The Bombay High Court has held that the donations of Rs. 228 crores to Shirdi Saibaba Sansthan is exempted from income tax.
The bench of Justice G. S. Kulkarni and Justice Firdosh P. Pooniwalla has observed that once tangible material during the course of assessment proceedings was available with the Assessing Officer and the same was considered in passing the assessment order under Section 143(3) of the Income Tax Act, the Assessing Officer, in the absence of any fresh material, could not have proceeded to reopen the petitioner’s assessment on similar materials.
The petitioner is a Public Trust deemed to be constituted and governed under the State Legislation namely under the provisions of the “Shri Saibaba Sansthan Trust (Shirdi) Act, 2004”.
The petitioner manages and administers the “Sai Baba Temple”, at Shirdi which is worshiped by millions of devotees from all over the world. Also, the petitioner is stated to be involved in religious and charitable activities. The petitioner has described the history in relation to Shirdi temple and the faith, which the people have in worshiping “Shri Sai Baba” who departed from the mortal world on 15 October 1918.
For AY 2015-16, a notice under Section 142(1) of the Income Tax Act was issued to the petitioner. The same was duly replied. There were also further notices issued and information/documents with respect to the assessment provided by the petitioner. Despite past assessments, namely for the AY 2014-15, the petitioner was issued a show cause notice as to why the income of the petitioner received by way of anonymous donations in the Hundi Boxes, should not be taxed under the provisions of Section 115BBC of the IT Act.
The petitioner in its reply to the show cause notice inter alia contended that Section 115BBC of the Income Tax Act was not applicable to a mixed purpose trust i.e. charitable as well as religious and therefore, the petitioner was exempted under sub-section 2(b) of Section 115BBC.
However, in the assessment order passed for the assessment year 2015-16, Assessing Officer included the anonymous donations received by the petitioner as the taxable income of the petitioner. Consequent to such assessment order, a demand notice came to be issued to the petitioner for payment of tax and recovery proceedings were also initiated.
The department submitted that as the reopening is within a period of four years, the requirements as per the first proviso to Section 147 (as on 31 March 2021) namely of a failure on the part of the petitioner to disclose fully and truly all material facts as a pre-condition to issue notice under Section 148 is not applicable.
The department submitted that the assessment order does not disclose that the Assessing Officer has applied his mind and it is on such issue reassessment is initiated. As the reopening itself is within 4 years, the Assessing Officer may find tangible materials from the records which are already made available by the petitioner so as to reopen the assessment. The tangible material need not always be new tangible material, hence, to say that tangible material to be new or fresh material would amount to reading the first proviso below Section 147, as it stood on 31 March 2021 for cases, which are re-opened within four years.
The court while allowing the petition held that Section 147 certainly does not postulate a review jurisdiction so that the assessment can be reviewed, on the Assessing Officer intending to form a different and/or a new opinion.
Case Details
Case Title: The Shri Saibaba Sansthan Trust (Shirdi) Versus UOI
Case No.: Writ Petition No. 4817 Of 2022
Date: 20 December 2024
Counsel For Petitioner: S. Ganesh, Senior Advocate
Counsel For Respondent: Akhileshwar Sharma
