2018 (2) TMI 438 - HC - Income Tax

Exemption u/s 10(23C)(vi) - Reopening of assessment - Held that - The assessee is entitled to seek reasons for reopening of the assessment and if such request is made, the assessing officer is bound to furnish the reasons for reopening and on receipt of the reasons for reopening, the petitioner is entitled to submit their objections, which have to be dealt with by the assessing officer and an order has to be passed thereof. It is thereafter open to the assessee to question the order, if they are so advised. Therefore, the present writ petitions are premature in the sense that the petitioner has not sought for the reasons for reopening of the assessment. Thus, for the above reasons, this Court is inclined to dispose of the writ petitions with the following direction - The petitioner/University through the competent authority in terms of Tamil Nadu Act 20 of 2013 is directed to address the respondent requesting for reasons for reopening and the respondent is directed to furnish the reasons for reopening giving sufficient time to the petitioner/University to submit their objections to the reopening proceedings. On receipt of the objections, the respondent shall consider the same and pass a speaking order on merits and in accordance with law and communicate the same to the petitioner.

Summary

Issues:
1. Reopening of income tax assessment for assessment years 1999-2000 to 2004-05 by the respondent.
2. Validity of exemption under the Indian Income-tax Act, 1922, and Section 10(23C)(vi) of the Income Tax Act, 1961.
3. Petitioner's right to seek reasons for reopening of assessment under Section 148 of the Income Tax Act, 1961.

Analysis:
1. The petitioner, a University, challenged notices issued by the respondent to reopen income tax assessments for specific years. The High Court noted that due to the University being taken over by the Government under the Annamalai University Act, 2013, the administration is now governed by the new Act. Consequently, the Registrar or Competent Authority under the 2013 Act should handle further proceedings, rendering the current issues raised by the petitioner potentially unnecessary.

2. Regarding the exemption claimed under the Indian Income-tax Act, 1922, the Court highlighted that the petitioner's benefit of exemption status was not adequately supported with documentation in the filed papers. The Court expressed uncertainty about the perpetual nature of this exemption, especially considering the University's takeover by the Government. Additionally, the petitioner had applied for exemption under Section 10(23C)(vi) of the Income Tax Act, and final orders were pending.

3. The respondent clarified that no exemption under Section 10(23C) had been granted yet. The Court referenced the guidelines from the Supreme Court's decision in GKN Driveshafts case, emphasizing the assessee's right to request reasons for reopening an assessment under Section 148 of the Income Tax Act. The Court deemed the present writ petitions premature as the petitioner had not sought reasons for the assessment's reopening.

In conclusion, the High Court directed the University, through the competent authority as per the Tamil Nadu Act 20 of 2013, to request and receive reasons for the assessment's reopening. The respondent was instructed to provide sufficient time for the University to submit objections, following which a decision based on merits and law should be communicated. The interim injunction granted to the petitioner was to remain in force until these procedures were completed, with no costs imposed, and connected miscellaneous petitions were closed.