Madras High Court
Sree Venkateswara Educational Trust vs The Income Tax Officer on 2 September, 2024
Author: C.Saravanan
Bench: R.Suresh Kumar, C.Saravanan
T.C.A.Nos.168 and 169 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 02.09.2024
CORAM:
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
and
THE HONOURABLE MR.JUSTICE C.SARAVANAN
T.C.A.Nos.168 and 169 of 2020
and
C.M.P.Nos.5380 and 5387 of 2022
Sree Venkateswara Educational Trust,
655/20 & 600, Jagilkathirampatti Village
and Post,
Pochampalli Taluk,
Krishnagiri District – 635 206.
(PAN: AAIT25220J) ... Appellant in both T.C.As
Vs.
The Income Tax Officer,
Exemptions Ward, Salem. ... Respondent in both T.C.As
Prayer in T.C.A.No.168 of 2020: Appeal under Section 260A of the Income Tax
Act, 1961, against the order of the Income Tax Appellate Tribunal, “C” Bench,
Chennai dated 30th December 2019 in ITA.No.1338/Chny/2019.
Prayer in T.C.A.No.169 of 2020: Appeal under Section 260A of the Income Tax
Act, 1961, against the order of the Income Tax Appellate Tribunal, “C” Bench,
Chennai dated 30th December 2019 in ITA.No.1339/Chny/2019.
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1/16
T.C.A.Nos.168 and 169 of 2020
For Appellant : Mr.G.Baskar
(In both T.C.As)
For Respondent : Mrs.V.Pushpa
(In both T.C.As) Senior Standing Counsel
COMMON JUDGMENT
(Judgment of the Court was delivered by C.SARAVANAN, J.)
These appeals are directed against the Impugned Common Order dated
30.12.2019 passed by the Income Tax Appellate Tribunal (ITAT), “C” Bench,
Chennai in I.T.A.Nos.1338 & 1339/Chny/2019.
2. By the Impugned Common Order, the appeals filed by the
appellant/assessee have been dismissed.
3. Operative portion of the Impugned Common Order dated 30.12.2019
in I.T.A.Nos.1338 & 1339/Chny/2019 reads as under:-
“5. We have heard both the sides, perused the materials
available on record and gone through the orders of authorities
below including paper book filed by the assessee. Admittedly,
the assessee has filed its return of income on 18.01.2014 as a
Trust. However, the assessee has no registration under Section
12AA of the Act in the assessment year under consideration or
not even applied for registration under the Act since the
assessee has application for registration in Form 10A only on
31.12.2015, which is in the financial year 2015-2016 and
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T.C.A.Nos.168 and 169 of 2020
relevant to the assessment year 2016-2017. Just because the
assessee is a trust, in the absence of registration under Section
12AA of the Act, the assessee cannot file its return of income as
a Trust. If at all the assessee has filed a revised return other
than assessee-trust and not considered by the Department, the
Tribunal can direct the authorities below to allow deduction.
Moreover, the assessee has not placed any material as to
whether any scrutiny on the assessee's activities/operations,
genuineness of its claim, etc., was ever made by the Revenue
and its claim was found to be in order but for registration under
Section 12AA of the Act nor it placed any material to suggest
that any proceeding was pending before the appellate authority
on such claim etc. The assessee has not placed any material to
suggest that when granting the registration of the Trust under
Section 12AA of the Act dated 02.03.2016 with effect from
01.04.2015 the ld. CIT(E) examined its activities/operations,
genuineness of its claim etc., for the earlier years or atleast for
the impugned assessment year and found its exemption claim is
otherwise in order. Therefore, the assessee's claim that for the
assessment year 2013-2014, it should be deemed to be an
assessment proceedings pending before the Assessing Officer
cannot be accepted. Based on the identical facts, similar
finding was given by the Coordinate Bench of the Tribunal in
the case of Soundaram Chokkanathan Educational and
Charitable Trust Vs. ITO in I.T.A.No.1844/Chny/2017 dated
30.08.2019. Respectfully following the above decision, the
appeal filed under Section 154 of the Act stands dismissed.
6. So far as the claim of deduction of expenditure is
concerned, the assessee has not at all filed revised return. In
this circumstances, neither the Assessing Officer nor the
appellate authority have any power to admit the claim of the
assessee as per the ratio laid down in the case of Goetze India
Ltd., Vs. CIT (supra), wherein, the Hon'ble Supreme Court
makes it clear that the power of the assessing authority to
entertain a claim for deduction otherwise than by a revised
return and did not impinge on the power of the Appellate
Tribunal under Section 254 of the Act. Therefore, the case law
relied on by the ld. Counsel for the assessee in the case of
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T.C.A.Nos.168 and 169 of 2020
Srinivasa Educational Trust Vs. ITO in I.T.A.Nos.1327 &
1328/Chny/2019 dated 05.09.2019 has no application. In the
present case, no doubt, the appellate authority has power to
entertain any new claim if the assessee has filed revised return
within the time prescribed under the Act and if the Assessing
Officer has not considered the revised return, then the Tribunal
can direct the Assessing Officer to consider the same. However,
in the present case, admittedly, the assessee has not filed any
revised return towards admitting the claim of deduction. Thus,
in view of the decision of the Hon'ble Supreme Court in the case
of Goetze India Ltd., Vs. CIT (supra), the appeal filed against
the order under Section 143(1) of the Act stands dismissed.
7. In the result, both the appeals filed by the assessee are
dismissed.”
4. At the time of admission of these appeals, this Court had framed the
following questions of law as substantial questions of law:
T.C.A.No.168 of 2020 T.C.A.No.169 of 2020
1. Whether on the facts and in the 1. Whether on the facts and in the
circumstances of the case the circumstances of the case the
Tribunal was right in law in Tribunal was right in law in holding
holding that the case of the that the case of the appellant would
appellant would not fall within the not fall within the 1st proviso to
1st proviso to Section 12A(2) of the Section 12A(2) of the Act?
Act?
2.Whether on the facts and in the 2.Whether on the facts and in the
circumstances of the case the circumstances of the case the
Tribunal was right in law in Tribunal was right in law in holding
holding that the appeal pending that the appeal pending before the
before the Commissioner cannot be Commissioner cannot be deemed to
deemed to be an assessment be an assessment proceeding
proceeding pending before the pending before the Assessing Officer
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T.C.A.Nos.168 and 169 of 2020
T.C.A.No.168 of 2020 T.C.A.No.169 of 2020
Assessing Officer for the purposes for the purposes of applying 1st
of applying 1st Proviso to Section Proviso to Section 12(A)(2) of the
12(A)(2) of the Act? Act?
3. Whether on the facts and in the 3. Whether on the facts and in the
circumstances of the case the circumstances of the case the
Tribunal was right in confirming Tribunal was right in law in holding
the levy of tax on gross income of that the proceedings under Section
the Trust, when the exemption 154 should not be taken as
claimed u/s 11 was denied for want assessment proceedings pending
of registration u/s 12AA? before the assessing officer?
4. Whether on the facts and in the 4. Whether on the facts and in the
circumstances of the case the circumstances of the case the
Tribunal was right in law in Tribunal was right in law in holding
holding that the proceedings under that in the absence of filing a revised
Section 154 should not be taken as return, the assessee cannot make a
assessment proceedings pending fresh claim relying upon the
before the assessing officer? judgment of the Hon'ble Supreme
Court in Goetze (India)?
5. Whether on the facts and in the
circumstances of the case the
Tribunal was right in law in
holding that in the absence of filing
a revised return, the assessee
cannot make a fresh claim relying
upon the judgment of the Hon'ble
Supreme Court in Goetze (India)?
5. The brief facts of the case are that the appellant/assessee had filed
Return of Income on 18.01.2014 under Section 139(1) of the Income Tax Act,
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T.C.A.Nos.168 and 169 of 2020
1961 (hereinafter referred to as the 'Act') for the Assessment Year 2013-2014.
While filing the return, the appellant/assessee had claimed exemption from
payment of tax as a Trust under Section 11 of the Act by filing the return in
consonance with Section 10 of the Act.
6. At that point of time, the appellant/assessee was not holding certificate
of recognising it as a Trust under Section 12AA of the Act. An application
under Section 12A(a) of the Act for recognizing the appellant/assessee as a
Trust eligible for exemption was made before the Commissioner of Income Tax
(Exemptions), Chennai only on 16.12.2015. A certificate recognizing the
appellant/assessee as a eligible Trust for exemption was subsequently granted
on 02.03.2016 by the Commissioner of Income Tax (Exemptions), Chennai.
7. By this time, the Return of Income of the appellant/assessee dated
18.01.2014 filed for the Assessment Year 2013-2014 was processed under
Section 143(1) of the Act and thus assessment was completed by the Assessing
Officer vide Assessment Order dated 12.03.2015.
8. The appellant/assessee filed an application dated 28.03.2015 under
Section 154 of the Act, to rectify the alleged mistake in the aforesaid
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T.C.A.Nos.168 and 169 of 2020
Assessment Order dated 12.03.2015 passed under Section 143(1) of the Act.
9. The Application dated 28.03.2015 filed by the appellant/assessee
under Section 154 of the Act was however rejected by the Assessing Officer
vide order dated 29.10.2015. The said order dated 29.10.2015 reads as under:-
“Order under Section 154 of the Income Tax Act, 1961
The assessee has filed its return of Income for the
Assessment Year 2013-2014 on 18-01-2014 admitting NIL
income. The return was processed by Centralized Processing
Center, Bangalore determining Rs.99,51,157/- as the liability
towards tax & interest and an intimation under Section 143(1) of
the I.T.Act, 1961 dated 12-03-2015 was sent to the assessee.
2. The assessee, aggrieved by the above intimation under
Section 143(1) of the Income Tax Act, filed the rectification
petition under Section 154 of the Income Tax Act as referred
above. Vide the above petition under Section 154, the assessee
has submitted that the demand of Rs.99,51,157/- has cropped up
due to non consideration of assessee's claim for exemption under
Section 11 of the I.T.Act and also because of non consideration
of expenditure of earlier years brought forward.
3. The petition filed by the assessee is carefully considered
and order under Section 154 is passed as under:
3.1 The claim of the assessee for exemption under Section
11 of the Income Tax Act was not considered by the Centralized
Processing Center, Bangalore during the processing of the return
of income under Section 143(1) of the Income Tax Act, for the
Assessment Year 2013-2014. The primary criteria for exemption
under Section 11 and 2 of the Income Tax Act that the assessee
trust should be registered under Section 12A(a) of the Income
Tax Act. In the instant case, even during the proceedings under
Section 154 of the Income Tax Act, the assessee has not filed any
evidence for its registration under Sectin 12A(a) of the Income
Tax Act.
4. In view of the above discussion, the petition filed by the
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T.C.A.Nos.168 and 169 of 2020
assessee is rejected.”
10. Aggrieved by the Assessment Order 12.03.2015 passed by the
Assessing Officer under Section 143(1) of the Act and order dated 29.10.2015
passed by the respondent under Section 154 of the Act, the appellant/assessee
preferred appeal before the Commissioner of Income Tax (Appeals). The
Commissioner of Income Tax (Appeals) however rejected the respective appeal
in I.T.A.Nos.138 & 136/2016-2017 vide Orders dated 25.03.2019.
11. A further appeal of the appellant/assessee was also rejected by the
Income Tax Appellate Tribunal (ITAT) vide Impugned Common Order dated
30.12.2019 in I.T.A.Nos.1338 & 1339/Chny/2019 and thus, the present appeals
have been filed by the appellant/assessee.
12. As far as the issue as to whether subsequent grant of
recognition/registration under Section 12 of the Act is concerned, the issue now
stands covered against the appellant/assessee in terms of the decision of the
Division Bench of this Court in M/s.Soundaram Chokkanathan Educational
and Charitable Trust Vs. The Income Tax Officer, Salem in T.C.A.No.1015
of 2019 dated 09.12.2020.
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T.C.A.Nos.168 and 169 of 2020
13. The surviving issue that arises for consideration in these appeals is
whether the appellant/assessee ought to have filed a revised return to claim
deductions as a “Regular Assessee” or as an “Association of Person”. It is the
contention of the Department, the appellant/assessee ought to have filed a
revised return to claim deductions either as a “Regular Assessee” or as an
“Association of Person”.
14. In support of his contention, the learned counsel for the appellant has
relied on the following decisions of the Tribunal:-
i. Kingston Educational Trust, Thiruvannamalai Vs. The Deputy
Commissioner of Income, CPC, Bengaluru in I.T.A.No.567/Chny/2019
dated 21.11.2019.
ii. M/s.Srinivasa Educational Trust Vs. The Income Tax Officer,
Exemptions Ward, Salem in I.T.A.Nos.1327 & 1328/Chny/2019.
15. In these cases, under a somewhat similar circumstance, the case has
been remitted back to the Assessing Officer to redo the assessment by
recomputing the taxable income.
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T.C.A.Nos.168 and 169 of 2020
16. Learned Senior Standing Counsel for the respondent Revenue on the
other hand would submit that the order of the Appellate Tribunal does not call
for any interference.
17. Learned Senior Standing Counsel for the respondent Revenue has
relied on the decision of the Hon'ble Supreme Court in Goetze (India) Ltd.,
Vs. Commissioner of Income tax, (2006) 284 ITR 323/2006 SCC Online SC
1446, wherein the Hon'ble Supreme Court held as under:-
“1. Leave granted.
2. The question raised in this appeal relates to whether
the appellant assessee could make a claim for deduction other
than by filing a revised return. The assessment year in question
was 1995-96. The return was filed on 30.11.1995, by the
appellant for the assessment year in question. On 12.01.1998,
the appellant sought to claim a deduction by way of a letter
before the assessing officer. The deduction was disallowed by
the assessing officer on the ground that there was no provision
under the Income Tax Act to make amendment in the return of
income by modifying an application at the assessment stage
without revising the return.
3. This appellant's appeal before the Commissioner
(Appeals) was allowed. However, the order of the further
appeal of the department before the Income Tax Appellate
Tribunal was allowed. The appellant has approached this court
and has submitted that the Tribunal was wrong in upholding the
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T.C.A.Nos.168 and 169 of 2020
assessing officer's order. He has relied upon the decision of this
court in National Thermal Power Company Ltd. Vs. CIT
MANU/SC/1287/1997 : [1998] 229 ITR 383 (SC), to contend
that it was open to the assessee to raise the points of law even
before the Appellate Tribunal.
4. The decision in question is that the power of the
Tribunal under Section 254 of the Income Tax Act, 1961, is to
entertain for the first time a point of law provided the fact on
the basis of which the issue of law can be raised before the
Tribunal. The decision does not in any way relate to the power
of the assessing officer to entertain a claim for deduction
otherwise than by filing a revised return. In the circumstances
of the case, we dismiss the civil appeal. However, we make it
clear that the issue in this case is limited to the power of the
assessing authority and does not impinge on the power of the
Income Tax Appellate Tribunal under Section 254 of the Income
Tax Act, 1961. There shall be no order as to costs.”
18. A reading of the decision of the Hon'ble Supreme Court in Goetze
(India) Ltd., (cited supra) makes it clear that it restricts the power of the
Assessing Authority and does not impinge on the power of the Income Tax
Appellate Tribunal (ITAT) under Section 254 of the Act. The Hon'ble Supreme
Court has clearly held that limited to the power of the Assessing Authority and
does not impinge on the power of the Income Tax Appellate Tribunal under
Section 254 of the Income Tax Act, 1961.
19. The facts of this case are not in dispute. The appellant/assessee had
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T.C.A.Nos.168 and 169 of 2020
claimed exemption-cum-payment under the Act without actually filing
application under Section 12A(a) of the Act as it stood then during the period in
dispute.
20. The appellant/assessee obtained registration under Section 12AA of
the Act only on 02.03.2016. The case pertains to the Assessment Year 2013-
2014. Therefore, in terms of the decision of the Division Bench of this Court in
M/s.Soundaram Chokkanathan Educational and Charitable Trust case
(cited supra), the benefit of registration would not enure in favour of the
appellant/assessee after registration.
21. At the same time, the appellant/assessee cannot be denied all the
legitimate deductions that would have been available, if the returns were filed
either as a “Regular Assessee” or as an “Association of Person”.
22. The purpose of assessment is to recover just tax and not subject an
assessee to unjust tax by holding that no return was filed either as a “Regular
Assessee” or as an “Association of Person” merely because revised return was
not filed under Section 139(4) of the Act, within a time specified under Section
134 of the Act.
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T.C.A.Nos.168 and 169 of 2020
23. The last date for filing the returns under Section 139(4) of the Act
would have expired on 31.03.2015 which was just few days before the return
was processed on 12.03.2015 under Section 143(1) of the Act.
24. The Hon'ble Supreme Court in Formica India Division, Bombay,
Burma Trading Corporation Limited Vs. Collector of Central Excise and
others, 1995 Supp (3) SCC 552/1995 (77) ELT 511, had held as under:-
“When it was found that they were liable to pay duty on
the intermediary product and had not paid the same, but had
paid the duty on the end product, they could not ordinarily have
complied with the requirements of Rule 56A. Once the Tribunal
took the view that they were liable to pay duty on the
intermediary product and they would have been entitled to the
benefit of the notification had they met with the requirement of
Rule 56A, the proper course was to permit them to do so rather
than denying to them the benefit on the technical ground that
the point of time when they could have done so had elapsed and
they could not be permitted to comply with Rule 56A after that
stage had passed. We are, therefore, of the opinion that the
appellants should be permitted to avail of the benefit of the
notification by complying at this stage with Rule 56A to the
satisfaction of the Department.”
25. In our view also, if assessments are to be completed, deductions and
applicable exemptions that are otherwise available to an assessee ought to have
been extended by the Assessing Officer to an assessee before finalizing the
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T.C.A.Nos.168 and 169 of 2020
assessment. Since the appellant/assessee was not entitled to exemption as a
Trust under Sections 11, 12 and 12A of the Act in absence of registration under
the Act as it stood Section 12AA of the Act, the benefit of other deductions
under the Act ought to have been given. The Assessing Officer is not expected
to act mechanically to confirm the liability to fasten an unjust tax liability on an
assessee.
26. Therefore, we are inclined to set aside the Impugned Common Order
dated 30.12.2019 and remit the case back to the Assessing Officer to pass a
fresh order under Section 143(3) of the Act.
27. These appeals stand disposed of with the above observations. The
substantial questions of law are partly answered in favour of the
appellant/assessee. No costs. Connected Civil Miscellaneous Petitions are
closed.
[R.S.K., J.] [C.S.N., J.]
02.09.2024
Index : Yes/No
Internet : Yes/No
Speaking Order/Non-Speaking Order
Neutral Citation : Yes/No
arb
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T.C.A.Nos.168 and 169 of 2020
To
The Income Tax Officer,
Exemptions Ward, Salem.
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T.C.A.Nos.168 and 169 of 2020
R.SURESH KUMAR, J.
and
C.SARAVANAN, J.
arb
T.C.A.Nos.168 and 169 of 2020
and
C.M.P.Nos.5380 and 5387 of 2022
02.09.2024
https://www.mhc.tn.gov.in/judis
