Sree Narayana Guru Memorial Educational And Cultural Trust Vs ACIT (Kerala High Court)
In a landmark judgment that has significant implications for income tax assessments in India, the Kerala High Court has ruled that revenue audit objections can indeed form a valid basis for reopening income tax assessments post-April 1, 2022. The case in question, Sree Narayana Guru Memorial Educational And Cultural Trust Vs. ACIT, delves into the nuances of the Income Tax Act, 1961, especially focusing on the amendments to Section 148.
The Case Background
The petitioner, a trust registered under Section 12A of the Act, found itself in the crosshairs of the Income Tax Department after a revenue audit flagged discrepancies in the assessment year 2016-17. Despite having its returns finalized at ‘Nil’ income following complete scrutiny, an audit objection led to the reopening of the assessment, with the department seeking to tax income allegedly escaping assessment amounting to Rs.1,60,39,464/-.
Revenue Audit Objection and Reassessment Notice:
- A revenue audit raised objections regarding the treatment of a corpus donation received by the trust.
- The audit argued that a portion of the corpus donation should have been included in taxable income.
- Based on this objection, the department issued a notice under Section 148A(d) of the Act to reopen the assessment.
Petitioner’s Contentions:
