St. John the Baptist Church V. The Income Tax Officer (Exemption), Aayakar Bhavan, Income Tax Office, Sakthanthampuran Nagar, Thrissur and The Income Tax Officer (Exemption), San Juan Tower, Behind C R Building, Ernakulam and The Commissioner of Income Tax (Exemption), San Juan Tower, Behind C R Building, Ernakulam and The Principal Chief Commissioner of Income Tax (Exemption), Pratyaksh Kar Bhawan Civic Centre, J.L.N. Marg, New Delhi and The Additional Director of Income Tax (Inv), Aayakar Bhavan, Income Tax Office, Sakthanthampuran Nagar, Thrissur and The Assistant Commissioner of Income Tax (CPC), Centralized Processing Centre, Post Bag No: 2, Bangalore

WA/184/2024

AI Insights

The case involves St. John the Baptist Church, a religious institution, which appealed against the judgment of the learned Single Judge dismissing their writ petition challenging an order under Section 148A(d) of the Income Tax Act. The order pertained to unaccounted cash loans and repayments for the assessment year 2016-2017, which were under scrutiny to ascertain compliance with Section 12AA and possible violations of Sections 269 SS and 269 T of the Income Tax Act. The appellant argued that the alleged escaped income would not attract tax liability due to their exemption under Section 12AA. However, the court maintained that the exemption is subject to conditions that need to be examined under the proceedings initiated by the notice under Section 148.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 678183 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 09-02-2024
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: K N SREEKUMARAN; N SANTHOSHKUMAR; P J ANILKUMAR
• Keywords: Cash loans; Exemption; Income Tax; Reassessment; Unaccounted transactions; Violation
• Section: 148; 12AA; 148A(d); 269(SS); 269-T

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR.JUSTICE V.G.ARUN FRIDAY, THE 9TH DAY OF FEBRUARY 2024 / 20TH MAGHA, 1945 WA NO. 184 OF 2024 AGAINST THE JUDGMENT DATED 15.012024 IN WP(C) 18468/2023 OF HIGH COURT OF KERALA APPELLANT/PETITIONER: ST. JOHN THE BAPTIST CHURCH, AGED 57 YEARS MOONUMURY, MATTATHUR, IRINJALAKUDA, THRISSUR, (REPRESENTED BY ITS VICAR, FR. GEORGE VEZHAPARAMBIL), PIN – 680684 BY ADVS. K.N.SREEKUMARAN N.SANTHOSHKUMAR P.J.ANILKUMAR (A-1768) RESPONDENTS/RESPONDENTS: 1 THE INCOME TAX OFFICER (EXEMPTION), AAYAKAR BHAVAN, INCOME TAX OFFICE, SAKTHANTHAMPURAN NAGAR, THRISSUR, PIN – 680001 2 THE INCOME TAX OFFICER (EXEMPTION), SAN JUAN TOWER, BEHIND C R BUILDING, ERNAKULAM- 682018., PIN – 682018 3 THE COMMISSIONER OF INCOME TAX (EXEMPTION), SAN JUAN TOWER, BEHIND C R BUILDING, ERNAKULAM- 682018., PIN – 682018 4 THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX (EXEMPTION), 25TH FLOOR, E2 BLOCK, PRATYAKSH KAR BHAWAN CIVIC CENTRE, J.L.N. MARG, NEW DELHI-110002., PIN – 110002 :2: WANo.184 of 2024 5 THE ADDITIONAL DIRECTOR OF INCOME TAX (INV), AYAKAR BAHVAN, INCOME TAX OFFICE, SAKTHANTHAMPURAN NAGAR, THRISSUR-680001., PIN – 680001 6 THE ASSISTANT COMMISSIONER OF INCOME TAX (CPC), CENTRALIZED PROCESSING CENTRE, POST BAG NO: 2, BANGALORE -560100., PIN - 560100 BY ADV.SRI.JOSE JOSEPH, SC THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 09.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: :3: WANo.184 of 2024 JUDGMENT Dr. A.K.Jayasankaran Nambiar, J. The writ petitioner in WP(C).No.18468 of 2023 is the appellant before us aggrieved by the judgment dated 15.01.2024 of the learned Single Judge. 2. Briefly stated, the facts necessary for a disposal of this writ appeal are as follows: The Writ Petition was filed challenging Ext.P9 order of the Income Tax Department under Section 148A(d) of the Income Tax Act. A perusal of the said order clearly reveals that the appellant herein, who is an assessee under the Income Tax Act and registered under Section 12AA of the Income Tax Act in its capacity as St. John the Baptist Church, a religious institution, had not accounted for certain cash loans and repayments for the assessment year 2016-2017. It was with a view to scrutinizing the said unaccounted transactions and to ascertain whether there had been a violation of the provisions of Section 12AA of the Income Tax Act, and a possible violation of Section 269 SS and 269 T of the Income Tax Act that the notice under Section 148A was served on the appellant. In response to the said notice, the appellant, vide its response dated 05.04.2023, sought an adjournment for 15 days to submit details. The said adjournment request was :4: WANo.184 of 2024 acceded to and time was granted up to 20.04.2023 for furnishing the reply. In the reply submitted by the appellant on 18.04.2023, no explanation was given in respect of the unaccounted cash loan and repayments, and hence, the authorities had no option but to pass Ext.P9 order to issue notice under Section 148 of the Income Tax Act for reassessment of the income of the appellant for the said assessment year. 3. The learned Single Judge who considered the challenge against Ext.P9 order found that the appellant's acceptance of Rs.1,87,69,000/- in cash and repayment of the same was an apparent violation of Section 12AA and the action of the assessing authority in issuing the notice under Section 148 could not be said to be erroneous in law. The Writ Petition was, therefore, dismissed as devoid of merit. 4. In the appeal before us, it is the contention of Sri.K.N.Sreekumaran, the learned counsel for the appellant, that the alleged escaped income, even if taken into account, would not attract any tax liability since the appellant enjoys an exemption in terms of Section 12AA of the Income Tax Act. We note, however, that the exemption under Section 11 read with Section 12AA of the Income Tax Act is one that is subject to certain conditions, and the question to be decided in the proceedings under Section 148 of the Income Tax Act is :5: WANo.184 of 2024 essentially as to whether the unaccounted transactions and the alleged escaped income would merit an exemption or not. It is for the said examination on merits that the proceedings under Section 148 of the Income Tax Act have been initiated. At this stage, where what is impugned is Ext.P9 order under Section 148 A(d), we see no reason to interdict those proceedings at the instance of the appellant. The Writ Appeal, therefore, fails and is accordingly dismissed. Before parting with this appeal, and taking note of the request of the learned counsel for the appellant, we make it clear that if the appellant files the return in response to the notice under Section 148 within two weeks from the date of receipt of a copy of this judgment, then, the assessing authority shall consider the return and finalize the proceedings under Section 148 of the Income Tax Act after hearing the appellant within a period of three months thereafter. Sd/- DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/- V .G.ARUN JUDGE mns "