CARMELITE CONVENT RAMAPURAM vs. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS)

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WP(C)/31513/2022HC KeralaKLHC01066925202210 October 2022Author: HONOURABLE MR. JUSTICE GOPINATH P.4 pages
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What did the High Court hold?

The High Court directed the 1st respondent (Commissioner of Income Tax (Exemptions)) to consider and pass orders on the petitioner's application for condonation of delay in filing Form 10B within three months from the date of receipt of a certified copy of the judgment, after affording an opportunity of hearing to the petitioner. Crucially, the Court ordered that any demand raised pursuant to the Section 143(1) intimation shall be kept in abeyance until such time as orders are passed on the condonation application. This decision provides interim relief to the petitioner by preventing the immediate enforcement of the tax demand while their application for condoning the delay in filing a mandatory audit report is being processed.

What were the facts?

The petitioner, Carmelite Convent Ramapuram, a Charitable Trust, is aggrieved by an Income Tax demand raised through an intimation under Section 143(1) of the Income Tax Act, 1961. The denial of exemption for the assessment year in question is attributed to a delay in filing the audit report in Form 10B. The petitioner has filed an application for condonation of this delay before the 1st respondent (Commissioner of Income Tax (Exemptions)), which is pending. The petitioner contends that enforcing the demand pending consideration of the condonation application would cause prejudice. The respondent Department stated that the 1st respondent would consider the application after providing a hearing.

What were the issues?

1. Whether the enforcement of an income tax demand raised under Section 143(1) should be stayed pending the decision on an application for condonation of delay in filing the audit report in Form 10B, which is crucial for claiming exemption under Section 12A of the Income Tax Act, 1961. Assessee's Contentions: The petitioner argued that they are a Charitable Trust entitled to exemption under Section 12A. The delay in filing Form 10B led to the denial of exemption. They have filed an application for condonation of delay before the 1st respondent, which is pending. Enforcing the demand before this application is decided would cause serious prejudice. They relied on the pendency of the condonation application. Revenue's Contentions: The respondent Department stated that the 1st respondent would consider and pass orders on the application for condonation of delay after providing an opportunity of hearing to the petitioner.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 12A

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 GOPINATH P. MONDAY, THE 10TH DAY OF OCTOBER 2022 / 18TH ASWINA, 1944 WP(C) NO. 31513 OF 2022 PETITIONER/S: CARMELITE CONVENT RAMAPURAM RAMAPURAM DOOR NO. IV/431, RAMAPURAM BAZAAR PO PALA, REPRESENTED BY ITS PROVINCIAL SUPERIOR, SISTER SIGI KIZHAKKEVELLILAPPILLIL, PIN - 686576 BY ADVS. NITISH SATHESH SHENOY SHERRY SAMUEL OOMMEN RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) SAN JUAN TOWERS, 2ND FLOOR, BEHIND CR BUILDING, OLD RAILWAY STATION ROAD, KOCHI, PIN - 682018 2 THE ASSISTANT DIRECTOR OF INCOME-TAX CENTRALISED PROCESSING CENTER, INCOME TAX DEPARTMENT, BENGALURU, KARNATAKA, PIN - 560500 3 THE COMMISSIONER OF INCOME-TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE NEW DELHI, PIN - 110001 4 THE ASSISTANT COMMISSIONER OF INCOME-TAX EXEMPTION WARD SAN JUAN TOWERS, 2ND FLOOR, BEHIND CR BUILDING, OLD RAILWAY STATION ROAD, KOCHI, PIN - 682018 ADV. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.10.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 31513 OF 2022 2

JUDGMENT

Petitioner has approached this court, being aggrieved by the fact that a demand for payment of Income Tax has been raised on the petitioner through Ext.P3 intimation under Section 143(1) of the Income Tax Act, 1961. 2. Learned counsel appearing for the petitioner submits that the petitioner is a Charitable Trust, entitled to exemption under Section 12A of the Income Tax Act, 1961. It is submitted that the reason for denial of exemption, for the year in question, is on account of the fact that there was a delay in filing audit report in Form 10B of the Income Tax Rules. It is submitted that the petitioner has filed Ext.P4 application for condonation of day in filing the audit report in Form 10B of the Rules, before the 1st respondent and the same is pending consideration before the 1st respondent. It is submitted that if the demands in Ext.P3 are sought to be enforced, pending consideration of the matter by the 1st respondent, the petitioner will be put to serious prejudice, injury and hardship.

3.

Learned counsel appearing for the respondent Department submits that the 1st respondent will consider and pass orders on Ext.P4, after affording an opportunity of hearing

WP(C) NO. 31513 OF 2022 3 to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment.

4.

Having heard the learned counsel appearing for the petitioner and the learned Standing Counsel appearing for the respondent Department, this writ petition is disposed of, directing the 1st respondent to consider and pass orders on Ext.P4, within a period of three months from the date of receipt of a certified copy of this judgment, after affording an opportunity of hearing to the petitioner. Till such time as orders are passed on Ext.P4, any demand pursuant to Ext.P3 shall be kept in abeyance.

The writ petition is disposed of as above. GOPINATH P. JUDGE ajt

WP(C) NO. 31513 OF 2022 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 31513/2022 PETITIONER EXHIBITS Exhibit P1 A TRUE COPY OF THE APPROVAL GRANTED UNDER SECTION 12A OF THE ACT DATED 27.4.1993 Exhibit P2 A TRUE OF ACKNOWLEDGMENT PAGE OF | THE INCOME-TAX RETURN FILED BY THE PETITIONER FOR AY 2020-21 ON 29.03.2021 VIDE ACKNOWLEDGEMENT RECEIPT NUMBER 239441640040221 Exhibit P3 A TRUE COPY OF THE INTIMATION UNDER SECTION 143(1) OF THE ACT DATED 30.11.2021 ISSUED BY THE 2ND RESPONDENT Exhibit P4 A TRUE COPY OF THE APPLICATION DATED 22.02.2022 SEEKING CONDONATION OF DELAY PENDING CONSIDERATION OF THE 1ST RESPONDENT Exhibit P5 A TRUE COPY OF THE APPELLATE ORDER DATED 08.08.2022 PASSED BY THE 3RD RESPONDENT Exhibit P6(A) TRUE COPY OF THE REQUEST LETTER DATED 15.03.2022 SEEKING EARLY DISPOSAL OF THE CONDONATION APPLICATION Exhibit P6(B) TRUE COPY OF THE REMINDER LETTER DATED 13-09- 2022 SEEKING EARLY DISPOSAL OF THE CONDONATION APPLICATION Exhibit P7 A TRUE COPY OF CIRCULAR NO 2/2020 DATED 03.01.2020 Exhibit P8 A TRUE COPY OF CIRCULAR NO 267/482/77-IT DATED 09.02.1978 Exhibit P9 A TRUE COPY OF CIRCULAR NO 10 — [F.NO.197/55/2018-ITA-I] DATED 26.03.2021

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