Delhi High Court
Care Today Fund And Anr. vs Director General Of Income Tax on 14 May, 2007
Author: M B Lokur
Bench: M B Lokur, V Gupta
JUDGMENT
Madan B. Lokur, J.
1. Rule D.B.
2. The Petitioner is aggrieved by an order dated 19th December, 2005 passed by the Director General of Income Tax (Exemptions), New Delhi bearing F. No. DGIT(E)/154/ND/50/2005-06/1103.
3. The impugned order has been passed by the Director General of Income Tax (Exemptions) under Rule 18AAAA of the Income Tax Rules read with Section 12(3) of the Income Tax Act, 1961.
4. The assessed is undoubtedly a charitable institution. According to the assessed, it received donations from Indian sources as well as from foreign sources towards relief work to be carried out consequent to the earthquake in Gujarat in January, 2001.
5. The donations were received between 26th January, 2001 and 30th September, 2001 and the amounts received were required to be utilised for earthquake relief on or before 31st March, 2004. If the amounts were not utilised before that date, then the requirement in law was to have the amounts transferred to the Prime Minister's Relief Fund, if the assessed desired to get exemption from income tax under Section 80G of the Income Tax Act, 1961.
6. According to the Petitioner, it received over Rs. 3 crores from Indian and foreign donors out of which an amount of Rs. 40,74,666/- was not utilised for earthquake relief. According to the assessed, the unutilised amount was attributable to foreign donations and from persons who were not assesseds in India.
7. The Petitioner filed the requisite details in Form No. 10AA before the competent authority and the form was signed by the chartered accountant of the Petitioner. A note was appended to the form in which it was mentioned that the management was of the view that the amount of Rs. 40,74,666/- received from foreign donations does not qualify for the purpose of Section 12 or Section 10(23C) of the Income Tax Act, 1961. It was also stated that the amount is being shown as taxable as a measure of abundant caution.
8. On the basis of the information contained in Form 10 AA, the Director General of Income Tax (Exemptions) appears to have passed an ex-parte order against the Petitioner which was subsequently recalled and a hearing was then given to the Petitioner which resulted in the impugned order dated 19th December, 2005.
9. In the writ petition filed before us, the Petitioner has placed on record some documents, such as the list of foreign donors who, according to the Petitioner, are not assesseds in India. It is submitted by learned Counsel that the amounts unutilised but attributable to these foreign donors are not liable to tax. It is also submitted that no certificates under Section 80G of the Act were issued by the Petitioner to these persons.
10. Since some fresh material (which is quite relevant) has been placed before us which ought to have been placed before the Director General of Income Tax (Exemptions), we are of the opinion that the issues involved ought to be reconsidered by the Director General of Income Tax (Exemptions). Learned Counsel for the Petitioner submits that the audited accounts of the Petitioner are also quite relevant and these were also not before the Director General and that they may also be taken into account by the Director General of Income Tax (Exemptions) while dealing with the case of the Petitioner.
11. If the Petitioner wishes to rely upon these and other materials, the proper course would be to file them before the Director General of Income Tax (Exemptions) since we cannot take them on record at this stage.
12. It has been submitted by learned Counsel for the Revenue that the order dated 19th December, 2005 is unassailable and is based on the material placed before the Director General of Income Tax (Exemptions). He further submits that the form signed by the chartered accountant is binding on the Petitioner and the note which reflects the opinion of the management rightly cannot be taken into account.
13. We do not propose to go into these issues since we are of the view that in the light of the material now placed before us it would be appropriate for the Director General of Income Tax (Exemptions) to de novo adjudicate the matter. We are taking this view only because the Petitioner is admittedly a charitable institution and it has received donations for a laudable purpose and a major part of these donations have been utilised for the purpose of rehabilitation of the victims of the Gujarat earthquake. It is for this reason that we feel that another opportunity should be granted to the Petitioner so that, since it is admittedly a charitable institution, it should not unnecessarily be taxed on account of full facts not being placed before the competent authority.
14. We, therefore, direct the Director General of Income Tax (Exemptions) to grant a hearing to the Petitioner and pass a fresh order under Rule 18 AAAA of the Income Tax Rules read with Section 12(3) of the Income Tax Act, 1961. The Petitioner will place on record, within four weeks, all the material that it seeks to rely upon, the Petitioner will not unduly delay the proceedings by requesting for an adjournment. All the issues arising in the impuged order dated 19th December, 2005 may be reconsidered by the Director General of Income Tax (Exemptions) de novo.
15. On 3rd April, 2006 we had stayed the operation of the order dated 19th December, 2005, and by an order dated 15th September, 2006 we had also stayed the reassessment proceedings. In view of our order today, the period of limitation for completing the reassessment proceedings shall stand extended and learned Counsel for the Petitioner does not raise any objection in this regard.
16. The Petitioner will appear before the Director General of Income Tax (Exemptions) for directions on 18th June, 2007 at 11.00 AM and on that date the Director General of Income Tax (Exemptions) may fix the hearing on any date convenient to him.
17. With the above directions the writ petition and all pending applications are disposed of.
18. dusty
