Marymatha Province of Vincentian Congregation Vs Additional/Joint/Deputy/ACIT/ITO (Kerala High Court)
Kerala High Court held that taking up the issue of appropriation of receipts of trust is justifiable since issue raised in scrutiny assessment is ‘receipts of trust’ and the same includes appropriation as well. Accordingly, no illegality committed when carrying out the assessment in respect of the appropriation of the amounts.
Facts- The petitioners are ‘Trusts’ exempted under Sec.12A of the Income Tax Act. The challenge raised in these writ petitions pertains to the assessment orders issued and the appellate orders passed by the statutory authorities. The reason for challenging the said orders by resorting to the remedy under Article 226 of the Constitution of India is that, according to the petitioners, the proceedings which ultimately culminated in the impugned orders were commenced as limited scrutiny, by issuing notices in this regard on a specific issue. However, during the course of scrutiny, the assessing officer went beyond the issues specifically highlighted in the first notice, and completed the assessments in respect of the issues which are not within the issues raised in the original notice.
Conclusion- Since that issue was framed in a notice which was issued for the purpose of initiating a scrutiny of the returns furnished by the assessee so as to complete the assessment, the appropriation of the receipts of the trust, also could be a matter falling within the same. This is because, unless the appropriation of the amount is taken into account, an assessment based on receipts of trust cannot be made. Therefore, the only conclusion possible is that, the discrepancies highlighted in the notices which were ultimately resulted in the assessment order, were pertaining to the appropriation of the amount, which would fall under issue “Receipts of trust”, as the ultimate purpose is to determine the tax liability of the assesee, based on the same. Therefore, on that reason also, I do not find that any illegality has been committed by the assessing officer, when carrying out the assessment in respect of the appropriation of the amounts.
