2023 (1) TMI 71 - HC - Income Tax

Reopening of assessment u/s 147 - Exemption u/s 11 - exemption registration U/s 12AA pending - request of the petitioner to set aside the assessment orders and remand the matter to the 1st respondent - as argued that the assessment orders made by the 1st respondent without acceding to the request of the petitioner that their appeal relating to issuance of exemption certificate u/s 12A was pending, hence the principles of natural justice were denied to the petitioner - whether there are merits in the writ petition to allow? - HELD THAT - Admitted facts in these cases are that while the 1st respondent passed assessment orders on 30.03.2022, the appeal filed by the petitioner was allowed thereafter on 07.04.2022 by the ITAT, Visakhaptnam and the said appellate order was given effect by the department and registration certificate U/s 12AA was issued as per the proceedings dated 26.10.2022. It is true, as contended by learned Standing Counsel no exemption was granted by the date of passing of the assessment orders. However, such exemption was granted within short time thereafter. The petitioner has requested the 1st respondent to keep the proceedings on hold. Due to close of Financial Year, it appears the 1st respondent passed the assessment orders. This Court is of the considered view that in the interest of justice the request of the petitioner to set aside the assessment orders and remand the matter to the 1st respondent shall be considered without expressing any opinion on the merits of the petitioner s case. Accordingly, without expressing any opinion on merits of the petitioner s case, the writ petitions are allowed and the impugned assessment orders dated 30.03.2022 for the assessment years 2013-14, 2015-16, 2016-17, 2017-18 and 2018-19 passed by the 1st respondent are hereby set aside and the matters are remitted back to the 1st respondent with a direction to issue notices to both parties and afford an opportunity of hearing to them.

Summary

Issues involved:
1. Validity of assessment orders passed by the Assistant Commissioner of Income Tax for the assessment years 2013-14, 2015-16, 2016-17, 2017-18, and 2018-19.
2. Denial of principles of natural justice to the petitioner.
3. Grant of exemption certificate under Section 12A after the assessment orders were passed.

Analysis:
1. The petitioner, a university established for educational purposes and substantially funded by the government, challenged the assessment orders passed by the Assistant Commissioner of Income Tax. The petitioner contended that as a non-profit educational institution, it was exempt from tax under Section 10(23C)(iiiab) of the Income Tax Act. The petitioner also highlighted that it had applied for registration under Section 12AA of the Act, which was rejected initially but later granted after an appeal. The petitioner argued that the assessment orders were arbitrary and illegal. The court acknowledged the subsequent grant of exemption and held that the assessment orders were passed without considering the pending appeal for exemption. The court set aside the assessment orders and remanded the matter to the Assistant Commissioner for a fresh assessment with an opportunity for both parties to present their case.

2. The petitioner raised the issue of denial of principles of natural justice as the Assistant Commissioner proceeded with assessments without granting a personal hearing or considering the pending appeal for exemption. The court noted the subsequent grant of exemption and held that the assessment orders were passed without allowing the petitioner a fair opportunity to present its case. The court emphasized the importance of natural justice and directed the Assistant Commissioner to afford an opportunity of hearing to both parties before passing a fresh order.

3. The court addressed the issue of the grant of exemption certificate under Section 12AA after the assessment orders were passed. The court observed that while no exemption was granted at the time of assessment, the exemption was subsequently allowed. The court noted that the petitioner had requested to keep the proceedings on hold, but the assessment orders were passed due to the close of the financial year. Considering the subsequent grant of exemption, the court set aside the assessment orders and remanded the matter for a fresh assessment, without expressing any opinion on the merits of the petitioner's case. The court emphasized the importance of ensuring justice and directed the Assistant Commissioner to consider the documents and arguments presented by both parties in accordance with the law.

In conclusion, the High Court of Andhra Pradesh allowed the writ petitions, set aside the assessment orders for the mentioned assessment years, and remitted the matter back to the Assistant Commissioner for a fresh assessment with a fair opportunity for both parties to present their case.