Saints Peter And Paul Church V. THE COMMISSIONER OF INCOME TAX (EXEMPTION)

WP(C)/16351/2023

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The case involves Saints Peter and Paul Church, a religious institution represented by its Vicar, Fr. Alphonse Panakal, who is an assessee under the Income Tax Act, 1961. The petitioner challenged the orders of the Income Tax authorities, which rejected their application for tax exemption under Sections 11 and 12 of the Act. The rejection was based on the grounds that the Audit Report in Form No.10B was not filed within the due date alongside the Income Tax Return. The petitioner argued that the Audit Report was filed in advance of the Income Tax Return, and thus there was substantial compliance with the Act. The court agreed with the petitioner, emphasizing the intention of the Central Board of Direct Taxes (CBDT) that claims under Sections 11 and 12 should not be denied merely because the Audit Report was not filed simultaneously with the return.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 761886 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 19-06-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: P J ANILKUMAR; K N SREEKUMARAN; N SANTHOSHKUMAR
• Keywords: Assessment Year; Audit report; Income Tax Return; Intimation; Rectification Application; Religious Institution; Violation of Section 12A(b)
• Section: 154; 143(1); 11; 12A; 264

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE N.NAGARESH MONDAY, THE 19TH DAY OF JUNE 2023 / 29TH JYAISHTA, 1945 WP(C) NO. 16351 OF 2023 PETITIONER: SAINTS PETER AND PAUL CHURCH, VENDURUTHY,KOCHI ERNAKULAM – 682 004. (REPRESENTED BY ITS VICAR, FR. ALPHONSE PANAKAL). BY ADVS. P.J.ANILKUMAR (A-1768) K.N.SREEKUMARAN N.SANTHOSHKUMAR RESPONDENTS: 1 THE COMMISSIONER OF INCOME TAX (EXEMPTION) INCOME TAX DEPARTMENT, 2ND FLOOR, SAN JUAN TOWERS, OLD RAILWAY STATION ROAD, ERNAKULAM – 682 018. 2 THE INCOME TAX OFFICER (EXEMPTION) INCOME TAX DEPARTMENT, 2ND FLOOR ,SAN JUAN TOWERS, OLD RAILWAY STATION ROAD , ERNAKULAM – 682 018. 3 THE ASSISTANT COMMISSIONER OF INCOME TAX (CPC) INCOME TAX DEPARTMENT, CENTRALIZED PROCESSING CENTRE, POST BAG NO: 2, BANGALORE – 560 100. BY ADV CHRISTOPHER ABRAHAM; SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 19.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P(C) No.16351 of 2023 2 JUDGMENT Dated this the 19th day of June, 2023 The petitioner is a religious institution represented by its Vicar who is an assessee under the Income Tax Act, 1961. The petitioner is registered under Section 12A of the Act and has been functioning as per the terms and conditions of the registration granted. 2. The petitioner states that the petitioner has filed Audit Report dated 14.07.2014 in Form No.10B for the Assessment Year 2013-2014 (Financial Year 2012-13) through Online Portal of the Income Tax Department on 24.09.2014. The same has been electronically acknowledged by the portal. Subsequent to the filing of Ext.P1 Audit Report, the petitioner has filed Income Tax Return on 17.11.2014 through the portal, providing the details of total receipts and application as prescribed under Section 11 of the Act. The 3rd respondent-Assistant Commissioner of Income Tax has rejected the claim of the application submitted by the petitioner and passed an intimation under Section 143(1) of the Act on W.P(C) No.16351 of 2023 3 27.03.2015 demanding Rs.4,33,286/- without recording any reasons for rejection by Ext.P3. 3. In response to Ext.P3 intimation, the petitioner submitted a rectification application through the portal and the same was transferred to the 2nd respondent-Income Tax Officer for rectification under Section 154 of the Act. The 2nd respondent-Income Tax Officer passed Ext.P6 order under Section 154 of the Act on 19.07.2021, confirming the intimation on the ground of not filing Audit Report in Form No.10B within the due date, without considering the Audit Report filed on the Portal. Aggrieved by Ext.P6 order, the petitioner filed Revision under Section 264 of the Act before the 1st respondent-Commissioner of Income Tax on 03.03.2023 which was also of no avail. 4. Counsel for the petitioner would submit that the impugned order of the 1st respondent-Commissioner of Income Tax is in violation of Section 12A(b) read with Ext.P8(a) instruction by the Central Board of Direct Tax. The intention of the CBDT is to ensure that a claim under Section 11 and 12 could not be denied on the ground that the Audit Report is not filed along with the W.P(C) No.16351 of 2023 4 Return and the claim is eligible even on filing the Audit Report on an anterior date. 5. Standing Counsel entered appearance on behalf of the respondents and resisted the writ petition. The Standing Counsel controverted all the material allegations made by the petitioner in the writ petition. On behalf of the respondents, it is submitted that the petitioner ought to have filed Audit Report along with Income Tax Return in view of Section 12 A(b) of the Income Tax Act. In the circumstances, the writ petition is not maintainable and liable to be dismissed, contends the Standing Counsel. 6. I have heard the learned Counsel for the petitioner and the learned Standing Counsel representing the respondents. 7. From the pleadings it is evident that the petitioner had filed the Audit Report on 24.09.2014. The Income Tax Returns were filed on 17.11.2014. Though the provision mandates that Audit Report should be filed along with Income Tax Return, as the petitioner has filed the Audit Report in advance even before filing of the Income Tax Return. I am of the view that there is substantial compliance of mandatory provisions of the Act. W.P(C) No.16351 of 2023 5 In view of the above, the writ petition is disposed of setting aside Ext.P9 order and directing the 2nd respondent to redo the assessment proceedings under the Act, after considering the Audit Report filed by the petitioner. Sd/- N.NAGARESH AMR JUDGE W.P(C) No.16351 of 2023 6 APPENDIX OF WP(C) 16351/2023 PETITIONER’S EXHIBITS Exhibit-P1 TRUE COPY OF THE E-FILING ACKNOWLEDGEMENT NUMBER:365029051240914 DATED 24..09..2014 ALONG WITH AUDIT REPORT DATED 14..07..2014 IN FORM NUMBER 10 B. Exhibit-P2 TRUE COPY OF THE INCOME TAX RETURNS FILED BY THE PETITIONER DATED 17..11..2014 ALONG WITH THE COMPUTATION OF INCOME. Exhibit-P3 TRUE COPY OF INTIMATION DATED 27..03..2015 U/S.143(1) OF THE ACT ISSUED BY THE 3RD RESPONDENT. Exhibit-P4 TRUE COPY OF THE NOTICE DATED 30..06..2021 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER. Exhibit-P5 TRUE COPY OF THE REPLY DATED 16..07..2021 AGAINST EXT-P4 FILED BEFORE THE 2ND RESPONDENT ALONG WITH THE RELEVANT ANNEXURE . Exhibit-P6 TRUE COPY OF THE ORDER PASSED BY THE 2ND RESPONDENT DATED 19..07..2021 AGAINST EXT-P4 NOTICE Exhibit-P7 TRUE COPY OF THE PETITION U/S.264 DATED 16..09..2021 ALONG WITH THE NOTARIZED AFFIDAVIT BY THE CHARTERED ACCOUNTANT FILED BEFORE THE 1ST RESPONDENT. Exhibit-P8 TRUE COPY OF THE ARGUMENT NOTE DATED 17..02..2022 FILED BEFORE THE 1ST RESPONDENT. Exhibit-P8(a) TRUE COPY OF THE CBDT INSTRUCTION NO: 1148/CBDT DATED 09..02..1978. Exhibit -P9 TRUE COPY OF THE ORDER U/S.264 OF THE ACT DATED 03..03..2023 PASSED BY THE 1ST RESPONDENT. "