TaxTMI 
TaxTMI 
2002 (1) TMI 60
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....ssioner of Income-tax, Surat, on December 22, 1986, for the first time and thereafter the recognition under section 80G of the Act has been renewed from time to time. The petitioner-trust was assessed since the assessment year 1984-85 and its claim of exemption under section 11 of the Act was duly granted for the assessment years 1984-85 to 1987-88. Similarly, for the assessment years 1988-89 to 1990-91, the Assessing Officer once again granted exemption under section 11 of the Act. However, for the assessment years 1991-92 and 1992-93, the assessment orders under section 143(3) of the Act were passed on November 11, 1992, and February 10, 1995, respectively, denying the claim of exemption under section 11 of the Act. It appears that the Assessing Officer initiated proceedings under section 147 of the Act for the assessment years 1988-89, 1989-90 and 1990-91 and in the reassessment the claim of exemption under section 11 was rejected. Therefore, the petitioner-trust went in appeal for all the five assessment years before the Commissioner of Income-tax (Appeals), but as it failed, second appeals were preferred before the Tribunal. The Tribunal, vide its order dated January 20, 200....
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....e-tax (Appeals) dismissed the appeal and the second appeal was decided by the Tribunal on January 20, 2000. The notice under section 148 of the Act has been issued on January 9, 2001. The petitioner called upon the respondent to supply reasons recorded under section 148(2) of the Act and the said reasons were supplied in August, 2001. The present petitions were filed on September 20, 2001, and the same were circulated for hearing on October 19, 2001, but were taken up for hearing on October 22, 2001. It appears that the petitioner furnished a return of income on July 20, 2001, in response to a notice under section 148 of the Act. The respondent issued a questionnaire letter dated September 3, 2001, fixing the hearing on September 17, 2001. The petitioner asked for time to comply with the questionnaire letter and the respondent by his letter dated October 10, 2001, fixed the next date of hearing on October 19, 2001. As the petitioner asked for time once again the respondent informed that the case was adjourned to October 23, 2001, for the last and final time. On October 22, 2001, the petitioner once again asked for time and pointed out to the respondent that the assessment was get....
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.... was filed by the petitioner on July 27, 1994, and the petitioner's claim for exemption under section 11 of the Act was accepted on October 27, 1994, under section 143(1) of the Act. On November 19, 1998, notice under section 148 of the Act was issued and the return in response to the said notice was submitted on December 28, 1998. On October 25, 2000, the respondent issued notice under section 143(2) of the Act and on November 23, 2000, the respondent dropped the proceeding initiated under section 147 of the Act. Fresh notice under section 148 was issued on January 9, 2001, and in the assessment framed in pursuance of the said notice gross receipts of Rs.20,29,255 have been brought to tax on October 23, 2001. Assessment year 1995-96: The petitioner submitted the return of income on July 10, 1995. It is the say of the petitioner that the said return was accepted, but the petitioner has not been intimated about the, same. However, on November 19, 1998, notice under section 148 of the Act was issued and the return was filed on December 28, 1998. Notice under section 143(2) of the Act was issued on October 25, 2000, and on November 23, 2000, the proceedings initiated under section....
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.... to show undue haste in which the assessment had been framed and to the questionnaire letter issued by the respondent to show that the requirements under the said letter were nothing but repetition of details which were already available with the respondent. In support of the contention that the action of the respondent was tainted with mala fides and the assessments had been framed in undue haste the attention of the court was also invited to the fact that the entire gross receipts had been taxed which was against the settled legal position. This court had specifically laid down in the case of CIT v. Ganga Charity Trust Fund [1986] 162 ITR 612, and in the case of CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal [1995] 211 ITR 293 (Guj), that even in the case of charitable trusts the assessment has to be framed on the basis of the net income, which had to be worked out on a commercial basis. As against this, Shri Mihir Joshi, learned standing counsel, appearing on behalf of the Revenue, submitted that these petitions should not be entertained and required to be dismissed summarily at the threshold because: (i) The petitions were barred by delay and laches. (ii) At least there....
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....To meet the contention of the respondent regarding availing of alternative remedy, reliance was placed on the decision of the apex court in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191. It was submitted that in cases where the statutory remedy like appeal would result in long drawn out proceedings resulting in harassment of the assessee it was incumbent upon the High Court to intervene. It was further pointed out that there was no distinction between the first three assessment years and the later three assessment years as the distinction sought to be drawn on behalf of the respondent, but as could be seen from the facts the reasons recorded were common, based on the findings of the Tribunal and furthermore, for the fourth, fifth and sixth years the petitioner's case was on a better footing as the respondent had already taken into consideration the Tribunal's order in the original proceedings. It is well settled that any challenge to initiation of reassessment proceedings has to be tested primarily on the basis of the reasons recorded. The case of the Revenue must succeed or fail on the basis of reasons recorded. In the present case, in para. 4 of the reasons rec....
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....iew of the provisions of section 13(1)(c)(i) read with section 13(3) of the Act. But what is more pertinent is that in para. 5, it is recorded by the respondent that the income liable to tax has escaped assessment in view of the law having emerged from the order of the Income-tax Appellate Tribunal. The respondent further goes on to state: that apart, there is also failure on the part of the trust in making full and true disclosure of such material facts relevant to such income eligible (exigible?) to tax with reference to section 11 read with section 13(1)(c) as evident from the returns of income filed. On a plain reading of the reasons recorded the following facts emerge: (a) the list of prohibited category of persons was available on record with the Assessing Officer, (b) liability to tax with reference to section 11 read with section 13(1)(c) of the Act is evident from the return of income filed as per his own say, (c) income has escaped assessment in view of the law having emerged from the order of the Tribunal. Having regard to the fact that the reasons recorded as extracted hereinbefore, themselves bring out contradiction in terms it cannot be stated that any failure or ....
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....ho will have to establish that the petitioner is not so entitled. The impugned notice having been issued after the expiry of the period of four years from the end of the relevant assessment year, the respondent shall have to establish that there was any omission or violation on the part of the petitioner to place all material facts necessary for the assessment of the assessment year in question. An omission or failure presumes a statutory obligation. From the reasons recorded itself it is apparent that the list of persons falling within the prohibited category as stipulated in section 13(3) of the Act was already available on record. Thereafter, what inference in facts or in law had to be drawn was the duty of the respondent and in case the respondent failed on the said count such failure or omission cannot be laid at the doorstep of the petitioner. In this context reliance placed by Mr. Joshi on the provision of Explanation 1 to the effect that even if the list was available it would not amount to disclosure within the meaning of the proviso merely because the Assessing Officer could have with due diligence discovered material evidence is to be stated to be rejected. This is not a....
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..... Joshi contended that it was not necessary for the petitioner to wait till reasons were supplied to the petitioner but the petitioner could have challenged the impugned notice immediately on the service of the said notice without waiting for the reasons recorded. The petitioner could have done so. However, if the petitioner chose to wait for being supplied the reasons recorded it cannot be stated that such action on the part of the petitioner deprived the petitioner of remedy available to it under the Constitution. In a case where on the receipt of the reasons recorded the assessee feels that it would be better to submit to the jurisdiction of the Assessing Officer, no prejudice would be caused to the Revenue. However, where reasons are demanded it would be better if they are supplied so as to enable the petitioner to make up its mind as to whether such reasons are germane to the belief as to escapement of income or otherwise. It has to be borne in mind that recording of reasons under section 148(2) of the Act, is a mandatory condition precedent and notice issued under section 148 of the Act is a serious proceeding resulting in dislodgment of earlier assessment and no person shoul....
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.... the Constitution conferred on the High Courts the power to give relief it became the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief were refused without adequate reasons." Before parting we may observe that during the course of hearing we had called for the original files of the respondent in view of the fact that the submissions were made on behalf of the petitioner to the effect that the assessment had in fact not been framed on October 23, 2001, but subsequently and an attempt had been made by the respondent to over reach the process of the court, that though the respondent had been served with process of the court on October 23, 2001, in the later half of the day he had chosen to remain silent about passing of the assessment order on the said day. However, we feel that it is not necessary for deciding the present controversy to enter into the larger question as to what would be the effect of perusal of the original files of the authority as contended by Mr. Joshi. Needless to state that, it is always open to the court to undertake such an exercise and in a given case strike down or uphold the proceedings wh....