2020 (1) TMI 173

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.... 2. Two orders of assessment passed under Section 143(3) of the Income Tax Act, 1961 (in short 'Act') are impugned in these Writ Petitions, both dated 28.12.2017, one in the case of Medical Research Foundation (MRF) and the other in the case of Vision Research Foundation (VRF). Both MRF and VRF are societies registered in terms of the Societies Registration Act, 1860. 3. MRF was formed in the year 1975 with the avowed objects of engaging in research in Opthalmology and establishment of hospitals, schools, colleges and similar Institutions for advancement of research in all forms of medicine, particularly eye diseases. It manages several units, mostly under the name and style of 'Sankara Netralaya' and variants thereof.....

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....dividuals, Mr.Ajay Kumar Shroff and Mr.Amarnath Shroff ('individuals') stated to have indulged in money laundering to several institutions including VRF. MRF, for its part, is stated to have entered into a construction agreement with one Alcove Industries Ltd. In which the two individuals referred to earlier are Directors. The respondent officer has examined the transactions between VRF and Mr.Ajay Kumar Shroff and Mr.Amarnath Shroff on the one hand and MRF and Alcove Industries Ltd. on the other in the light of the background provided by the Caution Notice from Calcutta. 8. The provisions of Section 13(3) of the Act are invoked, since the Officer notes that there is some commonality in the office bearers of MRF and VRF: Dr.SS.Ba....

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....r assessment prior to finalization thereof and this aspect of the matter is really not disputed or contested by the revenue. The stand of the Assessing Authority as revealed from a perusal of the impugned orders is that the donations by the two individuals to VRF have been received back by them through MRF by way of a circular transaction which amounts to money laundering. However, such a conclusion has to be arrived at only after soliciting an explanation for the proposed assessment from the petitioners as well as a proper consideration of the explanations furnished as well as materials filed, if any, by the petitioners. 11. Though the provisions of the Income Tax Act do not provide for the issuance of a show cause notice in all cases, ....