The High Court of Kerala upheld the validity of notices issued under Sections 148 and 148A(d) of the Income Tax Act, 1961, which requires the trust to file an Income Tax Return (ITR) and participate in assessment proceedings.
The petitioner, Annie Thayil’s Religious and Charitable Trust is a charitable organisation represented by its Executive Trustee Sri. Shaiju Joseph Madassery.
The petitioner had failed to file an income tax return for the assessment year 2016-2017, despite having sold a property for Rs. 61,81,600 during that period. The Income Tax Department issued a notice under Section 148A(d) of the Income Tax Act, stating that income chargeable to tax had escaped assessment and provided relevant documents to support this claim.
In response to the notice, the petitioner filed a reply acknowledging its charitable status and the registration obtained under Section 12AA of the Income Tax Act, effective from the assessment year 2017-2018.
The petitioner trust, however, admitted to not having filed any returns before 2017-2018 and did not provide valid reasons for this lapse. Moreover, it failed to furnish details regarding the property transaction in question.
The Income Tax Officer, after considering the petitioner’s reply, issued an order under Section 148A(d) of the Income Tax Act. This order noted that the petitioner’s reply lacked proof or details to substantiate its claims of exemption or taxability. Consequently, the assessing authority concluded that a notice under Section 148 of the Income Tax Act was necessary, as income to the tune of Rs. 61,81,600 had escaped assessment for the assessment year 2016-2017. Subsequently, a notice under Section 148 of the Income Tax Act was issued.
Rather than complying with the notice and filing an ITR, the petitioner approached the Kerala High Court.
The petitioner was represented by P. J. Anilkumar, K. N. Sreekumaran and N. Santhoshkumar while the respondent revenue was represented by Christopher Abraham.
The single bench of Justice Dinesh Kumar Singh ruled that the authority had not violated statutory provisions by issuing notices under Section 148 and 148A(d) of the Income Tax Act.
The bench emphasised that the petitioner’s exemption claims could only be considered after filing an ITR and obtaining acceptance from the assessing authority.
The petitioner has been given an opportunity to rectify its non-compliance by participating in the assessment process and filing the required ITR.
The bench concluded that the petitioner must actively participate in the assessment proceedings in response to the notice. The bench was granted seven days to file its ITR in compliance with the notice and make claims regarding exemption as allowed by law. The assessing authority was directed to expedite the assessment proceedings in accordance with applicable laws.
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