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II. Direct Taxes Case Law:
1. Ananda Social and Educational Trust Vs. CIT, Civil Appeal No(s). 5437-5438/2012 with 4702/2014, Date of Pronouncement: 19.02.2020, Supreme Court of India
Whether
a newly registered Trust is entitled for registration under section
12AA of the Income Tax Act, 1961 on the basis of its objects, without
any activity having been undertaken.
Held: Yes
Brief Facts:
The trust was formed as a society on 30.05.2008 and it applied for
registration on 10.07.2008 i.e. within a period of about two months. No
activities had been undertaken by the Trust before the application was
made. The Commissioner rejected the application on the sole ground that
since no activities have been undertaken by the trust, it was not
possible to register it, presumably because it was not possible to be
satisfied about whether the activities of the trust are genuine. The
Income Tax Appellate Tribunal, Delhi, reversed the orders and after
which the Revenue Department approached the High Court by way of filing
an appeal. The High Court upheld the order of the Tribunal and came to
the conclusion that in case of a newly registered trust even though
there was no activities, it was possible to consider whether the trust
can be registered under section 12AA of the Act. Hence the appeal was
made by the revenue on the aforesaid substantial question of law.
Held:
The Hon’ble Apex Court held that “Since section 12AA pertains to the
registration of the Trust and not to assess of what a trust has actually
done, we are of the view that the term ‘activities’ in the provision
includes ‘proposed activities’. That is to say, a Commissioner is bound
to consider whether the objects of the Trust are genuinely charitable
in nature and whether the activities which the Trust proposed to carry
on are genuine in the sense that they are in line with the objects of
the Trust.”
Therefore, the substantial question of law was answered in favour of the assessee trust.
(Please click here for judgment)
2. Super
Malls Private Limited Vs. PCIT, Civil Appeal No. 2006-2013 of 2020,
Date of Pronouncement: 05.03.2020, Supreme Court of India
Where
in case the Assessing Officer of the searched person and the other
person is the same, there need not be two separate satisfaction notes
recorded by the Assessing Officer of the searched person, where he is
also the Assessing Officer of the other person: Held Yes
Whether
there is a compliance of the provisions of Section 153C of the Act by
the Assessing Officer and all the conditions which are required to be
fulfilled before initiating the proceedings under Section 153C of the
Act have been satisfied or not: Held Yes
Brief Facts:
As a consequence of search and seizure operation conducted on the
director of the M/s Super Mall (P) Limited (hereinafter referred to as
the ‘Assessee’), notice was issued to the assessee u/s 153C of the Act
by the Assessing Officer. The Assessing Officer of the assessee and the
Assessing Officer of the search persons, was the same. The assessment
for the assessment year 2008-09 was finalised by the Assessing Officer
and additions were made in the assessment year 2008-09. The
assessment order was the subject matter of appeal before the CIT
(Appeals). The assessment order was challenged mainly on the ground
that the satisfaction note recorded under Section 153C of the Act in
respect of the assessee, i.e., a third party, was invalid. That the
learned CIT (Appeals) dismissed the assessee’s appeal. However, the
learned Income Tax Appellate Tribunal (for short ‘ITAT’) allowed the
appeal preferred by the assessee and held that the satisfaction note
recorded under Section 153C of the Act in respect of the assessee, i.e.,
a third party, was invalid. In the appeal before the Hon’ble High
Court, the Hon’ble High Court has allowed the said appeal preferred by
the Revenue and has observed and held that there was a compliance of
Section 153C of the Act. Therefore, the present appeal was preferred
before the Hon’ble Supreme Court in respect of aforesaid questions of
law.
Held:
The Hon’ble Apex Court held that “where the Assessing Officer of the
searched person and the other person is the same, it is sufficient by
the Assessing Officer to note in the satisfaction note that the
documents seized from the searched person belonged to the other person.
Once the note says so, then the requirement of Section 153C of the Act
is fulfilled. In case, where the Assessing Officer of the searched
person and the other person is the same, there can be one satisfaction
note prepared by the Assessing Officer, as he himself is the Assessing
Officer of the searched person and also the Assessing Officer of the
other person. However, the AO must be conscious and satisfied that the
documents seized/recovered from the searched person belonged to the
other person. In such a situation, the satisfaction note would be qua
the other person. The second requirement of transmitting the documents
so seized from the searched person would not be there as he himself will
be the Assessing Officer of the searched person and the other person
and therefore there is no question of transmitting such seized documents
to himself.
Therefore, the question of law was answered against the appellant-assessee and in favour of the respondent Revenue.
(Please click here for judgment)
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