BTM Social Centre Vs CIT (Exemption) (Kerala High Court)
No Assessment, No Stay, No Cause of Action: Kerala HC Rejects Trust’s Premature Bid to Freeze Tax Proceedings
Summary: In M/s BTM Social Centre v. CIT(E), O.P. (Tax) No. 4 of 2026, decided on 18 August 2026, the Kerala High Court considered whether the Income Tax Appellate Tribunal could restrain the AO from initiating or completing assessment proceedings merely because the assessee’s statutory appeal against denial of registration u/s 12A was pending before it. The Court upheld the Tribunal’s refusal to grant such a broad stay, observing that no assessment proceedings had yet been initiated. It nevertheless preserved the assessee’s right to seek an appropriate remedy if assessment action was subsequently taken.
Relevant Facts
M/s BTM Social Centre had applied for registration u/s 12A of the Income-tax Act, 1961. The CIT(E) rejected the application through an order issued in Form No. 10AD dated 27 March 2026.
The assessee challenged the rejection by filing a statutory appeal before the Cochin Bench of the Income Tax Appellate Tribunal. The substantive dispute regarding its entitlement to registration was therefore pending adjudication before the Tribunal.
While the appeal remained pending, the assessee filed a stay application, registered as S.A. No. 54/Coch/2026. Through this application, it sought restraint against all further proceedings consequential to the denial of registration, particularly any assessment proceedings that the AO might initiate during pendency of the appeal.
