TMI Blog2016 (11) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner Board has come to the conclusion that reopening is necessary, we may deem it proper not to interject the said process. We reiterate that the reasons which are recorded are since forming the belief about escapement of income, we deem it proper not to intercept the process. The aforesaid situation which is prevailing on the record of the case on hand, we deem it proper to refer to and rely upon the decision of the Supreme Court in case of Zauri Estate Development & Investment Company Ltd. (2015 (8) TMI 480 - SUPREME COURT ) and leave it open to the respondent authority to proceed further in response to the notice having been issued. We see no merits in the contentions raised by the learned counsel for the petitioner and therefore, the petition being devoid of merits, the same is dismissed. - SPECIAL CIVIL APPLICATION NO. 15716 of 2010 - - - Dated:- 3-10-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR RK PATEL, ADVOCATE FOR THE RESPONDENT : MR SUDHIR M MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE A.J. SHASTRI) 1. The petitioner, by way of this petition, is challenging the legality and validity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner 'to provide quality textbook at reasonable price . Reopening under section 147/148 by the same officer who granted exemption in original scrutiny assessment under section 143(3). Same Officer dropped reopening proceedings under section 147/148. Thereafter, once again same officer initiates reopening proceedings under section 147/148 of the Act on same facts and evidence on record right since initial year of A.Y.2003-04 without change in law. Objections filed by petitioner rejected by the Respondent Assessing Officer. (Reopening under challenge in this petition) 2006-07 Assessed u/s. 143(3) Addition made under section 11(4) of the Act by rejecting claim of total exemption in the scrutiny assessment under section 143(3) of the Act. Petitioner filed appeal to CIT (Appeals) which is partly allowed and petitioner's appeal before ITAT is pending. 2007-08 Processed u/s. 143(1) No scrutiny assessment under Section 143(3) of the Act. Same officer who framed scrutiny assessment on same facts and law and evidence on record right since initial year who framed asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not entitled for exemption u/s 11(1)(a) of the Act as per provisions contained in section 11(1)(a) of the Incometax Act,1961. The assessee has claimed exemption @ 15% at ₹ 13,99,51,138/- u/s 11(1)(a) of the Act. 2. It is further seen that the assessee trust is carrying on activities of publishing, printing and distribution / sale of Gujarat State School text books and other educational activities as per its objects. The Trust distributes all text books and publications directly to the public or through wholesale dealers and also supplies to the State Government agencies. Thus the Trust is holding a business undertaking which is engaged in publication, printing and distribution of school text books and the income from the undertaking is claimed to be exempt u/s. 11 of the Act. Therefore, the income of the assessee is assessable as per provisions contained Section 11(4) of the Act. 3. I have reasons to believe that income of the assessee has escaped assessment for the year 2007-08. 2.4 Against the said reasons having been received, on 13.8.2010 a detailed objection came to be raised by the petitioner which are not considered by the authority vide order dated 29.11.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that Section 11(4) of the Act has been incorporated with a contrary intent and not to snatch away the benefit which has already been accrued and by referring to well known case of Commissioner of Income-tax, Central-I, Calcutta V/s. Birla Education Trust , reported in 153 ITR 579 , learned counsel contended that ratio laid down in the said judgment is not permitting the authority to reopen the assessment. The true interpretation of Section 11(4) of the Act is that if there is no concealment of income or manipulation of account or suppression of any nature, in the absence of any other material contrary, the authority cannot reopen the assessment and therefore, the entire exercise sought to be undertaken is based upon mis-interpretation of the statutory provision. Learned counsel further contended that the petitioner has got a registration under Section 12AA of the Act which had been granted by the Commissioner of Income-tax, who being the higher authority, the Assessing Officer cannot take recourse to Section 148 or Section 147 of the Act being subordinate, as it has got a direct effect of an issue touching to the registration of the petitioner Board. Hence, the action being wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit of jurisdiction and therefore, the Court may not entertain the plea of petitioner in extraordinary jurisdiction of this Court. Learned counsel further submitted that in the present case return of the assessee was accepted under Section 143(1) of the Act and no scrutiny assessment was done and therefore,, the question of change of opinion does not arise and therefore, it is not open for the petitioner to intercept the process of reassessment which has already been initiated. Learned counsel further submitted that the reasons which are indicated are in consonance with the object of statutory provisions relevant to the issue and therefore, it is always open for the authority to examine whether the petitioner Board is fulfilling the same or not. Learned counsel also submitted that under the provisions of the Act, a particular percentage of income is required to be set apart for the object for which the Board is constituted and set up and therefore, this criteria of maintaining a particular amount to be set apart is always open for scrutiny on all successive years and therefore, learned counsel submitted that in view of settled position of law that issue of res-judicata is not attr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of original non-scrutiny assessment, the concept of change of opinion cannot be applied. 9. We may notice that the petitioner has tried to press into service some of the observations contained in the case of Commissioner of Income-tax V/s. Kelvinator India Ltd. , reported in 320 ITR 561 which is essentially on the concept of change of opinion. Here, in the present case, we feel that it is not a case of change of opinion but, a case in which the examination is required whether the petitioner - assessee fulfilled the conditions engrafted under Section 11 read with Section 12 of the Act for the year under consideration. Had there been scrutiny assessment taken place for this very year under consideration, possibly this judgment relied upon might have assisted the petitioner. But since the original proceedings never went beyond the stage of Section 143 (1) of the Act, this ratio is not applicable to the petitioner. 10. We further feel it necessary to indicate that by virtue of registration under Section 12AA of the Act not only the petitioner has to scrupulously act in consonance with the avowed object for which it has been set up but, the petitioner has also to fulfill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come applied to charitable or religious purposes in India falls short of [eighty-five] per cent of the income derived during that year from property held under trust, or, as the case may be, held under trust in part, by any amount- (i) for the reason that the whole or any part of the income has not been received during that year, or (ii) for any other reason, then- (a) in the case referred to in sub-clause (i), so much of the income applied to such purposes in India during the previous year in which the income is received or during the previous year immediately following as does not exceed the said amount, and (b) in the case referred to in sub-clause (ii), so much of the income applied to such purposes in India during the previous year immediately following the previous year in which the income was derived as does not exceed the said amount, may, at the option of the person in receipt of the income (such option to be exercised in writing before the expiry of the time allowed under sub-section (1) [* * *] of section 139[* * *] for furnishing the return of income) be deemed to be income applied to such purposes during the previous year in which the income was derived; an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under Section 143(1)(a) as it stood prior to 1-4-1989, the assessing officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the legislature i.e. to minimise the departmental work to scrutinise each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D.K. Jain, J.) in Apogee International Ltd. v. Union of India. 16. It may be noted above that under the first proviso to the newly substituted Section 143(1), with effect from 1-6-1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under Section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no question of opinion being formulated has arisen and therefore, since the scrutiny assessment has not been done for year under consideration, the ratio of above-referred decision is not applicable. 15. Yet in another case which is tried to be pressed into service is a case of Birla Education Trust (Supra) wherein, the trust was a charitable trust and was carrying on the business of running a textile mill and the technological institution of textile and therefore, looking to the activity of this nature, the issue had arisen whether the expenditure which has been incurred liable to be excluded under Section 11(1) of the Act or not in the context of sub-section (4) of Section 11 of the Act and therefore, based upon this factual circumstance, the Calcutta High Court was dealing with an issue in which it had been observed that sub-section (4) was intended to uncover tax evasion by manipulation of account books and it was not intended to apply to application or expenditure of income by a business undertaking and therefore, the said decision delivered by the Calcutta High Court in a different set of circumstance quite contrary to the case on hand and therefore, we are of the opinio ..... 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