THARAD JAIN YUVAK MANDAL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) Heard learned Counsel for the parties.

(2.) The petitioner is a trust assessed to income tax in the status of Association of Persons. The petitioner filed return of income for A. Y. 1985 -86 declaring gross total income of Rs. 2,52,826 and deducting therefrom a sum of Rs. 1,50,785 being the expenses incurred on the objects of the trust as well of capital nature. Out of the remaining balance of Rs. 1,02,041, the petitioner had transferred an amount of Rs. 90,000 to Upashraya Bhavan Fund Account which was an earmarked fund and claimed the said amount as exempt from income tax under Section 11(2) of the Act. The claim of the assessee was allowed. It appears that thereafter objection was raised by the audit informing the department that the trust has not obtained permission of the AO under Section 11(3 -A) of the Act and as such exemption under Section 12 should not have been allowed. The period for taking remedial action, on receiving audit objection, under Section 263, had expired and the concerned ITO and Deputy Commissioner, having not suggested action under Section 154, recourse to Section 147 was suggested by the Dy. Commissioner of income -tax (Audit). That is apparent from Annexure -I appended to the petition which is a letter of the Audit Officer and Annexure -J which are the contents of the letter of Dy. CIT (Audit), Ahmedabad. In pursuance thereof, notice under Section 148 was issued initiating proceedings for reassessment on 2 -1 -91. The petitioner challenged that notice by Special Civil Application No. 1228/91. During the pendency of that proceedings, notice dated 2 -1 -91 was withdrawn and the court recorded in its order dated 11 -3 -91, while disposing of SCA No. 1228/91, that "the impugned notice is intended to be withdrawn with liberty to issue a fresh notice in accordance with law. In view of the fact that the impugned notice is intended to be withdrawn, the petitioner does not intend to press the present application by reserving right to take appropriate action if needed against the proposed notice."

(3.) Thereafter, the impugned notice was issued on 29 -7 -91 under Section 148 of the Act. On demand, reasons that have been recorded for assuming jurisdiction to initiate proceedings under Section 147 were supplied to the petitioner, which read as under: