IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA Nos.1458 to 1462/Bang/2018 Assessment Years: 2009-10 to 2013-14 respectively

Respondent by : Smt. R. Premi, D.R.

Date of Hearing : 26.11.2020 Date of Pronouncement : 26.11.2020

O R D E R

PER BENCH:

All the appeals filed by the assessee are directed against the orders passed by Ld CIT(A)-10, Bengaluru and they relate to the assessment years 2009-10 to 2013-14. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the validity of reopening of assessment in all the years and also in confirming the additions made by the AO.

2. The facts relating to the case are stated in brief. The assessee herein was established by the Education Department of Government of Karnataka. The objectives were to carry out activities for the welfare of students. The fund was established way back in 1962 and has been carrying out its functions under the direction and control of the Government. The assessee was not filing return of income under the Income tax Act.

3. The assessee applied for registration u/s 12AA of the Income- tax Act,1961 ['the Act' for short] as a charitable organisation in prescribed Form 10A on 28-03-2014. The assessee was accorded registration u/s 12AA of the Act on 23-09-2014 w.e.f. AY 2014-15.

4. The revenue carried out Survey operations u/s 133A of the Act on 22-09-2015 upon getting information that the assessee was accumulating huge income year after year and was claiming exemption u/s 11 of the Act without having registration u/s 12AA of the Act. During the course of Survey operations, a statement was recorded from Smt. Syed Ruksana Bulquees, Programme Implementation Officer & In charge – Jt. Director of Public Instructions. In the statement, she clearly stated that the fund does not have registration for the earlier years and further confessed that the fund has not filed the returns of income for earlier years.

5. Accordingly, the AO reopened the assessments of the years under consideration by issuing notices us 148 of the Act on 30-09- 2015. The assessee sought reasons for reopening of assessment from the AO and the same was supplied. The assessee objected to reopening of assessments by placing reliance on the second proviso to sec.12A(2) of the Act. The AO, however, expressed the view that the second proviso to sec.12A(2) will not apply to the assessee. The observations made by the AO in this regard are extracted below:-

“37.1 It may be noted here that the said amendment is inserted in the Act, vide Finance Act 2014 (No.2) and the effective date for the said section and the provisions are with effect from 01-10-2014. Hence, this proviso does not apply to the case on hand.”

6. Before Ld CIT(A) also, the assessee challenged the validity of reopening of assessment by advancing arguments made before the AO. The assessee also placed its reliance on the Circular No.1 dated 21-01-2015 issued by CBDT explaining the provisos inserted in sec.12A(2) of the Act. The Ld CIT(A), however, took the view that the AO has reopened the assessment not on account of the reason that the fund was not registered u/s 12AA of the Act, but because the assessee has claimed deduction u/s 11 and 12 of the Act. Further the assessee was having huge surplus in all these years. Accordingly, he upheld the validity of reopening of assessment.

7. Before us, the Ld A.R advanced his arguments on the legal issue of validity of reopening of assessment. We also heard Ld D.R on this preliminary issue.

8. The reasons recorded by the AO for reopening of assessment of impugned assessment years are identical in all the years. The reasons recorded by the AO reads as under