2018 (11) TMI 52 - HC - Income Tax

Reopening of assessment - enormous donations received by the assessee - escapement of income from tax - Held that - Issue which is falling for consideration and determination in these proceedings is identical to that arising out of the challenge to the order dated 31st December, 2017, passed by the Assessing Officer for the Assessment Year 2015-16. That order is challenged in an appeal before the Commissioner of Income Tax (Appeals) by this very petitioner and the appeal is pending. The stand of the petitioner is common. We are of the firm opinion that in the event we express any views and either way on the contentions raised by Mr. Ganesh, they may prejudice the case of the petitioner in the pending appeal. Depending upon the view expressed by us, the petitioner would also not be in a position to then assail the notice impugned in this writ petition. In the light of these plural remedies and given the nature of the mixed issues involved, we are of the opinion that this writ petition need not be entertained. Any expression of opinion on disputed factual matters would prejudice the case of either side. The issues are not purely legal, but are mixed, namely, of fact and law. Whether the ingredients of section 115BBC(2) are fulfilled or satisfied will have to be considered in the backdrop of the factual assertions of the petitioner. Similarly, the language of section 80G (5) and section 11 has any bearing on the case will have to be decided in the backdrop of the petitioner s activities. The petitioner itself is asserting that its activities are mixed. It is a mixed purpose Trust. The writ petition is, therefore, disposed of by clarifying that this Court has kept open the challenge to be raised in appropriate legal proceedings. The writ petition stands disposed of accordingly.

Summary

Issues Involved:
1. Validity of the notice for reopening the assessment for the Assessment Year 2013-14.
2. Jurisdictional issue regarding the reopening of assessment.
3. Whether the income chargeable to tax has escaped assessment.
4. The applicability of Section 115BBC of the Income Tax Act, 1961.
5. The availability of alternate and efficacious remedies to the petitioner.

Detailed Analysis:

1. Validity of the Notice for Reopening the Assessment for the Assessment Year 2013-14:

The petitioner, The Shri Saibaba Sansthan Trust (Shirdi), challenged the notice dated 23rd March 2018, issued by the Deputy Commissioner of Income Tax (Exemptions) for reopening the assessment for the Assessment Year 2013-14. The notice was based on the belief that the income chargeable to tax had escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. The petitioner argued that the notice lacked tangible material and was merely a change of opinion.

2. Jurisdictional Issue Regarding the Reopening of Assessment:

The petitioner contended that there was no basis to infer escapement of income and that the reopening of the assessment was without jurisdiction. The objections raised by the petitioner were rejected by the authorities, leading to the filing of this writ petition under Article 226 of the Constitution of India. The petitioner argued that the Assessing Officer did not have any occasion to apply his mind to various issues during the original assessment.

3. Whether the Income Chargeable to Tax Has Escaped Assessment:

The Assessing Officer found that the Annual Information Return (AIR) for the Assessment Year 2013-14 showed cash deposits amounting to ?257 crores, which were not offered to tax under Section 115BBC of the IT Act. The petitioner argued that the donations received were not accompanied by any specific direction and thus should not be treated as anonymous donations under Section 115BBC. The petitioner relied on the judgment of the Income Tax Appellate Tribunal in the case of Gurudev Siddhapeeth vs. Income Tax Officer, which stated that Section 115BBC was enacted to tax unaccounted income shown as donations received by educational and medical institutions run by a charitable/religious trust.

4. The Applicability of Section 115BBC of the Income Tax Act, 1961:

The petitioner argued that as a mixed-purpose trust (both charitable and religious), the donations received should not be taxed under Section 115BBC. The petitioner relied on various judgments and circulars, including the CBDT Circular dated 28th December 2006, which supported their claim. The petitioner also referred to the decision of the High Court of Delhi and the judgment of the High Court reported in the case of Commissioner of Income Tax (Exemptions) vs. Bhagwan Shree Laxmi Naraindham Trust.

5. The Availability of Alternate and Efficacious Remedies to the Petitioner:

The court noted that the petitioner had an alternate and equally efficacious remedy of approaching the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The court referred to its earlier decision in Writ Petition No. 395 of 2018, where it held that the issues raised were mixed questions of fact and law and should be decided by the appellate authorities. The court emphasized that it would not be safe and proper to go into such mixed questions in the limited jurisdiction under Article 226 of the Constitution of India.

Conclusion:

The court disposed of the writ petition, clarifying that the petitioner should pursue the available appellate remedies. The court did not express any opinion on the merits of the case, leaving the issues to be decided by the appellate authorities. The court noted that any expression of opinion on disputed factual matters would prejudice the case of either side, and the issues involved were not purely legal but mixed questions of fact and law. The petitioner was advised to comply with the requisition in the letters and file a return of income, with the option to challenge any adverse reassessment order in appeal.