2019 (9) TMI 614 - HC - Income Tax

High Pitched Scrutiny Assessment - challenging the proceedings of the fourth respondent with consequential direction to the fourth respondent to pass speaking order - disallowing a portion of restricted project grants received from Compassion international - Petitioner is a Charitable Society registered under Section 12AA - HELD THAT - Local Committee, after considering the complaint filed by the petitioner, formed an opinion that the assessments for the subject matter Assessment Years cannot be termed as high pitched. As rightly pointed out by the learned Senior Standing Counsel for the respondents, the mechanism provided to approach the Local Committee is not in lieu of the appellate remedy and therefore, the rights and contentions of the assessee before the Appellate Authority in their appeal can very well be considered and decided by such Authorities notwithstanding the fact that the complaint filed by the petitioner before the Local Committee has resulted in passing the impugned communication. This Court is of the view that the rejection of the petitioner's complaint by the Local Committee will not prejudice the rights of the petitioner to pursue the appeal already pending before the Appellate Authority by raising all the grounds and that all the appeals pending before the Appellate Authority can be disposed of on merits and in accordance with law, after giving due opportunity of hearing to the petitioner. Writ petition is disposed of, by directing the fifth respondent/Appellate Authority to take up the appeals filed in respect of the Assessment Years 2010-11 to 2015-2016 and pass orders on the same on merits and in accordance with law, after giving due opportunity of hearing to the petitioner, uninfluenced by the report, if any sent by the said Local Committee.

Summary

Issues:
Challenging proceedings of the fourth respondent, direction for a speaking order, assessment orders for multiple years termed as high pitched, pending appeals before the Appellate Authority, complaint to Local Committee, rejection of complaint, rights of the petitioner.

Analysis:
The petitioner, a Charitable Society, challenged the proceedings of the fourth respondent regarding assessments for the years 2010-2016. The petitioner had filed returns and been assessed with nil income until the Assessment Year 2009-2010. Subsequent assessments raised tax demands, leading to appeals before the Commissioner of Income Tax (Appeal) and the Income Tax Appellate Tribunal. New additions were made by the Assessing Officer, challenging which the petitioner filed further appeals. While these appeals were pending, scrutiny assessments for the years 2013-2015 were initiated. The petitioner then filed a complaint to the Local Committee under instruction No.17 of 2015, claiming the assessments were high pitched. The Local Committee opined that the assessments were not high pitched, leading to the petitioner's writ petition.

The petitioner argued that the Local Committee should have passed a speaking order considering their grievances in detail. On the other hand, the respondents contended that the mechanism under instruction No.17 of 2015 is not an alternative to the appellate process, and the petitioner can raise contentions before the Appellate Authority. The Court noted that the petitioner had pending appeals before the Appellate Authority for the years in question. The Local Committee's rejection of the complaint does not prejudice the petitioner's right to pursue the pending appeals, as the Appellate Authority is the fact-finding body that must decide on merits and in accordance with the law.

The Court directed the Appellate Authority to consider and decide on the pending appeals for the years 2010-2016 on their merits and in accordance with the law, giving the petitioner a fair hearing. The Appellate Authority was instructed to do so within eight weeks from the date of the order, without being influenced by the Local Committee's report. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed.