Income tax return not file due to legal tussle between two parties

The present committee shall submit the reason for not filing the income tax return to IT department with a copy of court order of freezing the account.

Given the temple's situation, where a court has frozen the bank account due to a legal dispute between registered members, there are potential implications for non-compliance with statutory requirements, such as income tax return filing.

Possible Issues: - *Penalty for Late Filing*: The temple may face penalties for late filing of income tax returns. The penalty can be up to Rs. 5,000 for late filing, and an additional 1% interest per month on the tax due.- 

*Loss of Tax Benefits*: If the temple fails to file its income tax return on time, it may lose out on tax benefits, such as deductions and exemptions.

- *Prosecution*: In extreme cases, the income tax department may initiate prosecution proceedings for willful failure to file returns, which can lead to imprisonment and fines. Procedure to Assess the Bank Account:

 To assess the bank account, the temple can follow these steps: 1. *Obtain a Court Order*: The temple should obtain a court order to unfreeze the bank account or allow access to the account for the purpose of filing tax returns.

 2. *File a Condonation of Delay Request*: The temple can file a condonation of delay request with the income tax department, explaining the reasons for the delay in filing tax returns.

 3. *File the Income Tax Return*: Once the bank account is accessible, the temple should file its income tax return as soon as possible, paying any applicable taxes and interest.

4. *Seek Professional Advice*: It's recommended that the temple seeks the advice of a tax professional or chartered accountant to ensure compliance with all tax laws and regulations.

 Registration under Societies Act or Association of Persons: As the temple is registered under the Societies Act or Association of Persons, it's essential to ensure that all tax filings and compliance requirements are met to avoid any potential issues with the income tax department or other regulatory bodies.

Recently, the Delhi High Court observed that the order freezing bank accounts not to remain in force for more than sixty days from date of order under sub-section (8-A) to Section 132 of the Income Tax Act, 1961.

Without access to funds, a person/business can be completely paralysed. Financial restriction can adversely impact almost all aspects of one’s existence. From basic necessities to large liabilities, everything will be negatively affected, some of which will carry long-term consequences.

You can consult an auditor in the local and try to solve the issue.

Admittedly, the matter is subjudice. The parties can bring the present stalemate to the notice of the Court and seek appropriate remedies.

Given the court-frozen account, the temple faces serious compliance risks: penalties up to ₹5,000, monthly interest on tax due, loss of exemptions, and potential prosecution for willful failure to file. To resolve this, the temple must seek a court order to access funds, file a condonation of delay request with the IT Department, and immediately file returns once access is granted.

For expert guidance on navigating this complex legal and tax situation, contact Kanakkupillai.