M/S.KERALA CASHEW WORKERS RELIEF & WEL V. ASST.COMMR.OF INCOME TAX

OP/13151/2001

AI Insights

The case involves the Kerala Cashew Workers Relief & Welfare Fund Board (petitioner) seeking exemption under Section 10(23C)(iv) of the Income Tax Act for the assessment years 1989-1990 to 1995-1996. Initially, the exemption was recommended by the 3rd respondent and forwarded to the 4th respondent. However, the 4th respondent's order denying the exemption was found to be non-speaking and vague, leading to the petitioner's challenge in the High Court of Kerala. The court found that the 4th respondent failed to provide reasons for the denial, which is a requirement for quasi-judicial authorities, and thus quashed the order, directing a reconsideration of the exemption application.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 699809 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 20-10-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: P K R MENON; GEORGE K GEORGE
• Assessee Lawyers: P BALACHANDRAN; M K DAS
• Keywords: Income tax exemption; Non-speaking order; Quasi-judicial authority; Public Charitable Organisation
• Section: 11; 12; 10(23c)(iv)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR MONDAY, THE 20TH DAY OF OCTOBER 2014/28TH ASWINA, 1936 OP.NO. 13151 OF 2001 (N) ------------------------- PETITIONER(S): --------------- M/S.KERALA CASHEW WORKERS RELIEF & WELFARE FUND BOARD REPRESENTED BY ITS CHIEF EXECUTIVE MR.WILSON, MUNDAKKAL WEST BY ADVS.SRI.P.BALACHANDRAN (SR.) SRI.M.K.CHANDRAMOHAN DAS, SC, KCWR&WFB RESPONDENT(S): --------------- 1. THE ASST.COMMISSIONER OF (INCOME TAX )CIR-I, QUILON 2. THE ASST.COMMISSIONER OF INCOME TAX, KERALA, TRIVANDRUM 3. THE ASST.DIRECTOR OF INCOME TAX(EXEMPTION) HEAD QUARTERS.I/II,CALCUTTA-700071 4. THE SECRETARY TO THE GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NEW DELHI-110001 R1,2,4 BY SRI.P.K.R.MENON,SR.COUNSEL, GOVT.OF INDIA(TAXES) R1,2,4 BY ADV. SRI.GEORGE K. GEORGE, SC FOR IT THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 20-10-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP.NO. 13151 OF 2001 (N) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: A TRUE COPY OF THE KERALA CASHEW WORKERS RELIEF AND WELFARE FUND ACT & SCHEME EXT.P2: A TRUE COPY OF THE PROCEEDINGS BY THE SECOND RESPONDENT EXT.P3: A TRUE COPY OF THE APPLICATION EXT.P4: A TRUE COPY OF THE COVERING LETTER EXT.P5: A TRUE COPY OF THE COMMUNICATION ISSUED BY THE ASST.DIRECTOR OF INCOME TAX(EXEMPTION) TRIVANDRUM DATED 14.07.1997 EXT.P6: A TRUE COPY OF THE REPLY SENT BY PETITIONER DATED 29.07.1997 EXT.P7: A TRUE COPY OF THE COMMUNICATION BY THIRD RESPONDENT DATED 28.10.1997 EXT.P8:A TRUE COPY OF THE ASSESSMENT ORDER FOR 94-95 DATED 03-03-1997 EXT.P9:A TRUE COPY OF THE ASSESSMENT ORDER FOR 95-96 DATED 16-01-1998 EXT.P10:A TRUE COPY OF THE ASSESSMENT ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), TRIVANDRUM DATED 07-01-2000 EXT.P11: A TRUE COPY OF THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT DATED 14.06.1996 EXT.P12(A): A TRUE COPY OF THE REMINDER DATED 25.03.1998 EXT.P12(B): A TRUE COPY OF THE REMINDER DATED 11.01.1999 EXT.P12(C): A TRUE COPY OF THE REMINDER DATED 22.07.1999 EXT.P13: A TRUE COPY OF THE COMMUNICATION BY THE FOURTH RESPONDENT DATED 11.05.2000 EXT.P14: A TRUE COPY OF THE APPLICATION SENT BY THE PETITIONER DATED 12.06.2000 EXT.P15: A TRUE COPY OF THE COMMUNICATION BY THE GOVERNMENT OF KERALA DATED 07.03.2003 RESPONDENTS' EXHIBITS: NIL //TRUE COPY// P A TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. ---------------------------------------------------------- O.P.NO.13151 OF 2001 ---------------------------------------------------------- Dated this the 20th day of October, 2014 J U D G M E N T The petitioner had filed an application before the 2nd respondent for registration under Section 12 of the Income Tax Act. By Ext.P2 order dated 05.03.1997 the registration sought for by the petitioner was granted with effect from 15.11.1988. The petitioner thereafter filed an application in Form No.56 for exemption under Section 10(23C) (iv) of the Income Tax Act, for the assessment years 1989-1990 to 1995-1996. It would appear that by Ext.P7 communication, the 3rd respondent forwarded the application to the 4th respondent, recommending the case of the petitioner for the issuance of a notification granting exemption. In the meanwhile Ext.P8 and P9 assessment orders were passed for the assessment years 1994-1995 and 1995-1996, where the exemption prayed for by the petitioner was not granted. In an appeal preferred against the said assessment orders, the appellate authority in Ext.P10 common order found the petitioner entitled to be treated as a public charitable organisation under Section 11 of the Income Tax Act. It is pointed out that against Ext.P10 appellate order, the department has filed an appeal before the Income Tax appellate Tribunal which is pending before that forum. In the original petition the petitioner is essentially aggrieved by Ext.P13 order O.P.NO.13151 OF 2001 2 dated 11.05.2000, that was passed by the 4th respondent holding that the petitioner does not fulfil the conditions for issuance of a notification under section 10(23C) (iv) of the Income Tax Act. Insofar as Ext.P13 order does not cite any reasons for the rejection of the petitioners claim, the petitioner preferred Ext.P14 representation before the 4th respondent seeking a reconsideration of the matter. No decision was taken on the said representation and hence the petitioners approached this Court inter alia for a direction to quash Ext.P13 order and for a direction to the 4th respondent to consider Ext.P14 representation. 2. I have heard Sri.P.K.Ravindranath Menon, the learned Senior Standing Counsel for the Income Tax department. 3. On a consideration of the facts and circumstances of the case as also the submissions made across the bar, I am of the view that when the claim of the petitioner in terms of Section (23C) (iv) of the Income Tax Act was submitted before the 3rd respondent who in turn forwarded the application to the 4th respondent with a recommendation for the grant of exemption, it was incumbent upon the 4th respondent to state the reasons that weighed with him while taking the decision, in Ext.P13 order, not to grant exemption to the petitioner. A perusal of Ext P13 order passed by the 4th respondent O.P.NO.13151 OF 2001 3 does not disclose any reason for his decision. A quasi-judicial authority, who is entrusted with the task of adjudicating upon the rights of a person, cannot pass orders that are ambiguous and vague by not stating the reasons that informed his decision. In that view of the matter, for the sole reason that it is a non-speaking order that violates the rights of the petitioner, I quash Ext.P13 order of the 4th respondent. The 4th respondent is directed to reconsider the matter, taking into account the recommendations of the 3rd respondent, as contained in Ext.P7 communication, as also Ext.P14 representation by the petitioner, and pass fresh orders on the claim of the petitioner for exemption in terms of Section 10 (23C)(iv) of the Income Tax Act. The 4th respondent shall pass fresh orders as directed within a period of two months from the date of receipt of a copy of this judgment. A.K.JAYASANKARAN NAMBIAR JUDGE mns O.P.NO.13151 OF 2001 4 "