Jawaharlal Nehru Technological University, Kakinada (JNTUK) V. Assistant Commissioner of Income Tax

WP/12479/2022

AI Insights

The case involves Jawaharlal Nehru Technological University, Kakinada (JNTUK), which filed writ petitions against the assessment orders issued by the Assistant Commissioner of Income Tax for various assessment years. The university argued that it is exempt from income tax as it is substantially funded by the government and operates solely for educational purposes. The assessments were contested on the grounds that they were made without granting a proper opportunity of hearing and while an appeal for exemption under Section 12AA of the Income Tax Act was pending. The court found that the assessments were made without considering the subsequent grant of exemption and the pending appeal, thus setting aside the orders and remanding the matter for re-assessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 794434 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 20-12-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Jawaharlal Nehru Technological Universities Act, 2008, University Grants Commission Act, 1956
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M
• Assessee Lawyers: S
• Keywords: Assessment orders; Educational institution; Government Funded; Income tax exemption; Non-profit; Writ of Mandamus
• Section: 147; 144; 12AA; 10(23C)(iiiab); 139(4C)

Judgement Text

"HON’BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO Writ Petition Nos.12448, 12477, 12478, 12479 and 12480 of 2022 COMMON ORDER: (Per Hon’ble Sri Justice U. Durga Prasad Rao) The petitioner//Jawaharlal Nehru Technological University, Kakinada (JNTUK) filed above writ petitions seeking writ of mandamus to declare that the assessment orders dated 30.03.2022 for the assessment years 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19 passed by the Assistant Commissioner of Income Tax /1st respondent herein are illegal, arbitrary and to set aside the same and pass such other orders. 2. Petitioner’s case succinctly is thus: (a) The petitioner/JNTUK came into being w.e.f the 18th day of August, 2008 by virtue of Jawaharlal Nehru Technological Universities Act, 2008 (Act No.30 of 2008) enacted by State of Andhra Pradesh, with the sole objective of imparting education and certain other objects incidental thereto. (b) The petitioner is recognized by the University Grants Commission (UGC) as a State University under Section 12[B] of UGC 2 Act, 1956 and imparts education in various courses like B-Tech, M-Tech, M.B.A, B-Pharmacy, M-Pharmacy, MCA, Nano Technology, etc., through campus colleges located within the University campus and also through its constituent colleges and affiliated colleges located in different Districts of Andhra Pradesh. (c) The petitioner is substantially financed by the Government and all property and assets of the petitioner were acquired out of funds received from the Government of Andhra Pradesh, University Grants Commission and the Central Government. (d) The petitioner is carrying out an exclusive statutory function in the field of higher education with non-profit motive as per the policy of the Government and sacred tenets of the Constitution of India. As per the provisions of Section 10(23C)(iiiab) of the Income Tax Act, income of any University or other educational institution existing solely for educational purposes and wholly and substantially funded by the Government is exempt from tax. Further, as per the provisons of S.139(4C) of Act as they stood prior to the amendment made by the Finance Act, 2015 such institutions are also not obliged even to file their return of income. By virtue of the amendment made to S.139(4C) by the 3 Finance Act, 2015 w.e.f. 1st April, 2016; even these institutions are required to file their return income. (e) No Finance Officer was appointed to the petitioner University in spite of representations made to the State Higher Education Department. Due to the said reason the petitioner could not file Income Tax Returns within the due date for the assessment years 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19. (f) A survey was conducted by the Income Tax Authorities at the premises of the petitioner on 25.03.2019 and consequent to the findings by the survey, the 1st respondent issued notices u/s.148 of the Income Tax Act, 1961 on 30.03.2021. (g) Thereafter, the 1st respondent issued show cause notices dated 02.12.2021 under section 142(1) of Income Tax Act seeking certain information. However, due to lack of staff and prevalence of COVID-19 Pandemic the petitioner could not respond to the notices. Subsequently, the 1st respondent issued some more notices and the petitioner submitted short reply on 28.01.2022 submitting that the petitioner is an instrumentality of State and therefore it is not subjected to any tax liability. 4 (f) Thereafter the 1st respondent issued final notices dated 27.02.2022 proposing to assess the total income of the petitioner as follows: Writ Petition Number Assessment Year Proposed assessment income (In rupees) 12448/2022 2013-14 90,23,90,235/- 12479/2022 2015-16 66,53,37,311/- 12477/2022 2016-17 93,73,32,702/- 12478/2022 2017-18 74,89,90,798/- 12480/2022 2018-19 43,00,65,857/- (g) The petitioner was required to file reply on or before 10.03.2022. Then the petitioner submitted his objections vide replies dated 06.03.2022, 07.03.2022 and 09.03.2022 inter alia stating that the petitioner is substantially funded by the Government of Andhra Pradesh. Therefore, the petitioner is exempted U/s 10(23C)(iiiab) of the Income Tax Act. It would further submit that the petitioner was eligible for exemption U/s 11 to 13 of the Act and in that regard the petitioner filed application in Form 10A before the Commissioner of Income Tax (Exemptions), Hyderabad seeking registration under Section 12AA of the Income Tax Act and the said application was rejected by the said authority vide order dated 30.09.2019 and thereafter the petitioner has filed appeal 5 before the Income Appellate Tribunal, Visakhapatnam (ITAT) on 12.12.2019 and the said matter finally heard on 28.02.2022 and reserved for orders. The petitioner in his reply requested the 1st respondent to keep the proceedings on hold. (h) However, the 1st respondent did not grant opportunity of personal hearing and proceeded to complete the assessments u/s 144 r/w 147 of the Act on 30th March, 2022 vide orders dated 30.03.2022. The 1st respondent assessed the total income and raised total demand including interest as follows: Writ Petition Number Assessment Year Assessed Income (In rupees) Demand raised (In Rupees) 12448/2022 2013-14 77,52,03,060/- 74,73,57,670/- 12479/2022 2015-16 86,06,95,180/- 76,94,07,117/- 12477/2022 2016-17 1,21,85,68,210/- NIL 12478/2022 2017-18 1,43,05,97,344/- 1,05,45,65,370/- 12480/2022 2018-19 1,11,48,61,332/- 72,92,30,977/- Hence the present writ petitions seeking to set aside the assessment orders and to direct the 1st respondent to give an opportunity to the petitioner to submit the exemption registration U/s 12AA of the Act and submit his arguments. 6 3. Heard arguments of Sri S. Ravi, learned Senior Counsel representing Sri Anup Koushik Karavadi, learned counsel for the petitioner and Ms. M. Kiranmayee, learned Standing Counsel for Income Tax representing respondents. 4. Learned Senior Counsel would argue that the assessment orders made by the 1st respondent on 30.03.2022 without acceding to the request of the petitioner that their appeal relating to issuance of exemption certificate under Section 12A was pending, hence the principles of natural justice were denied to the petitioner. He would further submit that within a short time thereafter i.e., on 07.04.2022 the Appellate Authority has passed the order and subsequently the said order was given effect vide DIN and order No.ITBA/EXM/F /EXM41/2022-23/ 1046470548(1),dated 26.10.2022 and Registration Certificate was issued. 5. In that view, the assessment orders passed by the 1st respondent are null and void. He thus prayed to allow the writ petitions and remand the matter to the 1st respondent. 6. Learned Standing Counsel for respondents opposed the writ petition stating that since by the date of assessment, there was no exemption in favour of the petitioner, the assessment orders are valid in the eye of law. 7 7. The point for consideration whether there are merits in the writ petition to allow ? 8. POINT: Admitted facts in these cases are that while the 1st respondent passed assessment orders on 30.03.2022, the appeal filed by the petitioner was allowed thereafter on 07.04.2022 by the ITAT, Visakhaptnam and the said appellate order was given effect by the department and registration certificate U/s 12AA was issued as per the proceedings dated 26.10.2022. 9. It is true, as contended by learned Standing Counsel no exemption was granted by the date of passing of the assessment orders. However, such exemption was granted within short time thereafter. The petitioner has requested the 1st respondent to keep the proceedings on hold. Due to close of Financial Year, it appears the 1st respondent passed the assessment orders. 10. In the above circumstances, this Court is of the considered view that in the interest of justice the request of the petitioner to set aside the assessment orders and remand the matter to the 1st respondent shall be considered without expressing any opinion on the merits of the petitioner’s case. 8 11. Accordingly, without expressing any opinion on merits of the petitioner’s case, the writ petitions are allowed and the impugned assessment orders dated 30.03.2022 for the assessment years 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19 passed by the 1st respondent are hereby set aside and the matters are remitted back to the 1st respondent with a direction to issue notices to both parties and afford an opportunity of hearing to them and receive the documents produced by them if any and consider the same and pass an appropriate order in accordance with governing law and rules expeditiously. No costs. As a sequel, interlocutory applications pending, if any, shall stand closed. _________________________ U.DURGA PRASAD RAO, J _________________________ T. MALLIKARJUNA RAO, J 20.12.2022 krk 9 HON’BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO Writ Petition Nos.12448, 12477, 12478, 12479 and 12480 of 2022 20th December, 2022 krk "