The Patiala Improvement Trust, Patiala v. ITO, Patiala

ITA 1178/CHANDI/2013 | 2005-2006
Pronouncement Date: 29-04-2014 | Result: Allowed

Appeal Details

RSA Number 117821514 RSA 2013
Assessee PAN AAAJI0034L
Bench Chandigarh
Appeal Number ITA 1178/CHANDI/2013
Duration Of Justice 4 month(s) 5 day(s)
Appellant The Patiala Improvement Trust, Patiala
Respondent ITO, Patiala
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-04-2014
Date Of Final Hearing 27-03-2014
Next Hearing Date 27-03-2014
Assessment Year 2005-2006
Appeal Filed On 24-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R. SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITAS NO. 1178 & 1179/CHD/2013 ASSESSMENT YEARS : 2005-06 & 2006-07 THE PATIALA IMPROVEMENT VS. I.T.O. WARD -1 TRUST CHHOTTI BARADARI PATIALA PATIALA AAAJI 0034 L (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI Y.K. SOOD RESPONDENT BY: SHRI AMARVEER SINGH DATE OF HEARING 27.03.2014 DATE OF PRONOUNCEMENT 29 .04.2014 O R D E R PER T.R. SOOD A.M THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 17.10.2013 OF THE CIT(A) PATIALA. IN THESE APPEAL S SOME OF THE ISSUES ARE COMMON AND THESE WERE HEARD TOGETHER . SO THESE ARE BEING DISPOSED OFF BY THIS COMMON ORDER F OR THE SAME OF CONVENIENCE. ITA NO. 1178/CHD/2013 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1 THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACT ION OF THE AO IN REOPENING OF THE ASSESSMENT U/S 147 & 148. 2 THAT WHILE UPHOLDING THE ACTION OF THE AO IN RE-O PENING OF THE ASSESSMENT THE CIT(A) HAS FAILED TO APPRECIATE THAT THE NOTICE U/S 148 WAS NOT ONLY PASSED BY LIMITATION BUT ALSO WAS CLEA R CASE OF CHANGE OF OPINION. 3 THAT THE STATUS OF THE ASSESSEE HAS BEEN WRONGLY CHANGED BY THE AO FROM TRUST TO ARTIFICIAL JURIDICAL PERSON. BOTH THE AO AND CIT(A) FAILED TO APPRECIATE THAT THE TRUST WAS DULY GRANTED REGIS TRATION BY THE CIT PATIALA U/S 12 AA. THAT AT ANY RATE SUCH CHANGE IN STATUS ON THE BASIS OF THE RETURN FILED BY THE TRUST IS NOT PERMISSIBLE UNDER THE LAW. 4 THAT THE AO AND THE CIT(A) FAILED TO APPRECIATE T HAT ONCE THE REGISTRATION IS GRANTED TO THE TRUST U/S 12AA THE A O COULD ONLY EXAMINE THE APPLICATION OF THE FUNDS ACCORDING TO ITS OBJEC TS AND CANNOT TRAVEL TO COMMENT ON THE OBJECTS OF THE TRUST. 2 5 THAT THE CIT(A) HAS WRONGLY CONFIRMED THE ACTION OF THE AO IN ASSESSING RS. 4671987/- AS BUSINESS INCOME. BOTH TH E AO AND CIT(A) HAVE FAILED TO APPRECIATE THAT NO BUSINESS INCOME C OULD HAVE BEEN COMPUTED IN THE CASE OF A CHARITABLE TRUST. 6 THAT EVEN OTHERWISE AS AN ALTERNATIVE PLEA NO ALL OWANCE OF EXPENSES INCURRED BY THE ASSESSEE HAS BEEN ALLOWED TO THE ASSESSEE OUT OF THE BUSINESS INCOME. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT ORIGI NALLY THE RETURN WAS FILED DECLARING INCOME OF RS. 14 15 720/ 0 ON 30.10.2005 IN THE STATUS OF AOP (TRUST). THE ASSES SMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 27.11.2007 THROU GH WHICH RETURNED INCOME OF RS. 14 15 720/- WAS ACCEPTED. L ATER ON THE ASSESSMENT WAS REOPENED U/S 157 AFTER OBTAINING THE APPROVAL OF C.I.T. PATIALA AND NOTICE U/S 148 WAS ISSUED ON 23.3.2012. 4 BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE NARRA TED THE FACTS AND POINTED OUT THAT THE REASONS WERE RECORDE D FOR REOPENING THE CASE (COPY OF WHICH IS AVAILABLE AT P AGE 5 & 6 OF THE PAPER BOOK). HE CONTENDED THAT FIRST OF ALL BEF ORE REOPENING OF THE ASSESSMENT NOTICE U/S 148 CAN BE ISSUED AFT ER A GAP OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR ONLY AFTER OBTAINING PRIOR APPROVAL OF THE CCIT / CIT AS PER SECTION 151 OF THE ACT. HE POINTED OUT THAT READING OF THI S PROVISION WOULD SHOW THAT BEFORE ACCORDING THE SANCTION SUCH AUTHORITY I.E. CCIT / CIT SHOULD BE SATISFIED THAT IT IS A FI T CASE FOR REOPENING. NO SUCH SATISFACTION IS DEPICTED AND SA NCTION HAS BEEN GRANTED MECHANICALLY WHICH ITSELF MAKES REOPEN ING OF ANY LAW. 5 HE FURTHER SUBMITTED THAT HON'BLE PUNJAB AND HARY ANA HIGH COURT IN CASE OF CIT VS. IMPROVEMENT TRUST 30 8 ITR 361 (PH) CLEARLY HELD THAT AFTER CONSIDERING THE PROVIS IONS OF PUNJAB TOWN IMPROVEMENT TRUST ACT 1922 THE OBJECT S OF IMPROVEMENT TRUST WOULD BE COVERED UNDER THE EXPRES SION ANY OTHER OBJECT OF GENERAL UTILITY U/S 2(15) OF INCOM E -TAX ACT 1961 BECAUSE SUCH TRUST WHICH IS MAINLY ENGAGED IN THE IMPROVEMENT OF A TOWN BY PROVIDING STREETS HOUSING FACILITIES AND MAKING PROVISION FOR DRINKING WATER ETC. THE R EVENUE WAS BOUND BY THIS JUDGMENT AND THE ASSESSEE CORRECTLY F ILED THE 3 RETURN IN THE STATUS OF AOP (TRUST). THE ASSESSEE HAD DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR ASSE SSMENT. AS PER THE PROVISO TO SECTION 147 NO ACTION CAN BE TAK EN UNDER THAT SECTION AFTER A PERIOD OF FOUR YEARS IF THE OR IGINAL ASSESSMENT WAS COMPLETED U/S 143(3). THERE WAS ONL Y ONE EXCEPTION PROVIDED IN THIS PROVISO THAT ACTION CAN STILL BE TAKEN IF THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TR ULY MATERIAL FACTS RELEVANT FOR COMPLETION OF ASSESSMENT. SINCE THE ASSESSEE HAS NOT FAILED TO DISCLOSE ANY MATERIAL FA CTS THEREFORE PROVISIONS OF SECTION 147 COULD NOT HAVE BEEN INVOKED. IN THIS REGARD HE RELIED ON THE FOLLOWING JUDGMENTS: DULICHAND SINGHANIA VS. ACIT 269 ITR 192 (PH) MAHAVIR SPINNING MILLS LTD VS. CIT & ANOTHER 270 I TR 290 (PH) WINSOME TEXTILES IND LTD. VS. UNION OF INDIA & ORS 278 ITR 470 (PH) TECUMSEH PRODUCTS INDIA (P) LTD VS. ACIT & ANR 361 ITR 429 (A.P) IN THE ABOVE CASES IT HAS BEEN CLEARLY HELD IF THER E IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIA L FACTS FOR COMPLETION OF ASSESSMENT THEN REOPENING IS NOT POSS IBLE. PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OF FICER CLEARLY SHOW THAT THERE IS NO ALLEGATION THAT THE A SSESSEE HAS FAILED TO DISCLOSE ANY MATERIAL FACTS THEREFORE OP ENING WAS NOT POSSIBLE AFTER FOUR YEARS FROM THE END OF THE RELEV ANT ASSESSMENT YEAR BECAUSE ORIGINAL ASSESSMENT WAS FR AMED U/S 143(3). 6 ON THE OTHER HAND LD. DR SUBMITTED THAT FIRST OF ALL IT IS TO BE NOTED THAT ASSESSEE HAS FILED A RETURN IN THE STATU S OF LOCAL AUTHORITY WHICH IS NOT CORRECT BECAUSE TRIBUNAL HAS HELD IN T HE CASE OF ASSESSEE IN ITA NO. 544/CHD/09 AND THE ASSESSEE WAS HELD TO BE TREATED AS ARTIFICIAL JURIDICAL PERSON. HE FILED CO PY OF THE ORDER OF TRIBUNAL ON RECORD. HE FURTHER CONTENDED THAT DURIN G ASSESSMENT PROCEEDINGS AO HAD ISSUED A QUESTIONNAIRE DT. 10/08 /2007 ASKING ASSESSEE TO FURNISH BRIEF NOTE ON THE BUSINESS ACTI VITIES AND VARIOUS OTHER DETAILS. IN RESPONSE TO THIS QUESTIONNAIRE TH E ASSESSEE VIDE REPLY DATED 07/09/2007 SUBMITTED THAT IT WAS NOT CA RRYING ON ANY BUSINESS ACTIVITIES BUT THE OBJECTIVES OF THE TRUST WERE FOR PLANNING DEVELOPMENT AND IMPROVEMENT OF THE CITY. MAJOR SOUR CE OF THE 4 RECEIPTS WAS FROM TRANSFER CHARGES FINE PENALTY INTEREST AND WATER SUPPLY AND SEWERAGE BILLS. HOWEVER THE ASSESSEE VID E REPLY DATED 05/11/2007 AGAIN REFERRED TO SECTION 22 TO 26 OF TH E PUNJAB TOWN IMPROVEMENT TRUST ACT AND REITERATED THAT IT WAS EN GAGED IN THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY. NO W ASSESSING OFFICER WAS REQUIRED TO EXAMINE THE CASE OF THE ASS ESSEE IN TERMS OF SECTION 11(4A) OF THE INCOME TAX ACT 1961 WHETHER THE ASSESSEE WAS MAINLY ENGAGED IN PROMOTING THE OBJECTS OF GENE RAL UTILITY OR ENGAGED IN THE ACTIVITY FOR THE PURPOSE OF EARNING PROFIT BEARING THE MASK OF GENERAL PUBLIC UTILITY. THIS CLEARLY SHOWS THAT ASSESSEE DID NOT FURNISH THE CORRECT PARTICULARS AND KEPT ON REP EATING THAT IT WAS ENGAGED IN ACHIEVEMENT OF OBJECTIVES OF GENERAL PUB LIC UTILITY IN TERMS OF PUNJAB TOWN IMPROVEMENT TRUST ACT 1922. TH US IT IS CLEAR THAT ASSESSEE DID NOT DISCLOSE THE FULL MATERIAL FA CTS RELEVANT FOR THE PURPOSE OF ASSESSMENT. 7. HE ALSO SUBMITTED THAT MATERIAL PARTICULARS REFE RRED IN THE FIRST PROVISO OF SECTION 147 NOT ONLY REFER TO DETAILS IN RETURN OF INCOME BUT ALSO EXPLANATION AND DETAILS FURNISHED DURING T HE COURSE OF ASSESSMENT PROCEEDING. IN THIS REGARD HE RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF HONDA SIEL POWER PRODUCTS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX AND ANOT HER; 340 ITR 53 WHICH HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT IS REPORTED IN 340 ITR 64. THEREFORE IT IS CLEAR THAT ASSESSEE HAS NOT DISCLOSE THE FULL PARTICULARS AND AO WAS RIGHT IN R EOPENING THE ASSESSMENT. MOREOVER WHATEVER PARTICULARS WERE FUR NISHED HAVE NOT BEEN EXAMINED BY THE AO AND THEREFORE IT CANNOT BE SAID THAT AO HAS ALREADY TAKEN A PARTICULAR VIEW AND THE SAME CANNOT BE DISCLOSED AS A CASE OF CHANGE OF OPINION. ONCE AO D OES NOT TAKE A PARTICULAR OPINION THEN THE SAME CANNOT BE TERMED A S CHANGE OF OPINION AS OBSERVED BY THE FULL BENCH OF HONBLE DE LHI HIGH COURT IN CASE OF CIT VS. USHA INTERNATIONAL LTD. 348 ITR 485 . 8. IN THE REJOINDER THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT ASSESSEE HAD FILED THE ORIGINAL RETURN IN THE STATUS OF LOCAL AUTHORITY ON 30/10/2005 WHEREAS THE STATUS OF THE ASSESSEE WAS HELD TO BE ARTIFICIAL JURIDICAL PERSON BY THE TR IBUNAL BUT THE ORDER OF THE TRIBUNAL WAS PASSED ON 29/01/2010 AND THE R ETURN WAS FILED 5 ON 30/10/2005 THEREFORE ASSESSEE COULD NOT HAVE K NOWN THE OUTCOME OF THE ORDER OF THE TRIBUNAL AT THE TIME OF FILING THE RETURN. 9. HE FURTHER SUBMITTED THAT THERE IS NO FORCE IN T HE CONTENTION THAT AO HAS NOT EXAMINED CERTAIN ISSUES. ASSESSEE H AS FILED ALL THE NECESSARY DETAILS AND IT IS FOR AO TO DEAL WITH SUC H INFORMATION IN THE WAY HE LIKES AND ASSESSEE IS NOT REQUIRED TO IN FORM THE DEPARTMENT AS TO WHAT IS REQUIRED TO BE DONE BY HIM . IN THIS REGARD HE RELIED ON THE DECISION OF THE HONBLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF HARI IRON TRADING CO. VS. COMM ISSIONER OF INCOME TAX 263 ITR 437. 10. WE HAVE CONSIDER THE RIVAL SUBMISSION CAREFULLY IN THE LIGHT OF MATERIAL ON RECORD AND DECISIONS RELIED ON BY THE P ARTIES. WE FIND THAT ORIGINAL RETURN DECLARING INCOME OF RS. 14 15 720.00 WAS FILED ON 30/10/2005 AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 26/11/2007 LATER ON REASONS WERE RECORDED FOR REOP ENING OF THE ASSESSMENT WHICH READS AS UNDER: RETURN DECLARING INCOME OF RS. 14 15 720/- WAS FILE D ON 31/10/2005 WHICH WAS PROCESSED 143(1). THE ASSESSMENT U/S 143( 3) WAS COMPLETED ON 26/11/2007 BY THE THEN ACIT CIRCLE PATIALA AND THE RETURNED INCOME OF RS. 14 15 720.00 WAS ACCEPTED. PERUSAL OF ASSESS MENT RECORD FOR THE A.Y. 2005-06 REVEALS THAT THE ASSESSEE HAS EARNED I NCOME OF RS. 2 17 08 483/- AND CLAIMED EXEMPTION U/S 11(1)(A) OF THE I.T. ACT 1961. ON PERUSAL OF INCOME AND EXPENDITURE ACCOUNT FOR TH E PERIOD ENDING 31/03/2005 IT HAS BEEN NOTICED THAT THE ASSESSEE H AS EARNED NET PROFIT OF RS. 46 71 987/- BY CARRYING OUT BUSINESS ACTIVI TIES OF SALE AND PURCHASE OF PROPERTIES AND RECEIVED COMPLETION FEE COMPROMISE FEE CONNECTION FEE DEVELOPMENT FEE ENLISTMENT FEE MAP FEE MALBA FEE PROCESSING FEE TRANSFER FEE ENHANCEMENT FEE WATE R CONNECTION FEE AND BUILDING CONTROL FEE FINE AND PENALTIES INTEREST ETC. WHICH CLEARLY ESTABLISHES THAT THE ASSESSEE IS ENGAGED IN THE BUS INESS OF SALE AND PURCHASE OF PROPERTIES. THE ASSESSEE HAS SHOWN CLOS ING STOCK OF RS. 25 93 76 199/- AS SALEABLE PROPERTIES AND RECEIVED EARNEST MONEY AMOUNTING TO RS. 33 09 40 000/- WHICH CLEARLY SHOWS THAT THE INCOME EARNED RELATES TO BUSINESS OF SALE AND PURCHASE OF PROPERTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THIS CASE FOR THE A.Y. 2009 THE THEN ITO WARD-I PATIALA HAS DISALLOWED DEDUCTION CLAIMED U/S 11 BY THE ASSESSE FOR THE A.Y. 2009-10 CONSIDERING THE INCOME OF THE ASSESSEE AS BUSINESS INCOME AND ASSESSED AT A TOTAL OF RS. 11 00 88 987/- VIDE ORDER U/S 143(3) DATED 23/12/20 12. AO HELD THAT THE ASSESSEE HAD DONE THE SALE & PURCH ASE OF PROPERTIES BEING BUSINESS INCOME AND HAD HELD THAT THE ASSESSE E IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE I.T. ACT 1961 AS ASSESSEE T RUST IS NOT DOING THE WORK OF GENERAL PUBLIC UTILITY AS COVERED U/S 2(15) OF THE I.T. ACT 1961 RATHER IT IS ENGAGED IN COMMERCIAL ACTIVITIES. IN THE YEAR UNDER CONSIDERATION THE BUSINESS ACTIV ITIES OF THE ASSESSEE ARE THE SAME AND IT HAD SHOWN A NET PROFIT AT RS. 4 6 71 987/- THUS I HAVE REASON TO BELIEVE THAT BY VIRTUE OF WR ONG CLAIM OF EXEMPTION U/S 11 INCOME OF THE ASSESSEE AMOUNTING TO RS. 32 56 267 (4671987- 6 1415720) FOR ASSESSMENT YEAR 2005-06 HAS ESCAPED AS SESSMENT OR THE SAME ANALOGY AS THE ASSESSEE HAS NOT DISCLOSED FULL Y AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR THA T ASSESSMENT YEAR (A.Y. 2005-06) 11. THE PERMISSION OF CIT WAS ALSO SOUGHT IN TERMS OF SECTION 151(1) AND THE PERMISSION WAS GRANTED BY CIT PATIA LA ON 23/03/2012. 12. THE FIRST OBJECTION RAISED BY THE LD. COUNSEL F OR THE ASSESSEE THAT BEFORE GIVING THE SANCTION FOR ISSUANCE OF NOT ICE THE CIT SHOULD HAVE SATISFIED HIMSELF THAT THERE WAS ACTUALLY SOME REASON FOR REOPENING. WE FIND NO MERIT IN THIS OBJECTION BECAU SE SECTION 151 SIMPLY REQUIRES THAT NOTICE AFTER A PARTICULAR PERI OD CANNOT BE ISSUED WITHOUT THE SANCTION OF THE PARTICULAR AUTHORITY. T HERE IS NO REQUIREMENT FOR THAT AUTHORITY TO RECORD THE REASON S FOR SUCH PERMISSION IN THE ABSENCE OF SUCH REQUIREMENT. THE SATISFACTION EVEN IF REQUIRED CAN BE UNDERSTOOD AS STATE OF MIND AND IT HAS TO BE ASSUMED THAT CONCERNED AUTHORITY IS SATISFIED IF SU CH AUTHORITY HAS SANCTIONED THE ISSUE OF NOTICE. IN THE PRESENT CASE THE CIT HAS ACCORDED THE SANCTION TO PROPOSAL FOR ISSUING NOTIC E U/S 148 VIDE PROPOSAL DATED 21/03/2012. THE APPROVAL WAS GRANTED ON 23/12/2012 AND CIT HAS STATED AGAINST COLUMN NO. 12 AS UNDER: FROM THE ABOVE IT BECOMES CLEAR THAT PROPER SANCTIO N HAS BEEN GRANTED CIT AS REQUIRED U/S 151 OF ACT THEREFORE WE REJECT THIS OBJECTION. 13. THE SECOND ASPECT INVOLVED IN THE REOPENING IS WHETHER SUCH REOPENING IS PERMISSIBLE AFTER A PERIOD OF FOUR YEA RS FROM THE END OF THE ASSESSMENT YEAR SECTION 147 READS AS UNDER : IF THE ASSESSING OFFICER HAS REASON TO BELIEVE TH AT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR HE MAY SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 1 53 ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION OR RE- COMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR A NY OTHER ALLOWANCE AS THE CASE MAY BE FOR EH ASSESSMENT YEAR CONCERNE D (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS T HE RELEVANT ASSESSMENT YEAR): 12. WHETHER COMMISSIONER / BOARD IS SATISFIED ON THE REASONS RECORDED BY THE ITO / ACIT / DCIT THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE U/S 148 YES ITS A FIT CASE. 7 PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSE SSMENT YEAR NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLES S ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT Y EAR. PROVIDED . PROVIDED . NOT RELEVANT PROVIDED . THE FIRST PROVISO OF THE ABOVE SECTION MAKES IT CLE AR THAT IF ASSESSMENT HAS BEEN FRAMED UNDER SECTION 143(3) THE N NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THER E IS A FAILURE ON THE PART OF THE ASSESSEE TO MAKE THE RETURN UNDER S ECTION 139 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT. THE PERUSAL OF THE REASONS RECORDED DOE S NOT SHOW THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSES SEE TO TRULY AND FULLY DISCLOSE THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF DULI CHAND SINGHANIA VS. ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA) WHICH READS AS UNDER: HELD THAT THE REASON RECORDED FOR ISSUE OF NOTIC E SHOWED THAT THE SATISFACTION RECORDED THEREIN WAS MERELY ABOUT THE ESCAPEMENT OF INCOME. THERE WAS NOT EVEN A WHISPER OF AN ALLEGATI ON THAT SUCH ESCAPEMENT HAD OCCURRED BY REASON OF FAILURE ON THE PART OF HE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. ABSENCE OF THIS FINDING WHICH IS A SIN E QUA NON FOR ASSUMING JURISDICTION UNDER SECTION 147 OF THE ACT IN A CASE FALLING UNDER THE PROVISO THERETO MADE THE ACTION TAKEN BY THE A SSESSING OFFICER WHOLLY WITHOUT JURISDICTION. THE NOTICE WAS NOT VAL ID AND WAS LIABLE TO BE QUASHED. SIMILAR OBSERVATIONS WAS MADE BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF MAHAVIR SPINNIG MILLS LTD. VS . COMMISSIONER OF INCOME TAX AND ANOTHER WHICH READS AS UNDER : HELD THAT THERE WAS NO ALLEGATION THAT ESCAPEMEN T OF INCOME FROM TAX HAD OCCURRED BY REASON OF FAILURE ON THE PART OF TH E ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR IT S ASSESSMENT. SINCE THE ILLEGALITY OF NOTICE UNDER SECTION 148 OF THE ACT W AS APPARENT FROM THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS UNDE R SECTION 147 OF THE ACT THIS WAS A FIT CASE FOR INTERFERENCE IN THE EX ERCISE OF THE WRIT JURISDICTION. THE NOTICE WAS LIABLE TO BE QUASHED. AGAIN SIMILAR VIEW WAS TAKEN IN CASE OF WINSOME TEX TILES INDUSTRIES LTD. VS. UNION OF INDIA AND OTHERS WHICH READS AS U NDER: 8 HELD THAT THERE WAS NO OBLIGATION ON THE PART OF THE ASSESSE TO FURNISH PROFIT AND LOSS ACCOUNTS FOR THE ASSESSMENT YEARS 1 995-96 AND 1996-97 WITH THE RETURN FOR THE ASSESSMENT YEAR 1997-98.THE RE WAS NO PROVISION OF LAW OR RULE WHICH REQUIRED FURNISHING OF PROFIT AND LOSS ACCOUNTS OF THE EARLIER YEARS. IN THE ABSENCE OF ANY OBLIGATION TO FILE THESE DOCUMENTS THE ASSESSEE COULD NOT BE CHARGED WITH ANY FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THE PROFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEAR 1997-98 HAD BEEN FI LED. SIMILARLY THE DEPRECIATION CHART FOR THE ASSESSMENT YEAR 1997-98 GIVING PARTICULARS REQUIRED FOR COMPUTATION OF DEPRECIATION WAS ALSO A VAILABLE ON RECORD. THE ASSESSMENT HAD BEEN MADE UNDER SECTION 143(3) O F THE ACT AND IF THE ASSESSING OFFICER WAS OF THE VIEW THAT HE REQUI RED THE PROFIT AND LOSS ACCOUNTS AND DEPRECATION CHARTS OF THE ASSESSMENT Y EARS 1995-96 AND 1996-97 FOR EXAMINING THE CORRECTNESS OF THE CLAIM UNDER SECTION 80-IA OF THE ACT HE COULD HAVE REQUIRED THE ASSESSEE TO PRODUCE THEM. FAILURE OF THE ASSESSING OFFICER TO DO SO COULD NOT BE TRE ATED AT PAR WITH THE FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THE INITIATION OF PRO CEEDINGS UNDER SECTION 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR WAS WHOLLY WITHOUT JURISDICTION. THE NOTICE UNDER S ECTION 148 WAS NOT VALID. WE DO NOT FIND ANY FORCE IN THE SUBMISSION OF LD. D R THAT THE ASSESSEE HAS NOT FULLY DISCLOSED THE NATURE OF ACTI VITY WHICH WAS MATERIAL FOR DECIDING THE ISSUE AND THEREFORE THE S AME WILL CONSTITUTE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY THE MATERIAL FACTS NECESSARY FOR ASSESSMENT. THIS IS SO BECAUSE AT THE RELEVANT POINT OF TIME THERE WAS BINDING DECISION A VAILABLE FROM HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. IMPROVEMENT TRUST (SUPRA) WHEREIN THE HONBLE COUR T AFTER EXAMINING THE OBJECTS OF PUNJAB TOWN IMPROVEMENT TR UST ACT 1922 HELD THAT IMPROVEMENT TRUST WAS OF CHARITABLE NATUR E. THEREFORE REVENUE WAS BOUND TO FOLLOW THIS JUDGMENT AND ACCEP T THE ASSESSEE AS CHARITABLE ORGANIZATION. 14. THE AO COULD NOT HAVE DEVIATED FROM THIS SITUAT ION. IT IS ONLY AFTER THE AMENDMENT MADE IN SECTION 2 (15) OF THE A CT CONTAINED FINANCE ACT 2008 WITH EFFECT FROM 01/04/2009. A DIF FERENT VIEW COULD HAVE BEEN TAKEN. THEREFORE HAVING COMPLETED ASSESS MENT UNDER SECTION 143(3) LATER ON THE REVENUE CANNOT TAKE A U -TURN AND ISSUE NOTICE UNDER SECTION 148 WITHOUT SHOWING FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSED THE MATERIAL FACTS FOR THE ASSESSMENT. THEREFORE IN OUR OPINION ACTION OF THE REVENUE OF REOPENING THE ASSESSMENT IS LEGALLY NOT TENABLE AND ACCORDINGLY WE ANNUL THE REASSESSMENT PROCEEDINGS. 15. IN OUR OPINION OTHER ISSUES RAISED BY THE ASSES SEE BECOME ONLY OF ACADEMIC NATURE ONCE WE HAVE ALREADY HELD THAT RE- 9 ASSESSMENT PROCEEDINGS ARE NOT POSSIBLE AND ACCORDI NGLY WE DECLINE TO ADJUDICATE THOSE ISSUES. 16. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO. 1179 1. SINCE IN THIS APPEAL IDENTICAL ISSUES ARE INVOLV ED IS IN ASSESSMENT YEAR 2005-06 WHICH WE HAVE ADJUDICATE I N ITA NO. 1178/CHD/2013 IN THE ABOVEMENTIONED PARAS. FOLLOWIN G THE ABOVE ORDERS WE DECIDE THIS APPEAL IN FAVOUR OF THE ASSES SEE. 3. IN THE RESULT ASSESSEES APPEAL ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29-04-2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH APRIL 2014 AG COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR