SREE NARAYANA EDUCATIONAL AND CHARITABLE SOCIETY vs. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS)

On account of non-filing of the Return by the petitioner, the petitioner was received notice under section 142(1) of the Act to file the Return on or before 07/04/2018, but the same could not be filed within the time granted and in fact, it was filed on 04/05/2018. It is in this backdrop of the matter, exemption under Section 11 was denied by the 2nd respondent and assessed the Tax by invoking the provisions of Section 143(3) of the Income Tax Act, 1961, resulting into an assessment order dated 27/02/2019, Ext.P1 and the Demand Notice of even date Ext.P2 whereby the income was assessed as WP(C).No.8890 OF 2020(I) 3 Rs.1,11,20,325/- by denying the benefit of exemption under Section 11. Mr.Sajan Varghese K, the learned counsel appearing on behalf of the petitioner submits that there were certain disputes among the members and on account of that, the Return could not be filed and there was a delay. Under the provisions of Section 119 2(B) of the Income Tax and the Circular F.No. 197/55/2018 – ITA-1 dated 22/05/2019 the guidelines of the Board, the delay in filing of Form 10B Audit Report for assessment years 2016-17 and 2017-18 could be condoned. It is in this background of the matter, an application, Ext.P3 dated 30.01.2020 was filed. But it is still pending and in the meantime, the Demand, Ext.P4 dated 09.03.2020 calling upon the petitioner to pay a sum of Rs.50,101,576/- has been issued. The petitioner is thus left in lurch in the absence of any adjudication on Ext.P3. 3. Mr.Christopher Abraham accepts notice on behalf of the respondents and submits that on account of non-filing of Return within the usual period and extended period, the exemption under Section 11 had to be withdrawn/cancelled. The benefit of exemption had not been granted resulting into issuance of demand and urges this Court for dismissal of this Writ Petition.

Heard the learned counsel for parties and perused the paper book. The facts narrated above are not in dispute. Once the circular provides the WP(C).No.8890 OF 2020(I) 4 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. It is made clear that the interim order is only till the disposal of the application, Ext.P3 and not thereafter. This writ petition stands disposed of in the aforementioned directions. AMIT RAWAL N JUDGE