2021 (9) TMI 1186 - HC - Income Tax

Exemption u/s 11 - Whether the petitioner would be entitled to get benefit under Sections 11 and 12 of the Act or not, in view of the provisions of Section 13(1)(a), because of the amendment made in the year 1998 in the articles of the petitioner Society, is the question to be decided by the appellate authority, where admittedly, the appeal filed by the petitioner dated 29.04.2021, is pending? - HELD THAT - Petitioner had been enjoying the benefit of Sections 11 and 12 of the Act, hitherto and such a benefit all of a sudden is withdrawn or taken back by citing Section 13(1)(a) of the Act, whether such a levy of Tax made on behalf of the revenue by the assessing officer is justifiable or not is the subject matter before the appellate authority and therefore, once the appellate authority takes up the appeal and decide the same and before which, if any demand is made, even as a condition under Section 220(6), that will be a case of prejudice to the petitioner, if ultimately the appeal is decided otherwise. Therefore, this Court feels that in a case of this nature, when a prima facie case is made in this regard by the assessee that shall be taken into account.

Summary

Issues:
Challenge to assessment order for Assessment Year 2018-19, Appeal filed by petitioner, Show Cause Notice under Section 221(1) of the Act

Analysis:
The petitioner, a registered Society under the Societies Registration Act and the Income Tax Act, challenged the assessment order for the year 2018-19. The assessing officer denied the benefit under Sections 11 and 12 of the Act, citing Section 13, due to an amendment in the association's articles. An appeal was filed, pending at the National Faceless Appeal Centre. Subsequently, a show cause notice under Section 221(1) was issued, prompting the petitioner to file a writ petition. The petitioner argued that the stand taken by the revenue was unjust as the charitable nature remained unchanged. The assessing officer contended that the notice was valid as the appeal did not halt follow-up actions. The court considered both arguments and noted the pending appeal's significance.

The court deliberated on whether the petitioner was entitled to benefits under Sections 11 and 12 despite the amendment. It highlighted the provision for interim relief under Section 220(6) of the Act, allowing the assessee to approach the assessing officer during appeal pendency. The court acknowledged the petitioner's concern regarding onerous conditions that might be imposed. It emphasized that the assessing officer must decide fairly based on the case's circumstances. The court also referenced a previous order emphasizing the importance of considering prima facie cases made by the assessee.

The court directed the petitioner to file an application under Section 220(6) before the Assessing Authority within two weeks. The assessing officer was instructed to consider the case's facts, especially the petitioner's previous benefit under Sections 11 and 12. Until the appeal's outcome, any demand made by the assessing officer should not be considered a default. The assessing officer was given four weeks to make a decision following these guidelines. The court prohibited any coercive action against the petitioner until the assessing officer's decision. The writ petition was disposed of with these directions, and no costs were awarded.