Substantive exemptions under the Income Tax Act cannot be denied due to minor procedural lapses, emphasizing an equitable approach in delay condonation.

ORDER :

(BHARGAV D. KARIA, J.)

1. Heard learned advocate Mr. Manish J. Shah 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 19.12.2019 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 2017-2018 is rejected.

5. Brief facts of the case are that the petitioner is a charitable trust registered with Charity Commissioner, Ahmedabad having Registration No.A-597 dated 29.03.1952. The trust has been granted registration under section 12AA of the Act vide order dated 03.08.1977 and is running educational institutions namely H.K. Arts College of Commerce, Institute of Business Administration etc.

6. The petitioner filed its return of income for the Assessment Year 2017-2018 after claiming benefits under section 11 and 12 of the Act available to a registered trust.

7. The petitioner also filed Form No.10B dated 28.03.2018 which is an audit report prescribed under section 12A(b) of the Act.

8. The petitioner had also exercised the option of accumulation of income as per the provision of section 11(2) of the Act and accordingly filed Form No.10 on 27.03.2018 showing accumulation amounting to Rs. 31,32,000/- which is 31.04% of income of the trust for the year under consideration.

9. The petitioner received notice under section 143(2) of the Act dated 17.08.2018 informing the petitioner about the selection of its case for scrutiny assessment under Computer Aided Scrutiny Selection (CASS).

10. An intimation dated 24.03.2019 under section 143(1) of the Act was issued to the petitioner wherein demand of Rs. 3,09,408/- was raised by disallowing the benefit claimed under section 11(2) of the Act by citing the reason that the petitioner had failed to furnish Form 10 for accumulation of fund under section 11(2) of the Act before the date of furnishing the return under section 139(1) of the Act i.e. 07.11.2017.

11. The petitioner thereafter preferred an application on 24.04.2019 praying for condonation of delay in filing Form No.10 before the respondent.

12. The respondent however, issued a show cause notice dated 09.05.2019 to the petitioner to show cause as to why the condonation application should not be rejected on the ground that no genuine hardship has been shown in the said application.

13. Pursuant to such show cause notice, the respondent addressed another letter dated 24.05.2019 reiterating its stand and requested the respondent to condone the delay in filing Form No.10.

14. The petitioner thereafter through its Chartered Accountant addressed a letter dated 01.08.2019 to the office of respondent submitting copy of Form Nos.10 and 10B along with copies of deposit receipts from HDFC Ltd and Gruh Finance Ltd aggregating to Rs. 38,00,000/- as against the accumulation claim of Rs. 31,32,000/- as per the direction of PCIT to show compliance of pre-conditions laid down under section 11(2) of the Act.

15. The respondent however, passed impugned order dated 19.12.2019 under section 119(2)(b) of the Act rejecting the petitioner’s application for condonation of delay in filing Form No.10 by stating that delay in filing Form 10 had occurred due to internal administrative problems and thus it could not be considered as a reasonable cause for condonation of delay.

16. The Assessing Officer also passed assessment order dated 19.12.2019 under section 143(3) of the Act assessing the total income of the petitioner at Rs. 31,32,000/- after denying