MS Educational and Welfare Trust V. The Assistant Commissioner of Income Tax

WP/27977/2021

AI Insights

The case involves MS Educational and Welfare Trust, represented by its Managing Trustee/Chairman Mohammed Lateef Khan, who filed a writ petition against the Assistant Commissioner of Income Tax and the Principal Commissioner of Income Tax. The petitioner sought a writ of mandamus to compel the respondents to dispose of a rectification application concerning an assessment order for the year 2017-18, which included additions for unexplained cash credits and lack of information regarding Tax Deducted at Source (TDS). The High Court had previously directed the disposal of the rectification application, which was later addressed by the Assessing Officer. The petitioner contested the subsequent rectification order, leading to the present writ petition.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 753449 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 28-02-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J V PRASAD
• Assessee Lawyers: DUNDU MANMOHAN
• Keywords: Assessment Order; Rectification Application; Tax deducted at source; Unexplained cash credits; Writ of Mandamus
• Section: 143(3); 154; 69; 40(a)(ia); 115BBE; 156

Judgement Text

"lt HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY,THE TWENTY EIGHTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE SRI JUSTICE UJJAL BHUYAN THE HONOURABLE SRI JUSTICE A.VENKATESHWARA REDDY WRIT PETITION NO: 27977 OF 2021 Betwee n: MS Educational and Welfare Trust, Rep., by its lvanaging Trustee /Chairman Mohammed Lateef Khan S/o Gulam Rasool Khan R/o. H.No 12-2-83711lEl1, Asif Nagar, Hyderabad- 500028. ...PETITIONER AND 1. The Assistant Commissioner of lncome Tax, Circle 7(1), Signature Towers Opp- Botanical Gardens, Kondapur, Hyderabad - 500084 2. The Assistant Commissioner of lncome Tax, Circle 3(1), Signature Towers Opp- Botanical Gardens, Kondapur, Hyderabad - 500084 3. The Principal Commissioner of lncome Tax- 1, l. T. Towers, A.C. Gaurds, Masab Tank, Hyderabad - 500004. ,..RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction, more particularly one in the nature of Writ of Mandamus, declaring the action of 1st and 2nd respondents in not disposing of the rectification application dt. 2611212019, filed u/s 154 of the Act vide Acknowledgement No. 72589191001 1 , after considering the information furnrshed on 2311212019 by the Petitioner herein, as illegal and arbitrary on the part of the 1st and 2nd respondents and consequently direct the respondents to dispose of the rectification application dt. 2611212019 as expeditiously as possible, lA NO: 1 OF 2021 Petition under Section 151 CPC praying that in the clrcumstances stated in the affidavit filed in support of the petition, the High Court may be pleased pleased to grant stay of collection of outstanding demand arising out o-f the assessment order vide its Order No. ITBA/AST/S/143(3y2019- 2011022954460(1) dt. 2311212015, till the date of disposal of the rectification application filed u/s 154 of the lncome Tax Act, '1961 vide Acknowledgement No. 72589191001 1 dt. 2611212019 for the Assessment Year 2017- 18, in the interests of substantial justice, as otherwise the petitioner would be put to irreparable loss and severe hardship. Counsel for the Petitioner:SRl. DUNDU MANMOHAN Counsel for the Respondents: SRl. J,V.PRASAD, SC FOR lT The Court made the following: / HONOURABLE SRI JUSTICE UJJAL BHIIYAN HONOURABLE SRI JUSTICE A'VENKATESHWARA REDDY And WRIT PETITION No.27977 of 202t ORDER:( Per Hon'ble Sri Justice Ujjal Bhuyan) HeardSriManmohanDundu,Iearnedcounselforthe petitioner and Mr.J'V'Prasad' learned Standing Counsel for Income Tax Department, for the respondents' 2. By filing this petition under Article 226 ol Constitution of lndia, petitioner seeks the following reliefs: \"...... Hon'ble Court may be pleased to issue a writ' order, or direction, more particularly one in the nature of Writ ofMandamus,rleclaringtheactionofl*&2,drespondentsin not disposing of the rectification application dt'26'12'2019 ' filed u/s 154 No.725891910011, of the Act vide aiter considering Acknolwedgment the information furnished on 23J22019 by the Petitioner herein' as illegal and arbitrary on the part of the l\"t & 2nd respondents and consequently direct the respondents to dispose of the rectification application dt'26'12'2olg as expeditiously as possible and may pass such other order or orders the Honourable High Court may deems Iit in the circumstances of the case.\" 3. Petitioner is an assessee under the Income Tax Act' 1961 (briefly \"the Act\" hereinafter) assessed under the jurisdiction of the ) ) first resPondent. Status of the Petitioner as assessee is that of a I UB.J&AVI(,J wp_27911_2021 2 Trust. For the assessment year 2Ol7-18, first respondent as the assessing officer passed assessment order dated 23.72.2019 under Section 143(3) of the Act. By the said assessment order, two additions were made, one on account of unexplained cash credits under Section 69 of the Act amounting to Rs.4,02,|2,OOO l-, and the second addition was on account of lack of information regarding Tax Deducted at Source (TDS) with the Central Government. Under this head, an amount of Rs.4,66,79,904/ - was added. 4. Petitioner liled an application on 26.12.2019 before the first respondent for rectification of the order of assessment under Section 154 of the Act. With the grievance that the first respondent not acting on the representation of the petitioner, petitioner approached this Court by filing a writ petition being WP.No. 1734 of 2O2O. This Court by order, dated O3.O2.2O2O, disposed of the writ petition by directing the first respondent to dispose of petitioner's application for rectilication dated 26.1220 19 and till disposal of such application stayed recovery of dues as per the assessment order. 5. First respondent by letter dated 28.O2.2020 addressed to the petitioner stated that assessment was completed on 23' 12'2019 based on materials avaiiable on record. On the date of passing the l r UB,J&AVR,J wp_27971 2021 3 assessment order, there appeared no response from the assessee in the Assessment Portal. Thus, the order was passed based on the materials on record. Accordingly, request for rectification under Section 154 ol the Act was not considered and rejected' 6. It appears that there were a serLes between the petitioner and first respondent' of correspondence In the meanwhile, against the assessment order dated 23'12'2O19, petitioner has preferred appeal before the Commissioner of Income Tax (Appeals)' Hyderabad. Finally on 28.08.2021, first respondent passed an order under Section 154 read with Section i43 (3) ofthe Act' First respondent held that assessee (petitioner) had filed rectification application for deletion of the additions made under Section 69 read with Section 115 BBE of the Act, while passing the order of assessment. Taking the view that this was not a mistake apparent from the record within the ambit of Section 154 of the Act' rectification application was rejected Aggrieved thereby' present writ petition has been filed seeking the relief as indicated above' 7. On 09. ll.2O2l , the foilowing order was passed: \" Heard learned counsel for the parties Mr.J.V.Prasad, learned Standing Counsel for Income Tax, to obtain instructions regarding order passed on the rectification petition filed by the petitioner following ) ) ull,.r&Avlr..r wp_27977 _20?1 4 the order passed by this Court dated 03.02.2020 in WP.No.1734 of 2O20. If any order has been passed, copy of the same may be furnished to the learned counsel for the petitioner.\" 7 .l Thereafter, on 03.12.2021, the following order came to be passed: \"Learned counsel for the petitioner submits that on 29.7L.2O27, the Assessing Officer has passed an order of rectification. The grievance is that the rectification is not in terms of the earlier order passed by this Court. However, Mr.J.V.Prasad, learned Senior Standing Counsel for Income Ta-x Department seeks adjournment. Be that as it may, and without expressing any opinion at this stage, list this matter again on t7.t2.2021.\" 7 .2 . Finally on 07 .O2.2O22, Mr. Prasad sought time to obtain instructions. Thereafter, memo has been filed by Mr.J.V.Prasad, learned counsel enclosing therewith rectification order dated 29.11.2021 passed by the l-rrst respondent under Section 154 read with Section 143 (3) ofthe Act. The said order reads as under: RECTIFI ON ORDER Assessee, M/s M.S.Educational trust had filed its return for the assessment year 2017-2018 declaring total income of Rs,2,29,43,54O I -. The case was selected for the scrutiny and on completion of the assessment proceedings, the order under section 143(3) of the Income Ta-x Act, 1961 r 1 TIB,J&AVR,J Wp_27977 _2021 q was passed on 23.72.2079. in the said assessment order the addition was made on following two grounds: 1 Unexplained Cash credit arrd addition under section 69 read with section 11SBBE of the Income Tax Act, 1961. 2. Disallowance under section 4O i(a) of the Income Tax Act, 1961. Consequent upon the addition made on the aforementioned grounds, the total income was assessed at Rs. 10,98,35,440 arld assessee was asked to pay the demand of Rs.6,42,43,723 vide demand notice dated 23.12.2019 issued under section 156 of the Income Ta-x Act, 196 1 . On perusal of the Material on record, inter-alia, rectilrcation petition dated 26.12.2019 petition filed by the assessee and Form 24 Q and Form 26Q submitted during the assessment proceedings, it is found that payments made to the various parties and tax deducted thereof has been clearly reflected therein . Hence, I am of view that disa.llowing 3O percent of the expenditure of Rs.15,55,99,680/- pertaining to salary, rent, contract and professional fee as per the section 40 (a) (ia) of the Income Tax Act, 1961 is mistal