2019 (3) TMI 61 - HC - Income Tax

Benefit of exemption under Section 10(23C)(vi) as well as under Section 11 rejected - validity of assessment rejecting benefit - stay petition - HELD THAT - Argument advanced that the assessments themselves are invalid in the light of the proviso to Section 143(3) that casts a mandate upon the Assessing Officer to frame an assessment denying the benefit of Section 10(23C) of the Act unless the officer had intimated the Central Government or the prescribed authority the specifics of the contravention of the statutory provision and such approval had consequently been withdrawn and in the light of the fact that the Miscellaneous Applications of the Petitioner are pending before the Tribunal we do not propose to delve upon this legal submission at this juncture as it will, no doubt, be considered by the Tribunal while disposing the Miscellaneous Applications, in accordance with law. Stay application - recovery proceedings - HELD THAT - With the express consent of learned counsel before direct the Tribunal to list the stay applications on Friday, 22.02.2019, and dispose the same after hearing the parties and in accordance with law. No separate notice of hearing need be issued by the Registry of the Income tax Appellate Tribunal and both learned counsel before me will instruct the parties to appear for the hearing of the stay petitions on 22.02.2019 and cooperate in their conduct and disposal. Attachment of the movables, it is brought to my notice that the buses are used to facilitate the movement of students between their homes and the college. Students should not be made to suffer on account of the conflict inter se the petitioner and the Income Tax Department. Thus, while the attachment dated 07.02.2019 will continue, the Department is directed to release the buses to the petitioner solely for use in college activities.

Summary

Issues:
1. Cancellation of registration under Section 12AA and approval under Section 10(23C)(vi) of the Income Tax Act.
2. Coercive recovery action initiated by the Tax Recovery Officer.
3. Attachment of movables belonging to the petitioner by the Income Tax Department.
4. Validity of assessment orders for assessment years 2010-2011 and 2011-2012.
5. Request for a declaration that the assessments are invalid in law.
6. Direction to the Tax Recovery Officer not to initiate further coercive proceedings.

Analysis:
1. The petitioner, a trust managing an Engineering College, had its registration under Section 12AA and approval under Section 10(23C)(vi) cancelled due to a search conducted by the Income Tax Department. Appeals were filed challenging the cancellation and assessments, leading to a series of legal proceedings up to the Tribunal level.

2. Despite pending appeals, the Tax Recovery Officer initiated coercive recovery action, rejecting the petitioner's request for a settlement proposal. The petitioner sought relief from coercive action and lifting of attachments made by the Tax Recovery Officer.

3. The Income Tax Department attached movables belonging to the petitioner, specifically four buses used for student transportation. The court directed the release of buses for college activities, ensuring students were not affected by the conflict.

4. The petitioner argued that the assessment orders for the relevant years were invalid under Section 143(3) of the Income Tax Act. The court acknowledged this argument but deferred detailed consideration as the matter was pending before the Tribunal.

5. The petitioner requested a declaration that the assessments were invalid, citing non-compliance with mandatory provisions of the Act. The court refrained from delving into this issue, considering the pending proceedings before the Tribunal.

6. The court directed the Tribunal to expedite the hearing and disposal of the Stay Petitions filed by the petitioner, emphasizing the need for swift resolution to prevent further coercive action by the Tax Recovery Officer. The court did not interfere with the Tribunal's jurisdiction to decide on the pending matters.

This comprehensive analysis highlights the key legal issues, arguments presented, and the court's directions in the judgment delivered by the Madras High Court.