Holy Spirit Educational Society Vs ITO (Exemptions) (ITAT Bangalore)
Assessee, a charitable educational society registered under the Karnataka Societies Registration Act, 1960, was granted 12A registration & had been claiming exemption u/s 11 & 12. AO reopened the assessment for AY 2016–17 u/s 147 alleging violation of Section 13(1)(c), due to supposed receipt of donations from a related party – “Society of Servants of the Holy Spirit” – & denied exemption u/s 11. The assessee contended the amount was not a donation, but a reimbursement of smart class charges.
Assessee raised the following legal grounds
- Improper reopening u/s 147 – no fresh material; mere change of opinion.
- Jurisdictional defect – AO did not dispose of objections to reopening as m&ated by GKN Driveshafts (SC).
- Violation of CBDT DIN Notification 19/2019- Two different DINs issued for same notice.
- Misapplication of Section 13(1)(c)- The alleged “donation” was in fact a cost-sharing reimbursement, & even otherwise, the entire exemption couldn’t be denied.
Tribunal rejected the objection related to DIN as it found no defect as the two DINs pertained to separate communications (notice vs. intimation). However, Tribunal held that AO did not dispose of the assessee’s objections to the reopening notice u/s 148. Tribunal relied on Karnataka HC decisions in Hewlett Packard Financial Services, Deepak Extrusions, & SC decision in GKN Driveshafts (259 ITR 19), all m&ating prior disposal of objections & held that AO’s failure vitiated the reassessment proceedings.
