Wp(Md)/4639/2011 Of M/S. Katie Wilcox Education v. The Income Tax Officer

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED: 21.04.2011CORAM:THE HONOURABLE MR.JUSTICE B.RAJENDRANW.P.(MD).Nos.4639 & 4640 of 2011AndM.P.(MD).Nos. 1, 1 & 2 of 2011 M/s.Katie Wilcox Education AssociationRepresented by its SecretaryLady Doak College CampusMadurai The Income Tax OfficerWard II (4), Range – II2, C.R.BuildingsV.P.Rathinsamy Nadar RoadBibikulam, Madurai – 625 002: Respondents in both W.Ps. PRAYER IN W.P.(MD).No. 4639/2011: Writ Petition filed under Article 226of the Constitution of India praying to issue a Writ of CertiorarifiedMandamus calling for the records of the respondent in P.A.No. AAAAK0221Aand quash the notice dated 17.02.2011 under Section 226(3) of the IncomeTax Act and direct the respondent to return the amount of Rs.33,28,724/-withdrawn from the petitioner's account in the State Bank of India, LadyDoak College Branch, Madurai on 21.02.2011 pursuant to the impugnednotice. PRAYER IN W.P.(MD).No. 4640/2011: Writ Petition filed under Article 226of the Constitution of India praying to issue a Writ of Certioraricalling for the records of the respondent in PAN.No. and quashthe respondent's order dated 31.12.2010 as modified by the order dated11.01.2011. Mr.R.Krishnamoorthy, learned counsel takes notice on behalf of therespondent. By consent of both sides, these Writ Petitions are taken upfor final hearing. 2. The main point raised by the writ petitioner is that the Companyhas been registered under Section 25 of the Companies Act. Their maincontention is that it is not a religious institution but an charitableinstitution. Unfortunately, this has not been taken into considerationeven though they have been granted exemption under Section 12AA of thehttps://hcservices.ecourts.gov.in/hcservices/Income Tax Act 1961. On scrutiny in respect of assessment order 2008-2009, the income tax authorities have levied the tax on the ground that the total amount of grant receipt from the Government is less than 50% ;whereas they had got 45% of the total expenditure. As against theassessment order passed for the year 2008-2009, they have alreadypreferred an appeal and the same is pending before the appellateauthority, namely, the Commissioner of Income Tax, CET Appeals, Madurai.Pending appeal, since there was a move to collect the tax, theyapproached the assessing Officer under Section 220(6) of the Act forstaying all further proceedings, viz., collection of tax. Unfortunately,the authority without taking into consideration, that till date theexemption was not cancelled under Section 12AA of the Act and only a showcause notice was issued, the authority has rejected the petition forstay. In that rejection order, it is also stated that they cannotapproach the Court also and that there is no need for such a stay. Apartfrom stay, being rejected on the very next day, the assessing Officer hadissued a garnishee order to the Bank and also compelled the Bank to givethe demand draft for the amount due and also collected the amount evenprior to the service of the order. Therefore, aggrieved against thesame, they have challenged the garnishee order as well as the rejectionorder passed by the assessing authority. Hence, these two Writ Petitionsare filed. 3.At the admission stage, Mr.R.Krishnamoorthy, the learned counseltook notice for the respondent. He would contend that since the appealitself is pending, the appeal itself will be taken and disposed of at anearly point of time and there is no need for the writ petition as it isonly challenges the interim order. 4.Heard both sides. 3.At the admission stage, Mr.R.Krishnamoorthy, the learned counseltook notice for the respondent. He would contend that since the appealitself is pending, the appeal itself will be taken and disposed of at anearly point of time and there is no need for the writ petition as it isonly challenges the interim order. 4.Heard both sides. 5.The only point raised by the Senior counsel for the petitioneris that even before the order of rejection of the stay is received by thepetitioner, the assessing officer had immediately taken steps not only toissue the distraint order or the garnishee order to the Bank butcollected the tax. The assessing officer has issued order of dismissalof stay application and immediately send the garnishee order to the bankand obtained the demand draft from the bank on the very same day withouteven giving the petitioner any opportunity to contest. Even otherwise,it is also the contention of the petitioner that their request for stayduring the pendency of the appeal has not at all been considered,especially when the authority has only stated that the Commissioner hasissued the show cause notice only to cancel, but not cancelled theexemption granted under Section 12AA of the Act. Therefore, theauthority has acted very hastily passed the order was the main ground ofattack. 6.The learned counsel appearing for the respondent would contendthat since the money was lying in the bank, it is only sought to beattached . It was only passed after the stay petition was dismissed.Unfortunately, the fact remains that the appeal is pending. When theappeal is pending, it is always open for the assesses to move theauthority for a stay and the stay has been moved rightly. But it hasbeen rejected by the authority concerned. https://hcservices.ecourts.gov.in/hcservices/7. Now that it is only a matter relating within a rejection of theinterim order, as rightly pointed out by the learned counsel appearing for the respondent, it is better to immediately dispose of the appeal asthe matter pertains to college and the funds for the working of thecollege has been totally attached and then recovered. Since the collegehas to re-open in the month of June for the new academic year, suffice todirect the appellate authority, namely, the Commissioner, CET Appeals,where the appeal is pending from January 2011, which has been presentedby the petitioner to dispose of the same in accordance with law within aperiod of 30 days from the date of receipt of a copy of this order. 8.It is also made clear that the other Writ Petition, thejurisdiction point has been raised in so far as to the authority of therespondent in issuing the order that question is left upon. It can bedecided by the appellate authority. Since this Court has already directedthe appeal itself to be disposed of, the penalty proceedings will awaitthe disposal of the appeal. 9.With the above said direction, this Writ Petition is disposedof. Consequently, connected Miscellaneous Petitions are closed. Nocosts. Sd/-Deputy Registrar (L.A)/True Copy/ To Assistant Registrar The Income Tax OfficerWard II (4), Range – II2, C.R.BuildingsV.P.Rathinsamy Nadar RoadBibikulam, Madurai – 625 002 + 1 cc to Mr.K.K.Senthil, Advocate, SR No.14783+ 2 ccs' to Mr.R.Sathiamoorthy, Advocate, SR Nos.14705, 14706 vsgRJ/26.4.11 (IT)3p/5c