SMT. BHAWARI BAI GHEWARCHANDJI SURANA CHARITABLE TRUST vs. THE COMMISSIONER OF INCOME TAX

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WP/17820/2022HC KarnatakaKAHC01040375202227 March 2025Bench: S.R.KRISHNA KUMAR5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that it is an undisputed fact that the order at Annexure-E dated March 2, 2020, which granted registration to the petitioner-Trust, was not considered by the respondents while passing the impugned assessment order at Annexure-F dated December 30, 2019. Furthermore, the provisions contained in the proviso to Section 12A(ii) of the Income Tax Act were also not considered. Consequently, the Court found it just and appropriate to set aside the impugned order at Annexure-F. The matter was remitted back to the respondent for reconsideration afresh, taking into account Annexure-E and the proviso to Section 12A(ii) of the IT Act, after providing the petitioner with a sufficient and reasonable opportunity. The petitioner was also granted liberty to submit additional pleadings and documents. The petition was allowed.

What were the facts?

The petitioner, Smt. Bhawari Bai Ghewardhandji Surana Charitable Trust, filed a writ petition challenging an assessment order and demand notice dated December 30, 2019, passed by the Income Tax Officer (R2) for Assessment Year 2013-14. The demand was for Rs. 89,48,884/-. The petitioner sought to restrain the recovery of this demand and also prayed for directions regarding the effective date of their Section 12A registration. The petitioner argued that their Section 12A registration, granted for AY 2018-19, should be considered for the preceding year 2017-18, and consequently for AY 2013-14, based on the proviso to Section 12A(ii) of the Income Tax Act. The respondents contended that the petition had no merit.

What were the issues?

1. Whether the impugned assessment order dated December 30, 2019, passed by the Second Respondent for Assessment Year 2013-14, is liable to be set aside for failing to consider the provisions of Section 12A(ii) of the Income Tax Act and the order dated March 2, 2020 (Annexure-E) granting registration. - Assessee's contention: The petitioner argued that since they were granted registration as a Charitable Trust for AY 2018-19, they should be entitled to the same benefit for the preceding year 2017-18, and by extension, for AY 2013-14, in terms of Section 12A(ii) and its proviso. They relied on Annexure-E (order dated 02.03.2020) and the proviso to Section 12A(ii). - Revenue's contention: The revenue argued that there was no merit in the petition and it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 12A,Section 12A(ii),Section 11

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:13381 WP No. 17820 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.17820 OF 2022 (T-IT) BETWEEN:

SMT. BHAWARI BAI GHEWARCHANDJI SURANA CHARITABLE TRUST REGISTERED UNDER SEC.10A OF THE KARNATAKA STAMP ACT, 1957 REG.NO.3-11-2016, REP. BY ITS TRUSTEE, SRI ANAND SURANA, AGED ABOUT 52 YEARS, S/O LATE GHEWARCHAND SURANA, NO.45/3, FAIR FIELD LAYOUT, RACE COURSE ROAD, BENGALURU – 560 001. …PETITIONER

(BY SRI. S.PARTHASARATHI, ADVOCATE)

AND:

1.

THE COMMISSIONER OF INCOME TAX (EXEMPTION) UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU – 560 027.

2.

THE INCOME TAX OFFICER WARD 1 (2) (1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORMANGALA, BENGALURU – 560 095. …RESPONDENTS (BY SRI. M.DILIP., ADVOCATE)

Digitally signed by CHANDANA B M Location: High Court of Karnataka

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NC: 2025:KHC:13381 WP No. 17820 of 2022

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO RESTRAIN R2 FROM RECOVERY OF IMPUGNED DEMAND OF RS.89,48,884/- VIDE IMPUGNED ASSESSMENT ORDER ALONG WITH DEMAND NOTICE DATED 30.12.2019 IN ITBA/AST/S/143(3)/2019-20/1023479279(1) PASSED BY R2 FOR THE ASSESSMENT YEAR 2013-14 ANNEXURE- F; AND ETC.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner seeks the following reliefs:

“a) Issue a writ of Prohibition or a direction in the nature of Writ of Prohibition restraining the Second respondent from recovery of impugned demand of Rs.89,48,884/- vide impugned assessment order along with demand notice dt: 30.12.2019 in ITBA/AST/S143(3)/2019- 20/1023479279(1) passed by the Second Respondent for the assessment year 2013-14 (Annexure-‘F’)

b) Issue a writ of mandamus or a direction tin the nature of writ of Mandamus directing the First Respondent to treat the order passed on 02.03.2020 under Sec.12A to be deemed as an order passed on 25.04.2018 or it should be deemed to be an order passed any date prior to the date of passing the assessment order for the assessment year 2017-18(Annexure-‘F’)

c) In the alternative, issue a writ of Certiorari, quashing the order under section 12A of the Act passed by the 1st Respondent dt: 02.03.2020 with a direction to pass a

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NC: 2025:KHC:13381 WP No. 17820 of 2022

fresh order granting registration under Section 12A of the Act effective from the AY 2017-18 on ward (Annexure-E).

d) Issue a Writ of Mandamus or a direction in the nature of Writ of Mandamus directing the Second Respondent to allow the benefit of exemption under Section 11 and 12 of the Act and also to hold that the corpus donations collected were not taxable after setting aside de- nova assessment (Annexure-F) by the considering the Registration granted under Section 12A of the Act.

e) Pass such other order, direction or writ as this Hon’ble Court deems fit, and

f) direct the Respondent to award the costs of this writ petition.”

2.

Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.

3.

In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner invited my attention to the impugned assessment order at Annexure – F dated 30.12.2019 in order to point out that the provisions of Section 12A(ii) of the Income Tax Act was not considered by the respondents before passing the impugned order without appreciating that the petitioner having been granted registration as a Charitable Trust for the Assessment year 2018-19, the petitioner would be entitled to the same benefit

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NC: 2025:KHC:13381 WP No. 17820 of 2022

for the preceding year 2017-18 also in terms of provisions of Section 12A(ii) of the Income Tax Act. It is also submitted that by virtue of the order at Annexure – E dated 02.03.2020 giving effect to the ITAT and thereby granting registration to the petitioner – Trust for the Assessment year 2018-19, the benefit of the subsequent year would enure to the petitioner in view of proviso to Section 12A(ii) of the Income Tax Act and as such, the impugned order deserves to be set aside and matter remitted back to the concerned respondent for reconsideration afresh in accordance with law bearing in mind proviso to Section 12A(ii) as well as order at Annexure – E dated 02.03.2020 and in accordance with law.

4.

Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed.

5.

A perusal of the material on record will indicate that it is an undisputed fact that the order at Annexure – E dated 02.03.2020 was not considered by the respondents while passing the impugned order at Annexure – F earlier on 30.12.2019; so also, the provisions contained in the proviso to Section 12A(ii) have also not been considered by the respondent. Under these

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NC: 2025:KHC:13381 WP No. 17820 of 2022

circumstances, I deem it just and appropriate to set aside the impugned order at Annexure – F and remit the matter back to the respondent for reconsideration afresh in accordance with law bearing in mind Annexure – E and proviso to Section 12A(ii) of the IT Act.

6.

In the result, I pass the following: ORDER

(i) The petition is hereby allowed.

(ii) The impugned order at Annexure – F dated 30.12.2019 is hereby set aside.

(iii) Matter is remitted back to respondent No.2 for reconsideration afresh bearing in mind Annexure – E and proviso to Section 12A(ii) of the IT Act, in accordance with law after providing sufficient and reasonable opportunity to the petitioner. (iv) Liberty is reserved in favor of the petitioner to submit additional pleadings, documents, etc., to the respondent, who shall consider the same and proceed further in accordance with law.

Sd/- (S.R.KRISHNA KUMAR) JUDGE SV List No.: 1 Sl No.: 93

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