TMI Blog2021 (8) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2008 (11) TMI 665 - HIGH COURT OF PUNJAB AND HARYANA ] we are of the opinion that the ground raised by the assessee is devoid of merit and the same is liable to be dismissed and we accordingly dismiss the same. Exemption u/s 11 - Whether assessee's case was fully covered by amended provisions of section 12A as reproduced on account of addition of proviso to section 12A(2)? - The purpose of insertion of the new proviso in the act was to mitigate the hardship of the society/trust like assessee who were into charitable activities, and on account of some technical reasons, the registration has not been accorded or sought in time. Admittedly the assessee was running the educational institution and was having the requisite approval under section 10(23) for the year prior to the year under consideration and the assessee was granted the registration under section 12 A of the Act with effect from 25.9.2009. In the year under consideration, the assessee was neither having registration under section 12 A of the Act nor was having approval under section 10 (23) of the Act. However, the activities of the assessee continued to be charitable and there was no change in activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. So, the addition made needs to be deleted. 4. That the Learned CIT(A) has further erred in confirming the initiation of the penalty proceedings by the AO under Section 271 (1)c) of the Income Tax Act, 1961. 5. That on the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has further erred in confirming the addition made by the Assessing Officer without giving the reasonable opportunity to be heard to the assessee. 6. That it is prayed that the order of the Assessing Officer and Worthy Commissioner of Income Tax Appeal may be vacated and the original assessment at Rs. NIL under section 143(1) may please be restored. 7. That the appellant craves, leave to add or amend the grounds of appeal before the appeal is heard or disposed off. At the time of argument by the ld. AR and the departmental representative, had addressed the following issues/grounds as the remaining issues were consequential / academic. 1 Whether the reopening made by the assessing officer was valid in the eyes of law or not 2 Whether the assessee is entitled to the benefit of section 11 and 13 of the income tax Act in the light of the insertion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee trust has been claiming tax exemption 10(23C)(vi) without getting any approval from the worth Chief Commissioner of Income tax, Amritsar and also without getting itself registered u/s 12AA of the Income tax Act, 1961 with the Commissioner of Income tax-I, Amritsar. As such the assessee has regularly not been paying tax on the income chargeable to tax. During the period relevant to the Asstt. Year 2007-08 the assessee has shown excess of income over expenditure amount to ₹ 10375360/-which was chargeable to tax but assessee has claimed it exempted income u/s 10(23C)(vi) without getting any approval under this section and without getting registration u/s 12AA of the Income tax Act, 1961. The summary of the Income and Expenditure A/c is as under: Total Receipt ₹ 2,66,67,690/- Total expenditure ₹ 1,62,92,330/- Excess of income over expenditure ₹ 1,03,75,360/- I have, therefore reasons to believe that the income of ₹ 1,03,75,360/- has been escaped assessment. Keeping in view the above recorded reasons, I propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA. The copy of relevant portion of Finance Act, 2014 and the relevant portion of circular containing the Memorandum for explaining the provisions in The Finance Act (No. 2) Bill, 2014 is enclosed herewith. In the above provisions, it is crystal clear that no action u/s 147 can be taken by the assessing officer in any proceeding assessment year in case of the institution has granted the registration u/s 12AA for any subsequent assessment year only for non registration of such trust or institution for the said assessment year. In the case of the society, the society has granted the registration u/s 12AA of The Income Tax Act, 1961 with effect from A.Y. 2009-10. Therefore, the case can't be reopen u/s 147 for any Assessment Year preceding the Assessment Year 2009-10 as the society is an educational institution and also covered u/s 12A. We like to state here that the Objects and Activities of the society remains the same in this Assessment Year as it was provided for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that The appellant has also argued that its objections to reopening of assessment have not been considered by the AO by passing speaking order. In this regard, it is submitted that the objections to reopening filed by appellant vide letter dated 05.02.2015 and same objections raised again vide letter dated 23.02.2015 stood rejected by the AO vide letter dated 11.02.2015 and only thereafter the AO had proceeded to pass the assessment order u/s. 147/ 143(3) of the Act Further, reliance is placed upon the judgment Hon'ble jurisdictional High Court in the case of Sunil Bhaseen vs Commissioner of Income Tax in IT Appeal No. 411 of 2008 (28.11.2008) 18 DTR 0201 (2009) wherein the Hon ble Jurisdictional High Court while deciding appeal in the favour of Revenue has held that Contention that the Department was under obligation to dispose of objections of the assessee to the initiation of proceedings, by way of separate and independent order was also not tenable in the facts and circumstances of the case-No substantial question of law arises for consideration (copy of case law enclosed). 15. We have heard the rival contention of the parties on the first argument raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and more particularly, when the assessing officer has dispose of the objection of the assessee vide order dated 11 February 2015 and also in the light of the judgement relied upon by the revenue in the case of Sunil Bhaseen vs Commissioner of Income Tax in IT Appeal No. 411 of 2008 (28.11.2008) 18 DTR 0201 (2009), we are of the opinion that the ground raised by the assessee is devoid of merit and the same is liable to be dismissed and we accordingly dismiss the same. 17. 2nd point charged by the assessee before us was the assesee's case was fully covered by amended provisions of section 12A as reproduced above on account of addition of proviso to section 12A(2). 18. In support of the 2nd point, the appellant had submitted before us that appellant was allowed registration u/s 12AA for the assessment year 2009-10 on 27.3.2009 i.e. much before the amendment brought in section 12A with effect from 1.10.2014. 19. The proviso inserted with effect from 1.10.2014 specifically provides that where the registration has been granted to Trust or Institution u/s 12AA then the proviso of section 11 12 shall apply in respect of any income derived from property held under trust of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration i.e 24.09.2009 accordingly the first proviso of said amendment in section 12A of the Act applicable w.e.f 01.10.2014 was not applicable in the case of the appellant. 25. We have heard the rival contentions of the parties and perused the material on record. By the finance Act Finance Act, 2014, the section 12A of The Income Tax Act has been amended with effect from 01.10.2014 and inserted the following clauses: Provided that where registration has been granted to the trust or institution under section 12AA, then the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year: Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial member) was a party, in the said decision it was held as under: 5.1. For the purpose of adjudicating the additional ground, it is necessary to reproduce section 12A of the IT Act, which provides as under :- 12A. Conditions for applicability of sections 11 12. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely :- (a) The person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1 st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA. Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution, - (i) From the date of the creation of the trust or the establishment of the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r institution remain the same for such preceding assessment year. Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.] A bare reading of the proviso clearly provides that if at the time of grant of registration under section 12A the assessment proceedings are pending before AO and the object and activities of the Trust remain the same for such preceding assessment years, then the benefit of registration for sections 11 12 are required to be given to the Trust on the income derived from the property held under the Trust. In the present case as mentioned herein above, the appellant has filed application for grant of registration 16.03.2009 and the registration was directed to be granted by the order of the Tribunal with effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.] We have gone through the provisions of the Act and have also gone through the record. In our view, the proviso to sub-section (2) of section 12A has retrospective application and has been inserted in the Act to remove the hardship of the charitable trusts/institutions. Admittedly, in the present case when the registration was granted on 05.03.2010 with effect from 01.04.2008, the assessment proceedings for 2007-08 were pending before the AO. Therefore, the assessee cannot be treated as Association of Persons and is required to be treated as Registered Trust under section 12A of the IT Act. We find no reason to disagree with the judgment passed by the coordinate Bench (supra) where the coordinate bench has given the benefit of registration of the trust for the A.Y. 2006-07 though the application for registration was granted on 29.07.2013. Respectfully following the judgment of the coordinate bench, we are of the view that the assessee before us is also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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