitted that in earlier years, even the scrutiny assessment has taken place under Section 143(3) of the Act and thereafter, there is no substantial change which would permit the authority to take a different view and therefore, contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt paragraph contained of that circular is Para.7.2. Learned counsel submitted that the authorities are bound by the instructions and guidelines issued by the higher authority and therefore, the impugned action being in violation of this circular, the Court may not permit such initiation which is otherwise impermissible in law and therefore, learned counsel submitted that the action on the part of respondent authority is patently bad. 5. Learned counsel has further specifically submitted that though this impugned action is within a period of 4 years from the end of relevant assessment year, the earlier years' scrutiny has also opined that exemption is amenable to the petitioner Board and therefore, even if no res-judicata in strict sense is applicable, the said opinion of the authority is not to be altered and therefore, learned counsel submitted that in view of the consistent past years' process against the petitioner, no reassessment be permitted under the guise of impugned action. Learned counsel, for that purpose while contending this, has relied upon some of the decisions, to which we may deal with at a later point of time. 6. As against this, learned counsel, Mr.Sudhir Meht ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner to interject by way of bringing the petition before this Court. This being the position, learned counsel has resisted the stand taken in the petition and thereby, contended to dismiss the petition by granting no relief. 7. Having heard the learned counsel for both the sides and having gone through the materials on record, we feel that following issues are emerging from the record : (i) The original return was accepted without scrutiny assessment. (ii) In view of the statutory provisions, the criteria mentioned in Section 11 read with Section 12 of the Act are to be maintained and continued to be observed and therefore, it appears prima facie that simply because in past, in some year, scrutiny has taken place it would not automatically follow that in the present year also, claim must be allowed with examination of statutory requirement. (iii) It is also emerging from the record that since the return of income accepted under Section 143(1) of the Act, the concept of change of opinion does not arise and the authority has to look into the central issue concerned in the petition in the context of compliance of provisions contained in Section 11 read with Section 12 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is finally set apart for application to such purposes in India, to the extent to which the income so set apart is not in excess of [fifteen] per cent of the income from such property; (c) income [derived] from property held under trust- (i) created on or after the 1st day of April, 1952, for a charitable purpose which tends to promote international welfare in which India is interested, to the extent to which such income is applied to such purposes outside India, and (ii) for charitable or religious purposes, created before the 1st day of April, 1952, to the extent to which such income is applied to such purposes outside India: Provided that the Board, by general or special order, has directed in either case that it shall not be included in the total income of the person in receipt of such income; [(d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution.] [Explanation.-For the purposes of clauses (a) and (b),- (1) in computing the [fifteen] per cent of the income which may be accumulated or set apart, any such voluntary contributions as are referred to in section 12 shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... While coming to this conclusion, we may refer to a decision of the Supreme Court in case of Deputy Commissioner of Income tax V/s. Zuari Estate Development and Investment Company Limited, reported in 373 ITR 661 in which similar contention has been dealt with by the Supreme Court in which the following observations have been made which are substantiating the conclusion of this Court, hence reproduced hereinafter : "2. After going through the detailed order passed by the High Court, we find that the main issue which is involved in this case is not at all addressed by the High Court. A contention was taken by the appellant- Department to the effect that since the assessee's return was accepted under Section 143(1) of the Income Tax Act, there was no question of "change of opinion" inasmuch as while accepting the return under the aforesaid provision no opinion was formed and therefore, on this basis, the notice issued was valid. 3. We find that this aspect is squarely covered by the judgment of this Court in Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Private Limited [2008 (14) SCC 208] in the following manner: - "15. In the scheme of things, as noted abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a claim is dependent upon satisfaction of statutory requirements every year, each year will be separate proceeding and would require separate examination. No doubt, the Supreme Court in the said decision has propounded the policy of law of finality. But, here is a case wherein, the question is whether the petitioner is observing the statutory conditions in present year. 14. Learned counsel for the petitioner has further tried to contend by citing a decision of this Court in case of Cliantha Research Ltd. V/s. Deputy Commissioner of Income-tax, Ahmedabad Circle-I, reported in 35 Taxmann.com 61 (Guj.), in which the authority has tried to act within a period of 4 years from the end of relevant assessment year in the context of deduction claimed by assessee of that case under Section 80IB of the Act. The fact situation appearing of that case are quite distinct. What was emphasized was that in a case where record indicates that issue was raised and decided in favour of assessee, the reassessment proceedings would be hit by the principle of change of opinion. But, here in the case on hand, the question of formation of opinion has not arisen as the return of income is processed merely u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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