Tata Education and Development Trust v. Asstt. CIT
[ITA Nos. 1423 and 1424/Mum/2018 and ITA No. 1535/Mum/2018, dt. 24-7-2020] :
2020 TaxPub(DT) 2925 (Mum.-Trib.)
Suo moto rejection by
Commissioner (Appeals) against rectification done by assessing officer to his
assessed return in an appeal
Facts:
Assessee, a long standing reputed educational trust was
denied benefit of trust exemption by a reading of section 11(1)(c) by the
assessing officer besides of having not produced CBDT confirmation for
contributions made to foreign universities for furtherance of educational
benefits to deserving Indian students. This was appealed by the assessee to
Commissioner (Appeals). Subsequently the assessee reapplied to CBDT and was
granted the exemption for a series of assessment years which enshrined the
years under appeal as well. Noting this exemption the assessing officer suo
moto rectified the return and granted the exemption to the contributions of
the assessee. Meanwhile the Commissioner (Appeals) in the appeal reversed the suo
moto rectification order of assessing officer citing that the letter of
exemption from CBDT was obtained belated + was not mentioned retrospective in
application thus on frivolous grounds. Aggrieved the assessee went in higher
appeal -
Held in favour of the assessee that they were entitled to
the exemption. Strictures were passed against the Commissioner (Appeals) for
having denied the assessee the benefit of the CBDT's letter.
Following are key takeaways in this decision --
1. Once the assessing officer suo
moto passed the rectification order, the Commissioner (Appeals) did not
have power to revoke it as that stood merged with the original order. The
appeal itself to the Commissioner (Appeals) became non est not requiring any
adjudication. To this extent the Commissioner (Appeals) overran his powers.
2. The exemption letter from
CBDT mentions it for a span for assessment years -- questioning this as not
mentioning retrospective in application pointed to lack of application of mind.
3. Reference be made to Tata
Education and Development Trust v ACIT, SA Nos. 147 and 148/Mum/2020 arising
out of ITA Nos. 1423 and 1424/Mum/2018 -- Assessment Years 2011-12 and 2012-13,
Mumbai ITAT dated 17-6-2020 wherein assessee was required to retain INR 99
crores as reserve to take care of their tax dues as an outcome of the verdict
in this stay application. The amendment in section 254(2) proviso 3 vide
Finance Act, 2020 warranting a compulsory 20% pre-deposit to appeal to ITAT
does it fetters the plenary powers of ITAT's stay granting powers or is it
simply being directive to ITAT who thus are still empowered to grant stay even
without the 20% pre-deposition on merits even after this amendment is pending
adjudication before a higher bench.