M/S. Sri Gomandir Seva Trust, Sundargarh v. Commissioner Of Income Tax (Exemption), Hyderabad And Others

IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 24922 of 2023 M/s. Sri Gomandir Seva Trust, Sundargarh -versus- Commissioner of Income Tax (Exemption), Hyderabad and others …. Petitioner ….Opposite Parties Advocates appeared in the cases: For Petitioner : Mr. Sidhartha Ray, Sr. Advocate : Mr. R. Chimanka, AdvocateSr. Standing Counsel (Revenue) For Opposite Parties CORAM: DR. JUSTICE S.K. PANIGRAHI JUSTICE G. SATAPATHY Order No. 04. ORDER 08.09.2023 1. Thepetitioner by way of this application has prayed to quash the order passed on 14.06.2023 by the CIT (Exemption)-cum-OPNo.1 refusing to condone the delay U/S.119(2)(b) of Income Tax Act (in short the ‘IT’ Act) in filing Form No.-10B for the Assessment Year (AY) 2020-2021 and, consequently, the demand notice/intimation dated 30.11.2021 issued U/S.143(1) of the IT Act. 2. According to the petitioner, it is a trust as per section 2(15) of Income Tax Act and in order to avail the benefit of exemption U/Ss.11 and 12 of the IT Act, the society of trust has to file Audit Report in Form No.10B as required U/S.12A(b) of IT Act, which W.P.(C) No. 24922 of 2023 Page 1 of 5 was supposed to be filed by 15.02.2021 in this case, but due to unavoidable circumstance, the petitioner could file Form No.10B on 24.03.2021 along with an application for condonation of delay of 38 days. OPNo.1, however, on receipt of Form No.10B along with the application for condonation of delay (Annexure-1), rejected the aforesaid application for condonation of delay despite a circular being issued by Central Board of Direct Taxes (CBDT) to condone the delay up to three years, which eventually led the CPC (OPNo.3) to reject the claim for exemption by raising a demand of Rs.10,73,220/- (Annexure-2) giving rise to challenge of Annexures-1 and 2 by the petitioner in this writ petition. 3. Mr. S. Ray, learned Senior Counsel appearing for the petitioner submits by drawing attention of the Court to the circular (Annexure-7) issued by CBDT on 19.07.2022 that the Commissioner of Income Tax (CIT) has been authorized and empowered U/S.119(2)(b) of the Act to condone the delay up to three years, but the CIT (Exemption), by way of Annexure-1 has refused to condone the delay of mere 38 days without any justifiable reason and, thereby, the orders passed on Annexures-1 and 2 are unsustainable in the eye of law and liable to be quashed. Mr. Ray accordingly, prays to quash the orders passed under Annxure-1 and 2. 4. On the other hand Mr. R. Chimanka, learned Senior Standing Counsel for Revenue by drawing the attention of the Court to the counter affidavit of OPNos.1 to 3, submits that since the petitioner was unable to explain the delay, the CIT (Exemption) has not committed any illegality in refusing to condone of delay even for 38 days and, therefore, the orders passed under Annexures-1 and 2 cannot be interfered with. Mr. Chimanka, accordingly prays to dismiss the writ petition. 5. There appears no dispute about the petitioner filing Form No.10B for the AY 2020-2021 with a delay of 38 days on 24.03.2021, but CBDT by way of a circular issued on 19.07.2022U/S.119(2)(b) of the I.T. Act, has delegated power to the Commissioner of Income Tax (CIT) to condone the delay. In paragraphs-2 and 3 of such circular, it has been stated as follows: “2. Further to the powers delegated to Commissioners passed under Annexures-1 and 2 cannot be interfered with. Mr. Chimanka, accordingly prays to dismiss the writ petition. 5. There appears no dispute about the petitioner filing Form No.10B for the AY 2020-2021 with a delay of 38 days on 24.03.2021, but CBDT by way of a circular issued on 19.07.2022U/S.119(2)(b) of the I.T. Act, has delegated power to the Commissioner of Income Tax (CIT) to condone the delay. In paragraphs-2 and 3 of such circular, it has been stated as follows: “2. Further to the powers delegated to Commissioners of Income-tax as discussed above, the CBDT hereby directs that where there is delay of beyond 365 days upto three years in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the Pr. Chief Commissioners of Income-tax/Chief Commissioners of Income-tax are authorized to admit such applications of condonation of delay under section 119(2) of the Act and decide on merits.” directs that where there is delay of beyond 365 days upto three years in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the Pr. Chief Commissioners of Income-tax/Chief Commissioners of Income-tax are authorized to admit such applications of condonation of delay under section 119(2) of the Act and decide on merits.” 3. The Pr. Chief Commissioner/Chief Commissioner or Commissioners of Income-tax, as the case may be, while entertaining such applications for condonation of delay in filing Form No. 10B, shall satisfy themselves that the applicant was prevented by reasonable cause from filing such Form within the stipulated time.”or Commissioners of Income-tax, as the case may be, while entertaining such applications for condonation of delay in filing Form No. 10B, shall satisfy themselves that the applicant was prevented by reasonable cause from filing such Form within the stipulated time.” A plain glance of the aforesaid circular, it goes without saying that the Pr. Chief Commissioner/Chief Commissioner or Commissioners of Income-tax while entertaining such application for condonation of delay in filing Form No.10B shall satisfy themselves that the applicant was prevented by a reasonable cause from filing such Form within the stipulated time. The very use of word “reasonable cause” in the aforesaid circular itself denotes that it should be interpreted liberally to advance cause of justice W.P.(C) No. 24922 of 2023 Page 3 of 5 and mere condoning the delay is per se would not decide the matters on merit, rather it would facilitate the party to redress its grievance on merit. 6. In the present case, the petitioner by way of an application under Annexure-4 has prayed for condonation of delay in filing Form No.10B for the AY 2020-2021, which was in fact acknowledged by the Office of Commissioner of CIT (Hyderabad) by requesting the petitioner to furnish some information for condonation of delay in Annexure-5. It was also stated by the petitioner that since the audit of “books of account” could not be finalized before due date, there was a delay of 38 days in filing the Form No.10B. Besides, the petitioner has also relied upon the order passed by Apex Court in Re. Cognizance for Extension of Limitation, wherein the Apex Court has held: “1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.”appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.” “1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.”appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.” 7. In view of the aforesaid circular of CBDT in Annexure-7 and the order passed by the Apex Court as placed in Annexure-6 and, consequently, the explanation offered by the petitioner to condone the delay, this Court is convinced that the explanation offered by the petitioner for 38 days in delay in filing Form No.10B under Rule-17 of Income Tax Rules for the AY 2020-2021 is acceptable one, but the CIT (Exemption) being over technical has refused to condone the delay and, accordingly, rejected the application filed by the assessee for condoning the delay U/S.119(2)(b) in filing Form No. 10B, which in the circumstance is required to be set aside and the delay for the aforesaid period deserves to be condoned. 8. In the result, the writ petition is allowed on contest, but in the circumstance there is no order as to costs. Consequently, Annexures-1 and 2 are hereby set aside and the matter is remitted back to the concerned authority for deciding the matter on merits. 9. Accordingly, this Writ Petition is disposed of. (Dr.S.K.Panigrahi) Justice (G. Satapathy) Judge Subhasmita Signature Not Verified Digitally SignedSigned by: SUBHASMITA DASDesignation: Jr.StenographerReason: AuthenticationLocation: High Court of OrissaDate: 15-Sep-2023 17:13:03 W.P.(C) No. 24922 of 2023 Page 5 of 5