Society v. Income Tax Officer Ward Exempt 2(1)Delhi & Anr

$~71 IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C)3266/2025andCMNos.15405/2025,15406/2025,15407/202515407/2025 SHREE VARINDER GHAI EDUCATIONAL SOCIETY.....PetitionerThrough:MrAnandChaudhuriandMrDeepanshu Mehta, Advocates.Through:MrAnandChaudhuriandMrDeepanshu Mehta, Advocates. versus INCOME TAX OFFICER WARD EXEMPT 2(1)DELHI & ANR......RespondentsThrough:MrAbhishekMaratha,SeniorStanding Counsel with Mr ApoorvAgarwalandMrParthSamwal,Advocates. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R%17.03.2025 1.The petitioner has filed the present petition, inter alia, praying as under: “(i)Allow the present Writ Petition and pass a Writ ofCertiorari, Mandamus and/or any other appropriateWrit, direction or order quashing/setting aside theimpugned notice issued u/s. 226(3) of the Income-taxAct, 1961 dated 04.03.2025, the impugned rectificationorder dated 31.03.2024 purportedly passed u/s. 154 ofthe Act and any adverse/coercive action(s) by theRespondentinpursuancethereoforconsequencethereto qua impugned demand notice dated 23.03.2021issued u/s. 154 of the said Act in consequence ofimpugned assessment order dated 23.03.2021 passedu/s. 143(3) of the Act for subject Assessment Year(AY) 2018-19;Certiorari, Mandamus and/or any other appropriateWrit, direction or order quashing/setting aside theimpugned notice issued u/s. 226(3) of the Income-taxAct, 1961 dated 04.03.2025, the impugned rectificationorder dated 31.03.2024 purportedly passed u/s. 154 ofthe Act and any adverse/coercive action(s) by theRespondentinpursuancethereoforconsequencethereto qua impugned demand notice dated 23.03.2021issued u/s. 154 of the said Act in consequence ofimpugned assessment order dated 23.03.2021 passedu/s. 143(3) of the Act for subject Assessment Year(AY) 2018-19; (ii)Issue direction(s), order(s) et al. to Respondent No. 2for adjudicating the Petitioner’s appeal qua AY 2018-19 in a fixed time period deemed appropriate by thisHon’ble Court.”for adjudicating the Petitioner’s appeal qua AY 2018-19 in a fixed time period deemed appropriate by thisHon’ble Court.” 2.The petitioner claims that it is a society registered under the SocietiesRegistration Act, 1860 and is also registered under Section 80G of theIncome Tax Act, 1961 (hereafter the Act). During the financial year, 2017-18, the petitioner incurred a capital expenditure of ₹3,76,59,186/- for setting up an educational institution in the name of “Central Academy InternationalSchool” situated at Dwarka. 3.The petitioner claims that the said amount was paid from thedonations received by it and the same was duly disclosed in the scheduleforming part of the return for the assessment year 2018-19. Notice underSection 143(2) of the Act was issued for scrutiny of the said returnparticularly in respect of expenditure for (i) charitable and religious purposeand (ii) purchase of motor vehicle. 4.The assessment proceedings culminated in an assessment order dated23.03.2021 passed under Section 143(3) of the Act. The Assessing Officermade an addition of ₹3,76,59,186/- under Section 69C of the Act as unexplained investment and raised a demand for a sum of ₹3,98,44,390/-. 5.ThepetitionerhasappealedthesaiddecisionbeforetheCommissioner of Income Tax (Appeals), which is pending. In the meantime,the petitioner also filed an application for stay of the impugned demand. Thesaid application was partly accepted and the demand was stayed subject tothe petitioner depositing 20% of the impugned demand, that is, a sum of₹79,68,878/-. 6.The petitioner did not take any further steps in respect of the saidorder dated 23.11.2021 at the material time. On 27.12.2021, the petitionerpartially complied with the said order and deposited a sum of ₹5 lacs. This was followed by further deposit of ₹41,850/- made on 08.07.2022 and a deposit of a further sum of ₹60,030/- on 27.02.2023. 7.On 18.08.2023, the petitioner filed an application before the DirectorGeneral (Exemption) requesting issue of directions for early hearing of itsappeal. 6.The petitioner did not take any further steps in respect of the saidorder dated 23.11.2021 at the material time. On 27.12.2021, the petitionerpartially complied with the said order and deposited a sum of ₹5 lacs. This was followed by further deposit of ₹41,850/- made on 08.07.2022 and a deposit of a further sum of ₹60,030/- on 27.02.2023. 7.On 18.08.2023, the petitioner filed an application before the DirectorGeneral (Exemption) requesting issue of directions for early hearing of itsappeal. 8.Thereafter, on 13.09.2023, that is, more than two and a half yearsafter the assessment order had been passed, the petitioner filed a rectificationapplication under Section 154 of the Act in effect seeking to challenge theaddition made under Section 69C of the Act. 9.The petitioner’s application for rectification was rejected by an orderdated 31.03.2024. 10.The petitioner is, essentially, aggrieved by the Revenue now takingsteps for recovery of the demand that has been outstanding for the past threeyears. 11.Mr Maratha, learned counsel appears for the Revenue on advancenotice submitted that the petitioner has failed to mention that it hadsubmitted an undertaking to the concerned authorities and the presentpetition is liable to be dismissed on the ground of suppression of materialfacts. 12.He states that in response to the recovery notice dated 10.09.2024, thepetitioner had filed a letter showing its inability to deposit tax. However, it also stated as under: “We assure on oath that within a period of eight weeks fromtoday, we will get our appeal listed or we will pay the balancedemand as committed by us.” 13.We have heard the learned counsel for the parties. 14.As noted above, the petitioner has already availed of its remedy offiling an appeal against the assessment order dated 23.03.2021. Thepetitioner’s application seeking rectification of the said assessment order isan additional proceeding instituted on the same subject. 15.Given that (a) the petitioner had furnished an undertaking to theDepartment to pay the remaining demand within a period of eight weeks andhas not mentioned this in the petition; and (b) that the petitioner has availedof the appellate remedy, which is pending, we do not consider it apposite toentertain the present petition. 16.However, it would be open for the petitioner to approach the appellateauthority for an expeditious disposal of its appeal. Needless to state that ifan application is so made, the same would be considered sympathetically. 17.The petition is disposed of in the aforesaid terms. VIBHU BAKHRU, J MARCH 17, 2025RK TEJAS KARIA, J Click here to check corrigendum, if any