Wp(C)/8524/2019 Of Payyanur Sree Subrahmanya Swami Temple v. Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI MONDAY, THE 01ST DAY OF JULY 2019 / 10TH ASHADHA, 1941 WP(C).No.8524 of 2019 PETITIONER/S: PAYYANUR SREE SUBRAHMANYA SWAMI TEMPLEREPRESENTED BY ITS EXECUTIVE OFFICER, SS TEMPLE, PAYYANUR-670307. BY ADVS.SRI.MAHESH V RAMAKRISHNANSRI.K.PRAMOD RESPONDENT/S: W.P.(C) No.8524/2019 6THE SENIOR MANAGER,THE KANNUR DISTRICT CO-OPERATIVE BANK, PAYYANUR BRANCH, PAYYANUR, KANNUR-670307.THE KANNUR DISTRICT CO-OPERATIVE BANK, PAYYANUR BRANCH, PAYYANUR, KANNUR-670307. BY ADVS.SRI.B.RAMACHANDRAN, CGCSMT.P.K.RADHIKA, SC, MALABAR DEVASWOM BOARDSRI.M.SASINDRAN, SC, KANNUR DISTRICT CO.OP. BANKSRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01.07.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J U D G M E N T Payyanur Sree Subrahmanya Swami Temple, represented by its Executive Officer, is the petitioner. The petitioner prays for the following reliefs: “i)To issue a Writ of Certiorari or any other appropriate Writ, orderor direction to call for the entire documents culminated inExts.P5, P6 & P9 and to quash the same;or direction to call for the entire documents culminated inExts.P5, P6 & P9 and to quash the same; ii)To declare that the petitioner, being the administrative body ofthe religious endowments attached to the deity of Sree PayyanurSubrahmanya Swami and constituted under the Madras HinduReligious & Charitable Endowments Act, 1951, the income of thepetitioner is entitled for unconditional exemption from the levyof income tax, U/Sec-10(23BBA) of the Income Tax Act, 1961.the religious endowments attached to the deity of Sree PayyanurSubrahmanya Swami and constituted under the Madras HinduReligious & Charitable Endowments Act, 1951, the income of thepetitioner is entitled for unconditional exemption from the levyof income tax, U/Sec-10(23BBA) of the Income Tax Act, 1961. iii)To issue a Writ of Mandamus or any other appropriate Writ,order or direction, directing the 1[st] Respondent to repay theentire amount recovered from the petitioner through the 6[th]Respondent Bank, along with interest and costs forthwith;order or direction, directing the 1[st] Respondent to repay theentire amount recovered from the petitioner through the 6[th]Respondent Bank, along with interest and costs forthwith; iv)Award cost of these proceedings to the petitioner; and v)Pass such other or further orders as this Hon'ble Court may deemfit and proper in the circumstances of the case.”fit and proper in the circumstances of the case.” 2.The issue arises under Section 10(23BBA) of the Income Tax Act,1961 (for short 'the Act'). The section reads asfollows: “(23BBA) Any income of any body or authority (whether or not abody corporate or corporation sole) established, constituted orappointed by or under any Central, State or Provincial Act whichprovides for the administration of any one or more of thefollowing, that is to say, public religious or charitable trusts orendowments (including maths, temples, gurdwaras, wakfs,churches, synagogues, agiaries or other places of public religiousworships) or societies for religious or charitable purposesregistered as such under the Societies Registration Act, 1860 (21of 1860) or any other law for the time being in force: Provided that nothing in this clause shall be construed to exemptfrom tax the income of any trust, endowment or society referredto therein.” W.P.(C) No.8524/2019 “(23BBA) Any income of any body or authority (whether or not abody corporate or corporation sole) established, constituted orappointed by or under any Central, State or Provincial Act whichprovides for the administration of any one or more of thefollowing, that is to say, public religious or charitable trusts orendowments (including maths, temples, gurdwaras, wakfs,churches, synagogues, agiaries or other places of public religiousworships) or societies for religious or charitable purposesregistered as such under the Societies Registration Act, 1860 (21of 1860) or any other law for the time being in force: Provided that nothing in this clause shall be construed to exemptfrom tax the income of any trust, endowment or society referredto therein.” W.P.(C) No.8524/2019 3.The petitioner is an institution coming within thedefinition of Madras Hindu Religious & Charitable EndowmentsAct, 1951 (for short ‘HR&CE Act’) and for administration andoverseeing the function of the institution, Board of Trustees isconstituted under the provisions of HR&CE Act. The case ofpetitioner is that the petitioner is conforming to the mandate ofHR&CE Act and enjoys statutory exemption from the Act underSection 10(23BBA) of the Act. The petitioner temple, for theassessment year 2014-15, on the advise given by internalauditor, e-filed its returns under acknowledgmentNo.953303230150216 dated 15.02.2016. The third respondentprocessed the return Ext.P1 and determined the net tax payableby the petitioner and demanded a sum of Rs.29,69,290/- payablefor the said assessment year. The petitioner repeated the sameprocedure for the assessment year 2015-16 and the thirdrespondent determined the net tax payable by the petitioner W.P.(C) No.8524/2019 and demanded a sum of Rs.28,44,340/-. The first respondent through Ext.P4 summoned the petitioner to attend enquirytogether with books, accounts etc. 4. The case of petitioner is that the petitioner is a registered temple coming under the scope of HR&CE Act and isentitled to statutory exemption under Section 10(23BBA) of theAct as the petitioner satisfies the requirements of Section10(23BBA). The erroneous filing of returns ought not to havebeen processed and likewise by referring to these assessmentyears and the tax determined, withdrawing a sum of Rs.10 lakhfrom the account of the petitioner-temple, is illegal, arbitrary,beyond the Act and unconstitutional. 5. The respondents filed statement. The statement of respondents inter alia does not dispute the scope, purport andambit of Section 10(23BBA) of Act and the application thereofto the case on hand. The statement of respondents, on the W.P.(C) No.8524/2019 contrary, shifts the error in this behalf on to petitioner bystating as follows: “However the petitioner chose to file the returns in form no.ITR 7based on erroneous advice even when the petitioner was nothaving registration under Section 12A of the Income Tax Act. Inthe absence of registration u/s. 12A, the CPC while processing thereturns did not take into account the application of incomeclaimed in the return and thereby treating the entire receipts ofthe petitioner as the total income and raised the impugneddemands. In the above backdrop, the entire blame for creation ofthe tax demand falls on the petitioner. (emphasis applied) 6.The admission on the statutory exemption which the petitioner is entitled to is stated thus: contrary, shifts the error in this behalf on to petitioner bystating as follows: “However the petitioner chose to file the returns in form no.ITR 7based on erroneous advice even when the petitioner was nothaving registration under Section 12A of the Income Tax Act. Inthe absence of registration u/s. 12A, the CPC while processing thereturns did not take into account the application of incomeclaimed in the return and thereby treating the entire receipts ofthe petitioner as the total income and raised the impugneddemands. In the above backdrop, the entire blame for creation ofthe tax demand falls on the petitioner. (emphasis applied) 6.The admission on the statutory exemption which the petitioner is entitled to is stated thus: “As regards the petitioner’s prayer for a declaration by theHon’ble Court that the petitioner is entitled for exemption u/s.10(23BBA), it is submitted that such a declaration is not necessaryas the Income Tax Act itself grants exemption under section10(23BBA) to the entities of the nature coming within the ambitof that provision. As for the prayer of the petitioner for adirection to refund the amount already collected, it is submittedthat in so far as the demands are outstanding against thepetitioner in the records of the department, it is not possible todo so before these demands are wiped out by resort to W.P.(C) No.8524/2019 appropriate remedies.” 7.Heard Sri Mahesh V. Ramakrishnan and SriChristopher Abraham, the learned counsel appearing for theparties. 8.The case of the petitioner is that returns for twoassessment years, namely 2014-15 and 2015-16, were filed on anerroneous advice given by the internal auditor. The petitionerfirstly is an institution under HR&CE Act. Secondly, thepetitioner satisfies the requirement of Section 10(23BBA) of theAct. Therefore, is not under obligation to file return under theAct. Even if the tax is paid erroneously, the respondents, dehors the statutory exemption, firstly could not have determinedthe total receipts received from the petitioner as income for theparticular year and demand tax. Such determination of demandof income tax is contrary to Article 265 of Constitution andSection 10(23BBA) of Act. The said position remains W.P.(C) No.8524/2019 undisputed. The entitlement of petitioner in fact and law is notdisputed by the respondents. On the other hand, withoutjoining the issue with the petitioner, for the sake of resolving anissue, the factual and statutory position are fairly stated by therespondents. Therefore, the petitioner prays for appropriateorders. 9.With the above observations and by accepting thestand taken in the statement filed by the respondents, the writpetition could have been disposed of. Such course keeps alivethe issue of refund of tax collected without authority from thepetitioner. Therefore, this Court by keeping in view thecharacter, scope and admission of the petitioner vis-à-visHR&CE Act and exemption in Section 10(23BBA) of the Actdeclares that the determination of income of petitioner for theassessment years 2014-15 and 2015-16 is illegal, contrary to thestatutory exemption and violation of Article 265 of Constitution W.P.(C) No.8524/2019 of India. Consequent thereto the petitioner is entitled forrefund of the tax already collected from the petitionerinstitution. For the said purpose of securing refund of taxcollected, the petitioner is given liberty, by enclosing a copy ofthis judgment, within two months from today to apply tosecond respondent under Section 264 of the Act for passing aconsequential order keeping in view the above declaration,including refund of income tax recovered from the petitioner.The second respondent considers and disposes of theapplication filed by the petitioner in terms of this order withintwo months and ensures refund within the said period. The writ petition ordered as indicated above. Sd/- S.V.BHATTIJUDGE W.P.(C) No.8524/2019 of India. Consequent thereto the petitioner is entitled forrefund of the tax already collected from the petitionerinstitution. For the said purpose of securing refund of taxcollected, the petitioner is given liberty, by enclosing a copy ofthis judgment, within two months from today to apply tosecond respondent under Section 264 of the Act for passing aconsequential order keeping in view the above declaration,including refund of income tax recovered from the petitioner.The second respondent considers and disposes of theapplication filed by the petitioner in terms of this order withintwo months and ensures refund within the said period. The writ petition ordered as indicated above. Sd/- S.V.BHATTIJUDGE jjj APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1TRUE COPY OF THE RETURN SUBMITTED BY THE PETITIONER FOR THE ASSESSMENT YEAR 2014-15 IN FORM ITR-7.PETITIONER FOR THE ASSESSMENT YEAR 2014-15 IN FORM ITR-7. EXHIBIT P2TRUE COPY OF THE INTIMATION DATED 22.10.2016 U/SEC.143(1) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2014-15.U/SEC.143(1) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2014-15. EXHIBIT P3TRUE COPY OF THE RETURN SUBMITTED BY THE PETITIONER FOR THE ASSESSMENT YEAR 2015-16 IN FORM ITR-7.PETITIONER FOR THE ASSESSMENT YEAR 2015-16 IN FORM ITR-7. EXHIBIT P4TRUE COPY OF THE INTIMATION DATED 27.3.2017 U/SEC-143(1) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2015-16.U/SEC-143(1) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2015-16. EXHIBIT P5TRUE COPY OF THE ORDER DATED 6.4.2018 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER.THE 1ST RESPONDENT TO THE PETITIONER. EXHIBIT P6TRUE COPY OF THE LETTER DATED 21.1.2019 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER.THE 1ST RESPONDENT TO THE PETITIONER. EXHIBIT P7TRUE COPY OF THE PETITION DATED 18.2.2019 U/SEC.154 OF THE INCOME TAX ACT SUBMITTED BY THEPETITIONER (FOR THE YEAR 2014-15) BEFORE THE 1ST RESPONDENT.U/SEC.154 OF THE INCOME TAX ACT SUBMITTED BY THEPETITIONER (FOR THE YEAR 2014-15) BEFORE THE 1ST RESPONDENT. EXHIBIT P8TRUE COPY OF THE PETITION DATED 18.2.2019 U/SEC-154 OF THE INCOME TAX ACT SUBMITTED BY THE PETITIONER (FOR THE YEAR 2015-16) BEFORE THE 1ST RESPONDENT.154 OF THE INCOME TAX ACT SUBMITTED BY THE PETITIONER (FOR THE YEAR 2015-16) BEFORE THE 1ST RESPONDENT. EXHIBIT P9TRUE COPY OF THE NOTICE DATED 6.2.2019 ISSUED BY THE 1ST RESPONDENT TO THE 6TH RESPONDENT.THE 1ST RESPONDENT TO THE 6TH RESPONDENT. W.P.(C) No.8524/2019 EXHIBIT P10TRUE COPY OF THE PETITION DATED 8.3.2019 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2014-15. EXHIBIT P11TRUE COPY OF THE PETITION DATED 8.3.2019 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE ASSESSMENT YEAR 2015-16. EXHIBIT P12TRUE COPY OF THE LETTER DATED 24.10.2015 ISSUED BYTHE PETITIONER TO THE 6TH RESPONDENT. EXHIBIT P13 TRUE COPY OF THE DEBIT VOUCHER FOR RUPEES 10 LAKHS ISSUED BY THE 6TH RESPONDENT EXHIBIT P14 TRUE COPY OF THE CREDIT VOUCHER FOR RUPEES 10 LAKHS ISSUED BY THE 6TH RESPONDENT