Denial of Exemption Claim u/s 10(23C) (VI) of Income Tax Act: Kerala HC directs to Consider Stay Petition [Read Order]

The Kerala High Court directed to consider a stay petition against the denial of an exemption claim under section 10(23C) (VI) of the Income Tax Act, 1961. The court held that it cannot presume the outcome of the application filed before the 1st respondent for condoning the delay in submitting the audit report under Section 119(2)(b) of the Income Tax Act. The Centre for Management Development, the petitioner is a self-supporting autonomous educational institution that provides research, consulting and training support to development agencies, corporate sectors and the Government, both at the National and State level. The petitioner is managed by a Governing board comprising a Chairman, three Senior Secretaries to the Government of Kerala, four Chief Executives of public enterprises, two Academicians in the field of management, two industrialists and two representatives of professional bodies. The Director is the member Secretary to the Board. The petitioner got a certificate under Section 12A of the Income Tax Act, 1961 ('the IT Act') under the approval granted by the respondents on 22.01.2020. The petitioner has been claiming exemption under Section 10(23C)(VI) of the IT Act from the payment of income tax on its income. The notices under Section 143(1) and r/w Sections 153 of the IT Act were issued to the petitioner. The assessment order was completed concerning the Assessment Years 2018-2019, 2020-2021, 2021-2022 and 2022-2023 in series. The petitioner has been denied the exemption as the petitioner did not submit the audit report on time in respect of the aforementioned assessment years. After the assessment orders had passed, the petitioner moved an application under Section 119(2)(b) of the Act before the 1st respondent in a series for condoning the delay in submitting the audit reports belatedly before the assessing authority. However, no decision has been taken in the said application. Counsel for the petitioner submitted that the petitioner has filed appeals along with the stay petition and condonation of delay applications against the assessment order in respect of assessment years 2021-2022. However, in respect of the other assessment years, the petitioner has not filed the appeals. Counsel for the petitioner also submitted that the petitioner would file an appeal in respect of all the assessment years in question within 15 days from today along with the applications for condoning the delay in filing the appeals and the stay petitions. Counsel for the petitioner further submitted that till the decision is taken on the application for condoning the delay by the 1st respondent under Section 119(2)(b), the recovery proceedings may directed to be kept in abeyance. The petitioner has suffered the assessment orders and an appeal has been filed only in respect of one assessment year along with a stay petition. Justice Dinesh Kumar Singh viewed that the court cannot presume the outcome of the application filed before the 1st respondent for condoning the delay in submitting the audit report under Section 119(2)(b). The writ petition is disposed of, with direction to the 1st respondent to consider and pass appropriate order on a series of applications seeking condonation of delay in filing the audit reports under Section 119(2)(b) of the IT Act, expeditiously and preferably within two months by law. The court held that “The petitioner may file appeals in respect of other assessment years along with the applications for condoning the delay as well as the stay petitions. If the petitioner deposits 20 % of the assessed amount in respect of all the assessment years and files the appeals in respect of other assessment years for which the petitioner has not filed the appeals, along with the application for condoning of delay and stay petition, the further recovery of the assessed amount shall be kept in abeyance till disposal of the appeals.” Nitish Sathesh Shenoy and Sherry Samuel Oommen appeared on behalf of the petitioner. Sri Jose Joseph appeared for the respondents. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates