TMI Blog2023 (3) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... that such adjustment will have to be excluded from the income of the Trust under section 11(1)(a) of the Act. It is further well settled in the case of Director of Income-tax (Exem) v/s. MIDC [ 2013 (3) TMI 654 - BOMBAY HIGH COURT] where this Court had allowed the assessee s claim to carry forward the deficit relying on the decision of this Court in the matter of CIT v/s. Institute of Banking [ 2003 (7) TMI 52 - BOMBAY HIGH COURT] In the present case, the AO had recorded in the assessment order u/s 143 (3)that the petitioner was registered with the Director of Income- Tax exemption Mumbai, under section 12A of the Act and that during the year the Petitioner had claimed exemption u/s 11 of the Act. The reasons recorded in the letter dated 30th April 2015 evince that the AO has come to the conclusion that income has escaped assessment on the perusal of the records . There is no question of any failure to disclose any material fact necessary for assessment as held in the case of Income-tax Officer vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] AO s the reason to believe must be based on some new tangible material which was not available at the time of pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Trust, and activities carried on during the year; (b) Details of investments made in movable and immovable assets; (c) Details of accumulation made under section 11(2) of the Act in the last 10 years and the details of utilization thereof over the last 10 years alongwith the copies of application in Form No. 10; (d) Whether the capital expenditure made in the fixed assets have been claimed as application of income in earlier years, if so, justification for claiming depreciation in the year under assessment; (e) Complete details on the expenditure incurred on the objects of Trust; and (f) Earlier two years assessment orders under section 143(2) of the Act. 3. The Petitioner filed its submission by letter dated 3rd December, 2010 inter alia submitting that the note on object and activities of the Petitioner Trust; details of expenses on the object of Petitioner Trust; summary of accumulation / deficit in the last 10 years. The Petitioner received another show-cause notice dated 7th December, 2010 under section 142(1) of the Act requiring the Petitioner to file various other documents and details of certain capital expenditure incurred by the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant material facts in the relevant assessment year, as far as the above issue is concerned. Therefore, I have a reason to believe that the income has escaped assessment and action u/s. 147 is necessary. 4. The Petitioner by letter dated 14th May, 2015 challenged the validity of the re-assessment proceedings. In response, the respondent sent notice under 143(2) of the Act dated 24/7/2015 seeking certain information with respect to the assessment from the petitioner. By order dated 2nd November, 2015, the Petitioner s objections were rejected. By letter dated 23rd November, 2015, the Petitioner sought certified true copy of the reasons recorded by the respondent No.1 and the sanction from the appropriate authority obtained, if any. Aggrieved by the unlawful assumption of jurisdiction by Respondent No. 1, this Petition is filed. 5. Mr. J.D. Mistri, learned Senior Counsel for the Petitioner submits that the original assessment order under section 143(3) was passed in conformity with the view taken for the past number of years, whereby the Petitioner was allowed deduction of 15% on the gross profit and carry forward of deficit has also been allowed in the earlier year to be se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that certain facts were discovered during the assessment proceedings for A.Y. 2012-13 where the Petitioner s claim of deficit to be carried forwards for set off in the subsequent year was disallowed by A.O. He placed reliance on the decision of this Court in the case of Multiscreen Media (P) Ltd. v/s. Union of India [2010 324 ITR 54 (BOM.), wherein it was held that reassessment on the basis of the additional material discovered in the assessment proceedings of a subsequent year is justified. According to him, the case was reopened for two reasons. One for carry forward of deficit which issue was pending before the Apex Court when the case was reopened; and secondly, wrong claim of exemption under section 11(1)(a). He submitted that if the Assessing Officer on account of mistake or lapse does not examine a particular entry or a note in the return, it can be said that there was no application of mind and thus, not a case of change of opinion. He submits that the word used in Explanation 2 (c)(iv) is computed shows that after the insertion of the said explanation even where assessment has been made after due application of mind, there is no estoppel for reopening the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er years against income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and that such adjustment will have to be excluded from the income of the Trust under section 11(1)(a) of the Act. 10. It is further well settled in the case of Director of Income-tax (Exem) v/s. MIDC reported in Income Tax Appeal No. 2652 of 2011 where this Court had allowed the assessee s claim to carry forward the deficit relying on the decision of this Court in the matter of CIT v/s. Institute of Banking reported in 264 ITR 110 . The above proposition of law is now well settled by the Supreme Court in the case of Director of Income-tax v/s. Society for Applied Microwave Electronic Engineering Research (2019)106 taxman.com 204, upholding the decision of the Bombay High Court which held that the Tribunal was justified in upholding the decision of the CIT(A) to allow carry forward of deficit on account of excessive expenditure and directing the A.O. to carry forward de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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