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TMI Blog2018 (7) TMI 2058X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT (Exemptions) for issuing the show cause notice under section 10(23C)(vi) then it amounts that the notice was issued as per the directions and satisfaction of the ld. CIT (Exemptions) and, therefore, the order passed by the ld. CIT (E) is valid and within jurisdiction. Though there are other averments in the Miscellaneous Application, however, all the other contents are in the nature of arguments against the finding of the Tribunal on merits. Thus the ld. D/R has submitted that when the Tribunal has not considered this aspect that the show cause notice was issued with prior approval and as per the direction of the ld. CIT (E), then there is no deficiency or illegality in the said show cause notice merely because it was signed by the DCIT Hqrs. on behalf of the ld. CIT (E). 3. On the other hand, the ld. A/R of the assessee has submitted that the revenue has not pointed out any apparent mistake in the order of the Tribunal which can be rectified under section 254(2) of the IT Act. However, the revenue is raising the objections against the decision taken on merits. The Tribunal has decided the issue on merits after considering all the contentions and arguments which were raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the decision of Hon'ble supreme Court in case of National Thermal Power Co. Ltd. vs. CIT(supra) we admit the additional ground raised by the assessee for adjudication. 7. On the validity of show cause notice issued u/s 10(23C)(vi)of the Act, the ld. AR of the assessee has submitted that the show cause notice dated 08.07.2016 has been issued and signed by DCIT(Hqr.) and not by ld. CIT(E). Therefore, show cause notice was not issued by the competent authority and the proceedings best on the illegal show cause notice and consequential order passed by the ld. CIT(E) are not valid and hence liable to be quashed. As per the provisions of Section 10(23C)(vi) of the Act the prescribed authority can examine and consider the non fulfillment of the conditions under the said provisions by the institutions, trust etc. and therefore, before initiating the proceeding u/s 10(23C)(vi) r.w.s. 13th proviso to the said section only competent authority can issue a show cause notice giving an opportunity to the assessee to reply and explain its case. Since show cause notice is not issued by the competent authority, therefore the same is not valid and in the absence of a valid note the provision ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w cause notice is issued by the CIT(E) and the DCIT(Hqr.) has signed the same for and on behalf of the CIT(E). Hence, no fault can be found in the show cause notice issued u/s 10(23C)(vi) r.w.s. 13 proviso. The decision relied upon by the ld. AR are not applicable in this case because in those cases it was show cause notice issued u/s 263 for revision of the order of the Assessing Officer whereas in the case of the assessee it was for withdrawal of the approval granted u/s 10(23C)(vi) by the same authority. Thus, the ld. DR has contended that mere signing of the show cause notice by DCIT(Hqr.) would not render it invalid when it is issued by ld. CIT(E). The ld. DR has pointed out that the language and contents of the notice are required to be considered not mere signature. Further, it is withdrawal of approval and therefore, the same would be from the date of grant of approval i.e. with retrospective effect. 10. We have considered the rival submissions as well relevant material on record. The first objection of the assessee is regarding the validity of show cause notice that it was not signed by the competent authority and therefore, it is invalid. The power and jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescribed authority is the ld. CIT(E) and the satisfaction of the prescribed authority is a must before issuing the show cause notice for withdrawal of the approval granted u/s 10(23C)(vi) of the Act. Therefore, what is material and mandatory condition is the satisfaction of the prescribed authority and non else. In case in hand the impugned show cause notice dated 08.07.2016 was signed by the DCIT (Hqr.) and issued as per directions of the ld. CIT(E). In paras 2 and 6 Of the show cause notice in our opinion are relevant to the issue and the same are reproduced as under:- "2. In this regard, I am directed to state that your institution/society has violated the provisions of Section 10(23C)(vi) of the Act in respect of following issues:- Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 6. Your case is fixed for hearing before the Commissioner of Income Tax (Exemptions), Jaipur on 25.07.2016 at 12.30 P.M. in the Income Tax office (Exemptions) room No. 303, 3rd floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur. You may attend either personally or through an authorized representative in this behalf (holding valid Power of Attorney). Any failure to comply may lead to the conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and society has not charged any interest on such advances. Perusal of 'Application Form' submitted by the assessee in respect of allotment of plot, it has been revealed that date, amount and place etc. are not mentioned on the said form. As per submission of the society, even till today any land/immovable property was not purchased out of these advances. On giving show cause in this regard vide its reply dated 25.07.2016, the A/R of the assessee submitted as under: i) Advance given to Trimurti Colonizers & Builders Pvt. Ltd- The society has given advances to Trimurti Colonizers & Builders Pvt. Ltd. for purchasing of land at The Future city at phagi Jaipur. The advance was given for setting up an educational institution at Jaipur. M/s Trimurti Colonizers & Builders could not give us converted land because they could not get land converted. Your good self has mentioned that this advance given cannot be said for charitable activities and there is violation of section 11(5) of the IT Act, 1961. Sir, this advance is given for acquisition of land for opening of school and in accordance with the sole object of the society. Further clause (x) of the section 11(5) permits "in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the same is against order passed by the Ld. CIT u/s. 263 of the Act. At the outset, in this case, Ld. counsel for the assessee pointed out that the notice to the assessee u/s. 263 of the Act in these case, was issued by letter dated 06-03-2007. The said notice was signed by ACIT, Hqrs., Burdwan for Commissioner. Referring to this aspect, the Ld. counsel for the assessee pleaded that Section 263 of the Act provides for notice and adjudication by the Ld. CIT. Ld. counsel for the assessee claimed that since notice u/s. 263 of the Act has not been signed by the Ld. Commissioner. The jurisdiction assumed is defective and the order u/s 263 of the Act, is liable to be quashed on this ground itself. In this regard, Ld. counsel for the assessee referred to the decision of Hon'ble Allahabad High Court in the course of cit v. Rajesh Kumar Pandey (2012) 25 taxmann.com 242 (All.). The Ld. counsel for the assessee further referred to the decision of the Tribunal in the case of Satish Kumar Kashri v. ITO 104 ITD 382 (Pat). ITA No.706/Kol/2013 M/s. Assam Bengal Carriers. A.Yr.2008-09 4 6. Ld. DR on the other hand submitted that above is not the material defect and he submitted that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage, cannot be raised for the first time before this Court. No other arguments have been advanced in respect of other questions framed in the memo of appeal." 8. Similarly, we note that in the case of Satish Kr. Keshari (supra), the Tribunal had held that when the notice u/s. 263 of the Act was not under the seal and signature of Ld. CIT and suffered for want of details on the basis of which Ld. CIT came into conclusion that the order of Assessing Officer is erroneous and prejudicial to the interest of Revenue, assumption of jurisdiction u/s. 263 of the Act by the Ld. CIT was invalid. ITA No.706/Kol/2013 M/s. Assam Bengal Carriers. A.Yr.2008-09 5 9. From the above discussion regarding the provision of law and the case law in this regard, it is clear that for a valid assumption of the jurisdiction u/s. 263 of the Act, the notice issued u/s. 263 of the Act should be issued by the Ld. CIT. In this case, it is undisputed that notice was issued by ACIT, Hqrs, Burdwan who is not competent to assume jurisdiction u/s. 263 of the Act. Hence, the notice was not under the seal and signature of Ld. CIT. Hence, as per the precedents referred to above, the assumption of jurisdiction u/s. 263 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawing the approval granted under section 10(23C)(vi) is a mandatory condition and can be issued by the Competent Authority who has power to withdraw the approval. This defect in the show cause notice cannot be cured and, therefore, the provisions of section 292BB cannot be pressed into service for such an illegality and defect in the show cause notice. The Tribunal has also considered all the aspects of show cause notice issued as per the directions of the ld. CIT (E) and, therefore, it was found by the Tribunal that there is nothing in the language of the show cause notice to reveal that the decision was taken by the ld. CIT (E) to set out the grounds in the show cause notice for withdrawal of approval. The Tribunal has specifically considered this aspect and found that the language of show cause notice does not exhibit any thought process of ld. CIT(E) but it reveals that it was issued and signed by the DCIT Hqrs as per the instructions and directions of the ld. CIT (E). The Tribunal even went further on this point and observed that the matter would have been different if the show cause notice brings out the thought process and application of mind by the ld. CIT (E), but was onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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