9911796707
TMI Blog1993 (3) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 in column No. 1 of Schedule III of the notification issued by the Central Government on May 28, 1963. A copy of the memorandum of association of the petitioner-company is exhibit P-4. This original petition is prompted by the proceedings taken by respondents Nos. 1 and 2 under the Income-tax Act, 1961 ("the Act"), apparently with a view to ascertain whether the income, if any, of the petitioner is liable to be assessed under the said Act. The petitioner was assessed to tax under the Act for the year 1989-90 on an income of Rs. 5,910 with tax liability of Rs. 2,955 which was paid. It is said that the petitioner is facing loss in the year 1990-91. The petitioner filed an application, exhibit P-5, dated December 27, 1991, before the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accountant appeared, when it was alleged that he was abused for working with the petitioner-company. The original petition does not disclose what exactly was the work transacted when the chief accountant appeared. But the original petition followed soon thereafter on November 16, 1992, with a prayer for declaration that the petitioner is a Nidhi (mutual concern) entitled to exemption from income-tax "for its profits" and for a direction to respondents Nos. 1 and 2 to dispose of the applications exhibits P-5 and P-6 and also to quash the notices exhibits P-7 and P-10 series. This court admitted the original petition and directed respondents Nos. 1 and 2 not to take further action pursuant to exhibits P-7 and P-10 series of notices without di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y exhibit P-17 and produced copies of these documents as exhibits P-16 and P-17 in this case along with C. M. P. No. 2596 of 1993. Since the respondents sought for vacating the stay, the original petition itself was taken up and heard. A counter-affidavit has been filed by the first respondent in which, while stating that he was not expressing any final opinion on the point and that the question of the petitioner's liability will have to be considered only on an examination of all the relevant records and evidence in the case, he has stated that the certificate under section 620A does not ipso facto mean that the assessee is a mutual benefit society under the Income-tax Act. That matter has to be considered independently and on merits. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat section 620A of the Companies Act does is to enable the Central Government by a notification in the Gazette to direct that the provisions of the Act, specified in the notification shall not apply to any Nidhi or mutual benefit society or that it shall apply subject to such exceptions, modifications or adaptations as may be specified in the notification. Since such a notification has been issued by the Central Government, it must be taken that the petitioner is a Nidhi and, hence exempted. In other words, the extreme contention taken is that the notification issued by the Central Government is binding on the Income tax Officer and he cannot thereafter make any enquiry into the assessability or otherwise of the petitioner's income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pected to function as happened in the very case cited by the petitioner of Kumbakonam Mutual Benefit Fund, where the share holders were entitled to participate in the profits as and when dividend was declared even though they had not taken any loans from the benefit fund in question. Or it may be that the Nidhi in question may not con form to the prescriptions of a mutual fund and, therefore, its income may be assessable despite its being styled a Nidhi. These are all matters for investigation. Even the authorities under the Companies Act may be entitled to take proceedings if the company in question does not function as a Nidhi should. The jurisdiction of the Income-tax Officer under the Income tax Act, 1961, is plenary and he has got all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be decided only after inspection of the documents and after considering the facts of the case. The first respondent had every reason to initiate proceedings for another reason as well. The petitioner had admittedly been assessed under the Act for the year 1989-90. The assessment became final and the petitioner paid the tax. If that be so, the first respondent was definitely entitled to investigate whether there was any change of circumstance which will justify the petitioner's claim for exemption made in exhibits P-5 and P-6. The petitioner has a case that the first respondent is taking a vindictive attitude. I am sure that the first respondent will keep an open and fair mind as he has purported to do in the counter-affidavit and co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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