Khurja Development Authority v. Cit, Income Tax Appellate Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

ITA No. 2687.Del/2016 A.Y: 2011-12

Advocates

Assessee by: None
Department by: Sh. S.S Rana, CIT(DR)

Judges

H.S Sidhu, J.M
L.P Sahu, A.M

Acts

u/s 11 of the Income Tax Act, 1961 (hereafter referred as the Act)
Registration u/s. 12A of the I.T Act
u/s 12A of the I.T Act, 1961.
provisions of I.T Act, 1961.
u/s 143(1) of I.T Act, 1961
u/s 143(2) of I.T Act, 1961

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Smart Summary

Factual and Procedural Background

The Assessee, an Association of Persons (Trust), filed its income tax return claiming exemption under section 11 of the Income Tax Act, 1961, showing a taxable income of nil despite a surplus of Rs. 4,77,10,186. The return was initially processed under section 143(1) in January 2013. Subsequently, the case was selected for scrutiny and notices under sections 143(2) and 142(1) were issued. During the assessment, the Assessing Officer (AO) held that the Assessee did not possess registration under section 12A of the Income Tax Act, which is mandatory for claiming exemption under section 11. Therefore, the surplus income was treated as taxable under normal provisions, and assessment was completed under section 143(3) on the total income of Rs. 4,77,10,186. The Assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeal, holding that registration under section 12AA is mandatory for exemption under sections 11 to 13, and since the Assessee lacked such registration, no exemption was permissible. The Assessee then filed the present appeal before the Tribunal. The Assessee failed to appear at the hearing, and the Tribunal proceeded ex parte after hearing the Departmental Representative.

Legal Issues Presented

Whether the Assessee is entitled to exemption under sections 11 to 13 of the Income Tax Act, 1961 in the absence of registration under section 12AA of the Act?
Whether the dismissal of the Assessee's appeal by the CIT(A) was justified despite the pendency of a Special Leave Petition (SLP) filed by the Department against the order of the Allahabad High Court confirming the ITAT's grant of registration under section 12A?

Arguments of the Parties

Appellant's Arguments

The CIT(A) erred in dismissing the appeal merely because the Department had filed an SLP against the Allahabad High Court’s order confirming ITAT’s grant of registration under section 12A.
The Assessee contended that the Apex Court admitted the SLP but did not grant any stay on the Allahabad High Court’s order, implying the registration remains valid.
The main ground of appeal was that the assessing officer wrongly assessed the surplus income by rejecting the exemption on the basis that registration under section 12A was absent, despite the ITAT and Allahabad High Court ruling in favor of the Assessee.

Department's Arguments

The issue is similar to the case of Jammu Development Authority v. UOI (2014-TIOL-115-SC-IT), where the Supreme Court upheld the cancellation of registration under section 12A.
The Department relied on this precedent to argue that exemption under sections 11 to 13 cannot be granted without valid registration under section 12AA.
Requested dismissal of the Assessee’s appeal following the Supreme Court’s decision in the cited case.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Jammu Development Authority v. UOI (2014-TIOL-115-SC-IT)	Registration under section 12A is mandatory for claiming exemption under sections 11 to 13 of the Income Tax Act; cancellation of registration leads to denial of exemption.	The Tribunal followed the Supreme Court’s ruling to uphold the denial of exemption due to absence of valid registration under section 12AA, dismissing the Assessee’s appeal.

Court's Reasoning and Analysis

The Tribunal noted that the Assessee did not possess a certificate of registration under section 12AA of the Income Tax Act, which is a mandatory precondition for availing exemption under sections 11 to 13. Despite the Assessee’s contentions regarding the pendency of an SLP before the Supreme Court, no stay was granted against the Allahabad High Court’s order which had confirmed the ITAT’s grant of registration. The Tribunal further observed that the Assessee failed to produce any registration certificate before the AO, CIT(A), or the Tribunal. The Tribunal relied on the precedent set by the Supreme Court in Jammu Development Authority v. UOI, where cancellation of registration under section 12A was upheld, leading to denial of exemption. Accordingly, the Tribunal concurred with the CIT(A)’s dismissal of the appeal, finding no grounds for interference.

Holding and Implications

DISMISSED

The Tribunal dismissed the Assessee’s appeal, upholding the CIT(A)’s order denying exemption under sections 11 to 13 due to the absence of valid registration under section 12AA. The decision directly affects the parties by confirming the taxability of the surplus income as per the assessment. No broader precedent was established beyond the application of the existing Supreme Court ruling in Jammu Development Authority v. UOI.

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Khurja Development Authority v. Cit

H.S Sidhu, J.M:— The Assessee has filed this Appeal against the impugned order dated 24/2/2016 passed by the Ld. Commissioner of Income Tax(Appeals), Ghaziabad on the following grounds:

“1. Because the order passed by Learned Commissioner of Income Tax (Appeals) is bad in Law and against the facts of the appeal.

2. Because the Ld. Commissioner of Income Tax (Appeals) was wholly unjustified in dismissing the appeal merely on the ground that the department has filed a SLP against the order of Hon'ble Allahabad High Court confirming the order of Hon'ble ITAT granting registration u/s 12A of the Act. Ld. Commissioner of Income Tax (Appeals) has also ignored the fact that Hon'ble Apex Court has accepted the SLP but not granted any stay against the order of Hon'ble Allahabad High Court.

3. Because the Ld. Commissioner of Income Tax (Appeals) erred both in law and on facts in dismissing the appeal of the appellant whereas the main ground in the appeal before Learned CIT (Appeal) was that the assessing officer has assessed surplus of ‘receipts and expenditure accounts’ merely on the basis of rejection of registration u/s 12A, by Commissioner of Income Tax, although the issue of registration was decided by Hon'ble ITAT, New Delhi in favour of the appellant and further confirmed by Hon'ble Allahabad High court by rejecting appeal filed by the department against the order of Hon'ble ITAT. Now the matter of registration u/s 12A is sub-judice before Hon'ble Supreme Court, as SLP filed by the department has been admitted but the stay against the order of Hon'ble Allahabad High Court was not granted by the Apex Court.

4. The appellant craves leave to add or alter any of the ground of appeal before or at the time of hearing.”

2. The facts in brief are that assessee has filed its return of income in the status of AOP (Trust) showing taxable income at Rs. NIL after claiming exemption u/s 11 of the Income Tax Act, 1961 (hereafter referred as the Act) towards excess of income over expenditure at Rs. 4,77,10,186/-. In this case the return was processed u/s 143(1) of I.T Act, 1961 on 14.01.2013 on returned income. Later, the case was selected under scrutiny through CASS and notice u/s 143(2) of I.T Act, 1961 dated 07.8.2012 was issued and served upon the assessee. On change of incumbent notice u/s. 143(2) dated 26.6.2013 was issued fixing the date for compliance on 05.7.2013 Further, notice u/s. 142(1) alongwith detailed questionnaire dated 22.8.2013 was issued to the assessee. In compliance to these notices the AR of the assessee attended the proceedings from time to time and furnished the required details/explanation. The books of account were produced and examined on test check basis. Thereafter, the AO observed that as the issue of registration u/s 12A of the assessee as on date is sub-judice before the appellate authorities, therefore the submission of the assessee is not acceptable. As on date, the assessee has no registration u/s 12A of the I.T Act, 1961. Therefore, the assessee is not eligible for exemption u/s 11 of the I.T Act,. 1961 and all the surplus income over the expenditure are taxable under the normal provisions of I.T Act, 1961. Accordingly, the AO held that as pr the Income & Expenditure a/c enclosed with the return, the assessee has shown surplus at Rs. 4,77,10,186/-. Accordingly, the assessment was completed vide order dated 30.9.2013 passed u/s. 143(3) of the Act on total income at Rs. 4,77,10,186/-. Against the assessment order, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 24.2.2016 has held that it is uncontroverted fact that as on date the assessee does not enjoy registration u/s. 12AA and such registration is mandatory for availing exemption u/s. 11 to 13 of the Act. The assessment order therefore, denying such exemption in absence of mandatory registration u/s. 12AA calls for no interference.

3. Aggrieved with the impugned order dated 24.2.2016 passed by the Ld. CIT(a), Ghaziabad, Assessee is in appeal before the Tribunal.

4. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records.

5. Sh. S.S Rana, Ld. CIT (DR) and Sh. Kaushlendra Tiwari, Ld. Sr. DR. appeared for the Department and relied upon the orders passed by the Revenue Authorities. Mr. Rana, stated that the issue involved in the present Appeal is exactly similar to the issue involved in the case of Jammu Development Authority v. UOI (2014-TIOL-115-SC-IT) which has been decided in favour of the Revenue by the Hon'ble Supreme Court of India. Therefore, he requested that following the aforesaid precedent, the Appeal of the Assessee may be dismissed. For the sake of convenience, he filed the copy of the decision of the Hon'ble Supreme Court of India in the case of Jammu Development Authority v. UOI (2014-TIOL-115-SCIT).

6. We have heard the Ld. DR and perused the records, especially the orders passed by the revenue authorities as well as relevant record, we are of the considered view that Ld. CIT(A) has rightly dismissed the appeal of the assessee by holding that as on date the Assessee is not in possession of registration u/s. 12AA of the Act, which is mandatory for availing the exemption u/s. 11 to 13 of the I.T Act, 1961. We have also perused the Appeal File and we are of the view that assesse has not filed any Certificate of Registration granted u/s. 12AA of the I.T Act, 1961, which is mandatory for availing the exemption u/s. 11 to 13 of the Act, before the AO as well as Ld. CIT(A) and even before the Tribunal. Therefore, in the absence of the same, we are unable to accept the request of the Assessee for grant of exemption u/s. 11 to 13 of the I.T Act. Keeping in view of the facts and circumstances of the present case, we are of the view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), because the issue involved in the present Appeal is exactly similar to the issue involved in the case of Jammu Development Authority v. UOI (2014-TIOL-115-SC-IT) in which Registration u/s. 12A of the I.T Act was cancelled by the Ld. CIT(A) and order of the Ld. CIT(A) was upheld by the ITAT and Hon'ble Jammu & Kashmir High Court and finally an SLP filed by the Jammu Development Authority has also been dismissed by the Hon'ble Supreme Court of India. Therefore, respectfully following the Hon'ble Supreme Court of India decision in the case of Jammu Development Authority v. UOI (2014-TIOL-115-SC-IT), we uphold the impugned order passed by the Ld. CIT(A) and reject the grounds raised by the Assessee by dismissing the Appeal filed by the Assessee.

7. In the result, the Appeal filed by the Assessee is dismissed. Order pronounced on 04/12/2017.

Khurja Development Authority v. Cit

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Department's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Khurja Development Authority v. Cit

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