Delhi High Court
Commissioner Of Income Tax vs Goodearth Foundation on 11 April, 2012
Author: Sanjiv Khanna
$~13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : 11th April, 2012.
+ ITA 1100/2010
COMMISSIONER OF INCOME TAX ..... Appellant
Through Mr. Anupam Tripahti, sr. standing
counsel with Ms. Anusha Singh, Adv.
versus
GOODEARTH FOUNDATION ..... Respondent
Through Mr. Ajay Vohra, Ms. Kavita Jha
and Mr. Somnath Shukla, Advs.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE R.V. EASWAR
SANJIV KHANNA,J: (ORAL)
The present case is a saga of errors from both the assessee and
the revenue. Perhaps the assessee is more at fault. The assessee is a
society which claims that it is carrying on charitable activities. It
was formed in the year 1979. The society never filed income tax
return till at least 2003. The society had a school in Alwar and the
school treating itself as an assessee, though it was not an assessee,
was filing returns with the Assessing Officer at Alwar. The school
claimed that it was carrying on charitable activities. The Assessing
ITA 1100/2010 Page 1 of 5
Officer at Alwar continued to assess and treat the school as a
separate assessee undertaking charitable activities. We may also
note that on 1.4.2002, the respondent-society took over activities of
another school at Faridabad.
2. The respondent-society filed its return of income for the
assessment year 2003-04 at Delhi in respect of the two institutions
including the income of the APS School at Alwar and Eicher
Education Welfare society, Faridabad. On 2.12.2003, the
respondent-society filed an application in Form 10A for registration
under Section 12A of the Income Tax Act, 1961 (herein referred as
'Act') w.e.f. 1.4.2002. By order dated 17.6.2004, the Director of
Income Tax (Exemption) granted registration w.e.f. 1.4.2003. He
rejected the request/prayer of the respondent-society for registration
w.e.f. 1.4.2002.
3. In spite of the aforesaid position, the Assessing Officer did not
issue any notice under Section 147/148 of the Act to the respondent-
assessee calling upon them to file a return and assess them tax for the
period prior to 1.4.2003.
4. It appears that the Assessing Officer at Alwar issued notices
under Section 147/148 in respect of the school on the ground that
they did not have requisite registration under Section 12A and their
assessments were reopened. The Assessing Officer then denied
ITA 1100/2010 Page 2 of 5
exemption to the school. The assessee did not succeed in appeals
except in the year 1998-99, and thereafter the assessee filed appeals
before the Tribunal. For the assessment year 1998-99 assessee
succeeded before the CIT(Appeals) on the ground that jurisdictional
pre-conditions for reopening the assessment were not satisfied.
Revenue preferred an appeal before the Tribunal for the assessment
year 1998-99.
5. After a delay of more than 3 years & 4 months the respondent-
society on 11.6.2008 filed an appeal against the order dated
17.6.2004 passed by the Director of Income Tax (Exemptions)
granting registration under Section 12A w.e.f. 1.4.2003. In this
appeal they had prayed that the exemption should be granted w.e.f.
1.4.1997. We may note here that in the application which was filed
before the DIT(Exemption), the registration under Section 12A was
sought w.e.f. 1.4.2002 and not w.e.f. 1.4.1997. We may also record
here that the school at Alwar had filed an application under Section
12A before Commissioner of Income Tax, Alwar on 28.12.2005
seeking retrospective registration w.e.f. 1.4.1997. The application
was rejected. The school thereafter preferred an appeal before the
Tribunal at Jaipur.
6. When these appeals were pending in Delhi and Jaipur, the
matters were consolidated and were decided by Tribunal at Delhi and
ITA 1100/2010 Page 3 of 5
the impugned order dated 19.6.2009 has been passed.
7. The gist of the impugned order is that the respondent-society
shall be treated as registered under Section 12A w.e.f. 1.4.1997; the
notices issued under Section 147/148 of the Act to the school will be
treated as having been validly issued to the respondent-society and
therefore, the Assessing Officer will assess the income of the
respondent-society for the assessment year 1998-99 onwards for all
the assessment years.
8. The respondent-assessee had preferred ITAs before this Court
which were disposed of vide order dated 2.12.2010 giving liberty to
the assessee to raise the issues in the present appeal filed by the
Revenue. The contention of the revenue is that registration under
Section 12A should not have been granted with retrospective effect.
There may be some merit in the said contention as the registration
under Section 12A with retrospective effect has been granted from
1.4.1997. Another contention of the revenue is that there was delay
of 3 years & 4 months in preferring an appeal against the order of
Director of Income Tax (Exemptions) passed on 17.6.2004. The
Revenue may be a good case on the said aspect also. At the same
time the notices issued by the Revenue under Section 147/148 of the
Act to the school are clearly unsustainable as they have not been
issued to the assessee. Ex-facie there is merit in the contention
ITA 1100/2010 Page 4 of 5
raised by the respondent-assessee that they cannot be assessed on the
basis of the notices, which were issued to a non-existing assessee
(i.e., the school in Alwar).
9. The Tribunal, it is apparent has taken a pragmatic and practical
view of the whole situation. Even if we set aside the order of the
Tribunal because of the legal fallacy and lacunae, it will be against
and contrary to the interest of the Revenue as they would not be able
to now assess and if required tax the respondent-assessee in respect
of income right from 1998-99 onwards. The order of the Tribunal
ensures that the respondent-assessee is assessed and, if required and
justified taxed, w.e.f. 1998-99 onwards. There have been, as noticed
above, lapses on both the sides and interfering with the impugned
order will lead to difficulties and not in the interest of the Revenue,
particularly when the respondent-assessee has not been issued notice
under Section 147/148 of the Act for any of the assessment years. In
view of the aforesaid position, we are not inclined to interfere with
the ultimate decision of the Tribunal. The appeal is dismissed. No
costs.
SANJIV KHANNA, J.
R.V.EASWAR, J.
APRIL 11, 2012/vld
