MODI CHARITABLE FUND SOCIETY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution the petitioners, M/s. Modi Charitable Fund Society, Modinagar, U.P. (hereafter " the petitioner society "), and Sri Ashok Vashisht, one of the members of the society, seek the quashing of the notice dated 25th March, 1977, issued under Section 148 of the I.T. Act, 1961 (hereafter " the Act "), and another notice issued on 25th July, 1978, calling upon the assessee to produce certain records. The brief facts are these : The petitioner-society was established on July 5, 1940, and was duly registered with the Registrar of Societies and Firms, Lucknow, the certificate having been granted on 20th July, 1940. The aims and objects for which the society was established, inter alia, were to promote commerce, art and science; to establish and maintain or to give aid to institution or institutions for giving training in commerce, trades, industries, etc., and for imparting moral and physical education to the children of all castes and creeds ; to establish and maintain or to give aid to dharamshala, widow home cr any other such charitable institution ; to establish and maintain any dispensary or hospital for the benefit of the public, to acquire by purchase or otherwise any movable or immovable property for the proper carrying out of the objects of the society, to sell, mortgage, lease or otherwise dispose of any movable or immovable property for the better management of the society, to advance by way of loan for proper investment thereof the trust funds and to acquire financial assistance from Government and other bodies with a view to efficiently carry out the objects of the society. Another object was to work and establish agencies and depots for the purchase and sale of goods of all description, borrow money and to get insurance agencies of different companies and to do insurance work for the purpose of applying the income therefrom on the objects mentioned above.

(2.) THE Controller of Insurance by his order dated January 7, 1958, granted a licence to the society to carry on the business of insurance. Apart from donations, the society had income from following sources ; Dividends, rent from house properties, contribution of tuition fee received from hostel and commission from insurance agency business. THE petitioner approached the ITO some time in 1958 for the issue of a certificate of exemption of its income under Section 4(3)(i) of the Indian I.T. Act, 1922. THE ITO, A-Ward, Meerut, issued such a certificate to the society on February 17, 1958. THE society was thus held to be a charitable institution and its income was exempt from tax under Section 4(3)(i) of the 1922 Act as also under the relevant provisions of the 1961 Act. Thus the assessee was under no obligation to file any return of its income under Section 22(1)/Section 139(1). With effect from April 1, 1971, Sub-section (4A) was inserted in Section 139 of the 1961 Act. This provision reads as under :

(3.) TWO preliminary objections were raised before us by the learned counsel for the Department, Sri Markandey Katju: Firstly, that the notice under Section 148 of the 1961 Act was issued on March 25, 1977, whereas the writ petition challenging this notice was filed on September 13, 1978, thus, it was highly belated and the petitioners being guilty of laches, no relief can be allowed to them in this petition. The second objection is that the notice under Section 148 having been issued by the ITO, Delhi, the cause of action arose within the jurisdiction of the Delhi High Court and not of this court and for this reason also this court cannot grant any relief to the petitioners.