Carmel Haven v. The Commissioner Of Income Tax-1, Pune & Ors

RNG 1 wp5098.14 IN THE HIGH COURT OF JUDICATURE AT BOMBAYAPPELLATE CIVIL JURISDICTION WRIT PETITION NO.5098 OF 2014 CARMEL HAVEN.. Petitioner vs. The Commissioner of Income Tax-1, Pune & ors.. Respondents Mr.Sitesh Sharma and Mr.Thomas James for PetitionerMr.Vimal Gupta Sr.Advocate i/b Ms.Padma Divakar for Respondents. PC. CORAM : M.S.SANKLECHA AND G.S.KULKARNI,JJ DATE : 10 JUNE 2014 This Petition under Article 226 of the Constitution of India has been filed by a public charitable trust engaged in charitable work including running of old age homes for senior citizens. 2. The challenge in this petition is to the orders of the Commissioner of Income Tax (CIT) dated 6.3.2014 passed under Section 220 (6) of the Income Tax Act, 1961 (hereinafter referred to as the said Act) directing the petitioner to furnish a Bank guarantee of 50 % of the tax payable consequent to the order dated 16.12.2013 of the Assessing Officer till the disposal of the petitioner's appeal before the Commissioner of Income Tax (Appeals). RNG 2 wp5098.14 4. By an order dated 16.12.2013 the Assessing Officer had assessed the Petitioner to an income of Rs.5.28 crores as against the total income of Rs.28.56 lacs declared in its return of income. Aggrieved, the petitioners have filed an appeal to CIT (A). The basic issue in dispute is : (a) Whether the corpus donation made to the trust would be chargeable to tax in view of the fact that registration under section 12A of the Act has not been granted ? 5. Pending the disposal of its Appeal by the CIT (A), the Petitioner had filed an application for stay of the demand of tax of Rs.2.18 crores before the Assessing Officer. By order dated 20.1.2014 the Assessing Officer rejected the same. Further application was filed before the Commissioner of Income Tax for stay which led to the passing of the impugned order. The Commissioner of Income Tax by the impugned order granted stay on the petitioner furnishing a bank guarantee equivalent to 50 % of the tax demanded till disposal of the Appeal by CIT (A) and four weeks thereafter. 6. It was submitted on behalf of the petitioner that it is a public charitable institution and running an old age home, furnishing of a bank guarantee as directed may not be possible and would lead to resource crunch. However, it was submitted that in the alternative they would secure the revenue by making a statement that the land purchased by them at Kolwadi Ghat No.1155 Taluka Haveli Pune-412 110 (purchased vide Sale Deed dated 2.4.2011) from the corpus donation would not be alienated by sale, transfer, gift or in any other manner till the disposal of the appeal filed by the Petitioner with the CIT (Appeals), Pune. RNG 3 wp5098.14 7. We are of the view that the above offer would adequately safeguard the interest of the revenue. We therefore direct: (a) The petitioner would file the requisite undertaking of not alienating by sale, transfer gift or in any other manner the above land at Kolwadi Ghat No.1155, Taluka Haveli, Pune-412 110 within a period of one week from today to the satisfaction of the Commissioner of Income Tax, Pune and; (b)On the Petitioner furnishing the above undertaking the impugned order dated 6.3.2014 would stand modified and the tax demand is stayed till the disposal of its Appeal by the Commissioner of Income Tax (Appeals) and for a period of four weeks thereafter. 8. Considering the fact that the Petitioners are a charitable institution, the Commissioner of Income Tax (Appeals) would decide the Appeal as early as possible and preferably within a period of six months from today. (M.S.SANKLECHA,J.) (G.S.KULKARNI, J.)