Introduction: In a recent legal development, the Kerala High Court delivered a verdict in the case of Muvattupuzha Housing Co-Operative Society Ltd Vs ITO. The case revolves around notices issued under Section 148 of the Income Tax Act, 1961, and subsequent proceedings for the Assessment Year 2019-20. The key issue in this case is the non-filing of income tax returns by the petitioners based on their belief in exemption under Section 80P of the Income Tax Act.
Background: The petitioners in this case are cooperative societies registered under the provisions of the Kerala Co-operative Societies Act, 1969, and the corresponding rules. For the Assessment Year 2019-20, the petitioners chose not to file income tax returns, believing that their entire income was exempt under Section 80P of the Income Tax Act. Consequently, they deemed it unnecessary to file their income tax returns.
Assessing Authority’s Action: The assessing authority held a different belief, suspecting that the petitioners had concealed their income and attempted to evade assessment. As a result, notices were issued to the petitioners under Section 148A of the Income Tax Act. Following the petitioners’ responses to these notices, orders were issued (Ext.P3) to initiate proceedings against them. Despite these developments and orders issued under Section 148 of the Income Tax Act, the petitioners did not file their income tax returns.
Court’s Ruling: Following arguments, the petitioners’ counsel submitted that the petitions could be disposed of, granting the petitioners the liberty to file their income tax returns. The court accepted this submission and disposed of the writ petitions with the liberty for the petitioners to file their returns of income within one month from the date of the ruling.
Future Steps: If the petitioners comply with the court’s direction and file their income tax returns within the specified one-month period, the assessing authority will review the returns according to the relevant laws and expedite the process of passing the final assessment orders.
Conclusion: The Kerala High Court’s decision in Muvattupuzha Housing Co-Operative Society Ltd Vs ITO underscores the importance of adhering to income tax compliance, even when taxpayers believe they qualify for exemptions under specific sections of the Income Tax Act, such as Section 80P. The court directed the petitioners to file their income tax returns within one month, ensuring that their claims for exemption under Section 80P are thoroughly examined and assessed. This ruling serves as a reminder that taxpayers should engage in due diligence in meeting their income tax obligations and engaging with the tax authorities promptly to resolve any disputes or concerns.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The present writ petitions have been filed impugning the notices issued under Section 148 of the Income Tax Act 1961 and further proceedings taken pursuant to the notices issued for the Assessment Year 2019-20.
2. The petitioners are Co-operative Societies registered under the provisions of the Kerala Co-operative Societies Act 1969 and Rules made thereunder. The petitioners did not file the return of their income for the Assessment Year 2019-20 on the belief that the petitioners’ entire income was exempt under Section 80P of the Income Tax Act, and, therefore, they were not required to file the return of their income.
3. The assessing authority believes that the petitioners have concealed their income and tried to escape the assessment. The petitioners were therefore issued notices under Section 148A, and after considering their response, the orders in Ext.P3 were passed for proceeding against them. In response to the orders passed under Section 148 of the Income Tax Act, the petitioners have not filed their return of income.
4. After some argument, the learned Counsel for the petitioners submits that these petitions may be disposed of with liberty to the petitioners to file the return of income and take all the pleas which are available to them under the law in respect of their claim for their income being jumped under Section 80P of the Income Tax Act.
5. Considering the said submission, the present writ petitions are disposed of with liberty to the petitioners to file returns of their income within a period of one month from today. If the petitioners file their return of income within a period of one month from today, the assessing authority will examine the return in accordance with the law and pass the final assessment orders expeditiously.
With the aforesaid direction, the writ petitions stand finally disposed of.