Fine Arts Society Vs Deputy Director of Income Tax (Exemptions) 1-2 & Ors. (Bombay High Court)
Summary: The Bombay High Court allowed the writ petition filed by The Fine Arts Society, a charitable institution registered under the Bombay Public Trusts Act, 1950 and Section 12AA of the Income Tax Act, 1961, and quashed the reopening notice issued under Section 148 for AY 2007-08. The Assessing Officer had proposed to deny exemption under Section 11 on the ground that receipts of Rs.1,83,99,069/- indicated that the petitioner was engaged in commercial activities. The reopening reasons also relied upon the Supreme Court decision in M/s. Yogiraj Charity Trust Vs Commissioner of Income Tax, New Delhi.
The petitioner challenged the reopening primarily on the ground of non-application of mind. It pointed out that the reasons incorrectly described the judgment in Yogiraj Charity Trust as a decision of the Delhi High Court although it was a Supreme Court judgment. More significantly, the reasons proceeded on the factual premise that the petitioner’s assessment had earlier been completed under Section 143(3), whereas no such assessment order had been passed and the return had only been processed under Section 143(1). The petitioner contended that sanction for reopening had also been sought and granted on this erroneous factual basis.
