A.K.Mathur, J. - (1.) THE petitioner by this writ petition has prayed that the notice under Section 148 of the Income-tax Act, 1961, issued on February 17, 1981, may be quashed and the respondent may further be restrained from taking any proceedings in pursuance of the said notice.
(2.) THE petitioner is a public religious trust constituted under a registered trust deed dated May 21, 1953. This trust is also registered under Section 12A of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), with the Commissioner of Income-tax. THE petitioner-trust applies its funds for public and religious purposes in India and it maintains and runs hospitals, temples, etc. THE petitioner-trust has its head office at Ladnu, district Nagaur, and a branch at Calcutta. THE trust maintains regular books of account both for its head office and the branch office. Ladnu is a small town in the district of Nagaur in Rajasthan and it had no public water supply scheme. In 1961, a public water supply scheme was mooted for the town of Ladnu by the Government of Rajasthan. It was estimated to cost about Rs. 10 lakhs. THE State Government agreed to provide, water to the town if the public contributed about Rs. 3 lakhs and the balance amount was to be borne by the State Government. THE petitioner-trust was interested in the scheme as it would provide water facilities to the town situated in a desert area which was one of the several charitable objects for which the trust was, established. THE petitioner-trust opened a water supply scheme account in its books at Ladnu. It transferred a sum of Rs. 33,138 to this account out of its funds. Similarly, in the year 1963-64, it transferred a sum of Rs. 86,449.79 to the above account out of its own income making a total of Rs. 1,19,587 at the close of the accounting year and as opening balance in Samvat year 2020. Simultaneously, the petitioner-trust invited generous contributions from the public amongst others. It addressed a letter to Benjamine and Rehma Elias Memorial Trust at Calcutta (referred to hereinafter as "the Calcutta trust") to make a substantial contribution to the water supply scheme. THE Calcutta trust contributed a sum of Rs. 70,000 towards the water supply scheme. It issued a cheque for a sum of Rs. 70,000 dated March 31, 1964, in favour of the petitioner-trust drawn on the Hongkong and Shanghai Banking Corporation. This cheque was handed over to the Branch Office at Calcutta and the petitioner-trust credited it in the water supply scheme account in the Calcutta branch. THE Calcutta branch issued a cheque for Rs. 1,85,000 in favour of the Executive Engineer, Government of Rajasthan. Corresponding entries were passed in the books at the head office at Ladnu. THE petitioner-trust used to regularly file its return"of income each year with the Income-tax Officer, Nagaur. For the accounting period April 3, 1963, to April 19, 1964, the relevant assessment year being 1964-65, the petitioner filed its return of income with the Income-tax Officer/Nagaur. Along with the return, the petitioner-trust filed copies of the income and expenditure accounts and balance-sheets of both the head office and the branch office at Calcutta. THE Income-tax Officer was not satisfied and, in order to verify the correctness and completeness of the return, he issued a notice under Section 143(2) of the Act. THE accountant of the trust and its counsel attended and produced the books of account of the Ladnu and Calcutta offices and all relevant vouchers and correspondence before him. It is also submitted before him that the donation of a sum of Rs. 70,000 made by the Calcutta trust is not the income of the petitioner-trust. THE Income-tax Officer, after scrutiny of the record, adjourned the matter and, when the case was taken up again, the Income-tax Officer, after detailed examination of the donation of Rs. 70,000 from Calcutta trust, came to the conclusion that it could not be treated as income of the petitioner-trust. THE Income-tax Officer passed the assessment order accordingly on March 24, 1969. THEreafter, on October 21, 1980, the Commissioner of Income-tax, Jodhpur, vide his letter dated October 21, 1980, informed the petitioner that the Income-tax Officer, Nagaur, has reported that the trust had received voluntary contribution of Rs. 70,000 from another trust of Calcutta, namely, Benjamine and Rehma Elias Memorial Trust, on March 31, 1964, which the petitioner failed to disclose in the total income. It is further alleged that the Income-tax Officer had reason to believe that, by reason of the failure to disclose truly and fully the above material fact, income chargeable to tax has escaped assessment for the year 1964-65. THE petitioner filed a reply to the above notice. THEreafter, the Income-tax Officer issued a notice on February 17, 1981, under Section 148 of the Act for the assessment year 1964-65 intimating the petitioner that income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act and calling upon the petitioner to file a fresh return. THE petitioner filed objections on March 16, 1981, stating that there was no omission or failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment. All the material facts had been disclosed and noted by the Income-tax officer and are on the record. THEreafter, the Income-tax Officer passed the assessment order. THErefore, the petitioner has challenged this notice issued under Section 148 of the Act by filing the present writ petition. The main grievance of the petitioner is that there is no question of escape of income from assessment for the year 1964-65 as the petitioner has disclosed all the facts and the same were noted by the Income-tax Officer including the receipt of Rs. 70,000 received by the petitioner-trust from the Calcutta trust. Thus, it was submitted, the above notice is void ab initio. A reply has been filed by the respondents and they have traversed this ground. Mr. Bhandari, learned counsel for the petitioner, has pointed out that this question may not be necessary at this stage because, in a similar matter arising out of the same trust for a sum of Rs. 1,00,000 for the water supply scheme at Ladnu, a notice was given and ultimately a reference was made by the Tribunal to the High Court for the year 1965-66 and in which in a somewhat identical situation, the High Court has taken the view in the case of the petitioner-trust that the amount which has been received by the petitioner-trust cannot be said to be taxable and could not be included as part of the assessable income of the trust. Learned counsel has relied upon the decision given by this court in Sukhdeo Charity Estate v. CIT [1984] 149 ITR 470. In this case, the question which was referred to the High Court reads as under (at p. 471) : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that a sum of Rs. 1,00,000 received by the assessee-trust from Benjamine and Rehman Elias Memorial Trust is liable to be included as part of the income of the assessee-trust under the provisions of Section 12(2) of the Act of 1961 ?" In this case, ultimately, after reviewing all the case law on the subject, this court came to the conclusion that this amount cannot be treated to be part of the income of the petitioner-trust It was held in the above case as under (at page 486) : "The principles enunciated in the various cases referred to above, when applied to the present case, leave no room for debate that the intention of the donor-trust as well as the donee-trust was to treat the money as capital to be spent for the Ladnu Water Supply Scheme. It is of no significance whether the amount had since been paid to the State Government or kept in the account of the above-referred scheme by the assessee-trust. From whatever angle it may be seen, the deposited amount cannot be said to be income in the hands of the recipient trust. The conclusion, therefore, is that on the facts and circumstances of the case, the Tribunal was not right in holding that the sum of rupees one lakh received by the assessee-trust from the Calcutta trust was liable to be included as part of the income of the assessee-trust under the provisions of Section 12(2) of the Act of 1961. We, therefore, answer the question referred to us in the negative, i.e., in favour of the assessee and against the Revenue. The costs are made easy."
(3.) NOW, the same principle is applicable in the present case also. But the difference is that it is for the year 1964-65 and the aforesaid case was for the year 1965-66. Therefore, the same principle which has been laid down in the aforesaid case is equally applicable in the present case. Instead of going into detailed facts, suffice it to say that the ratio laid down in the above-mentioned case is squarely applicable in the present case also. More so because, the above case is between the same parties and it is also in respect of the same scheme. In these circumstances, I allow the writ petition and quash the notice dated March 17, 1981, issued under Section 148 of the Act.;