Wp(C)/18468/2023 Of St. John The Baptist Church v. The Income Tax Officer (Exemption)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 15 DAY OF JANUARY 2024 / 25TH POUSHA, 1945 WP(C) NO. 18468 OF 2023 PETITIONER: ST. JOHN THE BAPTIST CHURCH,MOONUMURY, MATTATHUR, IRINJALAKUDA, THRISSUR, PIN – 680684(REPRESENTED BY ITS VICAR, FR. GEORGE VEZHAPARAMBIL). BY ADVS. SRI. P. J. ANILKUMAR (A-1768) SRI. K. N. SREEKUMARAN SRI. N. SANTHOSHKUMAR RESPONDENTS: 1THE INCOME TAX OFFICER (EXEMPTION),AAYAKAR BHAVAN, INCOME TAX OFFICE, SAKTHANTHAMPURAN NAGAR, THRISSUR, PIN – 680001.AAYAKAR BHAVAN, INCOME TAX OFFICE, SAKTHANTHAMPURAN NAGAR, THRISSUR, PIN – 680001. 2THE INCOME TAX OFFICER (EXEMPTION),SAN JUAN TOWER, BEHIND C R BUILDING, ERNAKULAM-682018.SAN JUAN TOWER, BEHIND C R BUILDING, ERNAKULAM-682018. 3THE COMMISSIONER OF INCOME TAX (EXEMPTION),SAN JUAN TOWER, BEHIND C R BUILDING, ERNAKULAM-682018.SAN JUAN TOWER, BEHIND C R BUILDING, ERNAKULAM-682018. 4THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX (EXEMPTION),25TH FLOOR, E2 BLOCK, PRATYAKSH KAR BHAWAN CIVIC CENTRE, J.L.N. MARG, NEW DELHI-110002.25TH FLOOR, E2 BLOCK, PRATYAKSH KAR BHAWAN CIVIC CENTRE, J.L.N. MARG, NEW DELHI-110002. 5THE ADDITIONAL DIRECTOR OF INCOME TAX (INV),AYAKAR BHAVAN, INCOME TAX OFFICE, SAKTHANTHAMPURAN NAGAR, THRISSUR-680001.AYAKAR BHAVAN, INCOME TAX OFFICE, SAKTHANTHAMPURAN NAGAR, THRISSUR-680001. 6THE ASSISTANT COMMISSIONER OF INCOME TAX (CPC),CENTRALIZED PROCESSING CENTRE, POST BAG NO: 2, BANGALORE -560100.CENTRALIZED PROCESSING CENTRE, POST BAG NO: 2, BANGALORE -560100. BY ADVS. SRI. JOSE JOSEPH – SC - INCOME TAX DEPARTMENT, SRI. CHRISTOPHER ABRAHAM – SC - INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON15.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No. 18468 of 2023 ------------------------- Dated this the 15[th] day of January, 2024 JUDGMENT 1.The present writ petition has been filed impugning the order inExhibit P-9 dated 20.04.2023 passed under Clause (d) of Section148A of the Income Tax Act, 1961 (hereinafter referred to as ‘theAct’ for short). The present writ petition has been filed impugning the order in 2.The petitioner claims to be a religious institution. Petitionerhas been registered under Section 12AA dated 21.09.2007 w.e.f.01.04.2006. The petitioner has been filing return of its income. TheAssistant Director of Income Tax (Investigation), Thrissur haduploaded certain information in respect of financial transactions ofthe petitioner for the relevant assessment year 2016-17. A perusalof the data provided by the Assistant Director of Income Tax(Investigation) would reveal that the petitioner had accepted(interest free) cash loans (IFL) amounting to Rs. 1,87,69,000/- duringthe financial year 2015-16 relevant to the assessment year 2016-17and, out of the said amount Rs.1,69,65,611/- has been repaid by cashduring the said financial year itself. It is also evident from the data collected that unpaid loan amount of Rs. 19,30,000/- wasoutstanding on 31.03.2016 which had also been repaid by cashduring the financial year 2016-17. The competent authority was ofthe opinion that the said transaction in cash was a clear case ofviolation of the provisions of registration under Section 12AA of theAct and these transactions attract penal provisions under Section269SS and 269T of the Act. collected that unpaid loan amount of Rs. 19,30,000/- wasoutstanding on 31.03.2016 which had also been repaid by cashduring the financial year 2016-17. The competent authority was ofthe opinion that the said transaction in cash was a clear case ofviolation of the provisions of registration under Section 12AA of theAct and these transactions attract penal provisions under Section269SS and 269T of the Act. 3.A checking of the e-filing portal reveals that the assessee hadfiled return of income for the assessment year 2016-17 on14.06.2017. The gross receipts were stated to be Rs. 2,37,72,528/-with application of income to the tune of Rs. 2,45,92,429/-. The saidinformation obtained from the Directorate of Income Tax(Investigation) would suggest re-opening of assessment due toescapement of income from tax on account of non reflection of cashloan and repayment in audited statements. A show cause noticeunder Section 148A was issued and served on the assessee on31.03.2023 to show as to why notice under Section 148 should notbe issued in this case. The petitioner had participated in theproceedings. However, on careful consideration of the reply of theassessee, the assessing authority was of the opinion that the petitioner has no explanation relating to the acceptance andpayment of loan in cash to the tune of Rs. 1,87,69,000/-. Thepetitioner/assessee has also not confirmed whether theseacceptance and repayment have reflected in their audited financials.Instead, the petitioner had requested to exempt him from 148proceedings as the Commissioner of Income Tax has initiatedseparate penalty proceedings. 4.Considering aforesaid facts and in the absence of any materialscoming forth from the petitioner or explanation for accepting andmaking repayment of Rs. 1,87,69,000/- in cash, the notice underSection 148 was issued as in the opinion of the assessing authority,the income chargeable to tax to the tune of Rs. 1,87,69,000/- hasescaped assessment in the case of the petitioner for the assessmentyear 2016-17. 5.Considering the aforesaid fact that the petitioner’s allegedacceptance of Rs. 1,87,69,000/- in cash and repayment of the samewas in clear violation of Section 12AA and the assessing authorityhas been of the opinion that prima facie the said amount was anincome of the petitioner which had escaped assessment frompayment of the tax, I do not find that the assessing authority had Considering the aforesaid fact that the petitioner’s alleged committed any error of law or jurisdiction in passing the impugnedorder under Section 148A(d) of the Act. 6. The petitioner is required to file his return in response to the notice under Section 148 and if he files the return, the assessingauthority shall examine the returns and will finalise the assessmentorder after hearing the petitioner. At this stage, I do not find anyground to interfere with the impugned order. In the above facts and circumstances, this writ petition beingdevoid of merits and substance is hereby dismissed. Svn Sd/- DINESH KUMAR SINGH JUDGE APPENDIX OF WP(C) 18468/2023 PETITIONER’S EXHIBITS EXHIBIT P1INCOME TAX RETURN FOR A Y 2016-17 FILED ALONG WITHTHE COMPUTATION OF INCOME DATED 14..06..2017THE COMPUTATION OF INCOME DATED 14..06..2017 EXHIBIT P2AUDIT REPORT FOR AY 2016-17 IN FORM 10B FILED VIDEWITH E-FILING ACKNOWLEDGEMENT NO. 804489061150617DATED 15..06..2017 WITH E-FILING ACKNOWLEDGEMENT NO. 804489061150617DATED 15..06..2017 EXHIBIT P3NOTICE DATED 31..03..2023 U/S.274 READ WITHSEC.271D OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONERSEC.271D OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONER EXHIBIT P4NOTICE DATED 31.03..2023 U/S 274 READ WITHSEC.271E OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONERSEC.271E OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONER JUDGE APPENDIX OF WP(C) 18468/2023 PETITIONER’S EXHIBITS EXHIBIT P1INCOME TAX RETURN FOR A Y 2016-17 FILED ALONG WITHTHE COMPUTATION OF INCOME DATED 14..06..2017THE COMPUTATION OF INCOME DATED 14..06..2017 EXHIBIT P2AUDIT REPORT FOR AY 2016-17 IN FORM 10B FILED VIDEWITH E-FILING ACKNOWLEDGEMENT NO. 804489061150617DATED 15..06..2017 WITH E-FILING ACKNOWLEDGEMENT NO. 804489061150617DATED 15..06..2017 EXHIBIT P3NOTICE DATED 31..03..2023 U/S.274 READ WITHSEC.271D OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONERSEC.271D OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONER EXHIBIT P4NOTICE DATED 31.03..2023 U/S 274 READ WITHSEC.271E OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONERSEC.271E OF THE ACT ISSUED BY THE 2ND RESPONDENTTO THE PETITIONER EXHIBIT P5REPLY DATED 13..05..2023 FILED BY THE PETITIONERBEFORE THE 2ND RESPONDENT AGAINST EXHIBIT-P3NOTICE VIDE ACKNOWLEDGMENT NO. 146870211130523BEFORE THE 2ND RESPONDENT AGAINST EXHIBIT-P3NOTICE VIDE ACKNOWLEDGMENT NO. 146870211130523 EXHIBIT P6REPLY FILED BY THE PETITIONER DATED 13..05..2023BEFORE THE 2ND RESPONDENT AGAINST EXHIBIT-P4NOTICE VIDE ACKNOWLEDGEMENT NO. 146753951130523 BEFORE THE 2ND RESPONDENT AGAINST EXHIBIT-P4NOTICE VIDE ACKNOWLEDGEMENT NO. 146753951130523 EXHIBIT P7NOTICE U/S 148A DATED 31..03..2023 ISSUED BY THE2ND RESPONDENT ON THE GROUND OF NON-REFLECTION OFCASH LOAN TRANSACTIONS IN THE AUDITED STATEMENTS2ND RESPONDENT ON THE GROUND OF NON-REFLECTION OFCASH LOAN TRANSACTIONS IN THE AUDITED STATEMENTS EXHIBIT P8REPLY DATED 18..04..2023 FILED BY THE PETITIONERAGAINST EXT-P7 NOTICEAGAINST EXT-P7 NOTICE EXHIBIT P9ORDER DATED 20..04..2023 U/S148A(D) OF THE INCOMETAX ACT ISSUED BY THE 1ST RESPONDENT TO THEPETITIONERTAX ACT ISSUED BY THE 1ST RESPONDENT TO THEPETITIONER EXHIBIT P10NOTICE DATED 20..04..2023 U/S.148 OF THE INCOMETAX ACT ALLEGED INCOME ESCAPED ASSESSMENT WITHINTHE MEANING OF SEC.147TAX ACT ALLEGED INCOME ESCAPED ASSESSMENT WITHINTHE MEANING OF SEC.147 EXHIBIT P11TRUE COPY OF THE ORDER IN RED CHILLI INTERNATIONALSALES VS. INCOME TAX OFFICER & ANR, SLA(C) 86/2023DATED 03..01..2023SALES VS. INCOME TAX OFFICER & ANR, SLA(C) 86/2023DATED 03..01..2023