TMI Blog2002 (6) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... equiring assessee to file return for assessment year 1997-98 was issued by ITO, Azamgarh on 31-7-1997. The assessee filed returns of income on 31-3-1999. Notices under section 148 were issued by the ITO, Azamgarh. The return of loss for the assessment year 1997-98 was above Rs. 10 lakhs. The case records were transferred by the Income-tax Officer to Joint Commissioner of Income-tax (Asstt.) Special Range, Varanasi on the ground that the correct jurisdiction over the case lies with the Joint Commissioner of Income-tax (Asstt.) Special Range, Varanasi. The case records were received by the Joint Commissioner of Income-tax (Asstt.) Special Range, Varanasi (hereinafter referred to as 'the Assessing Officer') on 7th July, 1999. 3. The Assessing Officer issued notices under sections 143(2) and 142(1) of the Income-tax Act dated 18-1-2000 along with a detailed enquiry letter for each year separately. In response to these notices, Sri A.C. Srivastava, Advocate along with Sri P.R. Maurya, Office Supdt. and Sri R.P. Srivastava, Incharge of Accounts Section of the assessee attended from time to time. The Assessing Officer noted that the status was shown by the assessee as "03", which is mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs 1997-98 87.88 Lakhs From the surplus shown by the assessee after claiming depreciation the Assessing Officer came to the conclusion that the assessee-society is existing for profit and there is no element of charity or an act of benevolence. The Assessing Officer came to the conclusion that the assessee-society is running the show purely on commercial basis and only to evade legitimate incidence of tax. The Assessing Officer has also mentioned in paragraph 6(viii) that there is a systematic attempt to siphon out funds of the society in the garb of purchase of fixed assets such as land, construction of building etc. The assessee-society claimed that the surplus is invested in acquiring various fixed assets such as, land, construction of building and other assets. The Assessing Officer also observed that the society has debited the excess amount in connection with the purchase of land, which was over and above the amount shown in the purchase deeds. The details of such excess amounts have been mentioned by the Assessing Officer on page 6 paragraph 6(ix) of the assessment order. The Assessing Officer noticed that the amounts spent for purchasing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer denied the deduction under section 11 of the Income-tax Act to the assessee-society. Ultimately, the Assessing Officer came to the conclusion that the assessee-society is not carrying on any charitable activity and is running the business of schools and hostels etc. and the assessee is not entitled to deduction under section 11 of the Income-tax Act. The Assessing Officer also held that the society is not existing solely for educational purposes but for the personal profit of the management in the garb of society. The Assessing Officer denied exemption claimed under section 10(22) and deduction claimed under section 11 of the Act and assessed the surplus of receipts over expenses in assessment years 1993-94, 1994-95, 1995-96 and 1997-98 to tax in the status of AOP. The following amounts of net profit has been assessed to tax: Assessment year Amount 1993-94 Rs. 24,28,320 1994-95 Rs. 43,70,680 1995-96 Rs. 74,41,950 1996-97 Rs. 87,88,640 6. The assessee-society filed appeals before the CIT(A). In first appeal, the CIT(A) vide order dated 10-1-2002 dismissed the appeals of the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter intimation under section 143(1)(a) because notice under section 143(2) has already been issued. According to the ld. Standing Counsel, there is no illegality in sending intimation under section 143(1)(a) and assessment order under section 143(3) on the same date on 29-3-2002. 8. The assessee's counsel also raised a preliminary objection that the Assessing Officer viz. Joint Commissioner of Income-tax did not have the jurisdiction over the case of the assessee-society. The jurisdiction is to be conferred on various officers in the charge of Commissioner of Income-tax, Varanasi, hereinafter referred to as "the CIT" through an order passed under section 120 read with section 124 of the Income-tax Act. According to the ld. counsel for the assessee, territory-wise Income-tax Officer, Azamgarh should have jurisdiction (if so conferred by the CIT, Varanasi) and Joint Commissioner of Income-tax, Varanasi could have the jurisdiction only after an order under section 127 was passed by the CIT, Varanasi transferring jurisdiction in the case of the assessee-society from Azamgarh to Varanasi. Before passing such an order, which involved transfer from one station to another station, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tices dated 1-8-1997 have been addressed to M/s. Manager, All India Children Care and Welfare Society, Railway Station, Azamgarh for the assessment year 1993-94, Manager, All India Children Care and Welfare Society for assessment year 1994-95 and Manager, All India Children Care and Welfare Society for assessment year 1995-96. According to the ld. counsel for the assessee, notice for assessment year 1993-94 has been addressed to "M/s. Manager" but there is no such entity in existence and in any case, it cannot be said to be addressed to the assessee. For the assessment years 1994-95 and 1995-96, the notices have been addressed "Manager, All India Children Care and Welfare Society". The actual name of the society is "All India Children Care and Educational Development Society". Therefore, according to the ld. counsel, it cannot be said that notices for all the three years were addressed/issued to the assessee-society and it is argued by the ld. counsel that no proceedings have been initiated under section 148 in the case of the assessee-society and the assessment orders for these three years were wholly without jurisdiction. It is further stated by the ld. counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner and no person shall be entitled to call in question the jurisdiction of the Assessing Officer where he has made a return under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with the notice under section 142(1) or 143(2) or after the completion of the assessment whichever is earlier and where the assessee has made no return, he was not entitled to call in question the jurisdiction of the Assessing Officer after the expiry of time allowed by the notice under sub-section (1) of section 142 or notice under section 148 for the making of the return or by the notice under the first proviso to section 144 to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier. Where the assessee calls in question the jurisdiction of the Assessing Officer, then the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-section (2) of section 124 to the Commissioner before the assessment is made. 12A. The ld. Standing Counsel of the department argued that the assessee-society is an institution. The lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. According to the ld. counsel since no order regarding jurisdiction has been passed, the assessment orders dated 29-3-2000 are non-est. 14. As regards the issue of notice under section 147 of the Income-tax Act for the assessment years 1993-94, 1994-95 and 1995-96, it is argued by the ld. counsel for the assessee that the reasons recorded by the Assessing Officer did not meet the requirement of law in view of the principles laid down by the Hon'ble Supreme Court in the case of Lakhmani Mewal Das. The ld. counsel for the assessee argued that before notice under section 148 is issued reasons should be recorded by the Assessing Officer. Secondly, the reasons should such which could provide a reasonable nexus between the "formation of reasons to believe" and "escapement of income". It is argued by the ld. counsel that reasons recorded by the ITO, Azamgarh, who issued notices dated 1st August, 1997 for assessment years 1993-94, 1994-95 and 1995-96 do not meet the requirement of law laid down by the Hon'ble Supreme Court in the case of Ganga Saran Sons (P.) Ltd. v. ITO [1981] 130 ITR 1. According to the assessee's counsel, the Assessing Officer, who issued notice under section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was raised before the Assessing Officer and the CIT(A) about the name of the society mentioned on the body of the notices issued under section 148 of the Act. It is argued by the ld. Standing Counsel of the department that the reasons mentioned by the Assessing Officer for the issue of notice, gave rise to formation of belief in the Assessing Officer's mind that income has escaped assessment. The ld. Standing Counsel stated that the assessee has not denied having made investment in building, which created impression in the mind of the Assessing Officer that income has escaped assessment. The ld. Standing Counsel referred to section 2(35), which defines "Principal Officer". The ld. Standing Counsel referred to section 282(2) and said that notice can be issued to the Manager and mentioning of M/s. Manager on the body of the notice under section 148 is of no consequence. He also argued that belief formed by the Assessing Officer for the purpose of issue of notice under section 148 cannot be set at naught. It is sufficient compliance with the provisions of section 148 if the reasons are recorded by the Assessing Officer showing that he was satisfied about the escapement of income. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other purpose. Therefore, the assessee is entitled to exemption under section 10(22) of the Income-tax Act. According to the Learned Counsel, so long as the income is applied or even ear-marked to be applied for educational purposes only, it cannot be said that it has been existing for purposes of profit. The ld. Counsel also referred to the decision of the Hon'ble Supreme Court in the case of Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR 310. According to the Ld. Counsel, a combined reading of the two judgments - Secondary Board of Education s case and Aditanar Educational Institution s case would go to show that the correct test for determination as to whether the educational institution was existing "solely for educational purposes" and not "for purposes of profit" is that the income should be utilised for educational purposes and not for the purposes of personal gain or benefit of an individual. According to the Ld. Counsel for the assessee this test stood fully satisfied as can be seen from the analysis of income and expenditure account and utilisation thereof as contained in pages 34 and 35 of the Paper Book. The Ld. Counsel for the assessee also placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. 19. Replying to the arguments of the Standing Counsel of the Department, the Ld. Counsel for the assessee stated that the decision of the Madras High Court in the case of Rao Bahadur AKD Dharmaraja Education Charity Trust has no application to the case of the assessee because in that case only a small amount has been spent for educational purposes and rest of the funds were not spent for educational purposes and, therefore, on the facts available in that case it was held by the Hon'ble High Court that the assessee's claim for exemption under section 10(22) is not maintainable. But this is not so in the case of the present assessee-society. The present assessee-society is running schools and colleges and the income received by way of donations from public at large, contribution made by members, membership fee paid by them, rent received from the inmates of the working women hostel have been utilised for educational purposes only and reliance is placed on Receipt and payment accounts college/school-wise and activity-wise, which has been given at pages 254 to 257 of the second Paper Book. The Ld. Counsel also stated that the institutions run by the society have been awarded rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society at its own and certainly not in the years under appeal. Way back in the year 1981, such a hostel was constructed with the aid of the Government which is a source of income now and rent is charged from the inmates which formed part of the Income and Expenditure Account under the head "Building rent". No boarding facilities are provided to the inmates, no expenditure is incurred on this account except salary of the chowkidars, maidservant and maintenance expenses. Inmates of the hostel are only lady teachers and lady members of the staff and it serves the purpose of educational institution. As regards the setting up of Children Hospital and Old Age Homes, no such activities have been carried out by the assessee-society and, therefore, no expenditure was incurred on such objects which are non-educational purposes. 23. As regards the siphoning off the assessee-society's funds as mentioned by the Assessing Officer in paras 6(viii), 6(ix), 6(x), 6(xi) of the assessment order, it is argued by the Ld. Counsel for the assessee that regular assessment proceedings were initiated by issue of notices for all the years under sections 143(2) and 142(1) on 18-1-2000 and various queries w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as unreasonable and faulty. He referred to the decision of the Hon'ble Supreme Court in the case of McDowell Co. Ltd. v. CTO [1985] 154 ITR 148 and also the decision of the Hon'ble Supreme Court in the case of Workmen Associated Rubber Industry Ltd. v. Associated Rubber Industry Ltd. [1986] 157 ITR 77. And argued that the society has been brought into existence just to provide a cover and veil to the personal affairs of the Manager of the Society, Sri Bajrang Tripathi. According to the Ld. Standing Counsel, Income and Expenditure Account was not verifiable as the expenditure claimed therein are not supported by vouchers and on account of such unverifiability there is a lot of scope for misappropriating the funds and some specific details of such misappropriation of funds has even been brought on record by the Assessing Officer by referring to investment in purchase of land. 26. In reply it was argued by the Ld. Counsel for the assessee that there is no substance in allegation about siphoning of funds of the society. According to the Ld. Counsel, the Assessing Officer after perusal of the details and verification of the same from the books of account, was fully sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief must be clearly set out in the verification clause. Order XIX Rule 3 of Civil Procedure Code is totally silent in this respect. It is nowhere laid down in Order XIX Rule 3 that each and every para of the affidavit must be ascribed to either knowledge or belief in the verification clause. According to the Ld. Standing Counsel, the accepted and established format in all law courts, except the High Courts and Supreme Court, which have their own High Court and Supreme Court Rules prescribing the format for the verification clauses are to be in accordance with Order XIX Rule 3 of Code of Civil Procedure. The judgments relied upon by the assessee's counsel are of Hon'ble High Court of Rajasthan and Hon'ble Supreme Court respectively which do not apply to the case of the assessee in respect of the affidavit filed by the Assessing Officer. The affidavit can be submitted before the Tribunal as per Rule 10 of the Income-tax (Appellate Tribunal) Rules, which does not specify or lay down any particular format for the verification of the affidavit. Therefore, in the absence of any prescribed or specified format in the Income-tax (Appellate Tribunal) Rules, the general format used in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at case of Malad Jain Yuvak Mandal Medical Relief Centre has no bearing on the admissibility of the claim for exemption under section 11 and the ratio laid down in that case is not applicable to the facts of the case of the assessee. 33. We have considered the facts of the case, rival submissions and the material on record. The assessee's counsel has raised following preliminary issues/objections: (i) Whether the Assessing Officer has no jurisdiction and, therefore, it has to be considered whether the Joint C.I.T. has jurisdiction over the case of the assessee for assessment purposes? (ii) Whether the valid reasons have been recorded by the Assessing Officer before issue of notice under section 148 for all the three years? (iii) Whether the notice under section 148 has been properly issued and served? (iv) Whether the assessment proceedings are completed twice by the Assessing Officer on 29-3-2000? And on the basis of above point:-- Whether the impugned order passed under section 143(3) of the Act on 293-2000 is valid? On merits following points arise for determination: (i) Whether the assessee is entitled to exemption of income under section 10(22) of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is clear from the above-mentioned provisions that the C.B.D.T. under section 12D of the Act may issue directions to Income-tax Authorities and after issue of such directions, the concerned Income-tax Authorities shall exercise such powers and functions which are assigned to them under the Act. The CBDT may also authorise any Income-tax Authority to issue orders in writing for the exercise of the powers and performance of functions by other Income-tax authorities who are subordinate to him. Despite various opportunities given to the Department to produce jurisdiction order authorizing the Joint Commissioner of Income-tax, Varanasi to perform functions relating to assessment and collection of taxes from the assessee-society, no such jurisdiction order has been produced before us. On 17-4-2002, the Ld. D.R. was directed to file the copy of the order of the CIT, Varanasi conferring jurisdiction to the Assessing Officer and the case was adjourned to 18-4-2002. On 18th April, 2002, the Ld. D.R. did not file copy of the said order. Again on 22-4-2002, when Ld. Standing Counsel Shri Shambhu Chopra was present to argue the case, he was asked to file the copy of the order of the CIT co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of hearing was given, it seems that no order under section 127 was passed. Whatever may be the position, the Ld. Standing Counsel of the Department has not been able to produce any jurisdiction order of the CIT, Varanasi to show that the Joint CIT, Varanasi exercised jurisdiction over the case of the assessee. It is, therefore, clear that the Joint CIT, Varanasi in the absence of jurisdiction order passed by the CIT to confer jurisdiction over the case of the assessee, was not competent to exercise jurisdiction overt the case of the assessee. In the absence of jurisdiction order passed by the CIT, Varanasi or by the CBDT to confer jurisdiction over the case of the assessee to the Joint CIT, Varanasi, the Joint CIT, Varanasi was not competent to exercise power and perform functions with regard to assessment and collection of taxes in the case of the assessee-society. An order passed by an authority without jurisdiction is a nullity and its invalidity can be challenged whenever and wherever sought to be enforced or relied upon. 36. In the case of Ajantha Industries v. C.B.D.T. [1976] 102 ITR 281 (SC), it was held that the requirement of recording reasons under section 127(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier. Where he has made no such return, after the expiry of the time allowed by the notice under sub-section (1) of section 142 or under section 148 for the making of the return or by the notice under the first proviso to section 144 to show-cause by the assessment should not be completed to the best of the judgment of the Assessing Officer, whichever is earlier. The Standing Counsel also referred to sub-section (4) of section 124 and argued that where an assessee calls in question the jurisdiction of the Assessing Officer, then the Assessing Officer, if not satisfied with the correctness of the claim, refer the matter for determination under subsection (2) of section 124 before the assessment is made. 38. The Ld. Standing Counsel relied on the decision of Allahabad High Court in the case of Hindustan Transport Co. In this case, the issue of jurisdiction under section 124 of the Income-tax Act was considered by the Hon'ble Allahabad High Court. It was held by the Hon'ble High Court that section 124 of the Income-tax Act covers territorial jurisdiction as well other kinds of jurisdiction and that an objection raised at the appellate stage as to the jurisdiction of the particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. The assessee's counsel's arguments have been mentioned in paragraphs 14 and 9. The Assessing Officer has recorded the following reasons for issue of notice under section 148 of the Act: "1-8-1997: ... It has come to my notice that the assessee runs an Institution in the name of All India Children Care Welfare Society, Azamgarh and earns income from it. In addition, the assessee purchased buses etc. and invested huge amount. For this Institution, building is also constructed. Since the assessee earns huge income and invested in buses and building, therefore, I have reason to believe that the assessee in the years 199394, 1994-95 and 1995-96 has concealed the income. Therefore, notice under section 148 of the Income-tax Act is issued for the assessment years 1993-94, 1994-95 and 1995-96." 41. It is clear from the reasons mentioned above that no facts and figures have been mentioned by the Assessing Officer to come to the conclusion as to how much was income and how that income has escaped assessment. The reasons recorded by the Assessing Officer are not based on any information but based on presumptions and assumptions. The Assessing Officer assumed that the assessee- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from assessment. 43. In the case of the assessee, it is clear that the Assessing Officer has not mentioned any facts and figures to show that there was escapement of income. The Assessing Officer has not given any facts to show how much income was earned and whether the income earned by the assessee-society was above taxable limit. The Assessing Officer has not given any facts or figures to show that the investment in buses and buildings was out of the income earned by the assessee. Therefore, reasons recorded by the Assessing Officer for issue of notice under section 148 for assessment years 1993-94, 1994-95 and 1995-96 are vague and imaginary, which cannot form reason to believe for escapement of income. The Assessing Officer has not even mentioned that the assessee has not filed the return of income for these years. No facts and figures have been mentioned by the Assessing Officer, which could justify the conclusion that the Assessing Officer has reasonable belief that the income for three years has escaped assessment. 44. In the case of Ganga Saran Sons (P.) Ltd. the Apex Court held that belief entertained by the ITO must not be arbitrary or irrational. It must be based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as escaped assessment because no facts and figures have been mentioned to justify the reasons to believe before issue of notice under section 148. Therefore, the case of Rakesh Aggarwal is not helpful to the Revenue. 47. The Department's Standing Counsel has relied on the decision of Hon'ble Gujarat High Court in the case of Stock Exchange. In this case also, the Hon'ble Gujarat High Court held that the reasons for formation of belief for reopening of assessment must have a rational connection or relevant bearing on the formation of belief. In this case notice under section 148 was issued because the Assessing Officer gave finding that the assessee was not entitled to exemption under section 1O(23A) of the Income-tax Act in the relevant assessment year. It was held that the assessment proceedings were validly initiated. But in the case of the assessee-society no finding is given by the Assessing Officer before issue of notice under section 148 that the assessee is not entitled to exemption either under section 11 or under section 10(22) of the Act. Therefore, the decision of the Hon'ble Gujarat High Court in the case of Stock Exchange is not applicable to the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab-initio. This issue is decided in favour of the assessee and against the revenue. 49. The third preliminary issue raised by the Ld. Counsel for the assessee is that the notices under section 148 of the Act have not been properly issued and served. According to the Ld. Counsel for the assessee, the name of the assessee-society has not been properly mentioned on the body of the notices issued under section 148. The name of the assessee-society has been mentioned as "M/s. Manager, All India Children Care and Welfare Society, Railway Station, Azamgarh". The first objection of the assessee's Counsel was against the use of the word "M/s. Manager" because there is no such entity in existence. The second objection was against the name of the society. The third objection of the assessee's Counsel has been mentioned in paragraph 10 and arguments of the Ld. Standing Counsel of the Department have been mentioned in paragraph 12A of the order. After considering the arguments of the Ld. Counsel for the assessee and the Ld. Standing Counsel of the Department, we are of the opinion that there is defect in the issue of notices which would render the notices under section 148 for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997 but the same was never in the name of the assessee. The Assessing Officer, accordingly, never intended to record reasons for issuing notice under section 148 in the name of the assessee. We may also refer here that it is one of the condition necessary before proceeding under section 148 that the Assessing Officer in addition to recording reasons for his belief under section 147 should have also served notice upon the assessee. The Assessing Officer in this case has never recorded reasons for issuing notice under section 148 of the Income-tax Act in the name of the assessee, therefore, there is no question of the notice under section 148 being validly served upon the assessee. Hence, it cannot be said that it was a mistake in notice only. The above facts and circumstances clearly show that the Assessing Officer has committed glaring illegality in recording reasons for issuing the notice under section 148 as it was not in the name of the assessee. Therefore, the issue of notice was consequential to that which resulted that the notice is also invalid. As we have held that the Assessing Officer never issued notice and reasons in the name of the assessee, therefore, the same cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Laws (Amendment) Act. Now under section 143(1) where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, if any tax or interest is found due on the basis of such return, after adjustment of any tax deducted at source or paid by the assessee, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly. If any refund is due on the basis of such return, it shall be granted to the assessee and intimation to this effect shall be sent to the assessee. The first proviso to section 143(1) also lays down that the acknowledgement of the return shall be deemed to be intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him. The second proviso to section 143(1) also lays down that no intimation under this sub-section shall be sent after the expiry of two years from the end of the assessment year in which the income was first assessable. 51. Sub-section (2) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sent to the assessee. Such intimation is deemed to be a notice of demand under section 156 of the Income-tax Act only for the purposes of recovery of tax and does not mean that intimation under section 143(1) is an assessment in any manner as defined under section 2(40) of the Income-tax Act. 54. In the case of Pradeep Kumar Har Saran Lal v. Assessing Officer [1998] 229 ITR 46, the Hon'ble Allahabad High Court held as under as per head note: "The scheme of section 143(1)(a) of the Income-tax Act, 1961 and the clarificatory circular dated October 31, 1989, issued by the Central Board of Direct Taxes, makes it amply clear that unlike the past practice, assessments are not required to be made in each and every case and assessment orders will be passed only in a very limited number of cases, selected for scrutiny. Under section 143(1)(a), the Assessing Officer has to accept the return on its face value and make minor adjustments consistent with the information given in the return without touching upon debatable and controversial issues. There is a lot of difference between an assessment and an intimation, as contemplated by section 143(1)(a) and if it were not so, then Parliament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 143(1)(a) cannot 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. The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery of the amount indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision." 57. It is clear from the decision of the Hon'ble Delhi High Court also that intimation under section 143(1)(a) and regular assessment under section 143(2) operate in different fields that intimation under section 143(1)(a) is not an assessment. 58. The Ld. Counsel has relied on decisions of the courts in Hazari Mal Kuthiala v. ITO [1956] 30 ITR 500 (Punjab) and A.N. Lakshman Shenoi v. ITO [1958] 34 ITR 275 (SC). These decisions have been rendered prior to Amendment of section 143(1) and are not applicable in the case of the assessee because now after 1-4-1989, there is clear distinction between intimation under section 143(1)(a) and regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 10(22) of the Income-tax Act. The Assessing Officer examined the surplus of income over expenditure after allowing depreciation as mentioned in paragraph 6(vi) page 6 of the assessment order. The Assessing Officer observed that the assessee has shown following surplus after allowing depreciation: Assessment year Amount 1993-94 24.28 Lakhs 1994-95 43.70 Lakhs 1995-96 74.41 Lakhs 1997-98 87.88 Lakhs The Assessing Officer came to the conclusion that the assessee is existing solely for profit and there is hardly any element of charity or an act of benevolent. According to the Assessing Officer, the assessee is running the school purely on commercial basis and to evade legitimate incidence of tax. The Assessing Officer also considered that there is systematic attempt to siphon out funds of the society under the garb of fixed assets, such as, construction of building etc. The siphoning of fund according to the Assessing Officer has been mentioned in paragraph 6(ix) page 6 of the assessment order. The Assessing Officer worked out the excess amount shown by the assessee in respect of purchases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the society in the registration certification issued by the CIT, Allahabad dated 10-3-1978 is mentioned as "Children Care and Educational Development Society". The prefix "All India" was added by the society subsequently and the CIT has issued another certificate on 1st July, 1996 granting exemption under section 80G to the assessee-society. The name of the assessee-society has been mentioned as "All India Children Care and Educational Development Society". The assessee-society changed its name to All India Children Care and Development Society in July 1985 and the assessee filed certificate dated 15th July, 1985 issued by the Registrar of Societies in the name of All India Children Care and Development Society. This change in name was intimated by the assessee-society to the CIT, Allahabad vide letter dated 12-8-1985. It is, therefore, argued that the Assessing Officer was not justified because the name of the society in the registration certificate dated 10th March, 1978 issued by the CIT, Allahabad was mentioned as "Children Educational and Development Society". Similarly, the Assessing Officer was not justified in not considering the claim of the assessee-society that the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of the income of the Manager, which was questioned by the Assessing Officer. The ld. Counsel for the assessee also filed certified copy of the resolution of the Institution as taken from the Minute Books. We have heard both the parties and considered the material available on record at length on each and every aspects, which were raised by the Assessing Officer and the CIT(A) in their order. We have considered all the objections raised by the authorities below. Prima facie, we are satisfied from these explanations that the assessee was running educational institution. But since we have already set aside and quashed the assessment orders on the preliminary issues, therefore, we are not giving findings whether the assessee is entitled to deduction under section 11 of the Income-tax Act. Similarly, we are also not giving findings whether the assessee-society is entitled to exemption of its income under section 10(22) of the Income-tax Act as the decision would be of academic use only because each accounting year is a separate and self-contained period of assessment and whether the assessee-society is existing solely for educational purposes or for the purposes of profit, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
