Wp/25241/2023 Of M/S. Chaitanya Memorial Educational Society v. The Commissioner Of Income Tax (Exemption)

HIGH COURT THE AT HYDERABAD(Special Original Jurisdiction) IVONDAY, THE NINTH DAY TWO THOUSAND AND PRESENT THE HONOURABLE SRI [JUSTICE P.SAM KOSHY]ANDTHE HONOURABLE WRIT PETITION NO: 25241 [2023] Between: tr//s. chaitanya lvlemorial [Educational ][Society_., ]_a. .1:990, [It/ahabho-opalJt/anzil,]JirUagn, Hyderabad - [500'195, ][Telangana, PAN.No.aAATC2521L' ][Rep ][bv]iti SLii"ir.v. Shri. J. [Vikramdev Rao'-S/o. ][Ramdev ][Rao ][J., ][Aged ][81 ][years,]R/o. Plot No.476, Road [No.22, ][Jubilee ][Hills ][- 500033.] ...PETITIONERS AND 1The Commissioner [of lncome ][Tax ][(Exemption), Aaykar ][Bhavan, ][Opposite]L.B. Stadium, Basheerbagh, [Hyderabad ][- ][500004.]L.B. Stadium, Basheerbagh, [Hyderabad ][- ][500004.] 2The Joint commissioner [of lncome ][Tax ][(Exemption)' ][Aai/lar ][Bhavan,]Opposite L.B. Stadium, [Basheerbagh, ][Hyderabad ][- ][500004']Opposite L.B. Stadium, [Basheerbagh, ][Hyderabad ][- ][500004'] 3The lncome Tax Officer [(Exemption), ][Ward ][1 ][(1), ][Aaykar Bhavan, Opposite]L.B. Stadium, Basheerbagh. [Hyderabad - ][500004.]L.B. Stadium, Basheerbagh. [Hyderabad - ][500004.] 4Additional/JoinuDeputy/Assistant [commissioner of lncome ][Tax, ][lncome Tax]Officer, National [E-Assessment Centre, Delhi.]Officer, National [E-Assessment Centre, Delhi.] ...RESPONDENTS Petition under Article [226 ][of ][lhe ][constitution ][of ][lndia praying ][that ][in ][the]circumstances stated [in ][the ][affidavit ][filed ][therewith, ][the ][High ][court ][may ][be]pleasedtoissueanappropriateWrit,Directionororder,particularlyoneinthenature of writ of [Mandamus declaring ][the ][lmpugned ][order ][dated o4.o9.2023 ][for]the Assessment [year ][2018-19 ][under DIN ][and ][Letter ][No. ][ITBA/COM|F|17|2O23-]2411055733255(1)issuedbyRespondentNo'l,asillegal,arbitraryandunsustainable [in law ][and consequently, ][to ][quash ][the ][same, ][and ][grant ][stay ][of]of the entire [demand raised by ][the ][Respondent ][No- ][4, ][by ][the ][notice ][of]recovery demandunderSectionl56datedlg.o3.202lbyDlNandNotice No lrBA/AST/s 115612020-211103160821s(1) tiil the disposar of the appear fired bythe Petitioner on 17.04.2021 vide Annexure p-7 and pending before the FirstAppellate Authority ( Faceless) lA NO: 1 OF 2023 Petition under Section 151 cpc praying that in the circumstances stated inthe affidavit filed in support of the petition, the High court may be preased to stayall recovery proceedings in terms of the notice of demand under section 156 dated19 03.2021 bv DrN and Notice No rrBA/AST/s/15612020 21r1031608215 (1) Counsel for the Petitioner: SRI C. p. RAMASWAMI Counsel for the Respondents: SRI A. RADHA KRISHNA The Court made the following: ORDER THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTYWRIT PETITION No.25 241 of 2023 ORDER(per Hon'btc Si Justice P.SAM KOSHI) J'he instant,uvrit perition is filed assailing the order dated 04.o9.2023 passed by the respondent No. l /The commissionerof Income Tax (Exemption) vide DIN & Letter No:ITBA/COM/F/ tZ /2023_24/!OSST332S5 1(i) for the q.ssessmentyear 2OlB-19. Vide the said impugned order, ttrerespondentNo. I while deciding a stay application, pendingan appeaJchallenging the assessment order for the assessment year 20Lg_19, allowed ti.re application subject to the petitioner/assesseedepositinganamount oI lis.35,00,0O0/- out of the totaioutstanding demand of Rs.2,50,33 _,,S3O / 2. Heard Sri C.pRamaswami, learnedcounsel for thepetitioner and Sn ARamakrishna Reddy,learned StarrdingCounscl for Income Tax appearing for the respondents.3The facts of the case in brief are that the petitioner is a-neducational and charitable soclety engagedln activities ofeducationarl and medical relief, It is a society registered uncler 2. Heard Sri C.pRamaswami, learnedcounsel for thepetitioner and Sn ARamakrishna Reddy,learned StarrdingCounscl for Income Tax appearing for the respondents.3The facts of the case in brief are that the petitioner is a-neducational and charitable soclety engagedln activities ofeducationarl and medical relief, It is a society registered uncler Income [Tax ][Act' ][1961 ][(for ][short'thc Act) ][The]Section [12A ][of ][tl-r ][e]was taken [uP][ for ][scruttny][ and ][the ][entrre]petitioner's [return]Rs.5,25,06,298l[- ][has ][been ][brought to tax']gross [receiPts ][of ][Rs]a total [tax]Off-rcer [had ][levied]and [therefore' ][the ][Assesstng]habilitY [ot ][Rs'2'50'00'000/ ]['] 4. The said [demand against ][the ][petitioner ][was subjected ][to]cl-rallenge [before the Appellate ][Authority ][Pending ][the appeal' ][the]petitioner [moved arr ][application ][under ][Section ][22016\ ][of ][the ][Act]seeking [stay of ][the ][demand notice ][pending the appeal lt is ][this]application [under ][Sectio ][n ][22016\ ][of ][the ][Act ][which ][has ][been]decided [on ][04 ]['O9 ]['2023' ][whereby' ][the ][petitioner ][was ][directed ][to]a [sum ][of ][Rs'35'00'0OO/- ][before ][the ][Assessing Ofhcer ][by]pay 14 -Og.2023' [Subject ][to ][the ][compliance ][of ][which' ][there ][shall ][be]stay [and ][effect ][of ][the ][operation ][of ][demand ][notice ][dated]lg.O3'2O2\ [issued ][by ][the ][respondent No'4'] 5. lmmediately [aJter ][the ][demand ][was ][raised ][against ][the]petitioner, [an ][application requesting ][for ][rectification ][\\'|as ][sent ][to]the [Assessing ][Ofhcer ][by ][e-mait ][in ][terms of ][Section ][154 ][of ][the ][Act]and [the ][same ][was ][required ][to ][be ][disposed ][of ][within ][a ][period ][of]six [(6) ][months' ][However' ][till ][date' ][the ][same ][has ][not ][been]decided. [At ][the ][same ][time ][the ][petitioner ][had ][preferred ][an ][appeal] ..': against the order of assessment and similarly, an application forrectification of the order was also filed. Both of which are tilldate pending in spite of more than 2 yz years have lapsed. Inbetween after the appeal was filed, the petitioner on O5.05.2O2 1preferred an application seeking stay of the demand rajsedagarnst the petitioner. The said application also was pendingbefore the authorities concerned for more than 2/z years andhas only now beendecided by the impugnedorder. TheAppellate Authority inthe mea_nwhile could havedecided theappeal itself or have decided the rectification application itselfand upon a decision on either of the two, the grievance of thepetitioner could have got redressed. 6. Though the learned counsei for the respondents the learned counsei for the respondents learned counsei for the respondents for the respondents the respondents respondents haveentered appeara_nce artd filed their counter firstly denying thefact that there was a rectification application filed by thepetitioner and secondly, that in terms of the circular govemingthe field, ar order of payment of 20 percent out of the totaloutstanding demand cannot be found fault with. Though the learned counsei for the respondents the learned counsei for the respondents learned counsei for the respondents for the respondents the respondents respondents have w 7. The [High][Court ][of ][Bombal ][in ][the ][case][ ol ] [IlIVTUAL]FIiND [v/s ] [TAx ][1FFICERI][ in ][ParagraPh ][No' ][18 ][held ][as] undcr Though the learned counsei for the respondents the learned counsei for the respondents learned counsei for the respondents for the respondents the respondents respondents have w 7. The [High][Court ][of ][Bombal ][in ][the ][case][ ol ] [IlIVTUAL]FIiND [v/s ] [TAx ][1FFICERI][ in ][ParagraPh ][No' ][18 ][held ][as] undcr "counset [aPPeaing ]?: lt;::!:'f";{^Y?"f::i#: ';:::', :',;l ',,"!ii oZI [;:i:; ][; ;;;*"is ][2 ][o ][1 ][3 ][t ][a ][ki" ][s]thc uietLt [that ][in ]" [*'Ji""* ][*ritter ][^an ][inteim ][ordcr]be [passed ][on'g'i'n"ih" ][.,os'" ][o1 ][gt"':in'e ][frnonctal]sho,tld the"order [of]nordship [and ][not ]'itlp""t' "'h"#i;'; [ilitn ]the Karnataka [High ][cotrilonnot ][be ][iead' ][b ][mean ][that]consid-eration [o7 ][*n"tnJ'" ][on- ][assessee ][has ][made out ][a]';;;;;"';;,i:"*::Jfr .lii,*,:L",yi;'::;i:,"{^;,demand [is ][irreleuant'.;:";";*;;rn;p, ]no stig onthe'tz:z:;":L:?;ijti3:,zi:i;:x;;"2':I:#22;'li1!,'nlZ\i"{" [ji"oJi"'"i\i"iaa"s'?"t:!'thec'l'';urL]: ;,;; [bou ][id ].. [ro ][r:i*i;r::1",!f;f,lL,'li, ][:':,i.:[]lLnanciat [hardshtp ]" [-"';:";;;; ][iiaute ][issue ][has ][been]ol!,!!orliii,,il'.::foi;;:;;izii'n"ry"1io^nordcPosit'',i'[[oV;,-i^,t:i,-rt'^irtr*:"#,^*::"i3::t*i:::"'the Diuision [Bench ][o1 ][;] If the the [[panll ][has ][made ]][[has ][made ]][[made ]][[out ][a ][strong ]][[a ][strong ]][[strong ]][prima ][facie]-that bg itself *""ti A" a strong ground [[in ][the]][[the]] If the the [[panll ][has ][made ]][[has ][made ]][[made ]][[out ][a ][strong ]][[a ][strong ]][[strong ]]case, -that bg itself *""ti A" a strong ground [[in ][the]][[the]]matter [of ][exercise ][tl"iit*r:ii" ][as ][calting ][on ][the ][patlg]to deposit [tnt ][o^ouniJuii'i-pn*9 ][f":* ][i:-:* ][tiabte ][to]'i"i.ii,",,-n-^1f T:Y::::i',!"0!'n';;f ,"#";:X'r'y,;t.r,if rttould result [1t]'rZil"a"7i"'' to dePosit the amount' Where [a ][strong ][prima ][facie ][case ][has been made ]tuould [itselJ'][out]calling [upon ][the ]'J'i""*"i*"a"p"tit' occasion [undue ][n*iiniii' ][wnere ][thl ][issue ][has ][raised ][a']strong [pima ][fo"?"'ht"'' ][*ni'n ][requires ][seriousl]consideration [o, ][,n,tnJ}nsent ][case, ][a ][requirement ][of] ' ru13 Lawsuit [(Bom) ][340] tttould [itself ][be ][a ][matter ][of ][hardship' ][Finallll ']predeposit u)e express [o11r ][set'tous ][disapproual ][of the,manner ][in]brush [rtside ][a ][binding]7rLi"i{ri. [pernn ][n ][hc's ]'ougit'to Z.riti." i [,ns ][court ][in ][the ][case ][of ][the ][assess ][ee' ][on the]i:;;""'""i; on enforcement for [the ][preuious ][gear']";;;-;b of "log tiw has an abiding ualue in our legal.Reuenue' [can])L'ii*" ',;i;:;; [Nip"btic ][authoritg' includittg ]of ["precedert' ]certaints [the ]in [tax]ii'ii"'iptt 'Xii"r'"rtlZri"" importance [and ][its]i{ q ['cirdinat ]"ii [ti*" ][undermine ][s ][public ][confidence' ]["] Having [[hea-rd ]][[the ][contentions ]][[contentions ]][put forth on ][either ][side ][and] 8Having [[hea-rd ]][[the ][contentions ]][[contentions ]]onperusal of [records, ][undoubtedly ][the ][petitioner's]establishment [is ][an ][educational ][and ][charitable ][society registered]itself under [Section 12A ][of the ][Act. ][It ][is relevan ][t ][at ][this ][juncture]to consider [the ][fact ][that ][the ][Income ][Tax ][Department ][itself ][had]issued [a ][circular ][No'11 ][of 2008 dated ][lg'12'2OOB ][r'vhereby ][the]dehnition [of ][charitable ][purpose ][under ][Section ][2(15) ][of ][the ][Act]has been [clarified which ][for ready ][reference is ][reproduced herein]under: "The neuly [inserted ][Prouiso ][to ][Section ][2(15) ][Luill ][not]first [three ][limbs ][of ][s.ection];;;;;" i.spe.t [of ][rhe ]oi [the ][poor' ][education ][or ][medical];if;i ;';.-rii"r llit"'r'a""r"i;L"iia, [u-nLre ][the ][purpose ][of a ][trust ][or]'r1'!7irii"'iJrJ;.i't the poor' education [or ][medical]relief, it uill [constitute ]['ciaritabte ][purpose' ][euen ][if ][it]'rlliil'.i"r'i i",J'i' carryins [on ][of ][commerciat]'n' actiuities. ["] "The neuly [inserted ][Prouiso ][to ][Section ][2(15) ][Luill ][not]first [three ][limbs ][of ][s.ection];;;;;" i.spe.t [of ][rhe ]oi [the ][poor' ][education ][or ][medical];if;i ;';.-rii"r llit"'r'a""r"i;L"iia, [u-nLre ][the ][purpose ][of a ][trust ][or]'r1'!7irii"'iJrJ;.i't the poor' education [or ][medical]relief, it uill [constitute ]['ciaritabte ][purpose' ][euen ][if ][it]'rlliil'.i"r'i i",J'i' carryins [on ][of ][commerciat]'n' actiuities. ["] 9. If the contention of the learned counsel for the petitioner isto be accepted then, the petitioner has been availing theexemptior-r of pa'ment of Income Ta-x on account of the fact thatthe pctrtioner is a charitable institution and the works executedb,t, it again is r.r'ith a charitable purpose. Since the petitioneravailed rhe sard benefits ail along prior to the issuance ofdemand notice and even in the subsequent yea-rs as rvell, theredoes not seem to be any prejudice going to be caused il the sta_yapplication under Section 220(61 is decided in favour of thepetitioncr. Yet another fact s,hich is more important to beappreciated is rhat though the appeal u,as filed as early as on17 .O4.2O21 and the rectihcation application also was filed on20 .O3 .2021 , and both the rectification application and theappeal b1' no'r, are still pending consideration or is undecided formore than 2 Yz years. 10. Under these circumstances, we are of the consideredopinion that given thc aforesaid factual matrix and alsoconsidering the status or the petitioner which is a charitableestablishment u,ith a charitable object and purpose, theAssessing Authority should have allowed the application underSection 220(61 of the Act \ 11. In view of the same, we are inclined to allow the WritPetition. The impugned order dated 04.09.2023 lor the reasonsstated above stands set aside/quashed. It is ordered that thereshall be stay of the recovery of the entire demand raised by therespondent No.4 dated lg.O3.2O2I till the disposal of the appealfiled by the petitioner on 17 .04.2021 . No order as ro costs. As a sequel, miscellaneous petitions, pending it any, shallstarld closed sD/- K. AMMAJIASSISTAN T REGISTSECTIOFFICER //TRUE COPY// To,SECTI4.3.2.1Additional/JoL.B The Opposite The 1.8. The Stadiumlncome Joint Stadium Basheerbagh, Commis sroner of Lco BTm, Stadium, Basheerba gh,ax BasheerbrntssionerOfficer (Exemptiolnco agh, of me lncome HHydeydTaxerabad nrabad(ExemT, AXWard H Exemption(yderabad- - ption), S005000041 (1), oo4AaAa- ), ykar 500004ykar Aaykar Bhavan, OppositeBhavan, OppositeBhava n,inUDeputylAssistant Commission5One Officer, CC Natito Sri C.onal E P. -AsiesRamaswamisment Centre, Delhier of lncome Tax, lncome Tax7t)Two CD One CC Coto Sri presA. Radha Krishna sc Advocate[oPUC oPucltTJGJP--\k- HIGH COURT DATED:0911012023 ORDER WP.No.25241 of 2023 ALLOWING THE WRIT PETITION WITHOUT COSTS. {$E (q,7.ocs I [t{0I ][2$'8]L,Jir,1.l:,-(\r:F'ir:t1L [' ]-.