ATHANI VIDYAVARDHAN SANSTHE vs. ADDITTIONAL/JOINT/DY./ASSISTANT COLLECTOR

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WP/104484/2021HC KarnatakaKAHC02024116202127 September 2024Bench: JYOTI MULIMANI6 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the respondent (Assessing Officer) failed to consider the petitioner's reply dated 26.02.2021 from the right perspective and mechanically passed an untenable order. The reply indicated that the society was not registered under Section 12AA for AY 2018-19, making Sections 11 to 13 inapplicable, and claimed exemption under Section 10(23)(iiiad), relying on CIT Vs. M/s. Children’s Educational Society. The court found that the matter required a remand. Consequently, the assessment order dated 05.05.2021 and the demand notice dated 20.10.2021 were quashed. The matter was remanded to the respondents to the stage of the reply to the 142(1) notice, allowing the petitioner to file an added/additional reply, which the respondent authority was directed to consider carefully before taking a proper decision as per law. The court explicitly stated it had not expressed any opinion on the merits of the case.

What were the facts?

The petitioner, Athani Vidyavardhan Sansthe, an educational society, filed its income tax return for Assessment Year 2018-19 declaring NIL income and claiming exemption under Section 10(23C)(iiiad). Its return was selected for scrutiny due to issues with Form 10B/10BB. The Assessing Officer issued notices under Section 143(2) and Section 142(1) of the Income Tax Act. The petitioner responded to these notices, providing documents and replies. However, the petitioner alleges that the Assessing Officer passed an assessment order on 05.05.2021 and issued a demand notice on 20.10.2021 without considering its submissions. Aggrieved, the petitioner filed a writ petition before the High Court of Karnataka.

What were the issues?

1. Whether the Assessing Officer mechanically passed the assessment order without considering the petitioner's replies and documents, thereby violating principles of natural justice, turning on Section 143(2) and Section 142(1) of the Income Tax Act, 1961. Assessee's contention: The department mechanically passed the order without considering the reply submitted by the petitioner from the proper perspective. The petitioner sought permission to file an additional reply to the 142(1) notice. Revenue's contention: Sufficient opportunity was given, the department extensively considered the petitioner's replies, and the order was passed accordingly. The revenue vehemently opposed a remand and submitted that the writ petition is devoid of merits and should be dismissed.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 143(3),Section 144B,Section 11,Section 12AA,Section 13

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC-D:14158 WP No. 104484 of 2021

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 27TH DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO. 104484 OF 2021 (T-IT) BETWEEN:

ATHANI VIDYAVARDHAN SANSTHE, SOCIETY REGISTERED UNDER KARNATAKA SOCIETIES ACT, 1960, CTS NO.981/D, SHANKARNAGAR, ATHANI, DIST: BELAGAVI-591 304. REPRESENTED BY ITS CHAIRMAN, VIJAYKUMAR S/O. SHIVAPPA BURLI, AGE: 54 YEARS, OCC: BUSINESS, R/O: 3210, HUNDEKAR GALLI, ATHANI. …PETITIONER (BY SRI. SANGRAM.S.KULKARNI., ADVOCATE)

AND:

1.

ADDITIONAL/JOINT/DY./ASSISTANT COLLECTOR/ INCOME TAX OFFICER, NATIONAL E-ASSESSMENT CENTER, NEW DELHI.

2.

THE INCOME TAX OFFICER, WARD 1, BELAGAVI. …RESPONDENTS (BY M.THIRUMALESH., AND Ms.ROOPA ANAVEKAR., ADVOCATES)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN RELIEFS.

Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC-D:14158 WP No. 104484 of 2021

THIS WRIT PETITION IS LISTED FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, AN ORDER IS MADE AS UNDER: ORAL ORDER Sri.Sangram S.Kulkarni., counsel for the petitioner and Ms.Roopa Anavekar., counsel for the respondents have appeared in person. Sri.M.Thirumalesh., counsel for the respondents has appeared through video conferencing. 2. The short facts are these: The Athani Vidyavardhan Sansthe is a Society registered under the Karnataka Societies Registration Act, 1960 and has been running educational institutions for several years. The society filed an income tax return for the Assessment Year 2018-19 on 25.10.2018 declaring the total income as NIL. The petitioner claimed exemption under Section 10(23C) (iiiad) being an educational Society with each institution having gross receipts below Rs.100,00,000/-. The petitioner’s return was selected under CASS for complete scrutiny for the reason “Form 10B/10BB not filed or filed after due date of filing of return”.

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NC: 2024:KHC-D:14158 WP No. 104484 of 2021

Statutory notices in this regard were issued. The respondent issued a notice to the petitioner on 22.09.2019 under Section 143(2) of the Income Tax Act R/w Rule 12E of the Income Tax Rules, 1962. The first respondent issued another notice on 23.12.2020 under Section 142(1) of the Act calling upon the petitioner to furnish accounts and documents on or before 07.01.2021. On receipt of the second notice, the petitioner on 29.12.2021 sent a reply saying the reasons for delay in filing the reply beyond 07.01.2021. On 27.01.2021, another notice was issued under Section 142(1) of the Act calling upon the petitioner to furnish accounts and documents on or before 03.02.2021. Another notice was issued on 17.02.2021 fixing the time for reply as 22.02.2021. The petitioner contends that since the notices were sent by e-mail, it gave its reply on 26.02.2021, which is acknowledged by the respondent. The petitioner furnished documents and filed replies. However, the respondent without taking into consideration the replies and documents filed by the petitioner, passed an assessment order on 05.05.2021 and issued a demand notice on 20.10.2021. Hence, the petitioner has filed the captioned Writ Petition under Articles 226 and 227 of the Constitution of India.

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NC: 2024:KHC-D:14158 WP No. 104484 of 2021

3.

Counsel Sri.Sangram S.Kulkarni., in presenting his arguments submits that the department has mechanically passed the order without considering the reply submitted by the petitioner from the proper perspective. Hence, he submits that the petitioner may be allowed to file an added/ additional reply to the 142(1) notice. Counsel, therefore, submits that the Writ Petition may be allowed. By way of reply to this contention, counsel Sri.M.Thirumalesh., submits that sufficient opportunity was given and the department has extenso considered the replies of the petitioner and accordingly passed the order. He vehemently opposed to a remand. He submits that the Writ Petition is devoid of merits and the same may be dismissed. 4. Heard the arguments and perused the Writ papers with utmost care. 5. The reply given by the society is furnished along with the Writ Petition and the same is marked as Annexure-J. It is dated 26.02.2021. A perusal of the same reflects that the society has specifically contended that it is not registered under Section 12AA for the year 2018-19, hence provisions of

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NC: 2024:KHC-D:14158 WP No. 104484 of 2021

Sections 11 to 13 of the Income Tax Act are not applicable. It has also claimed exemption under Section 10(23) (iiiad) of the Act and placed reliance on the decision in CIT Vs. M/s.CHILDREN’s EDUCATIONAL SOCIETY – (2013) 358 373 (KAR). However, the respondent has failed to consider the reply from the right perspective and has mechanically passed the untenable order. Hence, the matter requires a remand. The order dated 05.05.2021 and the notice dated 20.10.2021 are liable to be set aside and so they are set aside. 6. The Writ of Certiorari is ordered. The order dated 05.05.2021 passed under Section 143(3) R/w Section 144B of the Income Tax Act, 1961 in DIN No: ITBA/AST/S/143(3)/2021-22/1032793796(1) for the Assessment Year 2018-19 vide Annexure-K and the notice dated 20.10.2021 in DIN & Letter No: ITBA/RCV/F/17/2021- 22/1036499730(1) for the Assessment Year 2018-19 vide Annexure-L are quashed. The matter is remanded to the respondents to the stage of reply to the 142(1) notice. The petitioner is at liberty to file an added/ additional reply. If such an added/ additional reply is

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NC: 2024:KHC-D:14158 WP No. 104484 of 2021

submitted, the respondent authority is directed to consider the same carefully and thereafter take a proper decision as per the law. This Court has not expressed any opinion on the merits of the case. 7. Resultantly, the Writ Petition is allowed and remanded.

Sd/- (JYOTI MULIMANI) JUDGE MRP, TKN LIST NO.: 1 SL NO.: 48

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