INTERNATIONAL SOCIETY FOR KRISHNA CONSCIOUSNESS V. UNION OF INDIA

WA/595/2007

AI Insights

The case involves the International Society for Krishna Consciousness (ISKCON Bangalore) appealing against the dismissal of their writ petition, which challenged the orders passed under Section 263 of the Income Tax Act, 1961, by the Director of Income Tax (Exemption), Mumbai. These orders were related to the re-assessment of returns for the year 2001-02 and involved the clubbing of accounts with ISKCON Mumbai. The appellant argued that this clubbing and the subsequent orders would adversely affect their interests in a pending civil suit. The High Court dismissed the appeal on grounds of lack of territorial jurisdiction and the separateness of legal entities.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 722821 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-11-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Karnataka Societies Registration Act, 1960
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M V SESHACHALA; K SHETTY
• Assessee Lawyers: SIDDA; KULKARNI
• Keywords: Assessment Year; Civil Suit; Income tax exemption; Jurisdiction; Legal entity; Re-assessment
• Section: 263; 12A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 27TH DAY OF NOVEMBER, 2012 PRESENT THE HON’BLE MR. JUSTICE N.KUMAR AND THE HON’BLE MR.JUSTICE B.V.PINTO Writ Appeal No.595 of 2007 (T - IT) BETWEEN INTERNATIONAL SOCIETY FOR KRISHNA CONSCIOUSNESS (ISKCON BANGALORE) HAVING ITS REGISTERED OFFICE AT HARE KRISHNA HILLS CHORD ROAD, RAJAJINAGAR BANGALORE-560 010 REPRESENTED BY ITS GOVERNING COUNCIL MEMBER SRI.SATYA GAURA CHANDRA DASA ... APPELLANTS (By SRI SIDDAREDDY K.G. AND SRI KULKARNI, ADVS. FOR SRI K.R.PRASAD.) AND 1. UNION OF INDIA REPRESENTED BY SECRETARY FINANCE MINISTRY OF FINANCE DEPARTMENT OF REVENUE, GOVT.OF INDIA NORTH BLOCK, NEW DELHI. 2 2. DIRECTOR OF INCOME-TAX (EXEMPTION) ROOM NO.616, 6TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI-400 012 3. DY.DIRECTOR OF INCOME TAX(EXEMPTION) CIRCLE 17(1), 3RD FLOOR, C R BUILDING QUEENS ROAD BANGALORE – 560 001 4. ASST.DIRECTOR OF INCOME-TAX (EXEMPTION) ROOM NO 616, 6TH FLOOR, PIRAMAL CHAMBERS PAREL MUMBAI- 400 012 5. INTERNATIONAL SOCIETY FOR KRISHNA CONSCIOUSNESS (ISKCON MUMBAI) A REGD. PUBLIC TRUST HAVING ITS OFFICE AT HARE KRISHNA LAND JUHU, MUMBAI -400 049 REPRESENTED BY ITS SECRETARY 6. V KRISHNASWAMY CHARTERED ACCOUNTANT PARTNER, S N MUKHERJEE & CO., CHARTERED ACOUNTANTS MALVA-ROOSA GROUND FLOOR, BULLSROY COLONY ROAD VAKALA SANTA CRUZ (E), MUMBAI – 400 055 7. DIRECTOR GENERAL OF INCOME TAX (EXEMPTION),PLOT NO 15, 2ND FLOOR, LAXMI NAGAR, DISTRICT CENTRE NEW DELHI -110 092 ... RESPONDENTS (By Sri. M.V.SESHACHALA, ADV. FOR R1-R4 & R7. Sri. K.SHASHI KIRAN SHETTY, ADV.FOR C/R5 & R6.) 3 THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETITION NO.15944/2006 DATED 22/02/2007. THIS WRIT APPEAL IS COMING ON FOR FINAL HEARING THIS DAY, N. KUMAR J., DELIVERED THE FOLLOWING:- JUDGMENT This appeal is filed challenging the order passed by the learned Single Judge who has declined to entertain the writ petition filed by the appellant petitioner, wherein, he has sought for setting aside the order dated 08.03.2006 passed under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for brevity) and the consequential order passed by the 2nd respondent, in re-assessing the returns for the year 2001-02. 2. Parties are referred to as they are referred to in the writ petition. 3. The case of the petitioner is that they came into existence as a legal entity – the Society under the 4 Karnataka Societies Registration Act, 1960. The registration certificate was issued by the Registering Authority bearing Registration No.S-49/78-79. They are having its registered office at Hare Krishna Hill, Chord Road, Rajajinagar, Bangalore – 560 010. They are pursuing the principal object from its inception as set out in its Memorandum of Association and as per the approved rules and regulations. They have been registered under Section 12 A of the Act granting exemption under the Act. The petitioner has filed a suit in O.S.No.7934/2001 seeking permanent injunction against 5th respondent from interfering with the affairs of the petitioner’s institution. 4. The Member of Income Tax, Central Board of Direct Taxes directed the Director General of Income Tax (Exemption), New Delhi to enquire into a complaint filed by the 5th respondent. The Director General of Income Tax (Exemption), New Delhi, intimated the 5 Member, Income Tax Central Board of Direct Taxes who in turn instructed respondent No.2 i.e., the Director of Income Tax (Exemption), Mumbai, who is not an authority to exercise jurisdiction over the petitioner - Society to look into the matter. The respondent No.2 passed Suo-Motu revision order dated 08.03.2006 under Section 263 of the Act, in respect of the assessment year 2001-02 pertaining to the respondent No.5 and directed the respondent No.4 - The Assistant Director of Income Tax (Exemption), Mumbai to pass fresh assessment order. Thereafter, after securing the copies of the income tax returns filed by the petitioner before the respondent No.3 and obtaining the same, a fresh order came to be passed for the years 2001-02, 2002-03 and 2004-05 by clubbing the account of the petitioner to that of the respondent No.5. Aggrieved by the said order, the petitioner preferred the writ petition on the ground that the said clubbing and contents of the order would affect their interest in 6 O.S.No.7934/2001, which is pending consideration. The learned Single Judge after hearing both the parties was of the view that if the respondent No.5 claims to be the Society, which had been assessed by the Income Tax at Mumbai and whose assessment order has been revised, then even, if observations are made in that order, the same cannot bind the petitioner if in law, the petitioner is a different legal person. When such is the position and when even according to the petitioner, the petitioner is an entity different from the respondent No.5 - Society and it is not necessary to examine the order passed against the respondent No.5 by the Director of Income Tax. There is no need to further examine any inter-se dispute between the petitioner and respondent No.5 in the writ petition. Writ petition is unnecessary and accordingly, he dismissed the petition. Aggrieved by the said order, the petitioner has preferred this appeal. 7 5. The apprehension expressed in this appeal by the petitioner is the finding recorded by the respondent No.2 would prejudice the interest of the petitioner in the pending suit before the civil court. Their apprehension is that finding recorded in the said income tax proceedings, though not having an impeachable binding effect on the civil court, will severely and adversely affect the appellant in the pending suit. In the practical world, unless so specifically directed by a higher court, the other authorities would naturally be influenced by a finding by other statutory authorities having a high standing in the hierarchy of administration and therefore, the finding of the respondent No.2 regarding the real ownership of the property and accretions thereto of the appellant would seriously prejudice the interest of the petitioner. Therefore, they want these aspects to be kept in mind by the learned Single Judge and want the order of the learned Single Judge to be set aside. From 8 the aforesaid facts, it is clear that the petitioner is claiming to be independent entity to that of the respondent No.5. 6. For the first time, the petitioner filed his return of income in March 2002 for the assessment year 2000-01 showing opening corpus fund of Rs.39.59 crores in the balance sheet. It is a registered Society at Bangalore and a separate legal entity. According to them, they have nothing to do with the respondent No.5. Now the impugned order passed is by the Director of Income Tax (Exemption), Mumbai, under Section 263 of the Act. The second order challenged is the order of the assessment passed by the Assistant Director of Income Tax, Mumbai - respondent No.4 in this proceedings. The grievance is that in these proceedings, the petitioner Society is shown as a part of the respondent No.5 - Society. There is dispute pending between the parties in the civil court. The said finding 9 by the Income Tax authorities may influence the civil court to come to a conclusion that the petitioner is an independent legal entity and part of respondent No.5. It is on that apprehension they have come to the Court. 7. Firstly, both the orders are passed at Mumbai in respect of respondent No.5 who is at Mumbai. Therefore, if the petitioner wants to challenge the said orders passed at Mumbai, it has to approach not the High Court of Karnataka at Bangalore but High Court at Mumbai at Mumbai and therefore, this Court has no territorial jurisdiction to decide the correctness and legality of the order. 8. Secondly, if the case of the petitioner that it is a different entity and they have nothing to do with respondent No.5, the order passed in respect of respondent No.5 will not bind them to any extent whatsoever. Now it is submitted that the civil court has disposed the suit against which an appeal was preferred 10 before this Court and it is already disposed. The matter is pending before the Apex Court. The apprehension was that the Civil Courts will feel that the order is passed by the Income Tax Authorities and that would be binding on them as they have no clear picture of the law. Now that the Supreme Court is seized of the matter their apprehension is misconceived. Their appeal would be decided according to law, without in any way being influence by the order passed by the income tax authorities. Therefore we do not see any merit in this appeal. Accordingly, the appeal is dismissed. Sd/- JUDGE Sd/- JUDGE nvj "