Court sets aside assessment orders under Section 143(3) of Income Tax Act for two societies due to violations.

The court set aside the assessment orders under Section 143(3) of the Income Tax Act, 1961 for two societies, Medical Research Foundation (MRF) and Vision Research Foundation (VRF), due to violations of natural justice principles. Allegations of money laundering and common office bearers led to the rejection of exemption claims. The court emphasized the importance of providing notice and an opportunity to respond. The assessments were quashed, requiring the petitioners to present their case afresh before the Assessing Officer within a specified timeline.

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Issues:
1. Challenge to assessment orders under Section 143(3) of the Income Tax Act, 1961 for two societies registered under the Societies Registration Act, 1860.
2. Allegations of money laundering through receipt of bogus donations and repayment in cash.
3. Invocation of Section 13(3) of the Act due to commonality in office bearers of the two societies.
4. Violation of principles of natural justice in the assessment process.

Analysis:
1. The judgment pertains to two assessment orders under Section 143(3) of the Income Tax Act, 1961, concerning Medical Research Foundation (MRF) and Vision Research Foundation (VRF), both registered societies under the Societies Registration Act, 1860. The assessments for the year 2014-15 were challenged by the petitioners.
2. The assessments were based on a letter alleging money laundering through bogus donations and cash repayments, received from the Commissioner of Income Tax (Exemptions), Calcutta. The letter raised concerns about donations received by VRF from individuals involved in money laundering and a construction agreement between MRF and a company directed by the same individuals.
3. Section 13(3) of the Act was invoked due to common office bearers between MRF and VRF, leading to the rejection of exemption claims under Section 11 on grounds of violation of Section 13. The petitioners contended that they are separate entities, and the transactions were legitimate, denying any wrongdoing.
4. The judgment highlighted a fundamental issue of natural justice violation in the assessment process. It was noted that the orders were identical, lacking prior notice to the petitioners regarding the proposed assessment basis. The court emphasized the importance of providing an opportunity for the assessee to respond to specific issues raised by the Assessing Authority.
5. Due to the procedural irregularities and the absence of natural justice principles in the assessment process, the court set aside the impugned orders. The assessments were directed to be treated as show cause notices, requiring the petitioners to appear before the Assessing Officer to present their case with supporting materials. The court refrained from delving into the merits of the assessments, leaving all contentions open for fresh consideration within a specified timeline.

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