Wp/6992/2019 Of M/S The Abraham Memorial Educational Trust v. The Deputy Commissioner Of Income Tax

IN THR HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THER 0 DAY OF MARCH, 2019 BEFORE: THR HON’BLE MRS. JUSTICK S.SUJATHA WRIT PETITION No.6992/2019 (TIT) BETWEEN: M/s. THE ABRAHAM MEMORIAL EDUCATIONAL TRUSTSINGENA AGRAHARA VIA HUSKUR ROAD, APMC YARDHUSKUR PO, ELECTRONIC CITY PHASE 2BBNGALURU-560099REP. BY ITS TRUSTBEBJESUS SUDHIR LALL»/O SUDHIR MADHAVJI LALLAGED ABOUT 39 YEARS. |_.. PETITIONER| IBY SRI CHYTHANYA.K.K., ADV.] AND: 1.|THERE DBPUTY COMMISSIONER OF INCOME TAX , UNITY BUILDING ANNE X5P.KALINGA RAO ROAD .BENGALURU-560027..P.KALINGA RAO ROAD .BENGALURU-560027.. «|THE COMMISSIONBR OF INCOMB TAX |EXEMPTIONS], 6 KLOOR, UNITY BUILDING ANNEXE, MISSION ROADBENGALURU-560027..BENGALURU-560027.. 3.)THE TAX RECOVERY OFFICER |EXEMPTIONS]$ FLOOR, UNITY BUILDING ANNEXE)MISSION ROAD, BENGALURU-35600027. ...RESPONDENT$ FLOOR, UNITY BUILDING ANNEXE)MISSION ROAD, BENGALURU-35600027. ...RESPONDENT |BY SRI JEEVAN J. NEERALAGI, ADV.| THIS WRIT PEIITION IS FILED UNDER ARTICLES 2260 &22/ OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH AS— FAR AS THR PETITIONER IS CONCBRNEBED BY AN APPROPRIATWRIT OR ORDER IN THR NATURBK OF CHRRITIIORARIOTHERWISKE THE IMPUGNED RECOVERY NOTICE [SSUED INFORM No.I.T.C.P.1, DATED 20.11.2018 BY THE R-3, ENCLOSEDIN ANNEXURE-A; AND ETC., THIS PETITION COMING ON FOR PRELIMINARY HEARING,THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER The petitioner has challenged the recovery noticedated 20.11.2018 issued by the respondent No.3)interallachallenging the notices issued by the respondentNo.1 under Section 226/3| dated 26.03.2018 and29.05.2018 to the Branch Managers of the petitioner’sas well as the order passed by the respondent No.2rejecting the stay of entire demand dated 20.03.2018. 2 |The petitioner is a charitable trust registeredunder Section 12A of the Income Tax Act, 1961 |'Act' forshort]. The petitioner trust is said to have been formedwith an object to run the educational institutions. Itappears that the petitioner has filed its total return ofincome by declaring Nil total income aiter claiming -3- exemption under Section 11 of the Act for theassessment year 2015-16. A survey was conductedunder Section 133A of the Act at the premises of thepetitioner's Trust on 03.09.2015. The respondent No.1.selected the case of the petitioner for scrutiny andissued notice under Section 143]/2] of the Act pursuantto which the petitioner furnished the details from timeto time. The respondent No.l passed an assessmentorder under Section 143]/3] of the Act by making certainadditions and issued a demand notice under Section|156 of the Act for the assessment year 2015-16. | 3.|It transpires that the petitioner filed anapplication before the respondent No.1 with respect torectification of assessment order passed under Section143]3] of the Act. The respondent No.1 passed an order,rejecting to rectify the assessment order. Aggrieved bythe same, the petitioner has preferred an appeal beforethe Commissioner of Income Tax |Appeals], Bengaluru. -4- Further the petitioner has filed stay application undersection 220/6| of the Act before the respondent No.1.requesting to keep the recovery of demand in abeyancetill the disposal of the appeal and not to treat thepetitioner as ‘assessee in default’. The respondent No.1.has passed a conditional stay order, directing thepetitioner to pay 20% of the demand. Aggrieved by thesaid conditional stay order, the petitioner has preferredan application before the respondent No.2 who issued anotice by fixing the date of hearing on 19.03.2018. © 4It is the grievance of the petitioner thatpursuantTO the hearingnotice,the petitioner’srepresentative appeared before the respondent No.2 andprayed for an adjournment but the same was deniedand the respondent No.2 proceeded to pass an orderwithout hearing the petitioner by directing the petitionerto pay 20% of the demand within two days. Hence, thiswrit petitioin.| -5- 4It is the grievance of the petitioner thatpursuantTO the hearingnotice,the petitioner’srepresentative appeared before the respondent No.2 andprayed for an adjournment but the same was deniedand the respondent No.2 proceeded to pass an orderwithout hearing the petitioner by directing the petitionerto pay 20% of the demand within two days. Hence, thiswrit petitioin.| -5- 5.|Learnedcounsel ori.Chythanya.K.K.,appearing for the petitioner would submit that prima-facie merits, high pitched assessment and genuinehardship are the factors which are necessarily to beconsidered by the respondent No.2 before passing of anorder. However, the respondent No.2 without providingan opportunity of hearing to the petitioner, proceeded topass the order impugned at Annexure-C, which is hit byprinciples of natural justice and accordingly seeks forsetting aside the order impugned and consequentially todirect the respondents not to proceed with the recoveryproceedings unless a speaking order is passed by therespondent No.2 in accordance with law. 6.|Learned counsel Sri.JJeevan J. Neeralagi,appearing for the Revenue supports the order impugnedand seeks for dismissal of the writ petition. TS|Having heard the learned counsel for theparties and perusing the material on record, it is not indispute that the petitioner being aggrieved by theconditional order of stay passed by the respondent No.1.has filed an application before the respondent No.2.Though the respondent No.2 has fixed the date ofhearing, denying the adjournment sought by thepetitioner’s representative, proceeded to pass the orderimpugned directing the petitioner to pay 20% of the taxdemanded. Prima-facie it appears that the petitionerhas filed the Nil return and the assessment concluded ishigh pitched. In such circumstances, in terms of theInstruction No.1914, the authorities are obligated toconsider the genuine hardship and the prima-tfaciemerits of the case qua the high pitched assessment. Theorder of the respondent No.2 is not in consonance withthe principles of natural justice as well as theInstructions of the CBDT as aforesaid. © -~Tf- 8.|In the circumstances, this Court is of theconsidered view that it is just and proper to set asidethe impugned order at Annexure-C and to remit thematter to the respondent No.2 to re-consider the matterafresh in accordance with law. Hence, the following: ORDER 1.The order impugned at Annexure-C dated|20.03.2018passedby|therespondentNo.21S|quashed.Consequently the notice issued atAnnexure-A and Annexures-Bl1 to B6shall stand quashed. ?)The proceedings are restored to the fileof the respondent No.2 to re-considerthe application filed by the petitionerafresh in accordance with law. ThisCXeTCI1SEshallbedone|bytherespondentNo.2afterproviding NGC. -8- sufficient opportunity of hearing to the petitioner and passing a _ speakin order. 3.The respondent No.2 shall proceed to pass the orders as aforesaid, in anexpedite manner. Till such decision to be taken by the respondent No.2, no recovery action shall be initiated by the authorities against the petitioner for the assessment year 2015-16. | 4With the aforesaid observations and directions, writ petition stand disposed of. Sd/-. JUDGE