TMI Blog2010 (11) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... The present writ petition has been filed under articles 226 and 227 of the Constitution of India seeking issuance of writ of certiorari quashing the order dated November 28, 2008, of the Director General of Income-tax (Exemptions) (in short, "the DGIT(E)") passed under section 10(23C)(via) of the Income-tax Act, 1961 (for brevity, "the Act"). 2. The facts of the present case are that the petitioner is a registered educational society (hereinafter referred to as "the petitioner-society") with its registered office at Delhi. The petitioner-society has been running an Ayurvedic Medical College, namely, J. D. Ayurvedic Medical College and Hospital situated at Bhankari, G. T. Road, Aligarh, Uttar Pradesh. The petitioner-society had made an application before the DGIT(E) seeking exemption under section 10(23C)(iv) and 10(23C)(via) of the Act. Later on at the petitioner-society's request the application was confined to seeking exemption under section 10(23C)(via) of the Act which provides exemption in respect of hospital or other institution for reception and treatment of persons suffering from illness. The DGIT(E,) after examining the relevant documents and other submissions of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(23C)(via) of the Act. She submitted that according to third proviso to section 10(23C)(via) of the Act, the prescribed authority granting exemption, had to ascertain as to whether the applicant applied its income wholly and exclusively to the objects for which it was constituted or established. She further submitted that in the present case the DGIT(E) examined the books of account including the donation account and salary registers and found them to be manipulated. She submitted that the DGIT(E) had rightly arrived at the finding that the activities of the petitioner-society were not genuine and charitable and the petitioner-society was being run for profitable purposes with huge siphoning off money of the petitioner-society. 9. Lastly, Ms. Bansal relied upon the decision of the Supreme Court in American Hotel and Lodging Association Educational Institute v. CBDT [2008] 301 ITR 86 (SC) to submit that even in cases where approval has already been granted, the prescribed authority is empowered not to renew or even withdraw the approval in case there is a violation of the provisions of the Act. She submitted that, therefore, the principle of res judicata does not apply to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record before the DGIT(E) all the evidence it had in its possession. 13. Further, we are in agreement with Ms. Prem Lata Bansal, learned counsel for the respondent, that the principle of res judicata is not applicable to the facts of the present case. We believe that not finding any discrepancy or inconsistency in earlier years while granting exemption under section 12A and registration under section 80G of the Act would not automatically entitle the petitioner-society to have approval under section 10(23C) in subsequent years. In income-tax matters, each assessment year is an independent year and the principle of res judicata, in general is not applicable. We may refer with profit the decision of the Supreme Court in Municipal Corporation of City of Thane v. Vidyut Metallics Ltd. [2007] 8 SCC 688, 694 ; [2007] 9 RC 521, 527, wherein it has been held as under : "18. So far as the proposition of law is concerned, it is well settled and needs no further discussion. In taxation matters, the strict rule of res judicata as envisaged by section 11 of the Code of Civil Procedure, 1908, has no application. As a general rule, each year's assessment is final only for that year a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasis supplied) 15. From a perusal of the papers and in particular the impugned order, it is apparent that the petitioner-society has neither maintained proper books of account nor proper receipts of donations. Also salaries are shown to have been paid to the employees even though they had resigned. Also the DGIT(E) cross examined the persons presented as witnesses by the petitioner-society and found their statements contrary to the records of the petitioner-society. Some of the relevant observations in the impugned order are reproduced hereinabove : "3 . . . Thus, the Mittal family has been shown to give donation to the society on 16 occasions. But, the donation receipt books of the applicant did not show a single receipt issued by the society to anyone in the Mittal family for the donations received . . . 4. Considering all these facts, it was obvious that the applicant's books of account were manipulated and its activities were not genuine and charitable . . . 6. However, the applicant filed the affidavits of the following persons but did not produce them for examination : (i) Dr. Anurag Dixit (ii) Sh. Sarvesh Kumar Further, it did not file any affi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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