THE KNANAYA MEDICAL MISSION MENATHOTTAM HOSPITAL vs. THE INCOME TAX OFFICER

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WP(C)/27124/2023HC KeralaKLHC01059483202320 September 2023Author: HONOURABLE MR. JUSTICE D. K. SINGH4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala disposed of the writ petition with a direction to the 3rd respondent, the Commissioner of Income Tax (Exemption), to decide the petitioner's application (Ext.P6) for condoning the delay in filing Form 10B expeditiously. The Court further directed that until a decision is taken on the condonation application, the demand of arrears of tax arising from Ext.P7 order shall not be given effect to. The judgment did not decide on the merits of the petitioner's claim for Section 11 benefits, but rather focused on the procedural aspect of the pending condonation application. The principle established is that pending applications for condonation of delay, especially when supported by a CBDT circular, should be considered promptly, and coercive recovery should be stayed until a decision is reached.

What were the facts?

The petitioner, The Knanaya Medical Mission Menathottam Hospital, filed a writ petition challenging Ext.P7 order by the Income Tax Officer (1st respondent) which denied the benefit of Section 11 of the Income Tax Act. The denial was based on the delay in filing the audit report in Form 10B. The petitioner stated that the delay was 74 days and that an application for condonation of this delay, filed as per a CBDT Circular dated 19.07.2022, was pending before the Commissioner of Income Tax (Exemption) (3rd respondent). The petitioner was facing a demand of Rs.14 lakhs due to Ext.P7. The respondents' counsel confirmed that the application for condonation of delay was pending and attributed the delay in processing to a backlog of applications.

What were the issues?

1. Whether the petitioner is entitled to the benefit of Section 11 of the Income Tax Act, 1961, despite a delay in filing the audit report in Form 10B? Assessee's Contentions: The petitioner argued that they had filed an application for condonation of the 74-day delay in filing Form 10B, referencing a CBDT Circular dated 19.07.2022. They contended that no order had been passed on this application, yet they were subjected to a demand of Rs.14 lakhs based on the denial of Section 11 benefits. Revenue's Contentions: The revenue acknowledged that the application for condonation of delay was pending and explained that a backlog of such applications was causing a delay in processing.

Which sections of the Income-tax Act were involved?

Section 11

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH WEDNESDAY, THE 20TH DAY OF SEPTEMBER 2023 / 29TH BHADRA, 1945 WP(C) NO. 27124 OF 2023 PETITIONER/S: THE KNANAYA MEDICAL MISSION MENATHOTTAM HOSPITAL, ANGADY, RANNY, PATHANAMTHITTA - 689 674, REPRESENTED BY ITS MANAGING COMMITTEE MEMBER, M.K. ABRAHAM, PIN - 689674 BY ADVS.HARISANKAR V. MENON MEERA V.MENON; R.SREEJITH K.KRISHNA; PARVATHY MENON RESPONDENT/S: 1 THE INCOME TAX OFFICER, EXEMPTION WARD, INCOME TAX DEPARTMENT, ALAPPUZHA, PIN - 688001 2 CENTRALIZED PROCESSING CENTER 1ST FLOOR, BERATENAAGRAHARA BEGUR, HOSUR ROAD, UTTARAHALLI HOBLI, BENGALURU, PIN - 560100 3 THE COMMISSIONER OF INCOME TAX (EXEMPTION)INCOME TAX DEPARTMENT, SANJUAN TOWERS, ERNAKULAM, KOCHI, PIN - 682010 BY ADV CHRISTOPHER ABRAHAM SC IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) No.27124/2023 -2-

J U D G M E N T

The present writ petition is filed impugning Ext.P7 order passed by the 1st respondent denying the benefit of Section 11 to the petitioner on the ground of delay in filing the audit report in Form 10B.

2.

Learned Counsel for the petitioner submits that the petitioner has filed an application before the Commissioner of Income Tax (Exemption) as per the Circular dated 19.07.2022 issued by the CBDT in this respect. The delay in filing the audit report is 74 days. Till date, no order has been passed, and the petitioner is being faced with the demand of Rs.14 lakhs in pursuance of Ext.P7 order.

3.

Mr Christopher Abraham, learned Counsel for the respondents, submits that the application for condonation of delay dated 19.06.2023 is still pending consideration, and as there is a huge backlog of such applications, it is taking some time to pass appropriate orders.

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4.

Considering the said submission, the present writ petition is disposed of with a direction to the 3rd respondent to decide the application of the petitioner (Ext.P6) for condoning the delay in filing the Form 10B application on time, expeditiously. Till the decision is taken on the said application, the demand of arrears of tax in pursuance of the Ext.P7 order shall not be given effect to.

With aforesaid, the present petition stands disposed of. DINESH KUMAR SINGH JUDGE

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Appendix — schedule of exhibits
APPENDIX OF WP(C) 27124/2023 PETITIONER EXHIBITS Exhibit P1 COPY OF RETURN OF INCOME ALONG WITH STATEMENT OF INCOME FILED BY THE PETITIONER DTD. 15-02-2021 Exhibit P2 COPY OF AUDIT REPORT OF THE PETITIONER IN FORM NO.10B DTD. 29-03-2021 Exhibit P3 COPY OF RETURN OF INCOME ALONG WITH STATEMENT OF INCOME FILED BY THE PETITIONER DTD. 31-03-2021 Exhibit P4 COPY OF INTIMATION ISSUED BY THE 2ND RESPONDENT DTD. 30-11-2021 Exhibit P5 COPY OF CIRCULAR NO. 16/22 ISSUED BY GOVERNMENT OF INDIA, NEW DELHI DTD. 19-07-2022 Exhibit P6 COPY OF APPLICATION FOR COHNDONATION OF DELAY FILED BY THE PETITIONER DTD. 19-06-2023 Exhibit P7 COPY OF LETTER ISSUED BY THE 1ST RESPONDENT DTD. 11-07-2023 Exhibit P8 COPY OF JUDGMENT IN WEPC NO. 6897 OF THIS HON'BNLE COURT DTD. 02-03-2023

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