Muvendar Trust v. The The Income Tax Officer, Exemption Ward, Trichy Main Building, Williams Road, Cantonment, Trichy –

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 16.12.2021 CORAM: THE HONOURABLE MR.JUSTICE M.SUNDARW.P. No.22287 of 2021 andW.M.P(MD).No.18848 of 2021 Muvendar Trust Vs. : Petitioner 1. The The Income Tax Officer, Exemption Ward, Trichy Main Building, Williams Road, Cantonment, Trichy – 620015. 2. Additional/Joint/Deputy/Assistant Commissioner of Income Tax/ Income Tax Officer, National Faceless Assessment Centre, Delhi. : Respondents P RAYER: Writ Petitions filed under Article 226 of the Constitutionof India for issuance of Writ of Certiorari calling for the recordsof impugned Assessment Order in DIN No.ITBA/AST/S/143(3)/2021-22/1035839283(1) dated 23.09.2021 passed by the second respondentherein and quash the same. For Petitioner : Mr.T.Ramesh for S.Radhakrishnan For Respondents : Mr.N.Dilip Kumar, Senior Standing Counsel for Income Tax O R D E R ******************** In the captioned main writ petition an 'assessment order dated23.09.2021 bearing referenceDIN No.ITBA/AST/S/143(3)/2021-22/1035839283(1)' (hereinafter 'impugned order' for the sake ofconvenience and clarity) being an assessment order made underSection 143(3) read with Section 144B of 'the Income Tax Act, 1961'[hereinafter 'said Act' for the sake of convenience and brevity] hasbeen assailed. 2. Mr.T.Ramesh, learned counsel appearing on behalf of thecounsel on record for writ petitioner submitted that the impugnedorder made by the second respondent is liable to be quashed,notwithstanding very many averments made in the writ affidavit andhttps://hcservices.ecourts.gov.in/hcservices/very many grounds raised in the writ affidavit, learned counsel in his campaign against the impugned order made three pointedsubmissions and they are as follows:(a) The registration of the assessee (whichaccording to him) is a registered 'Public CharitableTrust' under Section 12AA of said Act has been cancelledvide the impugned order without giving an opportunity tothe writ petitioner-assessee; (b) The benefit of Sections 11 and 12 of said Actvide registration under Section 12AA of said Act is beinggiven to the writ petitioner-assessee for over thirtyyears and it has suddenly been declined;(c) The impugned order is a non-speaking order andtherefore, it calls for interference in writjurisdiction. his campaign against the impugned order made three pointedsubmissions and they are as follows:(a) The registration of the assessee (whichaccording to him) is a registered 'Public CharitableTrust' under Section 12AA of said Act has been cancelledvide the impugned order without giving an opportunity tothe writ petitioner-assessee; (b) The benefit of Sections 11 and 12 of said Actvide registration under Section 12AA of said Act is beinggiven to the writ petitioner-assessee for over thirtyyears and it has suddenly been declined;(c) The impugned order is a non-speaking order andtherefore, it calls for interference in writjurisdiction. 3. Before I proceed further, it is necessary to give shortfacts or in other words, factual matrix in a nutshell containingessential facts that are imperative for appreciating this order.Short facts shorn of unnecessary particulars are that the writpetitioner-assessee claims to be a public charitable trust havingbeen so registered vide a Trust deed on the file of Sub-Registrar,Peravurani, Thanjavur District; that the writ petitioner-assesseeapplied for registration under Section 11 of said Act, exemption wasgranted vide letter Ref No.CNo.2039(43)/87; that approval underSection 80G of said Act was also granted in respect of donationsreceived by the petitioner under same reference dated 29.12.1988;that the exemption was subsequently renewed vide letter C No.2039)43)/87 dated 29.09.1992 for the period 05.12.1991 to 31.03.1994;that the exemption was periodically renewed until 31.03.2000 videcommunication dated 03.03.1999; that the writ petitioner-assesseedid not seek approval under Section 80G after 31.03.2000 as thepetitioner discontinued taking voluntary contributions and donationsfrom anyone; that the petitioner's accounts have been regularlyaudited as required under said Act and the petitioner has beenfiling income tax returns along with the audit report as requiredunder Section 12A(b) of said Act from the year of grant ofregistration under Section 12A of said Act; that the impugned orderwas preceded by a notice under Section 143(2) of said Act beingnotice dated 30.09.2020 and the writ petitioner-assessee uploadedits reply saying that registration under Section 12AA of said Acthad not been cancelled; that there were two reminders thereafterfrom the second respondent i.e., Department dated 25.02.2021 and30.08.2021 requesting the writ petitioner-assessee to upload theregistration certificate but the writ petitioner-assessee did notrespond; that thereafter the impugned (assessment) order came to bemade inter-alia negativing the claim of the writ petitioner of beinga trust entitled Sections 11, 12 benefits qua said Act and takingthe total income of the assessee trust i.e., taking the grossincome; that assailing the impugned order captioned main writpetition has been filed.https://hcservices.ecourts.gov.in/hcservices/ 4. This Court having set out the factual matrix in a nutshell,before proceeding further, deems it appropriate to say that thefactual matrix narrated supra is based on the writ affidavitaverments and the submissions made before this Court. This Courtnotices that the registration (as set out supra) is not underSection 12A but it is under Section 12AA of said Act. 5. Mr.N.Dilip Kumar, learned Senior Standing Counsel for IncomeTax accepted notice on behalf of both the respondents. Owing to thenarrow compass on which captioned writ petition turns, with theconsent of learned counsel on both sides, captioned main writpetition was taken up and heard out. 6. In response to the points raised by learned counsel for writpetitioner, learned Revenue counsel made submissions a summation ofwhich is as follows: 5. Mr.N.Dilip Kumar, learned Senior Standing Counsel for IncomeTax accepted notice on behalf of both the respondents. Owing to thenarrow compass on which captioned writ petition turns, with theconsent of learned counsel on both sides, captioned main writpetition was taken up and heard out. 6. In response to the points raised by learned counsel for writpetitioner, learned Revenue counsel made submissions a summation ofwhich is as follows: (a) Cancellation of registration under Section 12AAof said Act is not vide the impugned order but theimpugned order merely records the fact and moreparticularly, the impugned order records the fact thatthe writ petitioner-assessee has not uploaded the Section12AA registration certificate either in response tonotice under Section 142(1) of said Act or two remindersthereafter; (b) It is incorrect to say that the writ petitioner-assessee is being continuously given the benefit ofexemption under Section 12AA of said Act for thirty yearsas even according to the writ petitioner and evenaccording to the case file placed before this Court, suchexemption was negatived for the assessment year 2018-19vide assessment order dated 30.04.2021 bearing referenceDIN ITBA/AST/S/143(3)/2021-22/1032744474(1); (c) It is not tenable to say that the impugned orderis a non-speaking order as it clearly records thetrajectory and the reason for not extending Section 12AAbenefit to the writ petitioner-assessee. 7. In addition to the aforementioned submissions in terms ofreply, a reply to the arguments projected by learned counsel forwrit petitioner, learned Revenue counsel also brought to the noticeof this Court that there is a effective and efficacious alternateremedy qua impugned order as the same is appealable under Section246 of said Act. 8. By way of reply submissions, learned counsel for writpetitioner submitted that in 2018-19, Section 12AA of said Actregistration has not been cancelled by way of the assessment orderi.e., the aforementioned assessment order dated 30.04.2021 andtherefore the question of assailing the same in writ jurisdictionhttps://hcservices.ecourts.gov.in/hcservices/does not arise. 9. This Court carefully considered the rival submissions andthis Court is of the considered view that this is not a fit case forinterfering with the impugned order in writ jurisdiction and thatthe prayer of the writ petition in the captioned main writ petitioncannot be answered in affirmative i.e., cannot be acceded to andthe reasons are as follows: (a) The relevant part of the impugned order whichdeals with Section 12AA of said Act issue is captured intwo paragraphs of impugned order and the same read asfollows: '...For further proceedings of the case,Notice U/s 143(2) of the Income-Tax Act, 1961dated 30/09/2020 was issued and duly served uponthe assessee but the assessee has not complied.Further, reminder letters dated 25/02/2021 and30/08/2021 were issued to the assessee requestedto make compliance to upload registrationcertificate. But till date no reply has beenreceived from the assessee.Considering the above and going through thereason for selection of the case for scrutiny i.ethe Registration of the Trust under Section 12AAof the Income-Tax Act,1961 has been cancelled.Therefore, the authenticity of assessee being abnafide registered trust not fully confirmed.Hence, without evidence of registered documents,the assessee's claim of being trust is notaccepted and taxed as per Income Tax Act, 1961and the total income of the assessee trust isassessed taking the gross income received by thetrust of Rs.5,75,93,708/- during the FinancialYear 2018-19...' A careful perusal of the aforementioned twoparagraphs leaves this Court with the considered viewthat the cancellation of registration under Section 12AAof said Act is not vide the impugned order but it onlyrecords the cancellation;(b) There is nothing to demonstrate why the writpetitioner did not upload the registration certificateunder Section 12AA of said Act in spite of adequateample and multiple opportunities being given to the writpetitioner, all of which is captured in theaforementioned two paragraphs;(c) On a demurrer, even if it is to be construedthat the cancellation is vide impugned ordercancellation of registration under Section 12AA of saidAct is also revisable under Section 264 of said Act.https://hcservices.ecourts.gov.in/hcservices/Suffice to say that there is an effective and efficacious alternate remedy even against cancellation.To be noted, as mentioned in the opening part of thispoint this is on a demurrer; (d) The submission that the writ petitioner-assesseebeing given the benefit of registration under Section12AA of said Act for thirty years continuously fallsflat on its face in the light of aforementionedassessment order dated 30.04.2021 made for theassessment year 2018-19. The most relevant portion ofthis assessment order is contained in paragraph 14thereat and the relevant paragraph 14 reads as follows:'It is also undisputed that the assesseetrust has applied for registration u/s.12A andexemption u/s.80G of the Act on 12.08.1986onwards. From that time onwards, there has beenconstant renewal of exemption u/s.80G of the Actbut in the case of assessee, the assessee wasnot able to provide the copy of application forregistration u/s 12A and exemption u/s 80G fromthe inception of the trust i.e. 15/07/1985.Even,the submission of the assessee that it wasgranted 12A vide ref No.2039(43)/87 by the CIT,Tamilnadu-V, Chennai in the year 1987 is notacceptable. From the copy of ITR of the A.Y.2013-14 to A.Y. 2015-16 this fact was clear thatthe assessee did not have 12A registration.Further, the assessee had entered registrationno and date of 80G registration in the ITR ofA.Y. 2016-17. From this fact, it is clear thatthe registration number given and claim that itwas issued it I 1987 was the registration numberof 80G issued on 29/09/1992. Further, In A.Y.2013-14, the auditor has made audit (as per ITRof A.Y. 13-14) as per section 10(23)(iv) of theAct.' To be noted, there are two 'paragraph 14' in theprevious assessment order and I am referring to thefirst of the two paragraphs at pages 61 and 62 of thetyped set of papers that has been placed before me;(e) The impugned order, in the considered view ofthis Court cannot be said to be a non-speaking order.Two critical paragraphs in the impugned order which hascaptured the crux and gravamen of the matter had beenextracted and reproduced supra. Those two paragraphs byitself and of course the rest of the order make it clearthat it is not a non-speaking order. It may at best be aterse order. An order can be tersely eloquent, it cannothttps://hcservices.ecourts.gov.in/hcservices/be construed to be a non-speaking order unless it is laconic, not when it is epigrammatic or merely becauseit is terse. Therefore, this Court is of the consideredview that the argument that the impugned order is a non-speaking order becomes a non-starter i.e., an argumentwhich does not take off; laconic, not when it is epigrammatic or merely becauseit is terse. Therefore, this Court is of the consideredview that the argument that the impugned order is a non-speaking order becomes a non-starter i.e., an argumentwhich does not take off; (f)This takes this Court to the alternate remedyaspect. Alternate remedy no doubt is a self-imposedrestraint. It is not an absolute rule. Alternate remedyrule is a rule of discretion. Notwithstanding alternateremedy rule being a rule of discretion, Hon'ble SupremeCourt which in a long line of case laws i.e., in acatena of case laws starting from Dunlop India case[Assistant Collector of Central Excise, Chandan Nagar,West Bengal Vs. Dunlop India Ltd., and others reportedin (1985) 1 SCC 260] ; Satyawati Tandon [United Bank ofIndia Vs. Satyawati Tondon and others reported in (2010)8 SCC 110] and K.C.Mathew [Authorized Officer, StateBank of Travancore and another Vs. Mathew K.C. reportedin (2018) 3 SCC 85], has held that in fiscal lawStatutes, alternate remedy rule has to be applied withutmost rigour. Relevant paragraph in Dunlop case isparagraph No.3 and relevant portion of the same reads asfollows:'3. ....... Article 226 is not meant to short-circuit or circumvent statutory procedures. It is onlywhere statutory remedies are entirely ill-suited to meetthe demands of extraordinary situations, as for instancewhere the very vires of the statute is in question orwhere private or public wrongs are so inextricably mixedup and the prevention of public injury and thevindication of public justice require it that recoursemay be had to Article 226 of the Constitution. But thenthe Court must have good and sufficient reason to bypassthe alternative remedy provided by statute. Surelymatters involving the revenue where statutory remediesare available are not such matters. We can also takejudicial notice of the fact that the vast majority of thepetitions under Article 226 of the Constitution are filedsolely for the purpose of obtaining interim orders andthereafter prolong the proceedings by one device or theother. The practice certainly needs to be stronglydiscouraged.'(Underlining made by this Court to supply emphasis and highlight) Relevant paragraph in K.C.Mathew case is paragraph 10 and thesame reads as follows:'10. In Satyawati Tondon the High Court hadrestrained further proceedings under Section 13(4) of thehttps://hcservices.ecourts.gov.in/hcservices/ Act. Upon a detailed consideration of the statutoryscheme under the SARFAESI Act, the availability of remedyto the aggrieved under Section 17 before the Tribunal andthe appellate remedy under Section 18 before the AppellateTribunal, the object and purpose of the legislation, itwas observed that a writ petition ought not to beentertained in view of the alternate statutory remedyavailable holding: (SCC pp.123 & 128, Paras 43 & 55) “43. Unfortunately, the High Court overlookedthe settled law that the High Court will ordinarilynot entertain a petition under Article 226 of theConstitution if an effective remedy is available tothe aggrieved person and that this Rule applies withgreater rigour in matters involving recovery oftaxes, cess, fees, other types of public money andthe dues of banks and other financial institutions.In our view, while dealing with the petitionsinvolving challenge to the action taken for recoveryof the public dues, etc., the High Court must keep inmind that the legislations enacted by Parliament andState Legislatures for recovery of such dues are acode unto themselves inasmuch as they not onlycontain comprehensive procedure for recovery of thedues but also envisage constitution of quasi-judicialbodies for redressal of the grievance of anyaggrieved person. Therefore, in all such cases, theHigh Court must insist that before availing remedyunder Article 226 of the Constitution, a person mustexhaust the remedies available under the relevantstatute. 55.It is a matter of serious concern thatdespite repeated pronouncement of this Court, theHigh Courts continue to ignore the availability ofstatutory remedies under the DRT Act and the SARFAESIAct and exercise jurisdiction under Article 226 forpassing orders which have serious adverse impact onthe right of banks and other financial institutionsto recover their dues. We hope and trust that infuture the High Courts will exercise their discretionin such matters with greater caution, care andcircumspection.' (underlining made by this Court to supply emphasis andhighlight) Paragraph 10 of K.C.Mathew case extracts the Satyawati Tandonprinciples i.e., portions of the case law from Satyawati Tandon andthe same has been reproduced. Therefore, I deem it appropriate tonot to burden this order with extracts from Satyawati Tandon case.https://hcservices.ecourts.gov.in/hcservices/ To be noted, these three case laws are not an exhaustive list quaalternate remedy principle in Fiscal Law Statute but they areillustrative qua a long line of case laws. In addition to the above line of authorities, the latest caselaw is Commercial Steel Limited case [The Assistant Commissioner ofState Tax and others Vs. M/s.Commercial Steel Limited in CivilAppeal No.5121 of 2021] which was rendered by a three Member Benchof the Hon'ble Supreme Court on 03.09.2021. Three Member Hon'bleBench had culled out the exceptions to the alternate remedy rule andhad clearly held that interference in writ jurisdiction will ariseonly in exceptional cases where the exception adumbrated therein areattracted. Relevant paragraphs in Commercial Steel caseareparagraph Nos.11, 12 and the same read as follows: '11 The respondent had a statutory remedy undersection 107. Instead of availing of the remedy, therespondent instituted a petition under Article 226. Theexistence of an alternate remedy is not an absolute barto the maintainability of a writ petition under Article226 of the Constitution. But a writ petition can beentertained in exceptional circumstances where there is:(i) a breach of fundamental rights; (ii) a violation ofthe principles of natural justice; (iii) an excess ofjurisdiction; or (iv) a challenge to the vires of thestatute or delegated legislation. 12 In the present case, none of the above exceptionswas established. There was, in fact, no violation of theprinciples of natural justice since a notice was servedon the person in charge of the conveyance. In thisbackdrop, it was CA 5121/2021 7 not appropriate for theHigh Court to entertain a writ petition. The assessmentof facts would have to be carried out by the appellateauthority. As a matter of fact, the High Court has whiledoing this exercise proceeded on the basis of surmises.However, since we are inclined to relegate therespondent to the pursuit of the alternate statutoryremedy under Section 107, this Court makes noobservation on the merits of the case of therespondent.' In addition to the above the oft quoted and celebratedWhirlpoolprinciple [Whirlpool Corporation Vs. Registrar of TradeMarks, Mumbai and others reported in (1998) 8 SCC 1] case law alsofortifies the view that is being taken by this Court. The WhirlpoolCorporation case is such an oft quoted case law that it has come tostay in litigation parlance as 'Whirlpool exceptions'. In the caseon hand, the only arguments that comes closest to an exception isthe writ petitioner allegedly not being given an opportunity beforecancellation of Section 12AA registration. As already alluded tohttps://hcservices.ecourts.gov.in/hcservices/ In addition to the above the oft quoted and celebratedWhirlpoolprinciple [Whirlpool Corporation Vs. Registrar of TradeMarks, Mumbai and others reported in (1998) 8 SCC 1] case law alsofortifies the view that is being taken by this Court. The WhirlpoolCorporation case is such an oft quoted case law that it has come tostay in litigation parlance as 'Whirlpool exceptions'. In the caseon hand, the only arguments that comes closest to an exception isthe writ petitioner allegedly not being given an opportunity beforecancellation of Section 12AA registration. As already alluded tohttps://hcservices.ecourts.gov.in/hcservices/ supra, this Court is of the view that the impugned order may not bethe order by which the Section 12AA registration has been cancelled.Though not specifically pointed out, I am of the view that thisalleged NJP violation if at all and if that be so would bepredicated and posited on the proviso to Sub-section (3) of Section12AA of said Act. This did not arise as the impugned order merelyrecords a cancellation. This is buttressed and bolstered by the writpetitioner not uploading the registration certificate more so whenit is the positive and categoric averment of the writ petitionerthat the 12AA registration has been repeatedly renewed for over acontinuous period of time whereas only the 80G registration wasdiscontinued post 31.03.2000. To be noted, even now, even in thiswrit petition case file, Section 12AA registration certificate hasnot been produced. This Court is of the considered view that thewrit petitioner has not given any acceptable reason for notuploading the 12AA registration certificate which the writpetitioner claims is in its possession. 10. The above takes us to Section 142(1) notice which becomesrelevant. A scanned reproduction of 142(1) notice dated 30.08.2021is as follows: https://hcservices.ecourts.gov.in/hcservices/ What is of relevance is serial No.4 thereat. The second respondenthas sought for the registration certificate under Section 12AA ofsaid Act with utmost clarity and specificity but the same has notbeen uploaded. This 142(1) notice, as already alluded to supra wasfollowed by not one but two reminders i.e., dated 25.02.2021 and30.08.2021. There is nothing to demonstrate that the writpetitioner-assessee responded to these two reminders. There is noresponse which has been placed before me. There is no averment thatthe writ petitioner-assessee responded to these reminders. On thecontrary, specific submission made, on instructions, before thisCourt today is that the writ petitioner does not readily have the12AA registration certificate. 11. Reverting to the alternate remedy facet of the matter onhand which has been alluded to supra, interestingly andintriguingly, as rightly pointed out by learned Revenue counsel inone of the previous assessment year i.e., 2018-19 assessment orderdated 30.04.2021 (referred to supra) has been assailed by the writpetitioner by way of an appeal. Furthermore, the submission oflearned Revenue counsel that even vide the assessment order for2018-19, the 12AA benefit has been considered and negatived. Thereasons in paragraph 14 to which my attention was drawn has alreadyextracted and reproduced supra. The above is buttressed by thepositive averment of the writ petitioner in paragraph 5 of the writaffidavit. Relevant portion of paragraph 5 reads as follows: 'Without considering any of the submissions, theAssessing Officer passed an order dated 30/4/2021 for theAssessment Year 2018-19 denying the status of publiccharitable trust to the petitioner and treated the totalincome of the petitioner as gross income. The Respondentalso initiated action for imposing penalty under Sectionhttps://hcservices.ecourts.gov.in/hcservices/ 'Without considering any of the submissions, theAssessing Officer passed an order dated 30/4/2021 for theAssessment Year 2018-19 denying the status of publiccharitable trust to the petitioner and treated the totalincome of the petitioner as gross income. The Respondentalso initiated action for imposing penalty under Sectionhttps://hcservices.ecourts.gov.in/hcservices/ 274 read with Section 270 A of IT Act for underreportingof income. In the said Assessment Order there is nofinding or mention with regard to the cancellation orotherwise of the Registration Certificate earlier issuedto the petitioner under the IT Act. Against the saidorder, the petitioner has filed an Appeal beforeCommissioner (Appeals) and the same is pending.' 12. A perusal of above averment makes it clear that it is thestated position of the writ petitioner i.e., the stated case of thewrit petitioner that the assessment order qua 2018-19 has beenassailed by the writ petitioner by way of a statutory appeal. Thearguments that vide assessment order 2018-19 there is cancellationof 12AA registration certificate, does not hold water and does notcarry the writ petitioner any further for two reasons. One reason isas already alluded to supra, the impugned order is not the order bywhich the cancellation has been made and on a demurrer even if thatbe so, the same is revisable under Section 264 of said Act and moreimportantly the second reason is sauce for Goose is sauce for Gandertoo. If the writ petitioner can assail the assessment order for2018-19 (where Section 12AA benefit have been negatived) by way of astatutory appeal under Section 246 of said Act, there is no reasonas to why the writ petitioner cannot do it qua impugned assessmentorder. This by itself downs the curtains from all these argumentsand it douses the writ petitioner's campaign against the writpetitioner. 13. Notwithstanding the dismissal of the captioned writpetition, if the writ petitioner chooses to avail the alternateremedy either by way of an appeal under Section 246 of said Act orby way of a revision under Section 264 of said Act as the case maybe, subject to limitation and subject to pre-deposit condition, theappellate authority/revisional authority can consider theappeal/revision on its own merits and in accordance with lawuntrammelled by observations made in this order as the observationsmade in this order are for the purpose of deciding the tenability ofinterference qua the impugned order in writ jurisdiction. 14. In the light of the narrative, discussion and dispositivereasoning set out supra, the sequitur is the captioned writ petitionfails and the same is dismissed. Consequently, captioned W.M.P isalso dismissed. There shall be no order as to costs. https://hcservices.ecourts.gov.in/hcservices/ pknTo1. The The Income Tax Officer, Exemption Ward, Trichy Main Building, Williams Road, Cantonment, Trichy – 620015.2. Additional/Joint/Deputy/Assistant Commissioner of Income Tax/ Income Tax Officer, National Faceless Assessment Centre, Delhi.+1 CC to M/s.S.RADHAKRISHNAN, Advocate ( SR-39118[F] dated16/12/2021 ) +1 CC to M/s.N.DILIPKUMAR, Advocate ( SR-39350[F] dated 17/12/2021 ) W.P. No.22287 of 2021 16.12.2021 RD(29.12.2021) 12P 5C