The assessee is entitled to exemption under Section 11(2) of the Income-tax Act, 1961, despite not having filed the notice in Form No. 10 within the time prescribed by Rule 17 of the Income-tax Rules, 1962, if the assessee had reasonable cause for not filing the return by the due date and if the assessee could presume that his request for extension of time had been granted.

M.M.Punchhi, J.

1. On the direction of this court under Section 256(2) of the I.T. Act, 1961, the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, has referred the following question of law for settlement:

" Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the order of the income-tax authorities denying exemption under Section 11(2) of the Income-tax Act, 1961, to the assessee on the ground that it had failed to give notice in Form No. 10 within the time prescribed by Rule 17 of the Income-tax Rules, 1962?"

2. The assessee is a trust. It came into existence on March 1, 1962. Up to the assessment year 1970-71, the trust used to derive income from donations and interest but in the succeeding year 1971-72, the assessment year relevant, the assessee had also income from property. In order to claim exemption under Section 11(2) of the said Act, the assessee in the first instance, filed an application on June 28, 1971 (annex. D with the statement), praying to the ITO that for the assessment year in question, return was to be filed before June 30, 1971, but time be extended uptill July 31, 1971. It attracted no response from the ITO. Then again on July 28, 1971, a similar request was repeated (annex. E with the statement) whereby time was sought to be extended uptill August 31, 1971. This too solicited no response from the ITO. Suggestedly, a form (annex. F with the statement) has been prescribed under the Rules to be used by the ITO for intimating to the assessee either granting extension of time up to a particular date or, in the alternative, a regret that time cannot be extended. As said before, no such intimation was sent to the assessee. However, before the expiry of the second afore-referred date, i.e., August 31, 1971, the assessee filed its return and the application for exemption under Section 11(2).

3. The ITO took the view that the notice given by the assessee for exemption of the accumulated income under Section 11(2) read with Rule 17 of the I.T. Rules, 1962, was out of time and as such the assessee could not claim exemption in respect of its accumulated income. On appeal, the AAC affirmed such view of the ITO. On further appeal, the Tribunal took the view that in order to claim exemption in respect of its accumulated income, the assessee should have filed the application in the requisite form before the expiry of the time allowed under Sub-section (1) or Sub-section (2) of Section 139, whether fixed originally or on extension, for furnishing the return of its income. Noting that the time for filing the return under Section 139(1), in the instant case, expired on June 30, 1971, and the assessee had not given any such application in the requisite form before the ITO before that date, the Tribunal held that the authorities below were justified in rejecting the claim of the assessee under Section 11(2)(a). Such view was apparently taken since the assessee had not in its hand the grant of extension of time up to July 31, 1971, as originally prayed for, and further uptill August 31, 1971, as extendedly prayed for. The matter was then brought by the assessee to this court and he succeeded in claiming a mandamus in obedience to which the question above-noted has been referred to this court for answer.

4. As is plain from the proviso to Section 139(1) of the Act, the assessee has been conferred a right to make an application in the prescribed manner to the ITO praying for extending the date for furnishing the return and the ITO may, in his discretion, extend such date. Rule 13 of the I.T. Rules, 1962, prescribed that for the said purpose, Form No. 6 be employed. In the text of Form No. 6 there is an option exercisable by deleting inappropriate words to suit the assessees needs. The option is between that " it is not possible " for the assessee or " has not been possible " for the assessee to file the return before the said date. It is plain the