Karnataka High Court
M/S The Abraham Memorial Educational ... vs The Deputy Commissioner Of Income Tax on 5 March, 2019
Equivalent citations: AIRONLINE 2019 KAR 1637
Author: S.Sujatha
Bench: S.Sujatha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 05TH DAY OF MARCH, 2019
BEFORE:
THE HON'BLE MRS. JUSTICE S.SUJATHA
WRIT PETITION No.6992/2019 (T - IT)
BETWEEN:
M/s. THE ABRAHAM MEMORIAL EDUCATIONAL TRUST
SINGENA AGRAHARA VIA HUSKUR ROAD, APMC YARD
HUSKUR PO, ELECTRONIC CITY PHASE 2
BENGALURU-560099
REP. BY ITS TRUSTEE
JESUS SUDHIR LALL
S/O SUDHIR MADHAVJI LALL
AGED ABOUT 39 YEARS. ... PETITIONER
[BY SRI CHYTHANYA.K.K., ADV.]
AND:
1. THE DEPUTY COMMISSIONER OF
INCOME TAX [EXEMPTIONS],
UNITY BUILDING ANNEXE
P.KALINGA RAO ROAD [MISSION ROAD]
BENGALURU-560027.
2. THE COMMISSIONER OF INCOME TAX
[EXEMPTIONS], 6TH FLOOR
UNITY BUILDING ANNEXE, MISSION ROAD
BENGALURU-560027.
3. THE TAX RECOVERY OFFICER [EXEMPTIONS]
6TH FLOOR, UNITY BUILDING ANNEXE
MISSION ROAD, BENGALURU-560027. ...RESPONDENTS
[BY SRI JEEVAN J. NEERALAGI, ADV.]
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH AS
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FAR AS THE PETITIONER IS CONCERNED BY AN APPROPRIATE
WRIT OR ORDER IN THE NATURE OF CERTIORARI OR
OTHERWISE THE IMPUGNED RECOVERY NOTICE ISSUED IN
FORM No.I.T.C.P.1, DATED 20.11.2018 BY THE R-3, ENCLOSED
IN ANNEXURE-A; AND ETC.,
THIS PETITION COMING ON FOR PRELIMINARY HEARING,
THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
The petitioner has challenged the recovery notice dated 20.11.2018 issued by the respondent No.3 inter alia challenging the notices issued by the respondent No.1 under Section 226[3] dated 26.03.2018 and 29.05.2018 to the Branch Managers of the petitioner's as well as the order passed by the respondent No.2 rejecting the stay of entire demand dated 20.03.2018.
2. The petitioner is a charitable trust registered under Section 12A of the Income Tax Act, 1961 ['Act' for short]. The petitioner trust is said to have been formed with an object to run the educational institutions. It appears that the petitioner has filed its total return of income by declaring Nil total income after claiming -3- exemption under Section 11 of the Act for the assessment year 2015-16. A survey was conducted under Section 133A of the Act at the premises of the petitioner's Trust on 03.09.2015. The respondent No.1 selected the case of the petitioner for scrutiny and issued notice under Section 143[2] of the Act pursuant to which the petitioner furnished the details from time to time. The respondent No.1 passed an assessment order under Section 143[3] of the Act by making certain additions and issued a demand notice under Section 156 of the Act for the assessment year 2015-16.
3. It transpires that the petitioner filed an application before the respondent No.1 with respect to rectification of assessment order passed under Section 143[3] of the Act. The respondent No.1 passed an order, rejecting to rectify the assessment order. Aggrieved by the same, the petitioner has preferred an appeal before the Commissioner of Income Tax [Appeals], Bengaluru. -4- Further the petitioner has filed stay application under Section 220[6] of the Act before the respondent No.1 requesting to keep the recovery of demand in abeyance till the disposal of the appeal and not to treat the petitioner as 'assessee in default'. The respondent No.1 has passed a conditional stay order, directing the petitioner to pay 20% of the demand. Aggrieved by the said conditional stay order, the petitioner has preferred an application before the respondent No.2 who issued a notice by fixing the date of hearing on 19.03.2018.
4. It is the grievance of the petitioner that pursuant to the hearing notice, the petitioner's representative appeared before the respondent No.2 and prayed for an adjournment but the same was denied and the respondent No.2 proceeded to pass an order without hearing the petitioner by directing the petitioner to pay 20% of the demand within two days. Hence, this writ petitioin.
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5. Learned counsel Sri.Chythanya.K.K., appearing for the petitioner would submit that prima- facie merits, high pitched assessment and genuine hardship are the factors which are necessarily to be considered by the respondent No.2 before passing of an order. However, the respondent No.2 without providing an opportunity of hearing to the petitioner, proceeded to pass the order impugned at Annexure-C, which is hit by principles of natural justice and accordingly seeks for setting aside the order impugned and consequentially to direct the respondents not to proceed with the recovery proceedings unless a speaking order is passed by the respondent No.2 in accordance with law.
6. Learned counsel Sri.Jeevan J. Neeralagi, appearing for the Revenue supports the order impugned and seeks for dismissal of the writ petition. -6-
7. Having heard the learned counsel for the parties and perusing the material on record, it is not in dispute that the petitioner being aggrieved by the conditional order of stay passed by the respondent No.1 has filed an application before the respondent No.2. Though the respondent No.2 has fixed the date of hearing, denying the adjournment sought by the petitioner's representative, proceeded to pass the order impugned directing the petitioner to pay 20% of the tax demanded. Prima-facie it appears that the petitioner has filed the Nil return and the assessment concluded is high pitched. In such circumstances, in terms of the Instruction No.1914, the authorities are obligated to consider the genuine hardship and the prima-facie merits of the case qua the high pitched assessment. The order of the respondent No.2 is not in consonance with the principles of natural justice as well as the Instructions of the CBDT as aforesaid.
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8. In the circumstances, this Court is of the considered view that it is just and proper to set aside the impugned order at Annexure-C and to remit the matter to the respondent No.2 to re-consider the matter afresh in accordance with law. Hence, the following:
ORDER
1. The order impugned at Annexure-C dated 20.03.2018 passed by the respondent No.2 is quashed.
Consequently the notice issued at
Annexure-A and Annexures-B1 to B6
shall stand quashed.
2. The proceedings are restored to the file of the respondent No.2 to re-consider the application filed by the petitioner afresh in accordance with law. This exercise shall be done by the respondent No.2 after providing -8- sufficient opportunity of hearing to the petitioner and passing a speaking order.
3. The respondent No.2 shall proceed to pass the orders as aforesaid, in an expedite manner. Till such decision to be taken by the respondent No.2, no recovery action shall be initiated by the authorities against the petitioner for the assessment year 2015-16.
4. With the aforesaid observations and directions, writ petition stand disposed of.
Sd/-
JUDGE NC.