M/S. AARK INDIA EDUCATIONAL TRUST,TIRUNELVELI vs. ITO (EXEMPTIONS), TIRUNELVELI

A survey u/s. 133A of the Income Tax Act was conducted o 133A of the Income Tax Act was conducted on 133A of the Income Tax Act was conducted o 22.10.2018 at both the registered office of the Trust in Tirunelveli 22.10.2018 at both the registered office of the Trust in Tirunelveli 22.10.2018 at both the registered office of the Trust in Tirunelveli and at SCAD World School (CBSE), Chengalpattu. During the survey and at SCAD World School (CBSE), Chengalpattu. During the survey and at SCAD World School (CBSE), Chengalpattu. During the survey proceedings, it was observed that the Trust had been taken over by proceedings, it was observed that the Trust had been taken over by proceedings, it was observed that the Trust had been taken over by the present trustees on 07.04.2011. Examination of th the present trustees on 07.04.2011. Examination of the balance e balance sheet as on 31.03.2011 revealed that a sum of sheet as on 31.03.2011 revealed that a sum of Rs.6,24,68,843 6,24,68,843/- was reflected as advances received from eight different persons. In was reflected as advances received from eight different persons. In was reflected as advances received from eight different persons. In the balance sheet for the year ended 31.03.2012, after repayment the balance sheet for the year ended 31.03.2012, after repayment the balance sheet for the year ended 31.03.2012, after repayment of Rs.5,56,982/- the remaining amount of the remaining amount of Rs.6,19,11,861 1,861/- was converted into corpus funds. converted into corpus funds.

The eight individuals from whom the advances were received, as The eight individuals from whom the advances were received, as The eight individuals from whom the advances were received, as reflected in the balance sheet as on 31.03.2011, were the erstwhile reflected in the balance sheet as on 31.03.2011, were the erstwhile reflected in the balance sheet as on 31.03.2011, were the erstwhile trustees of the Trust. These advances were converted into corpus trustees of the Trust. These advances were converted into corpus trustees of the Trust. These advances were converted into corpus during the financial year 2011 cial year 2011-12 in the names of the same former 12 in the names of the same former trustees. Consequently, there was reason to believe that income trustees. Consequently, there was reason to believe that income trustees. Consequently, there was reason to believe that income chargeable to tax had escaped assessment, as the substantial sum chargeable to tax had escaped assessment, as the substantial sum chargeable to tax had escaped assessment, as the substantial sum of Rs.6,19,11,861 shown as advances in Assessment Year 2011 6,19,11,861 shown as advances in Assessment Year 2011-12 6,19,11,861 shown as advances in Assessment Year 2011 was converted into corpus in the subsequent Assessment Year into corpus in the subsequent Assessment Year into corpus in the subsequent Assessment Year 2012-13.

Notice u/s. 148 was issued to the assessee on 27.03.2019. In 148 was issued to the assessee on 27.03.2019. In 148 was issued to the assessee on 27.03.2019. In response thereto, the assessee filed its return of income on response thereto, the assessee filed its return of income on response thereto, the assessee filed its return of income on 29.04.2019 declaring Nil income and requested the reasons for 2019 declaring Nil income and requested the reasons for 2019 declaring Nil income and requested the reasons for reopening, which were duly furnished. The assessee submitted reopening, which were duly furnished. The assessee submitted reopening, which were duly furnished. The assessee submitted detailed explanations regarding the formation of the Trust on detailed explanations regarding the formation of the Trust on detailed explanations regarding the formation of the Trust on 06.06.2019 06.06.2019 06.06.2019 and, and, and, through through through the the the same same same communication, communication, communication, raised raised raised objections to the reopening of the assessment ening of the assessment u/s. 147. Thereafter, 147. Thereafter, notice u/s. 143(2) was issued on 04.07.2019 followed by notice 143(2) was issued on 04.07.2019 followed by notice u/s. 143(2) was issued on 04.07.2019 followed by notice 142(1) dated 09.07.2019 calling for further information. 142(1) dated 09.07.2019 calling for further information.

Meanwhile, the assessee filed a writ petition before the Hon’ble Meanwhile, the assessee filed a writ petition before the Hon’ble Meanwhile, the assessee filed a writ petition before the Hon’ble High Court challenging the notice issued nging the notice issued u/s. 148 dated 27.03.2019. 148 dated 27.03.2019. The Hon’ble High Court granted a stay of the assessment The Hon’ble High Court granted a stay of the assessment The Hon’ble High Court granted a stay of the assessment proceedings on 16.09.2019. Subsequently, the Madurai Bench of the proceedings on 16.09.2019. Subsequently, the Madurai Bench of the proceedings on 16.09.2019. Subsequently, the Madurai Bench of the Hon’ble High Court, by order dated 30.03.2021, disposed of the writ Hon’ble High Court, by order dated 30.03.2021, disposed of the writ Hon’ble High Court, by order dated 30.03.2021, disposed of the writ

After disposing of the objections, the Assessing Officer passed the After disposing of the objections, the Assessing Officer passed the After disposing of the objections, the Assessing Officer passed the assessment order u/s. 147 on 10.09.2021. 147 on 10.09.2021.

At the outset, the learned Authorised At the outset, the learned Authorised Representative (“ld. AR”) Representative (“ld. AR”) for the assessee raised a legal ground contending that the for the assessee raised a legal ground contending that the for the assessee raised a legal ground contending that the assessment order dated 10.09.2021 is barred by limitation and assessment order dated 10.09.2021 is barred by limitation and assessment order dated 10.09.2021 is barred by limitation and therefore liable to be quashed. therefore liable to be quashed.

The learned Departmental Representative (“ld. DR”) vehemently The learned Departmental Representative (“ld. DR”) vehemently The learned Departmental Representative (“ld. DR”) vehemently supported the order of the ld. CIT(A). She further contended that, the order of the ld. CIT(A). She further contended that, the order of the ld. CIT(A). She further contended that, for the purpose of computing limitation, the relevant date is the for the purpose of computing limitation, the relevant date is the for the purpose of computing limitation, the relevant date is the date of communication of the order vacating the stay and not the date of communication of the order vacating the stay and not the date of communication of the order vacating the stay and not the date on which the stay was actually vacated. date on which the stay was actually vacated.

For adjudication of For adjudication of this legal issue, the relevant dates and this legal issue, the relevant dates and events are tabulated below: events are tabulated below:

The relevant provisions of the section . The relevant provisions of the section 153 are as under: 153 are as under: Time limit for completion of assessment, reassessment and recomputation. Time limit for completion of assessment, reassessment and recomputation. Time limit for completion of assessment, reassessment and recomputation. 153. (1) ………………………………………………………………………. ………………………………………………………………………. ………………………………………………………………………. (2) No order of assessment, reassessment or recomputation shall be made (2) No order of assessment, reassessment or recomputation shall be made (2) No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of after the expiry of nine months from the end of the financial year the financial year in which the notice under in which the notice under section 148 was served: 92[Provided that where the notice und that where the notice under section 148 is served on or after the 1st day is served on or after the 1st day of April, 2019, the provisions of this sub of April, 2019, the provisions of this sub-section shall have effect, as if for the words section shall have effect, as if for the words "nine months", the words "t "nine months", the words "twelve months" had been substituted.] Explanation 1.—For the purposes of this section, in computing the period of For the purposes of this section, in computing the period of For the purposes of this section, in computing the period of limitation— (i) ……………………………………………………………………….. ……………………………………………………………………….. ……………………………………………………………………….. (ii) the period during which the assessment proceeding is stayed by an order or the period during which the assessment proceeding is stayed by an order or the period during which the assessment proceeding is stayed by an order or injunction of any court; or any court; or …………………………………………………………………………………………. …………………………………………………………………………………………. …………………………………………………………………………………………. …………………………………………………………………………………………. …………………………………………………………………………………………. ………………………………………………………………………………………….

It is also well settled by the judgment of the Hon’ble Allahabad It is also well settled by the judgment of the Hon’ble Allahabad It is also well settled by the judgment of the Hon’ble Allahabad High Court in Commissioner Commissioner of Income-tax-1, Agra vs. Chandra 1, Agra vs. Chandra Bhan Bansal [2014] 46 taxmann.com 108 (All.) that in terms of [2014] 46 taxmann.com 108 (All.) that in terms of [2014] 46 taxmann.com 108 (All.) that in terms of Explanation 1(ii) to section 153, the period of limitation stands Explanation 1(ii) to section 153, the period of limitation stands Explanation 1(ii) to section 153, the period of limitation stands excluded only during the subsistence of the stay order and once the excluded only during the subsistence of the stay order and once the excluded only during the subsistence of the stay order and once the stay is vacated, the perio stay is vacated, the period of limitation recommences, irrespective d of limitation recommences, irrespective of the date of communication of such order to the Department. of the date of communication of such order to the Department. of the date of communication of such order to the Department.

In view of the above factual matrix and the settled legal In view of the above factual matrix and the settled legal In view of the above factual matrix and the settled legal position, we are of the considered opinion that the relevant date for position, we are of the considered opinion that the relevant date for position, we are of the considered opinion that the relevant date for computation of limitation is the date on which the stay order was ation is the date on which the stay order was ation is the date on which the stay order was vacated(in the presence of the counsel for the revenue in the presence of the counsel for the revenue) by the in the presence of the counsel for the revenue Hon’ble High Court, i.e., 30.03.2021, and not the date of Hon’ble High Court, i.e., 30.03.2021, and not the date of Hon’ble High Court, i.e., 30.03.2021, and not the date of communication thereof. If the period of stay from 16.09.2019 to communication thereof. If the period of stay from 16.09.2019 to communication thereof. If the period of stay from 16.09.2019 to 30.03.2021 is excluded, the Assessing Officer was statutorily 30.03.2021 is excluded, the Assessing Officer was statutorily 30.03.2021 is excluded, the Assessing Officer was statutorily required to pass the assessment order on or before 15.07.2021. required to pass the assessment order on or before 15.07.2021. required to pass the assessment order on or before 15.07.2021.

Accordingly, the assessment order passed under section 147 Accordingly, the assessment order passed under section 147 Accordingly, the assessment order passed under section 147 dated 10.09.2021 is quashed as being barred by limitation. dated 10.09.2021 is quashed as being barred by limitation. dated 10.09.2021 is quashed as being barred by limitation.

In the result, the appeal of the asse In the result, the appeal of the assessee is allowed allowed on the ground of limitation and the appeal of the Revenue stands dismissed ground of limitation and the appeal of the Revenue stands ground of limitation and the appeal of the Revenue stands as infructuous. Order pronounced on the 04th day of February, 2026, in Chennai. Order pronounced on the , in Chennai.