RAILWAYMENS HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. NO.E-738 vs. THE INCOME TAX OFFICER

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WP(C)/4364/2021HC KeralaKLHC01011761202119 February 2021Author: HONOURABLE MR. JUSTICE A.M.BADAR5 pages
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What did the High Court hold?

The High Court held that the application for condonation of delay filed by the petitioner under Section 119(b) and (c) of the Income Tax Act, 1961, was still pending before the 2nd respondent. The Court found it necessary in the fitness of things to direct the 2nd respondent to decide the said application after hearing the petitioner. The Court did not decide on the merits of the exemption claim or the validity of the delay itself, but rather on the procedural aspect of the pending condonation application. The operative direction was to the 2nd respondent to consider and pass an order on the application for condonation of delay, ensuring the petitioner's presence and granting an opportunity of hearing, within two months from the date of communication of the order.

What were the facts?

The petitioner, Railwaymens House Building Co-operative Society Ltd., sought exemption from income tax under Section 80P of the Income Tax Act. To avail this exemption, returns were required to be filed by the due date as per Section 80AC. The petitioner could not file its return by the due date of 31.10.2019 because its accounts were not audited in time. Consequently, the respondents issued a communication (Ext.P7) stating that the claimed exempted amounts would be adjusted against the tax liability. The petitioner had filed an application for condonation of delay in filing the return with the Principal Commissioner of Income Tax (2nd respondent) under Section 119(b) and (c) of the Income Tax Act, which was pending.

What were the issues?

1. Whether the petitioner is entitled to claim exemption under Section 80P of the Income Tax Act, 1961, subject to filing returns by the due date under Section 80AC. 2. Whether the delay in filing the return can be condoned by the Principal Commissioner of Income Tax under Section 119(b) and (c) of the Income Tax Act, 1961. Assessee's arguments: The petitioner argued that it is entitled to exemption under Section 80P. It contended that the delay in filing the return was due to the non-auditing of accounts before the due date. The petitioner further argued that the 2nd respondent has the power to condone the delay under Section 119(b) and (c) and that its application for condonation was pending. The limited prayer was for a direction to the 2nd respondent to consider and decide this application after granting a hearing. Revenue's arguments: The learned Standing Counsel appearing for the respondents opposed the petition.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80AC,Section 119

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 A.M.BADAR FRIDAY, THE 19TH DAY OF FEBRUARY 2021 / 30TH MAGHA,1942 WP(C).No.4364 OF 2021(U) PETITIONER/S: RAILWAYMENS HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. NO.E-738, REPRESENTED BY ITS ASST. REGISTRAR/SECRETARY, RAILWAY BUILDING NO.77/A, ERNAKULAM JUNCTION, KOCHI,PIN-682 016 BY ADVS. SRI.T.R.HARIKUMAR SRI.ARJUN RAGHAVAN RESPONDENT/S: 1 THE INCOME TAX OFFICER, NON CORPORATE WARD 1(4), C.R.BUILDING, I.S. PRESS ROAD, COCHIN,PIN-682 018 2 THE PRINCIPAL COMMISSIONER OF INCOME TAX, C.R.BUILDING, I.S. PRESS ROAD, COCHIN,PIN-682 018 SC- SRI.CHRISTOPHER ABRAHAM THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.02.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.4364 OF 2021 2 JUDGMENT Dated this the 19th day of February 2021 Heard both sides. 2. Learned Counsel for the petitioner submits that the petitioner co-operative society is entitled for exemption from payment of income tax on certain transaction as per the provisions of Section 80 P of the Income Tax Act. However, for availing such exemption, returns are to be filed on or before the due date as per the provisions of Section 80AC of the Income Tax Act. It is further argued by learned Counsel for the petitioner that, as the accounts were not audited before the due date, i.e., on 31.10.2019, the petitioner could not file the returns on or before the due date and that is how the respondents have sent the communication at Ext.P7 informing the petitioner that the amount which were claimed to be exempted shall be adjusted towards the tax liability. Learned Counsel for the petitioner further argued WP(C).No.4364 OF 2021 3 that the 2nd respondent, The Principal Commissioner of Income Tax, has power to condone the delay in filing the return under Section 119 (b) and (c) of the Income Tax Act, 1961, and the application of the petitioner for condonation of delay is pending before the said authority. The limited prayer made in this petition is to direct the 2nd respondent to consider and decide the said application after granting opportunity of hearing to the petitioner. 2. Learned Standing Counsel appearing for the respondents opposed the petition. 3. The application for condonation of delay filed by the petitioner under Section 119 (b) and (c) of the Income Tax Act, 1961, is still pending on the file of the 2nd respondent. In the fitness of things, it is necessary to direct the 2nd respondent to decide the said application by hearing the petitioner.

Hence, this order.

4.

The petition is allowed. The 2nd respondent is directed to consider and pass the order on application, Ext.P4, for condonation of delay by WP(C).No.4364 OF 2021 4 securing presence of the petitioner and by granting him opportunity of hearing, within a period of two months from the date of communication of this order. The parties to act on the authenticated copy of this order. Accordingly, the petition is allowed. A.M.BADAR JUDGE uu 20.2.2021

WP(C).No.4364 OF 2021 5 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 AOF THE REQUEST DATED 21.11.2019 SUBMITTED BEFORE THE 1ST RESPONDENT EXHIBIT P2 AOF FORM NO.3CA DATED 12.11.2019 SUBMITTED BY THE PETITIONER EXHIBIT P3 AOF FORM NO.3CA DATED 12.11.2019 SUBMITTED BY THE PETITIONER EXHIBIT P4 AOF THE REQUEST,FILED BEFORE THE 2ND RESPONDENT FOR CONDONATION OF DELAY CAUSED IN FILING THE RETURNS ALONG WITH ACKNOWLEDGMENT DATED 23.12.20109 EXHIBIT P5 AOF THE NOTICE DATED 13.03.2020 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER EXHIBIT P6 AOF THE INCOME TAX RETURN ACKNOWLEDGMENT FOR THE ASSESSMENT YEAR 2019-2020 DATED 29.09.2020 EXHIBIT P7 AOF THE COMMUNICATION DATED 08.10.2020 ISSUED BY THE CENTRALIZED PROCEEDING CENTER TO THE PETITIONER EXHIBIT P8 AOF THE ONLINE RESPONSE FILED BY THE PETITIONER TO EXT-P7 DATED NIL EXHIBIT P9 AOF THE DETAILED REPLY DATED 29.10.2020 FURNISHED BY THE PETITIONER TO EXT.P7 EXHIBIT P10 AOF THE INTIMATION UNDER SECTION 143(1) OF THE INCOME TAX ACT DATED 04.01.2021

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