AI Structured Summary
Not yet generated for this judgment
Judgment
,,
By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby tribunal has allowed the appeal of the assessee.",,
Counsel for the appellant has framed following substantial question of law arises.,,
(i) Whether on the facts and in the circumstancesof the case and in law the Hon’ble ITAT is right in not appreciating the facts that the assessee,,
has violated the condition No.2 mentioned in the order of approval granted u/s 10(23C)(vi) of the Act according to which “the assessee will not,,
invest or deposit its funds (other than voluntary contribution received and maintained in the form of jewellery, furniture etc.) for any period during the",,
previous year relevant to the assessment years mentioned specified in sub-section (5) of section 11 of the Act�,,
(ii) Whether on the facts and in thecircumstances of the case and in law, the Hon’ble ITAT is right in setting aside the order passed by CIT(E)",,
inspite of the fact that the assessee has not invested its funds in the modes specified u/s 11(5) of the IT Act, 1961?",,
(iii) Whether on the facts and in thecircumstances of the case and in law, the Hon’ble ITAT is right in setting aside the order passed by the",,
CIT(E) inspite of the fact that the assessee has provided undue benefit to the specified person covered u/s 13(3) of the IT Act, 1961? (iv) Whether on",,
the facts and in circumstances of the case and in law, the Hon’ble ITAT is right in deciding that show cause notice should be signed by CIT(E)",,
inspite of the fact that only requirement under 13th proviso to the section 10(23C) has complied by conducting personal hearing?,,
(v) Whether on the facts ad in circumstances ofthe case and in law, the Hon’ble ITAT is right in travelling beyond law in pointing defect in show",,
cause notice, when there is no requirement of issuing notice under the 13th proviso to section 10(23C)?",,
(vi) Whether on the fact ad in circumstances ofthe case and in law, the Hon’ble ITAT is right in not appreciating the fact that the",,
ITO(Hq.)/AC/DC(Hq.) does not have any independent power to issue such notices and they act on behalf of CIT(E) while issuing these notices?,,
Counsel for the appellant has firstly taken us to the order of the tribunal and contended that the tribunal has committed an error in holding that the,,
person who has produced in evidence has no jurisdiction and has wrongly considered the provisions of Section 10(23C) and has given the benefit to,,
the assessee.,,
In our considered opinion, in view of the observations made by the tribunal, which reads as under:-",,
We have considered the rival submissions as well relevant material on record. The first objection of the assessee is regarding the validity of show,,
cause notice that it was not signed by the competent authority and therefore, it is invalid. The power and jurisdiction to withdraw the approval granted",,
u/s 10(23C)(vi) of the Act is provided under 13th proviso to the said section which reads as under:-,,
“Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) is notified by the,,
Central Government 7 [or is approved by the prescribed authority, as the case may be,] or any university or other educational institution referred to in",,
sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that",,
Government or the prescribed authority is satisfied thatâ€",,
(i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has notâ€" (A) applied its,,
income in accordance with the provisions contained in clause (a) of the third proviso; or,,
(B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or,,
(ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institutionâ€",,
(A) are not genuine; or,,
(B) are not being carried out in accordance withall or any of the conditions subject to which it was notified or approved, Â it may, at any time after",,
giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other,,
educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and",,
forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other,,
educational institution or any hospital or other medical institution and to the Assessing Officerâ€,,
The 13th proviso to section 10(23C)(vi) confers the power/ jurisdiction to withdraw the approval to the Government or the prescribed authority. It,,
further postulates that the prescribed authority, if satisfied that such fund or institution has not complied with the conditions as provided thereunder, can",,
withdraw the approval. For Initiation of proceedings to withdraw the approval the mandatory pre-condition is the satisfaction of the prescribed,,
authority. Undisputedly the prescribed authority is the ld. CIT(E) and the satisfaction of the prescribed authority is a must before issuing the show,,
cause notice for withdrawal of the approval granted u/s 10(23C) (vi) of the Act. Therefore, what is material and mandatory condition is the",,
satisfaction of the prescribed authority and non else. In case in hand the impugned show cause notice dated 08.07.2016 was signed by the DCIT,,
(Hqr.) and issued as per directions of the ld. CIT(E). In paras 2 and 6 Of the show cause notice in our opinion are relevant to the issue and the same,,
are reproduced as under:-,,
“2. In this regard, I am directed to state that your institution/society has violated the provisions of Section 10(23C)(vi) of the Act in respect of",,
following issues:-,,
Your case is fixed for hearing before the Commissioner of Income Tax (Exemptions), Jaipur on 25.07.2016 at 12.30 P.M. in the Income Tax office",,
(Exemptions) room No. 303, 3 rd floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur. You may attend either personally or through an authorized",,
representative in this behalf (holding valid Power of Attorney). Any failure to comply may lead to the conclusion that the assessee has nothing further,,
to say from his side in this regard, and the case may therefore, be accordingly decided.â€",,
The language and tenor of the show cause notice do not exhibit any thought process of ld. CIT(E) but it reveals it was issued and signed by,,
DCIT(Hqr.) as per instructions and directions of ld. CIT(E). The matter would have been different if the show cause notice brings out the thought,,
process and application of mind by the ld. CIT(E) but was only signed by the DCIT (Hqr.). In case in hand it is apparent that the ld. CIT(E) delegated,,
its powers to DCIT (Hqr.) to issue show cause notice and therefore, it is based on the satisfaction of the DCIT (Hqr.) and not of ld. CIT(E). para 2",,
and 6 of the impugned show cause notice clearly manifest that it was issued by the DCIT (Hqr.) and not by the CIT(E). The language of the show,,
cause notice does not give any impression or inference that it is an expression of the satisfaction of ld. CIT(E). The Kolkata Bench of this Tribunal in,,
case of Arun Kanti vs. CIT (supra) while considering the issue of validity of show cause notice issued u/s 263 of the Act not signed by the ld. CIT has,,
observed in para 5 and 5.1 as under:-,,
Investment/deposits of funds not in theprescribed modes:- The sub clause (b) of 3 rd proviso of section 10(23C) requires the society to,,
invest/deposit the funds in the modes specified under section 11(5) of the Act. However, it is noticed that the society has made advances which is",,
neither as per the objects nor in the modes prescribed u/s 11(5) of the Act. In the Balance Sheet as on 31.03.2013, it is noticed that the society has",,
shown loans and advances in the following names:-,,
S.No.,Name,Amount
1,Trumurti Colonisers & Builders Pvt. Ltd.,"1,38,00,000/-
2,A.K. Education Welfare Society,"1,00,00,000/-
3,Ambience Land Developer,"60,07,953/-
4,Surendra Kumar Meena,"3,00,00,000/-
quashed.†8. Facts of the present case being identical to the case referred to above, respectfully following the aforesaid decision we hold that the",,
assumption of jurisdiction u/s 263 of the Act in the present case is not valid. Order u/s 263 of the Act is accordingly quashed and the appeal of the,,
assessee is allowed. In view of the above conclusion, the other grounds of appeal are not taken into consideration.â€",,
The Hon’ble Allahabad High Court in case of CIT vs. Rajesh Kumar Pandey (supra) while dealing with the validity of notice and applicable of the,,
provisions of section 299BB has observed as under:-,,
“299BB Notice deemed to be valid in certain circumstancesâ€" Where as assessee has appeared in any proceeding or cooperated in any inquiry,,
relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him,",,
has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in,,
any proceeding or inquiry under the Act that the notice was--,,
(a) not served upon him; or,,
(b) not served upon time in time; or,,
(c) served upon him in an improper manner;Provided that nothing contained in this section shall apply where the assessee has raised such objection,,
before the completion of such assessment or reassessment.â€,,
Thus, it is settled proposition of law that the notice issued by the authority other than the prescribed authority is not valid and consequential order",,
passed by the ld. CIT(E) is without jurisdiction. The show cause notice confers the jurisdiction to proceed and to pass the order. In case the notice,,
itself is not valid then the jurisdiction assumed by the prescribed authority based on the invalid notice become invalid and consequential order passed by,,
the authority is invalid and void abinitio for want of jurisdiction. Further, invalid show cause notice vitiates the proceeding and consequential order.",,
Hence, we are of the considered opinion that the impugned order passed by the ld. CIT(E) is invalid and liable to quash on this ground.",,
Even on merits, the trip which was conducted was an educational trip and only the Director was picked up. In that view of the matter, no",,
substantial question of law arises.,,
The appeal stands dismissed.,,