P.t.lee Chengalvaraya Naicker Trustrep.by Its Secretary Mr.j.r.sadasivam v. The Director Of Income Tax (Exemptions) Ayakar Bhavan, Annex Iii Floor

P.T.Lee Chengalvaraya Naicker TrustRep.by its Secretary Mr.J.R.Sadasivam ...Petitioner --Vs-- 1. The Director of Income Tax (Exemptions) Ayakar Bhavan, Annex III Floor 121, Mahatma Gandhi Road Chennai-600034 2. The Joint Commissioner of Income Tax (OSD) (Exemptions) II, Chennai-600034...Respondents **** Prayer: Writ Petitions filed under Article 226 of theConstitution of India, to issue a Writ or order of direction orany other Writ in the nature Writ of Certiorarified Mandamus,calling for the records of the 1[st] respondent herein inProceedings No.DIT(E) No.26(25)/10-11 & No.DIT(E) No.26(1)/10-11and quash the order dated 15.12.2011 for the assessment year2008-09 & 2009-10 and further direct the 1[st] respondent herein tocondone the delay in filing Form 10, and treat the incomeaccumulated as having been done in accordance with sec.11(2) ofthe Income Tax Act. Senior Standing Counsel The petitioner, a charitable Trust, has challenged twoorders passed by the Director of Income Tax (Exemptions)/R1,passed in terms of Section 119(2)(b) of the Income Tax Act, 1961('Act'), rejecting the application for condonation of delay inaccumulation of income in respect of financial years 2007-08 and2008-09 relating to assessment years 2008-09 and 2009-10respectively. 2. The petitioner is a Trust that was constituted under Willdated 04.10.1870 of one Lt.P.T.Lee Chengalvaraya Naicker. Theobjective of the trust are stated to be the dissemination ofindustrial education, running of orphanages, school andhospitals on charitable basis for the down trodden and sick. 3. The petitioner has been granted an exemption underSection 12AA of the Act that is stated to be current. While thisis so, there was certain disputes that arose with regard to thefunctioning of the Trust and consequent litigation. By judgmentdated 01.04.1999, in an Original Suit filed before this Court, aScheme Decree was formulated. The Scheme Decree was challengedin OSA.Nos.115 and 144 of 1999 and 14 of 2001. By judgment dated12.03.2002, the Scheme was settled by a Division Bench of thisCourt, a Board of Trustees constituted, headed by a retiredJudge of this Court also appointed as ex-officio Chairman of theTrust. At the relevant point in time, the ex-officio Chairmanwas Mr.Justice K.M.Natarajan 4.The financial affairs of the Trust were being managed byM/s.C.Roy and Co., Chartered Accountants. In respect of the twoassessment years in question, the accounts as well as allconnected documents are stated to have been handed over forfinalization to the Chartered Accountant, who had fallen sickand thereafter expired in October 2009. As a result, the Returnof Income had not been filed within the due date. Necessarycompliances for the purpose of accumulation of income for grantof exemption under Section 11 of the Act were also not pursued.The Trust, however, leaned counsel states came to be aware ofthis position only in October 2010. 5. Learned counsel for the petitioner states that the Trustwas in the process of constructing a building to be utilised asschool, polytechnic and engineering college. It had thus,resolved to accumulate its income for the aforesaid purposes,Rs.1.78 crores in financial year 2007-08 and Rs.1.92 crores infinancial year 2008-09. All forms necessary for reporting theaccumulation had been handed over to the Chartered Accountant,who had, as stated earlier, not filed the same before theauthorities. Out of the accumulation sought in respect of theperiod 2007-08, an amount of Rs.1.34 crores is stated to havebeen spent in financial year 2008-09, as per the proposal. 5. Learned counsel for the petitioner states that the Trustwas in the process of constructing a building to be utilised asschool, polytechnic and engineering college. It had thus,resolved to accumulate its income for the aforesaid purposes,Rs.1.78 crores in financial year 2007-08 and Rs.1.92 crores infinancial year 2008-09. All forms necessary for reporting theaccumulation had been handed over to the Chartered Accountant,who had, as stated earlier, not filed the same before theauthorities. Out of the accumulation sought in respect of theperiod 2007-08, an amount of Rs.1.34 crores is stated to havebeen spent in financial year 2008-09, as per the proposal. 6. Once the Secretary of the Trust had noticed thediscrepancies and delays, a Resolution was once again passed andthe requisite document in prescribed Form no.10 had been filedbefore the Director of Income Tax (Exemption)/R1 requestingcondonation of delay in filing the Form and permission toaccumulate the stated amounts for the subsequent five years.This application was filed on 26.11.2010. 7. R1 however, proceeded to dismiss the application vide theimpugned orders dated 15.12.2011 being of the view that thedelay has not been properly explained. He also states that theconstitution of the Trust Board has itself changed and theResolution dated 24.11.2010 had been passed by an entirelydifferent set of Board members, who were not part of the Boardduring the relevant years. 8. Aggrieved by the aforesaid order, the petitioner hasfiled the present writ petition. 9. The respondent has filed a counter wherein it is arguedthat the Resolution relied upon is dated 24.11.2010 and cannotrelate to the assessment years in question that are priorthereto. 10. Heard learned counsel for the parties. 11. My attention is drawn to a Resolution passed by theTrust at a meeting held on 30.11.2010 chaired by Mr.JusticeK.M.Natarajan and eight other members. According to learnedcounsel for the petitioner, this Resolution had been passed wellwithin the periods in question but inadvertently omitted to bebrought to the notice of R1. owever states that. 12. One of the agendas approved by Resolution dated30.11.2007 is the construction of womens' hostel, extractedbelow: 13. Had the aforesaid resolution had been brought to thenotice of R1, his conclusion might, perhaps, have beendifferent. Thus, and in the interests of justice, particularly,since the respondent does not deny that the petitioner holds acertificate in terms of Section 12A of the Act and exemptionunder Section 11 is being consistently granted, I set asideimpugned order dated 15.12.2011 and remand the matter to thefile of the first respondent, (re-designated as Commissioner ofIncome Tax (Exemptions)) for de novo hearing. Let the petitionerappear before the respondent on Wednesday, the 23[rd] of October, 2019 or a day as proximate thereto to be intimated to him, withthe original Resolution book as well as any other material thatit may wish to produce. The first respondent shall, afterhearing the petitioner, pass orders de novo within a period offour weeks from date of personal hearing. 14. The orders of assessment passed for the assessment years2008-09 & 2009-10 are stated to be pending in appeal before theCommissioner of Income Tax (Appeals)-17 numbered as I.T.A.No.489 & 490/11-12. Let the aforesaid appeals be taken up foradjudication after an order is passed by the first respondent. 2019 or a day as proximate thereto to be intimated to him, withthe original Resolution book as well as any other material thatit may wish to produce. The first respondent shall, afterhearing the petitioner, pass orders de novo within a period offour weeks from date of personal hearing. 14. The orders of assessment passed for the assessment years2008-09 & 2009-10 are stated to be pending in appeal before theCommissioner of Income Tax (Appeals)-17 numbered as I.T.A.No.489 & 490/11-12. Let the aforesaid appeals be taken up foradjudication after an order is passed by the first respondent. 15. These writ petitions are allowed in the above terms. Nocosts. Sd/- Assistant Registrar (Insp.Cell) //True Copy// Sub Assistant RegistrarskaTo1. The Director of Income Tax (Exemptions) Ayakar Bhavan, Annex III Floor 121, Mahatma Gandhi Road Chennai-6000342. The Joint Commissioner of Income Tax (OSD) (Exemptions) II, Chennai-600034+2 ccs to M/s.J.Narayanaswami, Advocate, S.R.No.84274+1 cc to M/s.Arun Kurian Joseph, Advocate, S.R.No.83883W.P.No.11494 & 11495 of 2012 SAI(CO)SSM(23/10/2019)