Tca/131/2010 Of M/S Sri Balaji Educational v. Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 03.06.2013CoramThe Honourable Mrs.Justice CHITRA VENKATARAMANandThe Honourable Ms.Justice K.B.K.VASUKITax Case (Appeal) No.131 of 2010---M/s.Sri Balaji Educational andCharitable Public Trust'MGMC Complex'Pondy-Cuddalore Main RoadPillavarkuppamPuducherry-607 402 ...Appellant-vs-Commissioner of Income TaxCentral IIINo.46, Mahatma Gandhi RoadChennai-34 ...Respondent Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal Madras 'A' Bench dated 11.09.2009 in ITA.No.2127/Mds/2008. For appellant : Mrs.Pushya Seetaraman,Senior Counsel forMrs.J.Sreevidya For respondent : Mr.T.R.Senthil KumarStanding counsel for IncomeTax Department ********* JUDGMENT (The Judgment of the Court was made byCHITRA VENKATARAMAN, J.)The following substantial questions of law are raised by the assessee in the present Tax Case Appealfiled as against the order of the Income Tax Appellate Tribunal, Madras 'A' Bench dated 11.09.2009in ITA.No.2127/2008, confirming the order of the Commissioner of Income Tax, refusing to grantapproval under Section 80G(5)(vi) of the Income Tax Act, 1961 to the assessee's application forrenewal/approval. 1) Whether on the facts and circumstances of the case, the Tribunal was right in upholding thedenial of the benefit of Section 80G ? (2) Whether on the facts and circumstances of the case, the Tribunal was right in upholding an orderbased upon material collected behind the back of the assessee and copies of which were not furnished to the assessee on the ground that the assessee had not objected to the same at anyearlier stage ? (3) Whether the Tribunal was right in holding that the exemption u/s.80G ought to be denied on theground that the Chairman of the Board of Trustees was found to be having undisclosed incomewithout looking into his personal sources of income ? 2. On going through the papers filed before this Court, it is seen that the assessee is a PublicCharitable Trust, created on 28.08.1996. The Trust was registered under Section 12A of the IncomeTax Act, 1961 (hereinafter called as the "Act") and the approval was granted upto 31.03.2008 underSection 80 G (5)(vi) of the Act read with Rule 11 AA of the IT Rules, 1962. 3. The assessee filed an application before the Commissioner of Income Tax, Central III, Chennai inForm No.10-G for renewal of approval under Section 80 G(5)(vi) of the Act read with Rule 11 AA ofthe Income Tax Rules effective from 01.04.2008. 4. It is a matter of record that there was a search in the premises of the assessee and the Trustee on13.08.2007, during which, various books of accounts and documents were seized apart from certaincash. In the course of the proceedings before the Commissioner of Income Tax, the assessee made aspecific request for inspection of the copies of the seized records as well as copies of the statementrecorded from persons of the Trust viz., Chairman of the Board of Trustees. However, the requestwas not considered favourably and on the other hand, the seized documents were referred to duringthe proceedings. Once again, the assessee appealed before the Income Tax Appellate Tribunal andraised additional grounds alleging violation of principles of natural justice. 4. It is a matter of record that there was a search in the premises of the assessee and the Trustee on13.08.2007, during which, various books of accounts and documents were seized apart from certaincash. In the course of the proceedings before the Commissioner of Income Tax, the assessee made aspecific request for inspection of the copies of the seized records as well as copies of the statementrecorded from persons of the Trust viz., Chairman of the Board of Trustees. However, the requestwas not considered favourably and on the other hand, the seized documents were referred to duringthe proceedings. Once again, the assessee appealed before the Income Tax Appellate Tribunal andraised additional grounds alleging violation of principles of natural justice. 5. While considering the order of rejection of approval, the Income Tax Appellate Tribunal, however,held that in the reply to the show cause notice issued by the Commissioner of Income Tax dated05.09.2008, Shri.Rajagopalan, Chairman of the Trust, submitted a detailed reply vide letter dated10.09.2008, but, did not allege that the copies of his statement recorded under Section 132(4) of theAct and of the seized documents were not supplied to him. Even in the subsequent letter dated24.09.2008, there was no whisper about the non-availability of the copies of the statements and ofthe seized documents and accordingly, the Income Tax Appellate Tribunal, considered that therewas no merit in the contentions of the counsel for the assessee that the order of the Commissioner ofIncome Tax was in violation of the principles of natural justice. Aggrieved by this, is the presentappeal by the assessee. 6. Learned Senior counsel appearing for the assessee submitted that after the rejection of theapproval under Section 80 G (5)(vi) of the Act, the petitioner was issued with seized materials ofdocuments on 19.11.2009. The assessee is stated to have succeeded in the subsequent appeal beforethe Income Tax Appellate Tribunal. 7. There is no material to controvert the allegation of the assessee about the non-furnishing of thecopies of the statement recorded as well as the records seized and in fact, it is a matter of recordthat the Income Tax Appellate Tribunal itself has pointed out about the non-furnishing of the copiesof the seized records to the assessee-Trust. 8. Considering the facts that the order of rejection rested on the seized materials and non-furnishingof the copies of the same to the assessee relating to the search under Section 132 of the Act on13.08.2007, in fairness to the contention of the assessee with regard to non-compliance of theprinciples of natural justice, the matter is remanded back to the Commissioner of Income Tax,Central-III, Chennai for de novo consideration in accordance with law. CHITRA VENKATARAMAN, J.andK.B.K.VASUKI, J. nvsri 9. The Tax Case Appeal is disposed of of accordingly. No costs. (C.V.,J) (K.B.K.V.,J) 03.06.2013Index:NoInternet:Yesnvsri To 1.The Commissioner of Income Tax, Central III,No.46, Mahatma Gandhi Road,Chennai-34 2.The Income Tax Appellate Tribunal, Chennai Bench AChennai. Tax Case (Appeal) No.131 of 2010