MANOHARLAL JAIN MEMORIAL FOUNDATION vs. INCOME TAX OFFICER (EXEMPTION) WARD, SURAT

Petitioner   has   challenged   an   order   dated 15.03.2017   attached   at   Annexure­A   to   the   petition, under which, the Income Tax Officer, Surat, required the   petitioner   to   pay   15%   of   the   outstanding   tax demand of Rs.1,44,90,500/­, upon which, the recovery of   balance   outstanding   would   be   stayed   pending assessee's appeal.

Having   heard   learned   advocates   and   having perused documents on record what emerges is that the petitioner­assessee is a registered Trust running a hospital at a remote place in Navsari district.  For the assessment year 2009­10, the return filed by the C/SCA/2531/2018 ORDER assessee   was   reopened.     It   appears   that   though notices   were   served   upon   the   assessee,   no representation was made on behalf of the assessee. Assessee explains that possibly the notices may have been   received   by   the   department   other   than administrative department of the hospital which led to this lapse.  All in all, the assessment came to be completed  ex­parte,  during   which,   the   Assessing Officer   made   addition   of   all   cash   deposits   in   the bank   accounts   of   the   assessee   and   raised   the   tax demand   of   Rs.1,44,90,500/­.     Assessee   has   already filed the appeal against such order.   Pending such appeal, the assessee first approached the Assessing Officer seeking stay against the recoveries on such application, impugned order came to be passed.

Counsel   for   the   petitioner   submitted   that   the accounts of the Trust are regularly audited.   Cash deposits   relate   to   the   treatment   fees   paid   by   the patients   who   came   from   small   villages   and   rural areas.     They   in   majority   of   the   cases   made   cash payments.   Such cash payments are deposited in the bank accounts.   Proper accounts are maintained.   In the past also, such cash deposits were examined by C/SCA/2531/2018 ORDER the Assessing Officers and accepted as genuine.   In the present case, the Assessing Officer in his  ex­ parte order, erroneously proceeded on the ground that the assessee had not filed the return of income which was not true.

Learned counsel for the Revenue submitted that the notices of reassessment were duly served, since the   assessee   did   not   appear   despite   service   of notices, the Assessing Officer had no option but to proceed ex­parte.  The impugned order even otherwise does not require interference.  The assessee has also filed petition before the Commissioner of Income Tax for waiver of pre­deposit requirement.

In facts of the present case, we are inclined to permit the assessee to proceed the appeal without any pre­deposit   and   till   such   appeal   is   disposed   of, there shall be no recovery of the tax demand arising out   of   the   said   order   of   assessment.     This   is primarily for the following reasons.  The assessment was completed  ex­parte.   The Assessing Officer has erroneously recorded that the assessee had not filed the return of income.  In the past also, the assessee C/SCA/2531/2018 ORDER had shown cash deposits in the bank account stated to have been received from the patients for treatment. The assessee's accounts are duly audited.

In the result, with above directions, petition is disposed of. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH