MANOHARLAL JAIN MEMORIAL FOUNDATION V. INCOME TAX OFFICER (EXEMPTION) WARD, SURAT

SCA/2531/2018

AI Insights

The case involves the Manoharlal Jain Memorial Foundation, a registered Trust running a hospital, which challenged an order from the Income Tax Officer, Surat. The order required the Trust to pay 15% of an outstanding tax demand of Rs.1,44,90,500 to stay further recovery actions pending an appeal. The Trust argued that the cash deposits in question were legitimate treatment fees from patients, properly recorded and previously accepted by tax authorities. The Income Tax Officer contended that the Trust did not appear for reassessment despite proper notice, leading to an ex-parte decision. The High Court's decision favored the Trust, allowing the appeal to proceed without pre-deposit and halting recovery actions.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 768248 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 11-04-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: B S SOPARKAR
• Keywords: Cash deposits; Ex parte assessment; Stay on recovery; Tax demand; Audit of trust
• Section: 143(3)

Judgement Text

"C/SCA/2531/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 2531 of 2018 ========================================================== MANOHARLAL JAIN MEMORIAL FOUNDATION Versus INCOME TAX OFFICER (EXEMPTION) WARD, SURAT ========================================================== Appearance: MR B S SOPARKAR(6851) for the PETITIONER(s) No. 1 MRS MAUNA M BHATT(174) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 11/04/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioner has challenged an order dated 15.03.2017 attached at Annexure­A to the petition, under which, the Income Tax Officer, Surat, required the petitioner to pay 15% of the outstanding tax demand of Rs.1,44,90,500/­, upon which, the recovery of balance outstanding would be stayed pending assessee's appeal. 2. Having heard learned advocates and having perused documents on record what emerges is that the petitioner­assessee is a registered Trust running a hospital at a remote place in Navsari district. For the assessment year 2009­10, the return filed by the Page 1 of 4 C/SCA/2531/2018 ORDER assessee was reopened. It appears that though notices were served upon the assessee, no representation was made on behalf of the assessee. Assessee explains that possibly the notices may have been received by the department other than administrative department of the hospital which led to this lapse. All in all, the assessment came to be completed ex­parte, during which, the Assessing Officer made addition of all cash deposits in the bank accounts of the assessee and raised the tax demand of Rs.1,44,90,500/­. Assessee has already filed the appeal against such order. Pending such appeal, the assessee first approached the Assessing Officer seeking stay against the recoveries on such application, impugned order came to be passed. 3. Counsel for the petitioner submitted that the accounts of the Trust are regularly audited. Cash deposits relate to the treatment fees paid by the patients who came from small villages and rural areas. They in majority of the cases made cash payments. Such cash payments are deposited in the bank accounts. Proper accounts are maintained. In the past also, such cash deposits were examined by Page 2 of 4 C/SCA/2531/2018 ORDER the Assessing Officers and accepted as genuine. In the present case, the Assessing Officer in his ex­ parte order, erroneously proceeded on the ground that the assessee had not filed the return of income which was not true. 4. Learned counsel for the Revenue submitted that the notices of reassessment were duly served, since the assessee did not appear despite service of notices, the Assessing Officer had no option but to proceed ex­parte. The impugned order even otherwise does not require interference. The assessee has also filed petition before the Commissioner of Income Tax for waiver of pre­deposit requirement. 5. In facts of the present case, we are inclined to permit the assessee to proceed the appeal without any pre­deposit and till such appeal is disposed of, there shall be no recovery of the tax demand arising out of the said order of assessment. This is primarily for the following reasons. The assessment was completed ex­parte. The Assessing Officer has erroneously recorded that the assessee had not filed the return of income. In the past also, the assessee Page 3 of 4 C/SCA/2531/2018 ORDER had shown cash deposits in the bank account stated to have been received from the patients for treatment. The assessee's accounts are duly audited. 6. In the result, with above directions, petition is disposed of. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 4 of 4 "