Facts of the Case

  • The petitioner challenged an assessment order dated 21.12.2019 for AY 2012–13.
  • The assessment order was based on a reassessment order dated 31.12.2016 concerning another entity, Caruna Bal Vikas (CBV).
  • The Assessing Officer extracted only partial findings from the CBV reassessment order.
  • The petitioner had already filed a statutory appeal in February 2019, which remained pending for over four years.
  • Exemption under Sections 11 and 12 was denied on the ground that the petitioner fell within Section 13(1)(b).

Issues Involved

  1. Whether the Assessing Officer erred in relying on only a partial extract of another entity’s reassessment order.
  2. Whether prolonged pendency of a statutory appeal justified judicial intervention.
  3. Whether exemption denial under Sections 11 and 12 read with Section 13(1)(b) was properly examined.

Petitioner’s Arguments

  • The assessment order is flawed as it relies on incomplete extraction of the CBV reassessment order.
  • The entire reassessment order (31.12.2016) should have been considered.
  • CBV had provided a restricted sub-grant, which should not attract denial of exemption.
  • The statutory appeal has been unreasonably delayed since 2019, causing prejudice.

 Respondent’s Arguments

  • The petitioner approached the Court after a long delay, and is guilty of laches.
  • Since the petitioner received a sub-grant from CBV, it ought to have been aware of the reassessment proceedings earlier.

Court’s Findings

  • The Court identified a twofold grievance:
    1. Partial reliance on the reassessment order.
    2. Delay in disposal of the statutory appeal.
  • The Court held:
    • Delay in appeal disposal justified judicial intervention.
    • The petitioner is entitled to have the entire reassessment order considered.
  • The Court also referred to:
    • Director of Income Tax vs Society for Development Alternatives (2012 SCC OnLine Del 225)

Court Order / Directions

The writ petition was disposed with the following directions:

  1. The appellate authority shall dispose of the pending appeal within 3 months.
  2. The authority shall consider:
    • The entire reassessment order dated 31.12.2016, and
    • Relevant judicial precedents on restricted grants.
  3. A personal hearing must be granted to the petitioner before final decision.

Important Clarification

  • The Court clarified that restricted grants routed through intermediary entities (CBV) must be examined in entirety before denying exemption.
  • It emphasized that partial reliance on assessment records is impermissible.
  • Judicial intervention is warranted where statutory remedies are delayed excessively.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/RAS08052023CW59292023_145919.pdf

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