2023 (5) TMI 1268 - HC - Income Tax

Reopening of assessment u/s 147 - Allegation against the petitioner is that because of the activities carried out by it, the benefits available to it under Sections 11 and 12 may not be available - HELD THAT - As referring to income and expenditure account of the AY in issue expenditure that has been registered by the petitioner is Rs. 67,49,006/-, against which an adjustment of unutilized amount under Section 11(1) Explanation 2 amounting to Rs. 2,59,903/- has been made. Thus, the net expenditure, which has been registered by the petitioner, is the figure that we have noticed above as the alleged escaped income, i.e., Rs. 64,89,103/-. As a matter of fact, the petitioner has registered a net loss amounting to Rs. 6,54,461/-. Therefore, there is a misalignment, to say the least, between the purportedly escaped income, as indicated in the notice issued under Section 148A(b), and the order passed under Section 148A(d) of the Act. Given the aforesaid backdrop, in our view, the matter requires further examination. Accordingly, issue notice. Counter-affidavit will be filed within eight weeks.

Summary

Issues involved:
The judgment concerns a writ petition related to Assessment Year (AY) 2016-17, involving allegations against a trust regarding the availability of benefits under Sections 11 and 12 of the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Allegations against the petitioner
The broad allegation against the petitioner is that due to its activities, the benefits under Sections 11 and 12 of the Income Tax Act may not be available. The petitioner is a trust engaged in charitable activities.

Issue 2: Registration and Proceedings
A notice has been issued to the petitioner for canceling the registration granted under Section 12A of the Act, but the proceedings have not yet resulted in an order. Additionally, there is a suspension of the license under the Foreign Contribution (Regulation) Act, 2010, which is being addressed through a separate writ action.

Issue 3: Escaped Income and Discrepancies
The escaped income has been quantified differently in various orders, with discrepancies noted between the income and expenditure account of the AY in question. The petitioner has registered a net loss, indicating a misalignment between the purportedly escaped income and the order passed under Section 148A(d) of the Act.

Conclusion:
Given the discrepancies and the need for further examination, the court has issued notice to the respondent/revenue. The respondent has accepted the notice, and the counter-affidavit is to be filed within eight weeks, with a rejoinder, if any, to be filed before the next hearing date. The matter is listed for further proceedings on 13.12.2023.