BINDESHWAR PATHAK Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS writ petition has been preferred by the petitioner with the prayer to quash the notice dated 22.4.1997 (Annexure-2), issued by the learned Deputy Commissioner of Income Tax, in terms of Section 148 of the Income Tax Act (hereinafter referred to as 'the Act'), as to why his return for the assessment year 1994-95 be not re-assessed in terms of Section 147 of the Act. Respondent Nos. 1 and 2, the official respondents, have placed on record their counter affidavit as well as supplementary counter affidavit. Respondent Nos. 3 to 7, the alleged benamidars of the petitioner, are represented by their respective counsel but have not placed on record their respective counter affidavit(s).

(2.) A brief statement of facts essential for the disposal of this writ petition may be indicated. The petitioner before us is in the capacity of individual assessee. It is stated in paragraph 5 of the writ petition that his source of income, inter alia, is by way of advisory fee from different charitable institutions which are duly registered under the provisions of the Societies. Registration Act, 1860, also as charitable institutions in terms of Section 12A of the Act by appropriate orders of the Commissioner of Income Tax, and are respondent nos. 3 to 7 herein. The petitioner had rendered consultancy services to respondent nos. 3 to 7 during the assessment year 1994-95, and had received fees from them. The petitioner had submitted his returns where he disclosed all his income including the fees received from respondent nos. 3 to 7. The return was accepted and the order of assessment in terms of Section 143(3) of the Act was passed by the learned Deputy Commissioner of Income Tax by his order dated 2.3.1995 (Annexure-1). 2.1. On the other hand, respondent no. 3 to 7 had also submitted their returns and were separately assessed to tax for the same assessment year, namely, 1994-95. The learned Assessing Officer observed that respondent nos. 3 to 7 are benamidars of the petitioner, and in truth and substance have no separate legal existence. The orders of assessment with respect to respondent nos. 3 to 7 led to the impugned notice dated 22.4.97 (Annexure-2). It appears that the petitioner had submitted before the learned Assessing officer to disclose reasons for the impugned notice as mandated by the provisions of Section 147 of the Act. The learned Assessing Officer obliged the petitioner by supplying the reasons already recorded on 22.4.97, which was communicated to the petitioner on 28.5.97 (Annexure-3). The petitioner challenged the impugned notice by preferring the present writ petition which was for the first time taken up on 25.6.97. A Division Bench of this Court recorded the following interim order:- "Heard counsel for the parties. It appears that for the assessment years in question the charitable institutions from which the petitioner was getting consultancy fees have been treated as his Benamidars. Separate orders of assessment have been passed in respect of those institutions and it is stated that those institutions have preferred appeals against the orders of assessment. The decision in those appeals may be of some significance in the case of the petitioner as well, though it is open to the petitioner to argue his own case that those institutions are not benami of the assessee. Be that as it may, the matter requires consideration. This application is admitted for hearing. Pending disposal of this writ petition, further proceedings in pursuance of Annexure-2 are stayed. Liberty to the parties to mention when the appeals preferred by the so-called Benami institutions are disposed of." 2.2. Aggrieved by the orders of assessment with respect to their own returns, respondent nos. 3 to 7 preferred separate appeals before the learned Commissioner of Income Tax (Appeals), which were allowed by different orders. The orders of assessment with respect to them were set aside, and the learned appellate authority held that those institutions are charitable institutions within the meaning of Sections 11 and 12A of the Act.

(3.) LEARNED Junior Standing Counsel for the Deptt. of Income Tax has taken us through the counter affidavit and the supplementary counter affidavit filed for and on behalf of respondent nos. 1 and 2, and submits that the former was placed on record before the appellate orders, and the latter was filed after the appellate orders were passed with respect to respondent nos. 3 to 7 which explains the change in the department's stand. The respondents had taken the stand in the counter affidavit that the impugned notices were justified. They have in their supplementary counter affidavit taking notice of the appellate orders conceded the position in favour of the petitioner. He next submits that, in view of the appellate orders with respect to respondent nos. 3 to 7, the matter may now be remitted to the learned Assessing Officer to re-examine the case of the petitioner.