Punjab & Haryana H.C : Whether the Income-tax Appellate Tribunal is justified in not setting aside the order under section 263 of the Income-tax Act, 1961, dated March 27, 2009, passed by the Commissioner of Income-tax, which was based upon change of opinion and not based upon any cogent and tangible material ?

High Court Of Punjab And Haryana

Kandi Friends Educational Trust Vs. CIT

Assessment Year : 2004-05

Section : 11, 12A, 260A, 263

Hemant Gupta And Ms. Ritu Bahri, Jj.

It Appeal No. 191 Of 2012 (O&M)

April  4, 2013

JUDGMENT

Hemant Gupta, J. – The present appeal under section 260A of the Income-tax Act, 1961 (for short, “the Act”), is against the order dated March 14, 2012, in respect of the assessment year 2004-05. The assessee has claimed the following substantial questions of law :

“(i) Whether the Income-tax Appellate Tribunal is justified in not setting aside the order under section 263 of the Income-tax Act, 1961, dated March 27, 2009, passed by the Commissioner of Income-tax, which was based upon change of opinion and not based upon any cogent and tangible material ?
(ii) Whether the Tribunal is justified in confirming the order of the Commissioner of Income-tax, passed under section 263 of the Act, without appreciating the detailed submissions of the appellant regarding application of income in accordance with section 11 of the Income-tax Act, 1961 ?
(iii) Whether the Income-tax Appellate Tribunal is justified in holding that the information collected by the Assessing Officer was not considered by him after due application of mind whereas the same had been duly examined by the Assessing Officer before framing the original assessment ?”

2. The appellant is a technical educational trust. The assessment proceedings in respect of the assessee was finalised by the Assessing Officer on December 26, 2006, at nil income. The Assessing Officer found that the assessee has incurred more than 85 per cent. of the expenditure during the year in question and, therefore, allowed the exemption under section 11 and section 12A of the Act. However, the Commissioner of Income-tax revised the said order in exercise of the provisions under section 263 of the Act on March 26, 2009, after giving show-cause notice. It was found that the families of the trustees have been paid interest whereas in terms of the deed of trust, the members of the trust are not to be paid any benefit or profit from the trust. It was also found that the Assessing Officer has failed to examine the issue of deduction of tax at source while crediting interest to the family members of the trustees. Similarly, it was found that 50 per cent. of the development fund has been utilised whereas the balance was to be utilised after ten years. The Commissioner found that there is no data of creation of development fund and the year-wise break up of opening balance is also not available. It was found that towards development fund, each student was to contribute a sum of Rs. 600 per annum. It was found that such receipt is income of the trust and not exempted under section 11 of the Act. Similarly, the discrepancies were found on account of depreciation, repayment of term loan. Such order has been affirmed in appeal by the Tribunal.

3. Learned counsel for the appellant has argued that even if all such additions are made, still the tax effect is nil, therefore, it cannot be said that the order of the Assessing Officer was prejudicial to the interests of the Revenue. Learned counsel for the appellant has referred to a Division Bench judgment of the Gujarat High Court in CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81/79 Taxman 184 in support of such argument.

4. We have heard learned counsel for the appellant and find no merit in the present appeal. The assessee has disputed the show-cause notice justifying the return filed. It was never the stand of the assessee that even if the said aspects are taken into consideration, still the income of the assessee would be nil. In the absence of any plea that the additions made will not cause loss to the Revenue, we find that the appellant cannot be permitted to raise such questions in appeal without there being any factual basis.

5. In view thereof, we do not find that any substantial question of law arises for consideration in the present appeal.

6. Dismissed.

[Citation : 357 ITR 84]