2019 (1) TMI 1395 - SC - Income Tax

Reopening of assessment - taxability of anonymous donations received in Hundies maintained by the temple trust under Section 115BBC - eligible reason to believe that income had escaped assessment - Held that - The grievance that the High Court ought to have dealt with the challenge to the reopening of the assessment on the ground that there was no reason to believe that income had escaped assessment has to be appreciated in the context of the facts of the present case. The applicability of Section 115BBC is the central issue which is pending before the CIT (A) for Assessment Year 2015-16. In this view of the matter, we are of the view that the High Court has justifiably held that it would not be appropriate to exercise jurisdiction under Article 226 when the same issue is already pending before the CIT (Appeals) for Assessment Year 2015-16. As Mr. Ganesh urged that if an order of assessment is passed in the present case, the appellant would inevitably be relegated to pursue the remedies to seek a stay of recovery and hence it would be appropriate if the High Court is directed to decide the issue afresh we are not inclined to accede to that submission. We find that the High Court was justified in deciding not to enter upon a decision on an issue which is pending before the Commissioner of Income Tax (Appeals). Thus we direct as Assessing Officer shall complete the assessment for Assessment Year 2013-14 pursuant to the notice for reassessment which has been issued on 23 March 2018, in accordance with law. The issue as to whether the notice under Section 148 for reopening the assessment for Assessment Year 2013-14 is valid is kept open to be urged in appropriate proceedings after the assessment order is passed

Summary

Issues involved:
1. Validity of notice for reopening assessment for Assessment Year 2013-14 under Section 148 of the Income Tax Act 1961.
2. Taxability of anonymous donations received by a temple trust under Section 115BBC of the Income Tax Act, 1961.
3. Jurisdiction of the High Court under Article 226 when the issue is pending before the Commissioner of Income Tax (Appeals).
4. Stay of recovery during pendency of appellate proceedings.

Detailed Analysis:
1. The Supreme Court dealt with the issue of the validity of the notice for reopening the assessment for Assessment Year 2013-14 issued by the Deputy Commissioner of Income Tax. The appellant challenged the notice, arguing that the trust is of a mixed character as per Sections 19 and 21 of the Shri Saibaba Sansthan Trust (Shirdi) Act, 2004. The appellant contended that anonymous donations received without specific directions do not fall under the statutory provisions. The Additional Solicitor General supported the High Court's judgment, stating that any determination on the issue would affect the pending appeal before the Commissioner of Income Tax (Appeals). The Supreme Court held that it would not be appropriate to exercise jurisdiction under Article 226 when the same issue is already pending before the Commissioner of Income Tax (Appeals).

2. Another issue addressed by the Supreme Court was the taxability of anonymous donations received by the temple trust under Section 115BBC of the Income Tax Act, 1961. The appellant argued that such donations do not fall within the ambit of the statutory provisions. The Court noted that the central issue of the applicability of Section 115BBC is pending before the Commissioner of Income Tax (Appeals) for Assessment Year 2015-16. The Court upheld the High Court's decision not to enter into a decision on this issue while it is pending before the Commissioner of Income Tax (Appeals).

3. The Court also examined the jurisdiction of the High Court under Article 226 in cases where the issue is already pending before the Commissioner of Income Tax (Appeals). The Court emphasized that it would not be appropriate to interfere when the same issue is under consideration before the appellate authority. The Court directed that the assessment for Assessment Year 2013-14 be completed in accordance with the law, and the challenge to the notice for reopening be kept open for appropriate legal proceedings after the assessment order is passed.

4. Lastly, the Supreme Court addressed the issue of stay of recovery during the pendency of appellate proceedings. The Court directed that the appellant should be granted interim protection similar to the one provided by the High Court for Assessment Year 2015-16. It was further ordered that both the appeals for Assessment Years 2013-14 and 2015-16 should be heard together by the Commissioner of Income Tax (Appeals), allowing the appellant to pursue its remedies in accordance with the law. The appeal was disposed of with no costs.