THANTHI TRUST Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) ALL these matters raise one and the same question of law. Therefore, we propose to deal with them under a common judgment.

(2.) THE facts leading to the writ appeals are as follows: THE appellant is a trust know as Thanthi Trust. This was created under an instrument of declaration of trust dated March 1, 1954. THE purpose of the trust was to found Daily Thanthi Newspaper as an organ of educated public opinion for the Tamil reading public to disseminate news and ventilate opinions on all matters of public interest through the said newspaper. THE appellant trust is an assessee on the file of the respondent. Its permanent account number is P.A. No. 47,005-AZ-5117. THE trust had been claiming exemption under section 4(3)(i) of the Indian Income-tax Act, 1922, from the assessment year 1955-56 onwards in respect of its income. Though there were several proceedings in relation to the claim for exemption, ultimately, the Income-tax Officer upheld the appellant's claim for exemption for the assessment years 1955-56 to 1961-62. After the coming into force of the Income-tax Act, 1961, exemption was gain claimed by the appellant under section 11 of this Act on the basis of the original trust deed. THE claim for exemption was upheld by the concerned Income-tax Officer for the year 1962-63 to 1967-68. For the assessment year 1968-69, the Income-tax Officer issued a notice under section 143(2) of the Act calling upon the appellant to produce its books of account relevant to the assessment year and also for the earlier years. This necessitated the appellant to file Writ Petition No.611 of 1969 contending that the said notice was without jurisdiction. During the pendency of this writ petition, the Income-tax Officer issued notices dated May 23, 1969, to the petitioner under section 148 of the Income-tax Act, 1961 (for short "the Act"). It was proposed to reopen the assessment for the earlier assessment years 1965-66 to 1967-68. It was stated that the officer has reason to believe that there has been escarpment of income chargeable to tax for the relevant assessment years. THE appellant filed Writ Petitions Nos. 1557 to 1559 of 1969 questioning the validity of the said no ices issued under section 148 of the Act. Later, the Income-tax Officer, Special Investigation Circle issued similar notices to the appellant under section 148 of the Act proposing to reassess the income for the assessment years 1956-57 to 1961-62. THEreupon, the appellant filed Writ Petitions Nos. 3352 to 3357 of 1969 raising the same grounds as were urged in Writ Petitions Nos, 1557 to 1559 of 1969. This court by order dated December 21, 1972, disposed of the writ petition holding that the reopening of the assessments for the assessment years 1956-57. 1958-59, 1960-61 and 1962-62 was not valid. However, the reopening of the assessments for the assessment years 1957-58, 1959-60, 1965-66, 1966-67 and 1967-68 was valid. THE assessments in respect of the other years are pending at various stages.

(3.) TO continue the narration of facts, it has already been continued that the deed of declaration of trust was made on March 1, 1954. A supplementary deed was executed by the donor on June 28, 1961, directing that the surplus income of the trust should be utilised only for educational purposes. The appellant filed C.S. No. 90 of 1961 by way of originating summons in the High Court. The High Court held that the trustees were bound by the supplementary deed and, therefore, the entire income had to be spent for the purposes mentioned in the supplementary deed. On March 17, 1969, after the transfer of file from the Third Income-tax Officer, City Circle-II, to the Income-tax Officer, Special Investigation Circle, notices were issued under section 143(2) of the Act to produce the books of account. Accordingly, the account books were produced for the assessment years 1965-66 to 1967-68. As noticed above, writ petitions have been filed for the years 1956-57 and 1961-62 as well as for the years 1965-66 to 1967-68. As seen above, the reopening of assessments for the assessment years 1956-57, 1958-59, 1960-61 and 1961-62 came to be quashed. However, the proposal to reassess was upheld in respect of the years 1957-58, 1959-60, 1965-66, 1966-67 and 1967-68. This was by order dated December 21, 1972, to which we had made reference earlier. In the said order. It was noticed that in respect of the assessment year 1957-58, one of the main reasons given is the suppression of sales of newspaper to the extent of Rs. 4,00,000 which is stated to have been discovered from the figures given by the Audit Bureau of Circulation. Therefore, the notice under section 147(a) of the Act for the said assessment year was upheld. Likewise for 1958-60. The said judgment is reported in Thanthi Trust v. ITO .