1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 9TH DAY OF JUNE 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE HEMANT CHANDANGOUDAR I.T.A. NO.36 OF 2009 BETWEEN 1. COMMISSIONER OF INCOME TAX C R BUILDING, QUEENS ROAD, BANGALORE. 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17(1), C.R.BUILDING, QUEENS ROAD, BANGALORE. APPELLANTS (BY SRI K V ARAVIND, ADV.) AND M/S. INTERNATIONAL SOCIETY FOR KRISHNA CONSCIOUSNESS, HARE KRISHNA HILL, RAJAJINAGAR, BANGALORE. RESPONDENT (BY SRI ASHOK A.KULKARNI, ADV. FOR SRI K R PRASAD, ADV.) 2 --- THIS ITA IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961 ARISING OUT OF ORDER DATED 05-09-2008 PASSED IN ITA NO.113/BNG/2008, FOR ASSESSMENT YEAR 1997-98, PRAYINT TO I. FORMULATE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW APPEAL AND SET ASIDE ORDER PASSED BY ITAT BANGALORE IN ITA NO. 113/BNG/2008,DATED 05-09-2008 CONFIRM ORDERS OF DEPUTY DIRECTOR OF INCOME TAX , CIRCLE-17(1),BANGALORE IN INTEREST OF JUSTICE AND EQUITY. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act , for short) has been filed by revenue. subject matter of appeal pertains to Assessment year 1997-98. appeal was admitted by Bench of this Court vide order dated 29.06.2009 on following substantial questions of law: a) Whether Tribunal was correct in holding that Assessing Officer was justifying in dropping reopened assessments under order dated 3 15.03.2005 without recording any reasons by recording its own reasons for first time in its order presuming reasons on which Assessing Officer would have passed order? 2. Facts giving rise to filing of this appeal briefly stated are that assessee is society registered under Section 12A of Act. During course of proceedings for grant of registration under Section 80G of Act, assessee had filed copies of statement of accounts for year ending 31.03.1997. As per aforesaid accounts, income before granting exemption under Section 11 and 12 was Rs.12,60,9195/-. assessee was therefore required to file return of income under Section 139(4A) of Act. assessee stated to have submitted its account to ISKON, Mumbai for consolidation of their accounts. assessee did not file return as required under Section 139(4A) of Act. Therefore, proceeding under Section 147 of Act were 4 initiated by assessing officer. In response to aforesaid proceeding, assessee filed return of income on 28.04.2004. Therefore, proceeding was dropped vide order dated 15.03.2005. 3. Director of Income Tax (Exemptions) initiated proceeding under Section 263 of Act and notice was issued to assessee as to why order dated 15.03.2005 be not cancelled and assessing officer be directed to frame fresh assessment for Assessment year 1997-98. Director of Income Tax (Exemptions) by order dated 30.03.2007 inter alia held that order dated 15.03.2005, by which proceeding under Section 147 were dropped for Assessment year 1997-98 to be erroneous and prejudicial to interest of revenue. order dated 15.03.2005 was cancelled and matter was remitted to assessing officer by treating income shown as opening balance for Assessment year 1997-98. Being aggrieved, assessee filed appeal 5 before Income Tax Appellate Tribunal. tribunal by order dated 05.09.2008 inter alia held that contention of assessee that they were sending accounts to Mumbai for purpose of consolidation is correct and aforesaid fact finds place in order passed by Director of Income Tax (Exemptions) under Section 263 of Act. It was further held that assessee was registered under Section 12A of Act and accounts were being submitted along with ISKON, Mumbai. It was further held that Director of Income Tax (Exemptions) has not found anything wrong with accounts for financial year 1996-97. 4. It was further held that assessing officer applied his mind on basis of facts and found that no income has escaped assessment for Assessment year 1997-98. It was further held that view taken by assessing officer is one of possible views and therefore, in view of law laid by Supreme Court in case of MALABAR INDUSTRIES CO. LTD., VS. 6 CIT , 243 ITR 83, it cannot be held that order of assessing officer was erroneous and required action under Section 263 of Act. tribunal accordingly quashed order under Section 263 of Act and partly allowed appeal. In aforesaid factual background, this appeal has been filed. 5. Learned counsel for revenue submitted that assessee was admittedly registered under Section 12A of Act and did not file return. Therefore, proceeding under Section 148 of Act initiated. It is further submitted that scope of proceeding under Section 148 and 263 of Act is different and proceeding under Section 263 could not have been brought on ground that income was already assessed to tax in Mumbai. In support of aforesaid submission on decision of Supreme Court in COMMISSIONER OF INCOME-TAX, MUMBAI VS. AMITABH BACHAN , (2016) 69 TAXMANN.COM 170 (SC). It is also urged that assessing officer was 7 under duty to proceed with assessment and to find out whether amount in question was assessed to tax in Mumbai. 6. On other hand, learned counsel for assessee has submitted that proceedings under Section 263 of Act were brought after taking into account factual aspect. decision of division bench of this Court in W.A.No.595/2007 has also been referred to and our attention has been invited to paragraph 6 of aforesaid decision and it has been pointed out that return of income was filed for first time in year 2000-01 showing opening corpus fund of Rs.39.59 Crores in balance sheet. It is also urged that corpus fund is not taxable. In this connection, our attention has been invited to order passed by Commissioner of Income Tax (Appeals) as well as Section 11(1)(d) of Act where finding has been recorded that amount in question is part of corpus fund. It is also submitted that proceeding under Section 263 of Act were ab initio 8 void and tribunal has passed reasoned order, which does not call for any interference. 7. By way of rejoinder reply, learned counsel for revenue has invited our attention to paragraphs 7 & 8 of order passed by division bench in W.A.No.595/2007 and has submitted that assessee is separate legal entity and was required to file return. 8. We have considered submissions made on both sides and have perused record. Admittedly in response to notice under Section 148, assessee filed return on 28.04.2004. From perusal of proceeding, it is evident that assessee was called upon to furnish certain details as well as documents on 28.10.2004 and 06.01.2005, which were supplied by assessee on 18.02.2005. Deputy Director, Income Tax (Exemptions) on 23.02.2005 confirmed that assessee s consolidation of accounts was done at Mumbai and assessment was completed. After examining submissions, made by assessee, 9 proceeding under Section 147 of Act were dropped. Director of Income Tax (Exemptions) in its order has found that assessee for Assessment year 1997-98 had disclosed opening balance of Rs.15,88,02,860/- as corpus fund. finding recorded by Director of Income Tax (Exemptions) that proceedings were dropped without proper enquiry and appreciation, cannot be sustained as from perusal of record, it is evident that enquiry was conducted and confirmation was sought from Deputy Director, Income Tax (Exemptions), Mumbai who confirmed that consolidation was done at Mumbai and assessment was completed and exemption under Section 11 of Act was granted. fact that assessee was sending accounts to Mumbai is recorded in order under Section 263 passed by Director of Income Tax (Exemptions), Mumbai. relevant extract has been reproduced by tribunal in para 4.5 of order, which is reproduced below for facility of reference: 10 Up to asst. year 2000-01, assessee have included complete accounts of its Bangalore Branch functioning from Hare Krishna Hill in Rajajinagar, Bangalore in its final audited accounts. 9. Thus, accounts were being submitted along with ISKON, Mumbai. Director of Income Tax (Exemptions) has not found anything wrong in accounts for Assessment year 1997-98. It is pertinent to mention here that view taken by assessing officer is one of two plausible views and therefore, in view of law laid down by Supreme Court in case of MALABAR INDUSTRIAL CO. LTD., supra, proceeding under Section 263 of Act cannot be upheld. tribunal has therefore, rightly set aside proceeding under Section 263 of Act initiated against assessee. In view of preceding analysis, substantial question of law is answered against revenue. In 11 result, we do not find any merit in this appeal, same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss Commissioner of Income-tax, Bangalore / Deputy Commissioner of Income-tax, Circle-17(1), Bangalore v. International Society for Krishna Consciousne