Chattisgarh High Court
Chhattisgarh Rajya Open School vs Union Of India on 7 February, 2023
WA No. 38 of 2023
Chhattisgarh Rajya Open School Versus Union of India & ors.
1
NAFR
HIGH COURT OF CHHATTISGARH, BILASPUR
WA No. 38 of 2023
Chhattisgarh Rajya Open School, Madhyamik Siksha Mandal, Pension
Bada, Raipur Chhattisgarh Pin-492001
---- Appellant
Versus
1. Union of India Through Secretary, Central Board Of Direct Taxes,
North Block, New Delhi
2. Chief Commissioner of Income-Tax, Aaykar Bhawan, Civil Lines,
Raipur Chhattisgarh - 492001
3. Commissioner of Income - Tax (Exemption), Income Tax Office, Metro
Walk Building, E-5, Arera Colony, Bittan Market, Bhopal, Madhya
Pradesh - 462-016
4. Assessment Unit, National Faceless Assessment Centre, Income - Tax
Department, Through Principal Commissioner Of Income-Tax, North
Block, New Delhi
5. Deputy / Assistant Commissioner Of Income - Tax Exemption Circle,
Income Tax Office, Metro Walk Building, E-5, Arera Colony, Bittan
Market, Bhopal, Madhya Pradesh - 462-016
---- Respondents
For Appellant : Mr. S. Rajeshwara Rao, Advocate along
with Shri Manoj Kumar Sinha, Advocate
For Respondents : Ms. Naushina Afrin Ali, Advocate
Hon'ble Shri Justice Goutam Bhaduri
Hon'ble Shri Justice N.K. Chandravanshi
Judgment on Board
Per Goutam Bhaduri, J.
07/02/2023
Heard.
1. The present appeal is against the order dated 25/11/2022 passed by
the learned Single Judge in WP (T) No.250 of 2022 wherein the
WA No. 38 of 2023
Chhattisgarh Rajya Open School Versus Union of India & ors.
order dated 17/09/2022 was under challenge which was passed
under Section 143 (3) read with Section 144 B of the Income Tax
Act.
2. Learned counsel for the appellant would submit that initially after
submission of return of income, scrutiny was opened and
thereafter show-cause notices were issued on 29/08/2022 &
09/09/2022. The appellant filed its reply on 12/09/2022. In the
show-cause certain income was proposed to be added. The
appellant filed its reply and the total assessment was worked out
to Rs. 9,84,42,228/-. It is contended by the appellant that while
such assessment was worked out, certain part of the assessment
comprised disallowance to confidential expenses. He would
further submit that part of that disallowance of confidential
expenses was not the part of show-cause, as such the appellant
could not respond to it and almost it amounted to assessment
without giving any show-cause to the particular subject of
disallowance of confidential expenses. For the said assessment it
amount to not hearing to the appellant, therefore, the rules of
natural justice were defeated. Consequently, the writ petition was
maintainable before the learned Single Judge despite the
alternative appellate remedy is available. He would further
submit that in order to arrest the recovery by way of stay as per
the Income Tax Act, the appellant would be required to deposit
20% of the demand. He would further submit that his claim in
WA No. 38 of 2023
Chhattisgarh Rajya Open School Versus Union of India & ors.
this petition is confined to disallowance of confidential expenses
to the extent of Rs.3,55,17,204/-.
3. Learned counsel for the respondent opposes the submission
advanced by learned counsel for the appellant and would submit
that the appellant has an efficacious alternative statutory remedy
under Section 246 (A) of the Income Tax Act, therefore, the order
passed by the learned Single Judge is well merited as the writ
petition directly would not lie before this Court.
4. After hearing both the parties and going through the order passed
by the learned Single Judge, since the issue is only confined to
disallowance of confidential expenses to the extent of
Rs.3,55,17,204/-, we would like to deliberate on this issue. The
perusal of the petition would show that after the show-cause
notice was lastly served on 09/09/2022 and when the reply was
filed on 12/09/2022, the issue of confidential expenses did not
surface, it only surfaced after the assessment was worked out.
Perusal of the assessment order (para 3.3) would show that the
expenditure incurred in name of confidential expenses was not a
part of the show-cause to be explained. It only figured in the final
assessment order and expense of Rs.3,55,17,204/- in name of
confidential expenses was disallowed. Therefore, we are of the
view that the appellant who confined his case to the above extent
should get an opportunity to explain the figure of actual
confidential expenses, which may subject to scrutiny by
WA No. 38 of 2023
Chhattisgarh Rajya Open School Versus Union of India & ors.
assessment and perusal of the paper. Without giving any
opportunity of hearing or giving any opportunity to explain,
disallowance of such amount may cause prejudice to the
appellant. Consequently, the order of the learned Single Judge is
modified to the extent that the respondent may serve the show-
cause notice to the appellant in accordance with the Income Tax
Act, whereby the disallowance of confidential expenses would be
a subject issue and the appellant on receipt of the show-cause shall
file their reply and may place all the necessary documents which
are in their possession. The aforesaid exercise i.e. issuance of
show-cause and hearing shall be concluded within the further
outer limit of two months from the date of receipt of the copy of
this order.
5. With the aforesaid observation, the writ appeal stands disposed of.
Sd/- Sd/-
(Goutam Bhaduri) (N.K. Chandravanshi)
Judge Judge
Ashu
