Case Law Details
Navodaya Grama Vikas Charitable Trust Vs ACIT (ITAT Bangalore)
Conclusion: Reopening of assessment under section 147 was not justified when there was no evidence to show that there was escapement of income due to failure on the part of assessee to disclose fully and truly all material facts necessary for assessment.
Held: Assessee was a charitable trust registered 1u/s.12AA by the Commissioner of Income-tax, Mangalore. Assessee-trust was engaged in the charitable activities of helping the rural poor by forming Self Help Groups [SHG] and providing them with financial and other assistance. For the year under appeal, assessee had claimed exemption u/s. 11 of the Act. AO concluded the assessment determining the total income of assessee-trust at Rs.88,69,793/- as against the returned income of Rs. Nil that reported by assessee in the original return of income. This income of Rs. 88,69,793/- was computed by AO as excess of income over application u/s. 11 of the Act, by changing the method of computing the income and application excluding the loans advanced by assessee to SHG regarded as application of income and recovery of the loans from SHG that was considered as income. AO arrived at the belief that income had escaped assessment by virtue of the fact that Pushparaj Jain has received an advance of Rs.2.50 Crores towards sale of land from the assessee and had also made certain advances to M N Rajendra Kumar, the trustee of the assessee trust. AO was of the opinion that the trust was diverting its funds violating section 13(2) to specified people mentioned in Section 13(3) without adequate security or compensation resulting in loss of revenue to the trust, improper application of trust funds in investments and the income of Rs.2.5 Crores diverted to the trustee and treated as taxable income and was charged at maximum marginal rate. It was held that the original assessment for the assessment year 2009-10 was completed u/s. 143(3) on 25/11/2011 and notice for re-opening of assessment was issued to the assessee on 13/04/2015. As per the provisions of section 147 if in any assessment year and if after expiry of four years from the end of the relevant assessment year, action sought to be taken u/s. 147 of the I.T. Act, such action can be only in cases where income chargeable to tax has escaped assessment in such assessment year by reason of failure on the part of the assessee to disclose truly and fully all material facts necessary for his assessment in such assessment year. It was seen from the reasons recorded for re-opening of assessment that it did not show that there was escapement of income due to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment of income of the assessee for the assessment year 2009-10. Under the circumstances, the conditions stipulated under first proviso to section 147 were not satisfied and therefore, on the said ground alone, the impugned notice deserved to be quashed and set aside.
FULL TEXT OF THE ITAT JUDGEMENT
These two appeals are filed by the assessee against different orders of Commissioner of Income Tax (Appeals)-10, Bangalore Dt. 11.01.2018 for the Assessment Years 2009-10 & 2014-15. Since certain issues are common in both the appeals, they are heard together and consolidated order is passed for the sake of convenience.
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