The Kerala High Court directed to file income tax returns (ITR) as the acceptance and payment of loan in cash in violation of Section 12AA of the Income Tax Act, 1961.
The petitioner claimed to be a religious institution. Petitioner has been registered under Section 12AA dated 21.09.2007 w.e.f. 01.04.2006. The petitioner has been filing return of its income. The Assistant Director of Income Tax (Investigation), Thrissur had uploaded certain information in respect of financial transactions of the petitioner for the relevant assessment year 2016-17.
A perusal of the data provided by the Assistant Director of Income Tax (Investigation) would reveal that the petitioner had accepted (interest free) cash loans (IFL) amounting to Rs. 1,87,69,000/- during the financial year 2015-16 relevant to the assessment year 2016-17 and, out of the said amount Rs.1,69,65,611/- has been repaid by cash during the said financial year itself. It is also evident from the data collected that unpaid loan amount of Rs. 19,30,000/- was outstanding on 31.03.2016 which had also been repaid by cash during the financial year 2016-17.
The competent authority was of the opinion that the said transaction in cash was a clear case of violation of the provisions of registration under Section 12AA of the Income Tax Act and these transactions attract penal provisions under Section 269SS and 269T of the Income Tax Act.
The petitioner/assessee has also not confirmed whether these acceptance and repayment have reflected in their audited financials. Instead, the petitioner had requested to exempt him from 148 proceedings as the Commissioner of Income Tax has initiated separate penalty proceedings.
A Single Bench of Justice Dinesh Kumar Singh observed that “Considering the aforesaid fact that the petitioner’s alleged acceptance of Rs. 1,87,69,000/- in cash and repayment of the same was in clear violation of Section 12AA and the assessing authority has been of the opinion that prima facie the said amount was an income of the petitioner which had escaped assessment from payment of the tax.”
“The petitioner is required to file his return in response to the notice under Section 148 and if he files the return, the assessing authority shall examine the returns and will finalise the assessment order after hearing the petitioner. At this stage, I do not find any ground to interfere with the impugned order” the Court concluded.
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