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2020 (6) TMI 245 - HC - Income TaxExemption u/s 11 denied - non-filing of the Return by the petitioner - delay in filing of Form 10B Audit Report - HELD THAT - Once the circular provides the opportunity to assessees having issued a Registration under Section 12AA of the Income Tax Act, to seek to recall of the denied exemption in Form 10B and to seek condonation of delay which as noticed above has already been filed in January 2020 vide Ext.P1, but there is no adjudication so far and during its pendency, the impugned Demand Notice of March 2020, Ext.P4 has been issued. Without expressing anything on the merit of the matter, particularly contents of Ext.P3, I dispose of this Writ petition by issuing directions to the 1st respondent and take a call on the application, Ext.P3 filed under Form 10B of the Circular ibid in accordance with law, after affording an opportunity of hearing to the petitioner as expeditiously as possible within a period of 2 months. Until such time, the demand raised in Exts.P1, P2 and P4 is also to be kept in abeyance.
Issues:
1. Delay in filing Income Tax Return leading to denial of exemption under Section 11. 2. Pending application for condonation of delay in filing Form 10B Audit Report. 3. Issuance of Demand Notice for payment of assessed income. Analysis: Issue 1: Delay in filing Income Tax Return and denial of exemption under Section 11 The petitioner, an Educational and charitable Society, sought a writ of mandamus to direct the 1st respondent to dispose of Ext.P3, an application for condonation of delay, and keep the demand in Ext.P4 in abeyance. The petitioner's Income Tax Return for the assessment year 2017-18 was not filed within the extended deadline, leading to the denial of exemption under Section 11. The assessment order dated 27/02/2019 (Ext.P1) assessed the income at ?1,11,20,325/- without the benefit of exemption under Section 11. The petitioner attributed the delay to internal disputes among members. The court acknowledged the delay but emphasized the need for adjudication on the pending application (Ext.P3) before enforcing the demand. Issue 2: Pending application for condonation of delay in filing Form 10B Audit Report The petitioner filed an application (Ext.P3) seeking condonation of delay in filing Form 10B Audit Report, citing provisions of Section 119 2(B) of the Income Tax Act and relevant circulars. The application was filed in January 2020 and remained pending without adjudication. The court directed the 1st respondent to take a call on Ext.P3 expeditiously within two months, highlighting the importance of resolving the pending application before enforcing the demand raised in Ext.P4. Issue 3: Issuance of Demand Notice for payment of assessed income The 2nd respondent denied the exemption under Section 11 due to the delay in filing the Income Tax Return, resulting in the issuance of a Demand Notice (Ext.P2) for payment of the assessed income. The petitioner, through its counsel, emphasized the need for adjudication on Ext.P3 before enforcing the demand. The court, without delving into the merits of Ext.P3, directed the 1st respondent to decide on the application within two months and ordered to keep the demand raised in Ext.P1, P2, and P4 in abeyance until the application is disposed of. In conclusion, the court disposed of the writ petition by issuing directions for the expeditious adjudication of the pending application (Ext.P3) for condonation of delay in filing Form 10B Audit Report and ordered to keep the demand notices in abeyance until the application is resolved, emphasizing that the interim order is only valid until the disposal of Ext.P3.
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