ST.JOSEPHS MONASTERY vs. INCOME TAX OFFICER(EXEMPTIONS)

PDF · subscribers
WP(C)/2582/2020HC KeralaKLHC01007003202020 February 2020Author: HONOURABLE MR. JUSTICE AMIT RAWAL5 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the impugned order Ext.P6, rejecting the review petition, lacked cogent reasons and demonstrated a conspicuous absence of application of mind. The primary ground for rejection was the petitioner's non-compliance with notices under Section 142 of the Act. The Court found that the officers vested with judicial functions are expected to apply their mind in a pragmatic and reasonable manner, which was absent in this case. Consequently, the impugned order Ext.P6 was set aside. The matter was remitted to the Commissioner of Income-tax (Exemption), Kochi, to consider the revision petition afresh after affording an opportunity of hearing to the petitioner. The Court did not decide on the entitlement to exemption under Section 11 or 12A.

What were the facts?

The petitioner, St. Joseph's Monastery, a religious and charitable institution, filed an e-return for Assessment Year 2015 on February 27, 2017, declaring nil income and claiming exemption under Section 11 of the Income Tax Act. The assessment was completed under Section 144, with a best judgment assessment of Rs. 1,59,83,844/-, rejecting all expenses and denying legitimate accumulation under Section 11. The tax liability was calculated at Rs. 76,89,590/-. The petitioner's review petition under Section 264 was rejected by order dated March 21, 2019, on the grounds of non-response to notices under Section 142(1). The petitioner contends that no effective opportunity was given to claim exemption under Section 12A.

What were the issues?

1. Whether the impugned order dated March 21, 2019, rejecting the review petition under Section 264, is sustainable in law, considering the petitioner's contention that no effective opportunity was provided to claim exemption under Section 12A of the Income Tax Act, 1961. Assessee's Contentions: The petitioner argues that the rejection of the review petition is unsustainable as it was not given an effective opportunity to claim exemption under Section 12A. The assessment was completed ex parte, and the review was rejected solely on the ground of non-response to notices, without cogent reasons. Revenue's Contentions: The revenue supports the impugned orders, contending that the petitioner failed to place any material on record and did not respond to the notices issued by the Assessing Officer, thus failing to prove its case.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 142,Section 144,Section 264

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL THURSDAY, THE 20TH DAY OF FEBRUARY 2020 / 1ST PHALGUNA, 1941 WP(C).No.2582 OF 2020(W) PETITIONER: ST.JOSEPHS MONASTERY KOONAMMAAVU,KOONAMMAVU.P.O, KOCHI,PIN-683518,KERALA ,INDIA. REPRESENTED BY ITS AUTHORIZED SIGNATORY, & PRIOR (CHIEF EXECUTIVE) FR.ZACHARIAS PAIKKATTU CMI BY ADV. SRI.DALE P.KURIEN RESPONDENTS: 1 INCOME TAX OFFICER(EXEMPTIONS) SAN JUAN TOWERS,I.S.PRESS ROAD, KOCHI-682018. 2 3 COMMISSIONER OF INCOME TAX,(EXEMPTIONS), SAN JUAN TOWERS,I.S.PRESS ROAD, KOCHI-682018. CENTRAL BOARD OD DIRECT TAXES, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NEW DELHI – 560 001, REPRESENTED BY ITS SECRETARY. SRI CHRISTOPHER ABRAHAM SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.2582 OF 2020 -:2:-

JUDGMENT (Dated this the 20th day of February, 2020)

Petitioner in the instant case has impugned order dated 21.03.2019 Ext.P6 rejecting the review petition referred under Section 264 of the Income Tax Act, 1961. It is contended that the assessee petitioner is a Religious and Charitable institution under the name and style M/s.St.Joseph's Monastery, Koonammavu P.O., Ernakulam. For the assessment year 2015, e-return was filed through net on 27.02.2017 declaring 'nil' income claiming exemption under Section 11 of the Income Tax Act. Assessment was completed under Section 144 of the Income Tax Act. Learned counsel appearing on behalf of the petitioner submits that though the matter reached upto the level of ITAT, the fact remains that no effective opportunity was given to the petitioner to claim exemption under 12A of the Income- tax Act. After verification of return, best judgment assessment was passed ex parte adopting the income as returned at Rs.1,59,83,844/- for being taxed, rejecting the entire expenses. Rs,1,64,27,399/- as per the return and even 15% legitimate accumulation under Section 11 were denied. The tax liability

W.P.(C)No.2582 OF 2020 was calculated at Rs.76,89,590/-.

2.

The pith and substance of the impugned order reveals that the petitioner failed to respond to the notice issued under Section 142(1) of the Act. The Chartered Accountant of the petitioner could not appear in the matter. The order impugned lacks cogent reasons and review has been rejected merely on the ground that the petitioner did not respond to the notice issued.

3.

Per contra, learned counsel for the Income-tax Department Sri Christopher Abraham supports the impugned orders by urging that the petitioner has failed to place on record any material.

4.

Having heard learned counsel on both sides and on perusing the records, I am of the opinion that the impugned order Ext.P4 lacks reasons as to how and under what circumstances, the petitioner is not entitled to exemption being a Religious and Charitable Institution. The only ground for rejection of the review is that the petitioner did not respond to the notices issued under Section 142 of the Act. For the sake of convenience, operative portion of the said order is extracted below: “I have carefully examined the submission of the assessee. I

W.P.(C)No.2582 OF 2020 have also perused the report of the Assessing Officer. After considering the assessee's submissions and going through facts and circumstances of the case, it is seen that there was non-compliance to the notices issued by the Assessing Officer which is accepted by the assessee. In this case, the assessee was given sufficient opportunity by the Assessing Officer to prove its case. I, therefore, decline to interfere with the order of the Assessing Officer as the assessee has given no cogent reason for not responding to the Assessing Officer's queries and the petition U/s.264 dated 25.01.2018 is thereby not entertained and the same is filed.” For the aforementioned reasons the writ petition is bereft of material. The Officers vested with an obligation to discharge judicial functions are legitimately expected to resort to application of mind in a pragmatic and reasonable manner which is conspicuously absent in the instant case. For that reason, the impugned order Ext.P6 is set aside. The matter is remitted to the Commissioner of Income-tax (Exemption), Kochi to consider the revision petition afresh after affording an opportunity of hearing to the petitioner. AMIT RAWAL JUDGE

dsn

W.P.(C)No.2582 OF 2020

Appendix — schedule of exhibits
APPENDIX PETITIONER'S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE CERTIFICATE OF REGISTRATION ISSUED BY THE COMMISSIONER OF INCOME TAX,KOCHI DATED 8.03.1974. EXHIBIT P2 TRUE COPY OF THE STATUTORY RETURN OF INCOME DATED 27.02.2017. EXHIBIT P3 TRUE COPY OF THE NOTICE U/S.143(2)OF THE ACT DATED 18.09.2017. EXHIBIT P4 TRUE COPY OF THE ASSESSMENT ORDER DATED 7.12.2017. EXHIBIT P4(A) TRUE COPY OF THE DEMAND NOTICE DATED 7.12.2017. EXHIBIT P5 TRUE COPY OF THE REVISION PETITION DATED 23.01.2018 EXHIBIT P6 TRUE COPY OF THE REVISIONAL ORDER DATED 21.03.2019. EXHIBIT P7. TRUE COPY OF THE APPELLATE ORDER DATED 15-10- 2019 PASSED BY INCOME TAX APPELLATE TRIBUNAL,COCHIN BENCH. EXHIBIT P8 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2016-17 DATED 7.11.2018. EXHIBIT P9 TRUE COPY OF THE RETURN OF INCOME FOR THE 2017-18 DATED 03.04.2018. EXHIBIT P9(A) TRUE COPY OF THE RETURN OF INCOME FOR THE ASST.YEAR 2018-19 DATED 30.10.2018. EXHIBIT P9(B) TRUE COPY OF THE RETURN OF INCOME FOR THE ASST.YEAR 2019-20 DATED 01.10.2019. EXHIBIT P10 TRUE COPY OF THE WEBSITE PAGE ALLOTTED TO THE PETITIONER FROM THE INCOME TAX DEPARTMENT FOR UPLOADING DETAILS FOR TAX ASSESSMENT.

More judgments on Section 11

All 7,190 judgments and leading authorities on Section 11 →

Recent GST High Court judgments

Search GST case law →