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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, NIRAL R. MEHTA, JJ.
Shri 108 Parshwanath Bhakti Vihar Jain Trust - Petitioner
Versus
Commissioner of Income Tax (EXEM) or His Successor - Respondent
R/Special Civil Application No. 17385 of 2023
Decided On : 13-08-2024
Condonation - Income Tax - Income Tax Act, 1961, Sections 11, 12, 119(2)(b), 143(1), 154 - The court emphasized the need for a liberal interpretation of 'genuine hardship' in condoning delays in filing Form 10B, allowing the petitioner's request based on substantial compliance and equitable considerations.
Fact of the Case:
The petitioner, a public charitable trust, sought to condone a 34-day delay in filing Form 10B for AY 2018-2019, citing technical issues and the accountant's illness as reasons for the delay. The application was rejected by the respondent.
Finding of the Court:
The court found that the petitioner had sufficiently explained the delay and had a history of compliance with tax regulations. It noted that the respondent's rejection was overly strict and did not consider the equitable factors involved.
Issues: Whether the respondent erred in rejecting the petitioner's application for condonation of delay in filing Form 10B under Section 119(2)(b) of the Income Tax Act.
Ratio Decidendi: The court held that the interpretation of 'genuine hardship' should be liberal, allowing for substantial compliance with procedural requirements, especially for public charitable trusts that have historically met the conditions for tax exemptions.
Result: The petition is allowed, and the impugned orders are quashed, remanding the matter for condonation of delay in filing Form 10B.
JUDGMENT :
Bhargav D. Karia, J.
1. Heard learned advocate Mr. S.N. Divatia for the petitioner and learned advocate Ms. Maithili D. Mehta for the respondent.
2. Having regard to the issue involved in this petition which is in a very narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.
3. Rule returnable forthwith. Learned advocate Ms. Maithili Mehta waives services of notice of rule on behalf of the respondent.
4. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for quashing and setting aside the order dated 21.12.2021 passed under section 119(2)(b) of Income Tax Act, 1961 (For short “the Act”) whereby the application filed by the petitioner to condone the delay in filing Form No.10B for Assessment Year 2018-2019 is rejected.
5. Brief facts of the case are that the petitioner is a public charitable trust constituted under the Deed of Settlement dated 22.08.1974 which is registered under the Bombay Public Trust Act, 1950 (as applicable to the state of Gujarat) having registration no. A/744/Patan Dt. 22.10.2003. The Petitioner is also registered under section 12A(a) of the Act vide certificate dated 05.11.1976 issued by Commissioner of Income-tax Bombay City-4 Bombay. The petitioner trust derives income by way of voluntary contributions, corpus donation and other sources.
6. The Petitioner Trust is engaged mainly in public charitable and religious activities. The Petitioner trust had filed its return of income for A.Y.2018-2019 on 26.09.2018 declaring total income at Rs.Nil wherein inter-alia it had claimed voluntary contributions amounting to Rs.2,47,01,720/- and corpus donation of Rs. 16,67,534/- against which the exemption under section 11 aggregating to Rs.3,69,08,845/- (but limited to income) was claimed.
7. This return was processed under section 143(1) by Centralized Processing Centre Bengaluru (CPC) vide order dated 17.10.2019 wherein the exemption claimed aggregating to Rs.3,69,08,845/- was rejected and the total income was assessed at Rs.3.26,61,664/- and demand totaling to Rs.1,34,40,907/- was raised.
8. The petitioner thereafter had filed rectification application under section 154 of the Act against the order passed under section 143(1) by CPC which was disposed of by the Assessing Officer on 30.12.2020 vide order under section 154 read with section 143(1) whereby the exemption under section 11 was restored.
9. The petitioner thereafter preferred an application dated 13.09.2021 for condonation of delay in e-filing of form 10B for AY 2018-2019 on 27.09.2021. In the said application, the petitioner pointed out that the Form 10B could be filed on 30.10.2018 due to technical error in the system and the delay was not intentional and that the tax audit report in form 10B was already obtained on 28.08.2018 whereas return was filed on 26.09.2018.
10. The claim of deduction under sections 11 and 12 of the Act towards application of income for the objects of the trust was rejected by CPC Bengaluru for the reason of failure to file Form No.10B for A.Y.2018-2019 within the due date stipulated under the Act.
11. It is the case of the petitioner that the petitioner had filed Form 10B on 30.10.2018 after filing the ITR on 30.09.2018. Therefore, the petitioner made application on 27.09.2021 for condonation of delay for 34 days in e-filing of Form 10B which was rejected by the respondent vide order dated 21.12.2021 on the ground that the petitioner had failed to furnish reply in response to the letters dated 5.10.2021 and 12.11.2021 asking to furnish specific reasons of the delay.
12. The petitioner thereafter made a re- request to condone the delay vide letter dated 27.12.2021 to the respondent but the said re-request was rejected by the respondent vide communication dated 31.12.2021 on the ground that the period of delay of 34 days was a long time and a reminder letter dated 12.11.2021 was issued which was not responded.
13. In the mean
The court established that a liberal interpretation of 'genuine hardship' is essential in tax matters, particularly for public charitable trusts, to ensure substantial justice.
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The main legal point established in the judgment is that while the CBDT's circular authorized the Commissioner to admit belated applications for condonation of delay for up to 365 days, a special ord....
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Substantive exemptions under the Income Tax Act cannot be denied due to minor procedural lapses, emphasizing an equitable approach in delay condonation.
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