Court Orders Suspension of Demand Notices Pending Adjudication of Delayed Audit Report Application

The court directed the respondent to promptly adjudicate the pending application for condonation of delay in filing the Form 10B Audit Report. It ordered to suspend the demand notices until the application is resolved, emphasizing that the interim order is effective until the application's disposal.

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Issues:
1. Delay in filing Income Tax Return leading to denial of exemption under Section 11.
2. Pending application for condonation of delay in filing Form 10B Audit Report.
3. Issuance of Demand Notice for payment of assessed income.

Analysis:

Issue 1: Delay in filing Income Tax Return and denial of exemption under Section 11
The petitioner, an Educational and charitable Society, sought a writ of mandamus to direct the 1st respondent to dispose of Ext.P3, an application for condonation of delay, and keep the demand in Ext.P4 in abeyance. The petitioner's Income Tax Return for the assessment year 2017-18 was not filed within the extended deadline, leading to the denial of exemption under Section 11. The assessment order dated 27/02/2019 (Ext.P1) assessed the income at Rs. 1,11,20,325/- without the benefit of exemption under Section 11. The petitioner attributed the delay to internal disputes among members. The court acknowledged the delay but emphasized the need for adjudication on the pending application (Ext.P3) before enforcing the demand.

Issue 2: Pending application for condonation of delay in filing Form 10B Audit Report
The petitioner filed an application (Ext.P3) seeking condonation of delay in filing Form 10B Audit Report, citing provisions of Section 119 2(B) of the Income Tax Act and relevant circulars. The application was filed in January 2020 and remained pending without adjudication. The court directed the 1st respondent to take a call on Ext.P3 expeditiously within two months, highlighting the importance of resolving the pending application before enforcing the demand raised in Ext.P4.

Issue 3: Issuance of Demand Notice for payment of assessed income
The 2nd respondent denied the exemption under Section 11 due to the delay in filing the Income Tax Return, resulting in the issuance of a Demand Notice (Ext.P2) for payment of the assessed income. The petitioner, through its counsel, emphasized the need for adjudication on Ext.P3 before enforcing the demand. The court, without delving into the merits of Ext.P3, directed the 1st respondent to decide on the application within two months and ordered to keep the demand raised in Ext.P1, P2, and P4 in abeyance until the application is disposed of.

In conclusion, the court disposed of the writ petition by issuing directions for the expeditious adjudication of the pending application (Ext.P3) for condonation of delay in filing Form 10B Audit Report and ordered to keep the demand notices in abeyance until the application is resolved, emphasizing that the interim order is only valid until the disposal of Ext.P3.

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