Aiman Education And Welfare Society v. The National Faceless Appeal Centre, Income Tax Department,Ministry Of Finance, New Delhi. Income Tax Department,Ministry Of Finance, New Delhi

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 09.09.2021CORAM: THE HONOURABLE MR.JUSTICE R.SURESH KUMAR W.P. No.16263 of 2021 and W.M.P. Nos.13106 & 13108 of 2021 Aiman Education and Welfare Society,Represented by its Treasurer,Mr.A.Abdul Majeed,No.16, 17, K.Sathanur,Azad Nagar, K.K. Nagar,Tiruchirappalli – 620 021. Vs. ... Petitioner 1.The National Faceless Appeal Centre, Income Tax Department,Ministry of Finance, New Delhi. Income Tax Department,Ministry of Finance, New Delhi. 2.The Commissioner of Income Tax (Exemptions), No.122, Nungamakkam High Road, Chennai – 600 034. No.122, Nungamakkam High Road, Chennai – 600 034. 3.The National e Assessment Centre, Income Tax Department, Ministry of Finance, New Delhi. Income Tax Department, Ministry of Finance, New Delhi. 4.The Income Tax Officer (Exemptions) cum Tax Recovery Officer, 'Aayakar Bhavan', No.44, Williams Road, Cantonment, Tiruchirappalli – 620 001. Tax Recovery Officer, 'Aayakar Bhavan', No.44, Williams Road, Cantonment, Tiruchirappalli – 620 001. ... Respondents P RAYER: Writ Petition filed under Article 226 of the Constitution ofIndia for issuance of Writ of Certiorarified Mandamus, calling forthe records in the Demand / Show Cause notice in DIN & NoticeNo.ITBA/RCV/S/221/2021-22/1034797134(1) dated 11.08.2021 issued bythe fourth respondent and quash the same and further direct thefirst respondent to dispose of the appeal filed by the petitionerchallenging the order of assessment dated 13.04.2021 made by thethird respondent for the Assessment Year 2018-19 within a time to befixed by this Court. For Petitioner : Mr.N.RamakrishnanFor Respondents : Mr.N.Dilip Kumar, Standing Counsel O R D E R ************ The prayer sought for herein is for a Writ of CertiorarifiedMandamus, calling for the records in the Demand / Show Cause noticein DIN & Notice No.ITBA/RCV/S/221/2021-22/1034797134(1) datedhttps://hcservices.ecourts.gov.in/hcservices/ 11.08.2021 issued by the fourth respondent and quash the same andfurther direct the first respondent to dispose of the appeal filedby the petitioner challenging the order of assessment dated13.04.2021 made by the third respondent for the Assessment Year2018-19. 2. The petitioner is a Society, registered under the SocietiesRegistration Act, 1975 and also under the Income Tax Act, 1961, [inshort, 'the Act']. The petitioner is an assessee on the file of thethird respondent in PAN No.AAATA95470H. The petitioner Society wasoriginally established in the year 1982, with a primary object ofestablishing and managing Schools, Colleges, EducationalInstitutions in different fields. However, subsequently, there hasbeen an amendment in the articles of the association of the Societyon 09.12.1998, whereby, Clause 3 Item 1 of the memorandum ofassociation has been amended, to provide education to allcommunities in general and to promote the interests of the Muslimminority in particular. 3. With that background, when assessment order was passed forthe assessment year 2018-19, by the third respondent, the assessingofficer has stated that, the petitioner, claiming to be a charitableSociety or Trust or Institution, can no more enjoy the benefit underSections 11 or 12 of the Act, in view of the provisions namelySection 13 of the Act, under which, if any part of the income fromthe property held under a Trust for private religious purposes,which does not enure for the benefit of public, would not beexcluded from taxable income as provided under Sections 11 and 12 ofthe Act and therefore, in that context, it is the stand of therevenue that the petitioner would not be entitled to get any suchbenefit under Sections 11 and 12 of the Act and accordingly, theassessment has been completed and assessment order was passed on13.04.2021. 4. Felt aggrieved over the said stand taken by the revenue inworking an assessment for the assessment year 2018-19 dated13.04.2021, an appeal had been preferred under Section 246-A of theAct, originally to the Commissioner of Appeals, which stoodtransferred to the first respondent ie., The National FacelessAppeal Centre, Income Tax Department, New Delhi, where thepetitioner's appeal dated 29.04.2021 is pending. 5. Though the said appeal has been pending before the firstrespondent, the fourth respondent, by show cause notice dated11.08.2021, has directed the petitioner to show cause as to why apenalty should not be levied under Section 221(1) of the Act, and inthis regard, the petitioner was directed to show cause on or before18.08.2021. https://hcservices.ecourts.gov.in/hcservices/ 6. Felt aggrieved over the said notice issued under Section 221(1) of the Act, dated 11.08.2021, the petitioner has filed thepresent writ petition. 7. Canvassing the point to assail the said impugned notice,Mr.N.Ramakrishnan, learned Counsel appearing for the petitioner /assessee has submitted that, the petitioner is an Educational andWelfare Society and it is a charitable institution. Therefore, it isentitled to get exemptions or benefits whatever available underSections 11 and 12 of the Act and that benefit has been continuouslygiven. However, all of a sudden in the assessment made in theassessment year 2018-19, a stand has been taken by the respondent /Revenue in view of the amendment having been made in the year 1998in the memorandum of articles of the Society, whereby, a clause hasbeen inserted that the educational institutions established by thepetitioner charitable Society is to provide education to allcommunities in general and to promote the interest of Muslimminority in particular. Merely because such an amendment has beenmade to make it as a charitable institution for the entire generalpublic and particularly for Muslim minority people, the revenue hastaken a stand in view of Section 13(1)(a) of the Act that, thebenefit available under Sections 11 and 12 would not be madeapplicable to the petitioner institution. 8. According to the learned Counsel for the petitioner, thesaid stand taken by the respondent / Revenue is untenable because,the character of charitable nature is not changed or modified,merely because the amendment has ben made and that is permissibleunder the provisions of the Constitution and therefore, the learnedCounsel would further contend that, as against the said view takenby the Revenue, appeal has been preferred before the firstrespondent, where the said appeal is yet to be decided. When thatbeing the position, in order to make a demand and also to impose apenalty under Section 221(1), the impugned order has been passed.Thus, the interest of the petitioner is prejudiced in the pendingappeal and therefore, during the pendency of the appeal, this kindof further precipitative action cannot be permitted to be taken bythe assessing officer. Therefore, on that ground, the impugnednotice is infirm and hence, the learned Counsel seeks indulgence ofthis Court. 9. I have heard Mr.N.Dilip Kumar, learned Standing Counselappearing for the Income Tax Department, who would submit that, nodoubt, as against the assessment order, where the stand has beentaken by the assessing officer that in view of Section 13 of theAct, the benefits available under Sections 11 and 12 of the Actwould not be made available to the petitioner, appeal has been filedby the petitioner before the first respondent, where he can seek forany interim order. Suppose he has not obtained any interim order orhe has not at all sought for any interim order, merely because hehttps://hcservices.ecourts.gov.in/hcservices/ 9. I have heard Mr.N.Dilip Kumar, learned Standing Counselappearing for the Income Tax Department, who would submit that, nodoubt, as against the assessment order, where the stand has beentaken by the assessing officer that in view of Section 13 of theAct, the benefits available under Sections 11 and 12 of the Actwould not be made available to the petitioner, appeal has been filedby the petitioner before the first respondent, where he can seek forany interim order. Suppose he has not obtained any interim order orhe has not at all sought for any interim order, merely because hehttps://hcservices.ecourts.gov.in/hcservices/ has filed an appeal before the first respondent, the further follow-up action, pursuant to the assessment made, cannot be put to haltand therefore, there is no wrong on the part of the fourthrespondent to make a demand and issue show cause notice to seek showcause from the petitioner, as to why penalty should not be imposed. 10. Learned Counsel would further submit that, in this regard,if the petitioner feels aggrieved, as his appeal is pending, wherehe cannot get any disposal or get any interim order, during thependency of the appeal, he can very well approach the assessingofficer under Section 220(6) of the Act, by making an application totreat him as the assessee not in default and therefore, such acourse of action, since is available to the petitioner, withoutexhausting the same, the petitioner cannot rush to this Court byfiling the present writ petition, instead of giving the show causeto the said notice. 11. I have considered the rival submissions made by the learnedCounsel appearing for the parties and have perused the materialsplaced before this Court. 12. Whether the petitioner would be entitled to get benefitunder Sections 11 and 12 of the Act or not, in view of theprovisions of Section 13(1)(a), because of the amendment made in theyear 1998 in the articles of the petitioner Society, is the questionto be decided by the appellate authority, where admittedly, theappeal filed by the petitioner dated 29.04.2021, is pending. Sincethe first respondent appellate authority is a National Forum, beforewhom a number of appeals throughout the country would have beenfiled, we cannot expect that within a particular time frame, appealwould be disposed of. But, in such cases, normally a mechanismwould be provided to seek a plea to grant an interim order asagainst the order of assessments which are impugned before theappellate authority. If there is no such mechanism is available orsuch mechanism is not effectively administered, with a result, theparties who approach the appellate forum is not able to get anyinterim relief, certainly, there must be a way out. 13. In this regard, as pointed out by the learned StandingCounsel for the respondents, in such cases where appeal is filed andpending before the appellate forum either under Section 246 or 246(A), the appellant can very well approach the assessing officerconcerned by filing an application under sub-section 6 of Section220 of the Act and in such cases, the assessing officer, in hisdiscretion, and subject to such conditions as he may think fit toimpose in the circumstances of the case, may treat the assessee asnot being in default in respect of the amount in dispute in theappeal, even though the time for payment has expired, as long assuch appeal remains undisposed of. Therefore, it is an enablingprovision for the appellant, for getting an interim relief, byhttps://hcservices.ecourts.gov.in/hcservices/ making an application before the Assessing Officer. making an application before the Assessing Officer. 14. In this context, an apprehension is raised by thepetitioner that if such an application is filed under Section 220(6), by using the discretion, the assessing officer may impose suchan onerous condition of directing the petitioner assessee to paycertain percentage of the demand and in that case, again thepetitioner would be prejudiced, as the very liability of paying thetax demanded by the assessing officer is the subject matter inappeal and thus, by one way or the other, the action of demand ofanything would be a prejudicial to the petitioner. Therefore, suchkind of conditions, if it is imposed, then again, that may not be anappropriate remedy for the petitioner assessee or like persons. 15. Be that as it may, merely because of some apprehensions ashas arisen in the minds of the assessee, it cannot be stated thatthe assessing officer would not decide the issue in properperspective, in view of the facts and circumstances of the case inhand. 16. In this context, it is to be noted that, in the case inhand, the petitioner had been enjoying the benefit of Sections 11and 12 of the Act, hitherto and such a benefit all of a sudden iswithdrawn or taken back by citing Section 13(1)(a) of the Act,whether such a levy of Tax made on behalf of the revenue by theassessing officer is justifiable or not is the subject matter beforethe appellate authority and therefore, once the appellate authoritytakes up the appeal and decide the same and before which, if anydemand is made, even as a condition under Section 220(6), that willbe a case of prejudice to the petitioner, if ultimately the appealis decided otherwise. Therefore, this Court feels that in a case ofthis nature, when a prima facie case is made in this regard by theassessee that shall be taken into account. This has also beenreiterated by this Court in an earlier order in W.P. No.5550 of2020 dated 08.04.2021. 17. When that being the position, this Court feels that, nodoubt, the petitioner assessee can very well approach the assessingofficer, by invoking Section 220(6) of the Act and accordingly, theapplication to be filed in this regard, under the aforesaidprovision can be decided by the assessing officer by taking intoaccount the facts and circumstances of the case, especially in thecontext of the observations made hereinabove. 18. In that view of the matter, this Court is inclined todispose of this writ petition with the following order:“that the petitioner is relegated to file anapplication under Section 220(6) of the Act, beforethe Assessing Authority ie., the third respondentwithin a period of two [2] weeks from the date ofhttps://hcservices.ecourts.gov.in/hcservices/ 17. When that being the position, this Court feels that, nodoubt, the petitioner assessee can very well approach the assessingofficer, by invoking Section 220(6) of the Act and accordingly, theapplication to be filed in this regard, under the aforesaidprovision can be decided by the assessing officer by taking intoaccount the facts and circumstances of the case, especially in thecontext of the observations made hereinabove. 18. In that view of the matter, this Court is inclined todispose of this writ petition with the following order:“that the petitioner is relegated to file anapplication under Section 220(6) of the Act, beforethe Assessing Authority ie., the third respondentwithin a period of two [2] weeks from the date ofhttps://hcservices.ecourts.gov.in/hcservices/ receipt of a copy of this order. On receipt of suchapplication, after giving an opportunity of beingheard to the petitioner, the same shall be decided bythe third respondent. While deciding the same, thethird respondent shall borne in mind the factsituation of this case, where the petitioner, tillthe assessment year 2018-19 had enjoyed the benefitavailable under Sections 11 and 12 of the Act andtherefore, such benefit, if it is taken away or therevenue wanted to take away, the same shall bedecided and the issue to be decisively concluded.Hence, in this regard, since the petitioner hasalready filed an appeal before the first respondentwhich is admittedly pending before the firstrespondent, unless and until the appeal is decidedone way or the other, the demand made in this regardby the assessing officer, which includes the amountotherwise to be exempted for the concerned assessmentyear ie., 2018-19, insofar as the claim of exemptionmade under the benefit of Sections 11 and 12, may notbe considered to be a tax in default and therefore,the same shall be taken into account by the assessingofficer within the meaning of the language used insub-section 6 of Section 220 of the Act andaccordingly, the order needful shall be passed by thethird respondent / assessing officer, within a periodof four [4] weeks, thereafter. It is made clear that, till such a decision ismade by the third respondent / assessing officer asindicated above, no persuasive or coercive actionshall be taken, including the action pursuant to theimpugned notice against the petitioner.” 19. With the above directions, the Writ Petition standsdisposed of. However, there shall be no order as to costs.Consequently, connected miscellaneous petitions are closed. // True Copy // Assistant Registrar(Writs) https://hcservices.ecourts.gov.in/hcservices/ Note:In view of the present lock down owing to COVID-19pandemic, a web copy of the order may be utilized forofficial purposes, but, ensuring that the copy of theorder that is presented is the correct copy, shall bethe responsibility of the advocate/litigant concerned. To1.The National Faceless Appeal Centre, Income Tax Department, Ministry of Finance, New Delhi.2.The Commissioner of Income Tax (Exemptions), No.122, Nungamakkam High Road, Chennai – 600 034.3.The National e Assessment Centre, Income Tax Department, Ministry of Finance, New Delhi.4.The Income Tax Officer (Exemptions) cum Tax Recovery Officer, 'Aayakar Bhavan', No.44, Williams Road, Cantonment, Tiruchirappalli – 620 001.+1 CC to M/s.N.DILIPKUMAR, Advocate ( SR-28886[F] dated 13/09/2021 )+1 CC to M/s.M.P.SENTHIL, Advocate ( SR-28735[F] dated 09/09/2021 ) ORDER MADE INW.P. No.16263 of 202109.09.2021 TR(15.09.2021) 7P 7C https://hcservices.ecourts.gov.in/hcservices/