Raj Educational Trust v. The Deputy Commissioner Of Income-Tax (Exemptions

W.P.Nos.3826 & 3686 of 2024 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.02.2024 CORAM THE HONOURABLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY W.P.Nos.3826 & 3686 of 2024 & WMP Nos.4133, 4135, 4139, 3979, 3980 & 3982 of 2024 Raj Educational Trust,Represented by its Managing Trustee,B.Renuka Devi,Old No.14, New No.29,Raman Street, T.Nagar,Chennai-600 017.... Petitioner in both WPs vs 1. The Deputy Commissioner of Income-Tax (Exemptions) Chennai, 121 MG Road, 121 MG Road, Nungambakkam, Chennai 600 034. 2. The Commissioner of Income Tax (Appeals) Faceless Assessment Centre 121 MG Road, Nungambakkam, Chennai 600 034. ... Respondents 1 & 2 in both WPs 1/13 W.P.Nos.3826 & 3686 of 2024 3. Indian Overseas Bank, Thanjavur Branch, Represented by its Branch Manager, No.377, North Main Street, Thanjavur-613 009. ... 3[rd] Respondentin W.P.No.3826/2024 4. Indian Overseas Bank, Thanjavur Branch, Represented by its Branch Manager, No.377, North Main Street, Thanjavur-613 009. ...3[rd] Respondent in W.P.No.3686/2024 PRAYER in W.P.No.3826 of 2024 : WritPetition filed under Article 226 of the Constitution of India to issue a writ of Certiorarified Mandamuscalling for the records of the 1[st] respondent pertaining to DIN & Letter No. ITBA/COM/F/17/2023-24/1060516741(1) dated 05.02.2024 and quash the same and consequently direct the respondents 1 to 3 to lift the attachment on the following savings bank accounts of the petitioner maintained in the 3[rd] respondent Bank forthwith : W.P.Nos.3826 & 3686 of 20242.136401000029335 Savings Account 5,201.00 North Main Street,Thanjavur3.136401000030998 Savings Account 11,192.00 North Main StreetThanavurj4.136401000031001 Savings Account 6,151.00 North Main Street,Thanjavur5.136401000029772 Savings Account 5,967.00 North Main StreetThanjavur6.136401000031003 Savings Account 14,919.00 North Main StreetThanavurj7.136401000029334 Savings Account 6,940.00 North Main StreetThanavurj8.136401000029331 Savings Account 5,728.00 North Main StreetThanavurj9.136401000030999 Savings Account 5,791.00 North Main StreetThanavurj10.136401000031002 Savings Account 10,993.00 North Main StreetThanavurj W.P.Nos.3826 & 3686 of 202421. 136401000023791 Savings Account 4,089.15North Main Street, Thanavurj22. 136401000029769 Savings Account 37,880.80 North Main Street, Thanavurj23. 136401000030393 Savings Account 14,557.00 North Main Street, Thanavurj24.136401000031005 Savings Account 38,328.00 North Main Street, Thanavurj25. 136401000031006 Savings Account 16,275.00 North Main Street, Thanavurj PRAYER in W.P.No.3686 of 2024 : WritPetition filed under Article 226 of the Constitution of India to issue a writ of Certiorarified Mandamuscalling for the records of the 1[st] respondent pertaining to DIN & Letter No. ITBA/COM/F/17/2023-24/1060521450(1) dated 05.02.2024 and quash the same and consequently direct the respondents 1 to 3 to lift the attachment of the savings bank account of the petitioner bearing account number 6002000006789 in the 3[rd ]respondent Bank forthwith. In both WPs: For Petitioner : Mr.P.Wilson, Senior Counsel for Richardson Wilson 5/13 For Respondents : Mr.P. Prithvi Chopda, Standing Counsel (Corporation) COMMON ORDER In both these writ petitions, orders of attachment of the petitioner's bank accounts are challenged. In both WPs: For Petitioner : Mr.P.Wilson, Senior Counsel for Richardson Wilson 5/13 For Respondents : Mr.P. Prithvi Chopda, Standing Counsel (Corporation) COMMON ORDER In both these writ petitions, orders of attachment of the petitioner's bank accounts are challenged. 2. The petitioner runs educational institutions under the name and style of 'Kings College of Engineering' and 'Queens College of Arts and Science for Women'. The petitioner Trust is registered under Section 12-A of the Income-tax Act, 1961 (the Income-tax Act) and a certificate has also been issued under Section 80 G thereof to the petitioner. The matter pertains to the receipt of a sum of Rs.2,57,00,000/- from M/s.Golden Vats Private Limited on 02.05.2017. On the suspicion that the said amount was received as cash, a notice under Section 143(2) of the Income-tax Act and a subsequent notice under Section 142(1) were issued to the petitioner in 2019. The petitioner responded to such notices and pointed out that the amount was received as donation under Cheque No.119160 6/13 W.P.Nos.3826 & 3686 of 2024 dated 02.05.2017. Eventually, an order dated 05.02.2022 came to be issued under Section 271 DA of the Income-tax Act imposing penalty of Rs.2,57,00,000/-, which is equivalent to the amount remitted into the petitioner's accounts, for violation of Section 269 ST of the Income-tax Act. This was followed by the impugned attachment notices. Meanwhile, the petitioner had filed an appeal on 05.03.2022 before the Commissioner of Income-tax (Appeals). 3. Learned senior counsel for the petitioner invited my attention to the communication dated 18.12.2020 from M/s.Golden Vats Private Limited and pointed out that the donor stated expressly that the amount was paid as a donation under Cheque No.119160 dated 02.05.2017. In spite of such communication, he points out that the penalty of Rs.2,57,00,000/- was imposed merely because the bank had not confirmed the mode of payment of the said sum. By also placing on record the statement issued by the Indian Overseas Bank in respect of the relevant bank account of the petitioner, he contends that the said statement clearly indicates that the amount was remitted 7/13 W.P.Nos.3826 & 3686 of 2024 under cheque No.119160. 4. After pointing out that a statutory appeal was filed against the said order, he further submits that arguments were concluded in the appeal and that the appellate authority reserved orders on 09.02.2024. In the above facts and circumstances, learned senior counsel submits that the attachment of the petitioner's bank accounts has gravely prejudiced the petitioner and that the petitioner is unable to disburse payments for the various purposes indicated in paragraph 4 of the additional affidavit dated 19.02.2024. 5. In response to these contentions, Mr.V.Mahalingam, learned senior standing counsel, submitted that the principles of natural justice were adhered to before issuance of the order dated 05.02.2022. As against the said order, he submits that a statutory appeal was filed. He points out that the petitioner did not apply for or obtain a stay of the order impugned therein. Therefore, learned counsel 8/13 W.P.Nos.3826 & 3686 of 2024 submits that this Court should not exercise discretion in favour of the petitioner and that the petitioner should be directed to seek a stay in the pending proceedings or be directed to approach the assessing officer with the additional evidence placed before this Court. 5. In response to these contentions, Mr.V.Mahalingam, learned senior standing counsel, submitted that the principles of natural justice were adhered to before issuance of the order dated 05.02.2022. As against the said order, he submits that a statutory appeal was filed. He points out that the petitioner did not apply for or obtain a stay of the order impugned therein. Therefore, learned counsel 8/13 W.P.Nos.3826 & 3686 of 2024 submits that this Court should not exercise discretion in favour of the petitioner and that the petitioner should be directed to seek a stay in the pending proceedings or be directed to approach the assessing officer with the additional evidence placed before this Court. 6. Since a statutory appeal was filed against the order issued under Section 271 DA of the Income-tax Act, it is not appropriate to record definitive conclusions on the issues raised in the said order. However, the petitioner has placed on record evidence that prima facie indicates that the receipt of Rs.2.57 crore was under Cheque No.119160 issued by M/s.Golden Vats Private Limited. If the petitioner is able to satisfy the appellate authority that the said remittance was indeed made by a cheque, the order imposing penalty would be unsustainable. Meanwhile, on account of the impugned orders of attachment, the petitioner which operates two educational institutions is unable to discharge payment obligations. 9/13 7. Therefore, it becomes necessary to balance the petitioner's interest, on the one hand, and safeguard revenue interest, on the other. Towards such end, the petitioner is directed to remit a sum of Rs.12.5 lakhs as a condition for raising the attachment of its bank accounts. Subject to an immediately upon receipt of the said sum, all of the attachment orders impugned herein shall stand raised and the petitioner shall be free to operate its bank accounts. This order is, however, subject to the outcome of the appellate proceedings. 8. W.P.Nos.3686 of 2024 and 3826 of 2024 are disposed of on the above terms. Consequently, connected miscellaneous petitions are closed. There shall be no order as to costs. Index : Yes / NoInternet: Yes / NoNeutral Citation : Yes / No 27.02.2024 10/13 kal To 1. The Deputy Commissioner of Income-Tax (Exemptions) Chennai, 121 MG Road, Chennai, 121 MG Road, Nungambakkam, Chennai 600 034. 2. The Commissioner of Income Tax (Appeals) Faceless Assessment Centre 121 MG Road, Nungambakkam, Chennai 600 034. 3. Indian Overseas Bank, Thanjavur Branch, Represented by its Branch Manager, No.377, North Main Street, Thanjavur-613 009. 4. Indian Overseas Bank, Thanjavur Branch, Represented by its Branch Manager, No.377, North Main Street, Thanjavur-613 009. 11/13 12/13 https://www.mhc.tn.gov.in/judis W.P.Nos.3826 & 3686 of 2024 SENTHILKUMAR RAMAMOORTHY J.kal W.P.Nos.3826 & 3686 of 2024& WMP Nos.4133, 4135, 4139, 3979, 3980 & 3982 of 2024 13/13 https://www.mhc.tn.gov.in/judis 27.02.2024