No Reassessment if Trust Had No Taxable Income; Excess of Expenses Over Income is Not Escaped Income | HC

Case Details: Mahatma Gobarji Seva Sansthan ILOL vs. Income-tax Officer Ward - 1 - [2025] 172 taxmann.com 89 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & D.N. Ray, JJ.
• Rushin Patel for the Petitioner.
• Varun K. Patel for the Respondent.

Facts of the Case

Assessee was a public charitable trust registered under the provisions of the Bombay Public Trust Act, 1950. For the relevant assessment year, the assessee did not file the return of income as there was no taxable income. The Assessing Officer (AO) issued a reopening notice under section 148A(a) against the assessee based on information that the assessee had deposited a certain amount in its bank account.

In response to the notice, the assessee submitted that it was running a resident school/ashram shala and had received a maintenance grant from the State Government Department. The same was deposited in the bank account and withdrawn during the year. It was utilized towards the expenses of the ashram shala.

However, AO issued an order under section 148A(d) along with the notice under section 148. The matter then reached the Gujarat High Court.

High Court Held

The High Court held that it was clear that from the reasons recorded in both the notices that there was no cash deposit made by the assessee in any of the bank accounts. There was no information of any escaped income with the AO to initiate the reopening proceedings.

Moreover, the explanation given by the assessee in reply to the notice and the documents annexed therewith, prima facie, showed that there was no income earned by the assessee. There was an excess of expenditure over income for the year under consideration. As such, the assessee was not liable to file the return of income if there was no taxable income or exemption claimed by the assessee.

Thus, the AO could not have assumed the jurisdiction to reopen the assessment.