A division bench of the Kerala High Court has held that the exemption under Section 11 read with Section 12AA of the Income Tax Act is one that is subject to certain conditions, and the question to be decided in the proceedings under Section 148 of the Income Tax Act is essentially as to whether the unaccounted transactions and the alleged escaped income would merit an exemption or not. The bench observed that It is for the said examination on merits that the proceedings under Section 148 of the Income Tax Act have been initiated. The court refused to intervene with the proceedings initiated to ascertain the same.
The Writ Petition was filed challenging order of the Income Tax Department under Section 148A(d) of the Income Tax Act. A perusal of the said order clearly reveals that the appellant herein, who is an assessee under the Income Tax Act and registered under Section 12AA of the Income Tax Act in its capacity as St. John the Baptist Church, a religious institution, was being investigated on account of certain cash loans and repayments for the assessment year 2016-2017.
Assessee contended that the alleged escaped income, even if taken into account, would not attract any tax liability since the appellant enjoys an exemption in terms of Section 12AA of the Income Tax Act.
Revenue contended that the assessee had not accounted for certain cash loans and repayments for the assessment year 2016-2017.Revenue contended that there had been a violation of the provisions of Section 12AA of the Income Tax Act, and a possible violation of Section 269 SS and 269 T of the Income Tax Act that the notice under Section 148A was served on the appellant.
The division bench comprising A.K.Jayasankaran Nambiar and V.G.Arun held that “ the exemption under Section 11 read with Section 12AA of the Income Tax Act is one that is subject to certain conditions, and the question to be decided in the proceedings under Section 148 of the Income Tax Act is essentially as to whether the unaccounted transactions and the alleged escaped income would merit an exemption or not. It is for the said examination on merits that the proceedings under Section 148 of the Income Tax Act have been initiated. At this stage, where what is impugned is Ext.P9 order under Section 148 A(d), we see no reason to interdict those proceedings at the instance of the appellant”
Assessee was represented by K.N.Sreekumaran, N.Santhoshkumar and P.J. Anilkumar. Revenue was represented by Jose Joseph.
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