M/S C.t. Educational Society v. Commissioner Of Income Tax (Appeals) & Another

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. C.W.P. No.1323 of 2010 (O&M)Date of decision: 16.8.2010 M/s C.T. Educational Society. -----Petitioner. Vs. Commissioner of Income Tax (Appeals) & another. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Akshay Bhan, Advocatefor the petitioner.for the petitioner. Mr. Vivek Sethi, Standing Counselfor the respondents. --- ADARSH KUMAR GOEL, J. 1. This petition seeks direction for refund of the amountof tax, which has been paid but has been found to be not due.2. Case of the petitioner is that vide order dated16.8.2002, the Commissioner of Income Tax registered thepetitioner as Public Charitable Institution under Section 12AA ofthe Income Tax Act, 1961 (for short, “the Act”) w.e.f. 1.4.2002.For the assessment year 2005-06, the Assessing Officeraccepted the petitioner as charitable organization and did notraise any demand of tax. However, for the assessment year2006-07, demand of tax was wrongly raised, against which appeal of the petitioner was accepted vide order dated14.10.2009, Annexure P-6. As a result of the said order, thepetitioner became entitled to refund of the tax paid in view ofprovisions of Section 240 of the Act. The petitioner maderepresentation for refund but vide impugned order dated30.12.2009, instead of granting refund, the amount was adjustedagainst liability for the assessment year 2002-03 by reopening theassessment. 3. Contention raised on behalf of the petitioner is that theamount having been deposited against demand for theassessment year 2006-07, on appeal being accepted, the amountshould have been refunded to the petitioner. As regards liabilityfor the assessment year 2002-03, contention on behalf of thepetitioner is that no tax is payable in view of reasons given for theassessment year 2006-07. It has been further submitted that theprovision of Section 245 of the Act could not be invoked withoutgiving intimation to the petitioner. Even though order ofassessment has been passed, the petitioner has filed appealagainst the said order and stay has been granted against theamount remaining balance after adjustment. But for adjustment,the petitioner would have got complete stay. 4. In the reply filed on behalf of the revenue, only standtaken is that adjustment was only a precautionary measure asearlier recovery had been effected by attaching bank accountsand through instalments. 5. In view of facts noticed above, it is patent that thepetitioner has been accepted as a charitable institution underSection 12AA of the Act. Even though it is stated that an appealis pending in the matter, the position which stands today is thatthe assessee is entitled to be treated as a charitable institution.In these circumstances, action of adjusting tax deposited by thepetitioner, for the year for which its liability has been struck down,towards demand for an earlier year in respect of which appeal ispending and stay has been partially granted, is not justified,particularly without following the procedure laid down underSection 245 of the Act. 6. In view of above, we set aside the order of adjustmentand direct passing of a fresh order in accordance with law withinone month from the date of receipt of a copy of this order. The petition is disposed of. (ADARSH KUMAR GOEL) JUDGE August 16, 2010 ( AJAY KUMARMITTAL )ashwani JUDGE