2002 (1) TMI 60 - HC - Income Tax

Summary

Issues Involved:
1. Validity of reassessment proceedings initiated u/s 147 of the Income-tax Act.
2. Entitlement of the petitioner-trust to exemption u/s 11 of the Income-tax Act.
3. Allegations of mala fide intentions behind issuing notices u/s 148.
4. Delay and laches in filing petitions.
5. Acquiescence by the petitioner.

Summary of Judgment:

1. Validity of Reassessment Proceedings Initiated u/s 147:
The Tribunal quashed the reassessments for the assessment years 1988-89 to 1990-91 due to the absence of recorded reasons and lack of fresh facts or material, deeming the reassessments illegal and without jurisdiction. The Tribunal upheld that the petitioner-trust is a charitable institution u/s 11(1) and entitled to exemption u/s 11. The High Court noted that the reasons recorded by the respondent for reopening assessments were contradictory and did not establish any failure on the part of the petitioner to disclose material facts. Hence, the reassessment proceedings were invalid.

2. Entitlement to Exemption u/s 11:
The Tribunal's order confirmed the petitioner-trust's entitlement to exemption u/s 11 for the assessment years 1988-89 to 1990-91, subject to conditions regarding application and utilization of income as per sections 11 to 13. The High Court found no failure on the petitioner's part to disclose material facts necessary for the assessment, thus supporting the Tribunal's view.

3. Allegations of Mala Fide Intentions:
The petitioner argued that the notices u/s 148 were issued to withhold refunds due to them, indicating mala fide intentions. The High Court observed undue haste in framing assessments and noted that the entire gross receipts were taxed against settled legal positions, supporting the petitioner's claim of mala fide actions by the respondent.

4. Delay and Laches in Filing Petitions:
The High Court rejected the respondent's contention regarding delay and laches, noting that the petitioner waited for the reasons recorded before filing the petitions. The court emphasized that waiting for reasons to be supplied is justified and does not deprive the petitioner of constitutional remedies.

5. Acquiescence by the Petitioner:
The High Court referred to the case of P.V. Doshi v. CIT, stating that an assessee cannot waive the fulfillment of mandatory conditions precedent, and participation in proceedings cannot confer jurisdiction where none exists. Thus, the petitioner's submission of returns and responses to notices did not amount to acquiescence.

Conclusion:
The High Court allowed the petitions, quashing the impugned notices dated January 9, 2001, issued u/s 148 for all assessment years. Consequently, all subsequent proceedings and assessment orders dated October 23, 2001, were set aside, and the respondent was directed to refund the taxes collected in pursuance of such assessment orders. No costs were imposed.