Vellore Institute of Technology Vs ACIT (Exemptions) (Madras High Court)
The petitioner, a public charitable trust, challenged reassessment proceedings initiated under Sections 147 and 148A of the Income-tax Act, 1961 for Assessment Year 2015-16. The trust had originally filed its return declaring nil income, which was accepted without any addition in a scrutiny assessment completed under Section 143(3) on 18.12.2017 after notices under Sections 143(2) and 142(1) and consideration of the petitioner’s replies.
The first reassessment notice under Section 148 was issued on 12.04.2021 under the pre-amended reassessment provisions despite the Finance Act, 2021 having introduced a new reassessment regime effective from 01.04.2021. The petitioner challenged the notice before the Madras High Court. A Division Bench allowed the writ petition on 04.02.2022, quashed the notice and granted liberty to the Department to initiate reassessment proceedings in accordance with law. The Department accepted that decision.
Pursuant to that liberty, the Department issued a second notice under Section 148A(b) dated 31.03.2022 under the amended provisions. The notice alleged escapement of income on the basis of various items requiring verification, including donation of ₹5,89,60,034, fines and penalty of ₹3,67,640, TDS late payment interest of ₹74,129, prior-year expenses of ₹1,07,84,362, notional loss on sale of assets of ₹3,10,78,268, profit on sale of assets of ₹67,74,179 and receipts of income received in advance of ₹263,22,53,913. The Department stated that income aggregating to ₹373,04,33,191 had escaped assessment.
