SHRI NAYAK EDUCATION SOCIETY V. THE INCOME TAX OFFICER (EXEMPTIONS)

WP/23947/2016

AI Insights

The case involves the Shri Nayak Education Society, an educational institution, which filed a writ petition against the Income-Tax Officer (Exemptions), challenging the assessment order and demand notice for the assessment year 2009-10. The petitioner had initially declared 'NIL' income claiming exemption under Section 11 of the Income Tax Act, 1961, but was denied exemption under Section 10(23C) following a survey. The Commissioner of Income Tax (Appeals) initially allowed the petitioner's appeal, but the ITAT remitted the issue back to the Assessing Officer. The High Court found that the assessment was made without observing the principles of natural justice and noted a jurisdictional error regarding the issuance of notice to the petitioner.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 755377 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 23-08-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: E R KUMAR
• Assessee Lawyers: S PARTHASARATHI
• Keywords: Assessment Order; Exemption; Income Tax; Jurisdiction; Natural Justice; Writ petition
• Section: 143(3); 11; 133A; 10(23C); 254; 226; 227

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF AUGUST, 2016 BEFORE THE HON’BLE MR.JUSTICE L.NARAYANA SWAMY WRIT PETITION NO.23947 OF 2016 (T-IT) BETWEEN: SHRI NAYAK EDUCATION SOCIETY 899/3, GAYNAG BOWDI NEAR HAZARAT JUNEDI DARGA VIJAYAPUR-586 101 REPRESENTED BY ITS PRESIDENT SRI PRAKASH RATHOD AGED ABOUT 55 YEARS S/O LATE K.T.RATHOD ... PETITIONER (BY SRI.S.PARTHASARATHI, ADVOCATE) AND: THE INCOME-TAX OFFICER (EXEMPTIONS) WARD-1, R.NO.208 2ND FLOOR, AAYAKAR BHAVAN SEDAM ROAD, GULBARGA-585 105. ...RESPONDENT (BY SRI.E.R.INDRA KUMAR, SR. COUNSEL FOR SRI.E.I.SANMATHI, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH THE ASSESSMENT ORDER PASSED UNDER SECTIONS 143(3) R.W.S.254 OF THE ACT DATED 31.03.2016 FOR THE ASSESSMENT YEAR 2009-10 AT ANNEXURE-F PASSED BY THE RESPONDENT ETC. 2 THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R Petitioner is an educational institution and an income tax assessee. The petitioner had filed its return of income declaring ‘NIL’ for the assessment year 2009-10 claiming exemption under Section 11 of the Income Tax Act, (for short ‘the Act’) 1961. However, survey was conducted by the Assessing Officer under Section 133 A of the Act at the premises of the petitioner and assessed the tax denying the exemption under Section 10(23C) of the Act. Being aggrieved, the petitioner had preferred an appeal before the Commissioner of Income Tax (Appeals) and the same was allowed. Against the said order, the Revenue preferred an appeal before the ITAT, Bengaluru. The ITAT by its order dated 31.12.2014 remitted the said issue to the Assessing Officer for de novo consideration. As per the order of the ITAT, re-assessment proceeding was initiated by way of issuing notice to the petitioner dated 23.03.2016. In response to the notice, petitioner sought reasonable time to place the records and the required details since the offices of 3 the concerned persons (President and Secretary) were located at Bengaluru. In spite of his request, the respondent assessed the income of the petitioner. Being aggrieved, the petitioner is before this Court seeking quashing of the assessment order (Annexure-F) dated 31.03.2016 so also the demand notice (Annexure-G) dated 31.03.2016 passed/issued by the respondent for the assessment year 2009-10. 2. Learned counsel for the petitioner contends that the grounds urged by the petitioner in his reply to the notice, the assessment made by the respondent is without observing the principles of natural justice. Further, he contends that the ITO (Exemption), Kalaburgi, has no jurisdiction to issue notice to the petitioner since the petitioner comes under the jurisdiction of ITO, Bijapur. Hence, the said notice has to be set aside. 3. Learned counsel for the respondent submitted that this petition may be disposed of since the petitioner has already approached the Appellate Authority. Hence, this Court may issue a direction to the Appellate Authority to pass appropriate order. 4 4. After hearing learned counsel for the parties, the petition is disposed of reserving liberty to the petitioner to approach the jurisdictional Court at Kalaburagi, since the petitioner-assessee and the respondent-Revenue are residing in the same place. Since the petitioner has already preferred an appeal before the Appellate Authority, the Appellate Authority is directed to pass appropriate order on the appeal which is pending before it. 5. The petitioner shall appear before the Appellate Authority on 31.08.2016 without awaiting notice. Till the disposal of the appeal, the respondent-Revenue shall not precipitate recovery. Sd/- JUDGE TL "