Annie Thayil's Religious and Charitable Trust V. The Commissioner of Income Tax (Exemption) and The Income Tax Officer (Exemption)

WP(C)/15505/2023

AI Insights

The case involves Annie Thayil's Religious and Charitable Trust, which filed a writ petition against notices issued by the Income Tax Department under Sections 148A(d) and 148 of the Income Tax Act, 1961. The trust, claiming to be a charitable entity, did not file income returns for the assessment year 2016-2017 despite selling a property for Rs.61,81,600. The Income Tax Department issued notices alleging that income chargeable to tax had escaped assessment. The trust argued that as a registered charitable entity under Section 12AA, it was exempt from tax for the said assessment year. The court, after reviewing the submissions and the relevant legal provisions, directed the trust to file the ITR and participate in the assessment process, emphasizing that the claimed exemption could only be validated through the acceptance of the filed return by the tax authorities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 685055 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2023
• Assessment Year: misc
• Other Referred Cases: St. Joseph Higher Secondary School vs The Commissioner of Income Tax (Exemption)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: SHIJU MADASSERY; P J ANILKUMAR; K N SREEKUMARAN; N SANTHOSHKUMAR
• Keywords: Assessment Year; Charitable Trust; Income Tax; Property sale; Tax Exemption
• Section: 147; 148; 12AA; 148A(d); 148A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 27TH DAY OF SEPTEMBER 2023 / 5TH ASWINA, 1945 WP(C) NO. 15505 OF 2023 PETITIONER: ANNIE THAYIL'S RELIGIOUS AND CHARITABLE TRUST, ARCH BISHOPS HOUSE., BROADWAY, ERNAKULAM – 682 031. (REPRESENTED BY SRI. SHAIJU JOSEPH MADASSERY, EXECUTIVE TRUSTEE), PIN – 682 031. BY ADVS. P.J.ANILKUMAR (A-1768) K.N.SREEKUMARAN N.SANTHOSHKUMAR RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (EXEMPTION), INCOME TAX DEPARTMENT, 2ND FLOOR, SAN JUAN TOWERS, OLD RAILWAY STATION ROAD, ERNAKULAM, PIN – 682 018. 2 THE INCOME TAX OFFICER (EXEMPTION), INCOME TAX DEPARTMENT , 2ND FLOOR ,SAN JUAN TOWERS, OLD RAILWAY STATION ROAD ERNAKULAM, PIN – 682 018. BY ADVS. CHRISTOPHER ABRAHAM, SC THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No. 15505/2023 : 2 : DINESH KUMAR SINGH, J. --------------------------------------------------------- W.P.(C). No. 15505 of 2023 --------------------------------------------------------- Dated this the 27th day of September, 2023. JUDGMENT The present writ petition has been filed questioning Exhibits P11 and P12 notices issued under Sections 148A(d) and 148 of the Income Tax Act, 1961. 2. The petitioner claims to be a Charitable Trust. The petitioner, however, did not file return of its income for the assessment year 2016-2017. In the relevant assessment years, the petitioner has sold a property for a consideration of Rs.61,81,600/-. The petitioner was issued with Exhibit P9 notice under Section 148A(d) of the Act, 1961 stating that information is received to the effect that income chargeable to tax for the assessment year 2016-2017 had escaped assessment within the meaning of Section 147 of the Act, 1961. The relevant supporting document for such finding was provided to the petitioner along with the notice. The petitioner was required to show cause as to why a show cause notice under Section 148 of the Act, 1961 should not be issued, in view of the details contained in the documents annexed to it. W.P.(C) No. 15505/2023 : 3 : 3. In response to the said show cause notice, the petitioner has filed a reply vide Exhibit P10 dated 15.03.2023. The petitioner, in its reply, states that the petitioner is a Charitable Trust, for which registration has been obtained under Section 12AA of the Act, 1961 with effect from the assessment year 2017-2018. It is also admitted that they have not filed any return prior to the assessment year 2017- 2018. It was further stated that since the petitioner has been granted registration under Section 12AA of the Act, 1961, the benefits of exemption are also available to them for the assessment year 2016- 2017. 4. After considering the said reply, Exhibit P11 order under clause (d) of Section 148A of the Act, 1961 was issued by the second respondent. The order would disclose that the petitioner’s reply was duly considered. However, it was held by the authority that on a careful consideration of the reply, it could be seen that the assessee themselves admitted that they had not filed their ITR for the assessment year 2016-2017 and no valid reasons were provided for not filing the returns upto the year 2017-2018. The petitioner also did not provide any details relating to the transaction of the immovable property other than the agricultural land disposed of by the assessee during the financial year 2015-2016 relevant to the assessment year W.P.(C) No. 15505/2023 : 4 : 2016-2017. 5. It has also been stated in Exhibit P11 that the applicability of exemption/taxability of transaction performed by the assessee and the averments made by the assessee are not supported with any proof or details. The authority, after considering the reply and the facts of the case, concluded that the taxability/exemption applicable to the property transaction could be checked only if ITR Is filed and therefore, a notice under Section 148 is issued suggesting that income chargeable to the tax to the tune of Rs.61,81,600/-had escaped assessment in the case of the assessee for the assessment year 2016-2017. Thereafter, the second respondent has issued Exhibit P12 notice under Section 148 of the Act, 1961. 6. However, the petitioner, instead of filing ITR in pursuance to Exhibit P12 notice under Section 148 of the Act, 1961, has approached this Court. Considering the aforesaid facts and after perusing Exhibit P11 order passed under Section 148A(d) of the Act, 1961, I find that there is no violation of the statutory prescriptions by the authority, while issuing a notice under Section 148A of the Act, 1961 to the petitioner. Unless the petitioner files a return and the same is accepted by the assessing authority, an exemption as claimed by the petitioner cannot be granted. W.P.(C) No. 15505/2023 : 5 : 7. The petitioner should participate in the assessment proceedings in pursuance to Exhibit P12 notice issued under Section 148 of the Act, 1961. The petitioner is permitted to file ITR within seven days from today, in compliance with Exhibit P12 notice issued under Section 148 of the Act, 1961 and may make a claim regarding exemption as permitted under law. The assessment proceedings shall be finalised by the assessing authority in accordance with law expeditiously. With the above observations and directions, instant writ petition stands finally disposed of. sd/- DINESH KUMAR SINGH, JUDGE. Rv W.P.(C) No. 15505/2023 : 6 : APPENDIX OF WP(C) 15505/2023 PETITIONER’S EXHIBITS: Exhibit-P1 TRUE COPY OF THE APPLICATION DATED 22.03..2017 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT FOR OBTAINING REGISTRATION U/S 12A OF THE INCOME TAX ACT Exhibit-P2 TRUE COPY OF THE NOTICE DATED 21..04..2017 ISSUED BY THE 2ND RESPONDENT DIRECTING THE PETITIONER TO FILE ADDITIONAL DOCUMENTS IN CONNECTION WITH 12A REGISTRATION. Exhibit-P3 TRUE COPY OF THE REPLY DATED 05.05.2017 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT AGAINST EXHIBIT -P2 NOTICE. Exhibit-P4 TRUE COPY OF THE NOTICE DATED 13..07..2017 ISSUED BY THE 1ST RESPONDENT DIRECTING THE PETITIONER TO APPEAR FOR A PERSONNEL HEARING ON 02..08..2017 IN CONNECTION WITH 12AA REGISTRATION . Exhibit-P5 TRUE COPY OF THE REPLY DATED 02..08..2017 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT AGAINST EXHIBIT-P4 NOTICE . Exhibit-P6 TRUE COPY OF THE ORDER DATED 26..09..2017 U/S12AA ISSUED BY THE 1ST RESPONDENT ACCEPTING THE PETITIONERS SUBMISSION AND CONNECTED DOCUMENTS. Exhibit-P7 TRUE COPY OF THE NOTICE DATED 21..02..2023 U/S 133(6) ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit-P8 TRUE COPY OF THE REPLY DATED 03..03..2023 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT AGAINST EXHIBIT-P7 NOTICE. Exhibit-P9 TRUE COPY OF THE NOTICE DATED 09..03..2023 U/S148A ISSUED BY THE 2ND RESPONDENT ON THE GROUND OF NON FILING OF RETURN. Exhibit-P10 TRUE COPY OF THE REPLY DATED 15..03..2023 FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER AGAINST EXT-P9 NOTICE.. Exhibit-P11 TRUE COPY OF THE ORDER DATED 31.03..2023 U/S 148A(D) OF THE INCOME TAX ACT PASSED BY THE 2ND RESPONDENT Exhibit-P12 TRUE COPY OF THE NOTICE U/S.148 DATED 31..03..2023 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. W.P.(C) No. 15505/2023 : 7 : Exhibit-P13 TRUE COPY OF THE RELEVANT PORTION OF THE CIRCULAR NO: 01/2015/ EXPLANATORY NOTE TO THE PROVISIONS OF THE FINANCE (NO.2) ACT, 2014 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES DATED 21/01/2015 . Exhibit-P14 TRUE COPY OF THE STATEMENT OF INCOME FOR THE ASSESSMENT YEAR 2016-17. Exhibit-P15 TRUE COPY OF THE ORDER IN ST. JOSEPH HIGHER SECONDARY SCHOOL VS THE COMMISSIONER OF INCOME TAX (EXEMPTION) , W.P.(C) 16444/2022 DATED 20.05.2022 RESPONDENTS’ EXHIBITS: NIL True Copy PS To Judge. rv "