TMI Blog2022 (12) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Ld. Commissioner and therefore are not inclined to interfere with the impugned order consequently, the appeal filed by the revenue department stands dismissed. - ITA No. 166/Del/2015 ITA No.7598 & 7599/Del/2018 - - - Dated:- 29-4-2022 - SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SHRI N. K. CHOUDHRY, JUDICIAL MEMBER Revenue by : Shri Hemant Gupta, Ld. Sr. DR Assessee by: Shri Rohit Kapoor, Ld. CA Shri Vir Aggarwal, Ld. Adv ORDER PER N. K. CHOUDHRY, J. M. 1. The instant Appeals i.e. ITA No. 166/Del/2014 by the Revenue Department and ITA Nos. 7598 and 7599/Del/201 by the Assessee , have been preferred against the orders dated 24.01.2014 and 05.09.2018 impugned herein, respectively passed for the Assessment Years 2007-08 and 2005-06 and 2006-07 by the Ld. CIT(A)-40and CIT(A)-XI, New Delhi (in short Ld. Commissioner) u/s 250 of the Income Tax Act 1961 (in short the Act ). 2. As all these appeals related to the Assessee and more or less involved similar facts and issues, therefore for the sake of brevity, we are disposing off by this composite order. 3. First we will decide the appeals filed by the Assessee. Facts and issues involved in ITA Nos. 7598/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its clear circulation of funds between two societies in the form of unsecured loan and repayment which resulted into difference between loan amount of Assessee society and patronage welfare and educational society. Further the original bills and vouchers were not presented by the Assessee and the expenses claimed of Rs. 38450457/- by the Assessee is not supported by original bills and vouchers for verification. 4.3 Ultimately, the AO vide Assessment order dated 28-03-2013 passed u/s 143(3) of the Act, made the additions of Rs. 38450457/- (3,55,71,267 + 28,79,190) on account of difference between original and revised balance sheet and Rs. 15 lakhs on account of cash withdrawn and also held that the activities of the society are not in accordance with its objects and accordingly, the Assessee society is not entitled for the claim of exemption u/s 11 of the Act and accordingly it is denied. A proposal for withdrawal of registration u/s 12AA has been moved separately to DIT(Exemptions) as the organization can no longer be regarded as a charitable organization within the meaning of provision of section 2(15). For brevity and ready reference, the concluding part of the Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has claimed that the original bills and voucher are with the bank for the taking the term loan from Central bank of India, but his claim has also not been supported by any letter or explanation from the Bank authorities. In absence of documentary' evidence for the expense incurred and not reflected in the original Audited accounts arc being added to the total income of the assessee. 5. Therefore, from the activities of the assessee vis-a-vis its objects, it is held that the activities of the Society are not run, in accordance with its objects and accordingly, the assessee Society is not entitled for the claim of exemption u/s 11 of the I.T. Act and accordingly it is denied. A proposal for withdrawal of registration u/s 12AA has been moved separately to D1T (Exemptions) as the organization can no longer be regarded as a charitable organization within the provision of Section 2(15). The assessee has concealed facts from the AO during the first assessment proceedings and furnished incorrect information as well. In view of clear violation of Sec-13(l)(d) r.w.s 13(30 r.w.s 11(5) of Act, 1961, exemption u/s 11 and 12 are denied to the assessee. 6. Hence, the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onage Society. 4.1.1 The Assessing Officer noted that a special audit was conducted under section 142(2A) for the assessment year 2009-10 in which various inconsistencies were noted. It was also noted that the books of account of the assessee were re-audited from assessment year 2005-06 onwards but were not submitted to revenue till the time the inconsistencies were recorded. Further, in response to notice under section 148, return was not submitted within 30 days from the date of the notice and the assessee failed to file the return on time. The return filed on 12/10/2012 was declared to be non-est. Further, it was noted that the explanation given by the assessee about the difference in the amounts as per the original return accounts and as per the re-audited accounts was unacceptable since no reason for not maintaining the books of account correctly has been given by the assessee. It was also noted that no explanation has been given regarding transfer of fund between die assessee society and the Patronage Society, which was a specified person within the meaning of section 13(3). No vouchers were presented, and the books of accounts were maintained poorly as a result of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Bank of India-OD 1814789 1814789 0 Central Bank of India-TL 24964994 24959487 -5507 Unsecured loan 0 2879190 2879190 Audit fee payable 2000 2000 0 25596860 45184390 19587531 4.1.3 It is noted that the Assessing Officer has made an addition of Rs. 3,84,50,457/- (Rs. 3,55,71,267/- + Rs. 28,79,190/-) on account of difference between the original and revise balance sheet. From the above analysis it is apparent that the said amount is a result of addition on account of differences in debit and credit entries, being Rs. 1,95,87,531/- each. Making addition on both counts would result in adding the same amount twice which cannot be sustained. 4.1.4 However, it is also a fact that the said expenses have been disallowed by holding that the expenses are not supported by original bills and vouch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations on the part of tire assessee and auditors and the original audit report does not indicate that the assessee society had dealing with any specified persons as defined in section 13(3). In view of these facts, there is no infirmity the order of the Assessing Officer in treating the assessee as an AOP. 4.1.7 In view of the discussion above, grounds of appeal Nos. 1 to 4 are partly allowed. 4.2 Ground of appeal No. 5 states that the appellant keeps the right to add, change and delete any of the grounds of appeal. Since no such option was exercised during the appellate proceedings, this ground of appeal is academic in nature and is considered to be dismissed for statistical purposes. 5. In the end result, the appeal is PARTLY ALLOWED 6. The Assessee being aggrieved, challenged the partly affirmation of the additions and sustaining the treatment of Assessee as an AOP by the Ld. Commissioner by raising following grounds of appeal:- 1. On the facts and circumstances of the case, the Learned Assessing Officer has erred in considering the educational society into A.O.P 2. On the facts and circumstances of the case, the Learned Assessing Officer has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrary the ld. DR supported the impugned order passed by the Ld. Commissioner and submitted that the same is not suffered from any perversity, impropriety and illegality and therefore does not require any interference. 9. Heard the parties and perused the material available on record. The Assessee has raised the additional grounds, which admittedly are legal in nature and emanates from the facts already on record in the proceedings of the authorities below and does not require any independent facts and material for its adjudication, hence we deem it appropriate to allow the Assessee to raise the same and consequently the additional grounds raised are admitted for adjudication, as per dictum of the Hon ble Apex Court in the case of NTPC Vs. CIT [229 ITR 383 (SC)]. 9.1 Coming to the merit, the Assessee before us vide additional ground No. 1 raised the issue that the notice issued u/s 143(2) on dated 01.05.2012 is bad in law and consequently, assessment framed in response to the said notice is also bad in law, because no notice u/s 143(2) of the Act was issued to the Assessee after filling of its return of income 12.10.2012in response to the notice issued u/e 148 of the Act on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even prior to filing of the return of income and therefore, on its face value would amount to gross violation of the scheme of section 143(2) of the Act. 9.8 The Hon ble jurisdictional High Court in the case of PR. Commissioner of Income Tax-08 Versus Shri Jai Shiv Shankar Traders Pvt. ltd (2016) ITR 448, also dealt with identical situation and held as under: 19. The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) of the Act subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148 of the Act, is fatal to the order of re-assessment. 9.9 Even jurisdictional bench of the Tribunal in the case of Shri Rishav Prakash Jain, New Vs ITO, New Delhi ( ITA No.2061/Del/2012 decided on 08-02-2019) also dealt with the identical issue and held as under: 8. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We have also considered the various decisions cited before us. It is an admitted fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t framed against the Assessee without issuing notice u/s 143(2) of the Act is unsustainable and liable to be quashed being void-ab-initio, hence the questions posed by us, answered accordingly. 9.11 Coming to the instant case, admittedly the AO issued the notice u/s 148 of the Assessee on dated 27.03.2012, in response to which the Assessee filed its revised return of income on dated 12.10.2012, which was although accepted by the AO, but treated as non-est being filed after the prescribed period of 30 days. The case of the Assessee is at much higher footing than the cases as referred above wherein the Assessees in response to the notice u/s 148 of the Act claimed that return filed originally may be treated as filed in response to the notice u/s 148 of the Act, whereas in this case the Assessee-responded the notice u/s 148 of the Act, may be belatedly, by filling its revised return of income which was though duly accepted but later on treated as non-est by the AO but used for comparison with the original Return of income. The AO has passed the order u/s 143(3) of the Act but not u/s 144 of the Act, meaning thereby the AO has proceeded with the return filed in response to the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulsory scrutiny as per guidelines for selection of cases for scrutiny during 2008-09. Issue notice u/s 143(2) and ensure its service. DDIT(E) Thereafter, the next order-sheet entry is dt.12.08.2009 which is in respect of issuance of notice u/s 143(2) and 142(1) alongwith questionnaire fixing the hearing on 24.08.2009. It is, however, noticed that the office copy of notice u/s 143(2) dt. 30.07.2008 is nowhere placed on record. It is further observed that in response to notice and questionnaire dt. 12.08.2009, the appellant filed the following letter (placed at page 234 of assessment folder) objecting the assessment proceedings: To, Date: 18.09.2009 The Asst Director of Income Tax (Exemptions) Trust Circle-11, Delhi Ref: Assessment Proceeding of Innovative Welfare Educational Society for Asst Year 2007- 2008 Sir, We received the notice u/s 142 143(2) of I. T. Act 1961 on 26/08/2009for A/y 2007-08 as per law, a notice u/s 143(1) should not be sent after the expiry of one year from the end of financial year in which return of income is made. In our case we have filed a return on 27/03/2008for a.y 2007-08. Copy of roi f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITR of the assessee for AY 2007-08 is not supported with the available papers in the assessment record. Neither the office copy of the notice is available in the assessment folder nor there exists any evidence of sending the notice through speed post. 7.7. In view of the above facts, it is clear that the AO failed to issue notice u/s 143(2) of the Act within the stipulated time as provided in the section. Notice u/s 143(2) dt. 12.08.2009 was definitely barred by limitation as provided in proviso to section 143(2)(ii) of the Act. The Hon ble Courts have decided the issue in several cases that assessment made on the service of notice u/s 143(2) beyond the stipulated time is bad in law. In the following cases, it is held that issue of notice u/s 143(2) of the Act is mandatory for finalization of assessment; In the case of CIT vs. Cebon India Ltd. (2010) 34 DTR 119 /229 CTR 188 / (2009) 184 Taxman 290 (P H), it is held that: In the absence of service of notice the Assessing Officer had no jurisdiction to make assessment. In the case of Semite Sisters Society (2010) 37 PTR 371 /130 TTJ 96 (Ind.)(Trib.), it is held that: Notice under section 143(2), though issued within 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the assessment null and void disregarding the fact that the notice was sent on the correct address mentioned in the return of income. 2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the assessment null and void disregarding the fact that the intimation of the change of address from M/s Arun Viander Co. which is without any power of attorney and not from any the functionary of the society. 3 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding the assessment null and void disregarding the fact that the notice has been sent on all known addresses of Members of the Society and the addresses of the Institutions because the notice was refused to receive at the 82/21, Circular Road, Mukesh Nagar, Shahdara, Delhi when Inspector was sent to deliver this notice. 13. Heard the parties and perused the material available on record. In the instant case, the return filed by the Assessee on dated 27.03.2008 was processed u/s 143(1) of the Act and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 30.07.2008 wherein it has been recorded that Assessee trustee/society has filed return declaring gross receipt including donation which exceeds Rs. 5 crores. The case falls under compulsory scrutiny as per guidelines for selection of cases for scrutiny during 2008-09. Issue notice u/s 142(2) and ensure its service. 14.4 The Ld. Commissioner further observed that next order sheet entry dated 12.08.2009 which in respect of issuance of notice u/s 143(2) and 143(1) along with questionnaire fixing the date of hearing on 24.08.2009 and noticed that the office copy of notice u/s 143(2) dated 30.07.2008 is nowhere placed on record. Further, in response to notice and questionnaire dated 12.08.2009, the Assessee filed the following letter (placed at page 234 of the AO folder) objecting the assessment proceedings wherein, in the letter the Assessee submitted that in its casethe return was filed on 27.03.2008 for AY 2007-08 therefore, notice u/s 142(2)/ 143 should be issued by 31.03.2009, so notice is time barred and no assessment can be made. 14.5 The AO vide reply dated 20.11.2009, replied objection of the Assessee and submitted that proceedings were initiated vide issuance of n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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