Shree Maharaja Agrasen Seva Sansthan v. Commissioner Of Income Tax (Exem) Or His Successor ==========================================================Appearance

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 13536 of 2021 ========================================================== SHREE MAHARAJA AGRASEN SEVA SANSTHAN Versus COMMISSIONER OF INCOME TAX (EXEM) OR HIS SUCCESSOR ==========================================================Appearance: MR SN DIVATIA(1378) for the Petitioner(s) No. 1MR MR BHATT, SENIOR ADVOCATE FOR M R BHATT & CO.(5953) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALAand HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 05/04/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1.By this writ-application under Article 226 of the Constitutionof India, the writ-applicant has prayed for the following reliefs:- 10(a) To issue a writ of certiorari or in the nature of certiorarior any other appropriate writ, orders or directions quashing andsetting aside the impugned order dt.17-6-2021 passed u/s.119(2)(b) of the Act [Annexure A] rejecting the application forcondonation of delay in filing of Form No.10B for A.Y.2014-15 aswell as the orders passed in consequence to the impugned order. (b) To issue a writ of mandamus or in the nature of mandamusor any other appropriate writ, orders or directions to theRespondent condoning the delay in filing the Form No.10B forA.Y.2014-15 and allow all consequential reliefs, allowances,deductions & exemptions as permissible under the Act. (c) To allow the petitioner to amend the petition in view of theorder passed, if any, by the respondent disposing off theobjections. (d) To call for the records of the proceedings, look into themand be pleased to issue a writ of certiorari or any otherappropriate writ, order or directions quashing the impugnednotice and order. (e) Pending the hearing and final disposal of this petition ask therespondent and its subordinates not to take any action or to doanything in furtherance and pursuance of this impugned order. (f) To allow this petition with cost. (g) To pass any further or other orders as the Hon’ble Court maydeem proper in the interest of justice and in the circumstances ofthe case. 2.The impugned order passed by the respondent under Section-119(2)(b) of the Income-tax Act, 1961 [for short ‘the Act, 1961’]dated 17.06.2021 declining to condone the delay reads thus:- ORDER U/S/119(2)(b) OF THE INCOME-TAX ACT, 1961 The assessee vide letter dated 22.03.2021 has sought Condonationfor delay in filing Form 10B for A.Y.2014-15. As per thedocuments on file, the assessee has filed the return of income forA.Y.2014-15 on 22.07.2014, but Form 10B is filed only on18.03.2021. The reason for the delay is mentioned in applicationas “due to technical problem and no support from software”. Inview of the same, condonation has been sought. 2.As the reason given cannot be taken as reasonable cause,letter was issued to the assess vide this office letter dated08.04.2021 to show cause why its application should notrejected. The assessee was requested to file its reply within 7days of receipt of the letter. The assessee vide its reply dated17.04.2021 and 22.04.2021 has reiterated that the delay was onlyon account of technical issues. 3.The reply of the assessee is not found to be acceptable asit could have filed the Audit report subsequently withoutconsiderable delay. In the instant case, the delay is more than 6years from the date of filing of return. The reason due totechnical error Form No.10B could not be filed by more than 6years is not satisfactory and acceptable reason. Accordingly,taking into account the instructions given in para 4(ii) of Circular No.10/2019 dated 22.05.2019, I hereby reject the Condonationapplication for delay in filing of Audit report in Form 10B forA.Y.2014-15. 3.The respondent has filed reply stating as under:- 3.The reply of the assessee is not found to be acceptable asit could have filed the Audit report subsequently withoutconsiderable delay. In the instant case, the delay is more than 6years from the date of filing of return. The reason due totechnical error Form No.10B could not be filed by more than 6years is not satisfactory and acceptable reason. Accordingly,taking into account the instructions given in para 4(ii) of Circular No.10/2019 dated 22.05.2019, I hereby reject the Condonationapplication for delay in filing of Audit report in Form 10B forA.Y.2014-15. 3.The respondent has filed reply stating as under:- “3.At the outset, I humbly submit that the petitioner haschallenged the order dated 17.06.2021 rendered by therespondent – Commissioner of Income Tax (Exemptions),Ahmedabad in exercise of powers conferred under Section 119(2)(b) of the Income Tax Act, 1961 (herein after referred to as ‘theAct’) whereby the petitioner’s application for condoning the delaycaused in filing the Form 10B for the Assessment Year 2014-2015came to be rejected on the ground that the sole reason oftechnical problem cannot be said to be sufficient ground forcondoning huge delay of six (6) years. Furthermore, the reasonsof technical problem and no support from software stated by thepetitioner are self serving inasmuch as the petitioner did file itsaudit report within time for the subsequent assessment years. Isubmit such delay in filing Form 10B was due to inaction andlethargic approach on part of the petitioner. The powers underSection 119(2)(b) of the Act has been exercised diligently andjudiciously after providing an opportunity of hearing to thepetitioner and considering the material available on record. Therebeing no flaw in the decision making process as well as noviolation of the principles of natural justice, the instant petitionis misconceived and, therefore, requires to be dismissed. 4.The facts in a nutshell are that the petitioner filed returnof income for A.Y. 2014-15 on 22.07.2014. An intimationu/s.143(1) came to be served on 16.03.2016. The petitioner filedForm 10B online on 18.03.2021 after long gap of 6 years withoutany application for condonation of delay. The petitioner –assessee filed an application under Section 119(2)(b) of the Actbefore the respondent on 22.03.2021 requesting for condonationof delay. The dates relevant are as under: 422.03.2021The petitioner filed an application forcondonation of delay in filing Form 10Bi.e. after delay of around 6 years. The above sequence clearly goes to show the lethargic and casualapproach adopted by the petitioner. I submit that no sufficientcause or explanation has been shown for condoning such hugedelay of 6 years. In view of the above, the rejection ofapplication is legal and valid. 422.03.2021The petitioner filed an application forcondonation of delay in filing Form 10Bi.e. after delay of around 6 years. The above sequence clearly goes to show the lethargic and casualapproach adopted by the petitioner. I submit that no sufficientcause or explanation has been shown for condoning such hugedelay of 6 years. In view of the above, the rejection ofapplication is legal and valid. 5(IV)With reference to para 3.4A, it is submitted that if thepetitioner came to know from the intimation u/s.143(1) dated16/03/2016 that exemptions claimed was denied due to non-filingof Form No.10B, then why Form No.10B was not uploaded by31/03/2016 u/s.139(4) of the Act, which is the main reason fordenial of exemptions u/s.11 and 12 of the Act. However, thepetitioner uploaded disagreement with demand on the CPC portalon 28/06/2016 without any attachment in support of its reply.Further, on perusal of reply letter dated 05.06.2018, it isobserved that copy of rectification application and copy of FormNo.10B was not furnished to the Assessing Officer as requestedvide letter dated 30/05/2018 to get remedy. Furthermore, theresponse downloaded from I.T. portal dated 19/12/2018 whereinit was clearly mentioned that rectification rights has beenavailable with the Assessing Officer, then why petitioner has notfiled rectification application before the Assessing Officer, in spiteof that the petitioner has reiterated the same facts on10/07/2019. Only registration granted u/s.12AA does not conferany right of entitlement of benefit under sections 11, 12 and 13of the Act. Form No.10B is also mandatory to claim exemptionsu/s.11 and 12 of the Act. Further, audit report u/s.12A(1)(b) hasto be filed by a charitable or religious trust or institutions hasbeen granted registration u/s.12A of the Act.” 4.We have heard Mr. S.N. Devetia, the learned counselappearing for the writ-applicant and Mr. M.R. Bhatt, the learnedsenior counsel appearing for the revenue. 5.We should look into the position of law as regards the subjectmatter of this writ-application : (i) In Artist Tree Pvt. Ltd. vs. Central Board of Direct Taxes andothers, (2014) 369 ITR 691 (Bombay). The relevant paragraphs 11to 14 and 23 of the said judgment are quoted below for readyreference: “11. The expression 'genuine hardship' came up for considerationof the Supreme Court in the case of B.M.Malani (supra), wherein,by reference to New Collins Concise English Dictionary, theSupreme Court accepted the position that "genuine" means notfake or counterfeit, real, not pretending (not bogus or merely aruse). Further, a genuine hardship would, inter alia, mean agenuine difficulty. The ingredients of genuine hardship, must bedetermined keeping in view the dictionary meaning thereof andlegal conspectus attending thereto. For the said purpose, anotherwell known principle, namely, that a person cannot takeadvantage of his own wrong, may also have to be borne inmind. Compulsion to pay any unjust dues per se would causehardship. But a question as to whether the default in payment ofthe amount was due to circumstances beyond the control of theassessee, also bears consideration. 12. In the case of R. Seshammal (supra), the Madras High Courtwas pleased to observe as under (page 187 of 237 ITR): “This is hardly the manner in which the State is expectedto deal with the citizens, who in their anxiety to complywith all the requirements of the Act pay monies as advancetax to the State, even though the monies were not actuallyrequired to be paid by them and there after seek refund ofthe monies so paid by mistake after the proceedings underthe Act are dropped by the authorities concerned. The Stateis not entitled to plead the hyper technical plea oflimitation in such a situation to avoid return of theamounts. Section 119 of the Act vests ample power in theBoard to render justice in such a situation. The Board hasacted arbitrarily in rejecting the petitioner's request forrefund.” “This is hardly the manner in which the State is expectedto deal with the citizens, who in their anxiety to complywith all the requirements of the Act pay monies as advancetax to the State, even though the monies were not actuallyrequired to be paid by them and there after seek refund ofthe monies so paid by mistake after the proceedings underthe Act are dropped by the authorities concerned. The Stateis not entitled to plead the hyper technical plea oflimitation in such a situation to avoid return of theamounts. Section 119 of the Act vests ample power in theBoard to render justice in such a situation. The Board hasacted arbitrarily in rejecting the petitioner's request forrefund.” 13. In the case of Sitaldas Motwani (supra), this court has heldthat the expression "genuine hardship" used in section 119(2)(b)of the said Act should be construed liberally, particularly inmatters of entertaining of applications seeking condonation ofdelay. This court was pleased to observe as under (page 228 of323 ITR): “The phrase 'genuine hardship' used in section 119(2) (b)should have been construed liberally even when thepetitioner has complied with all the conditions mentioned inCircular dated October 12, 1993. The Legislature hasconferred the power to condone delay to enable theauthorities to do substantive justice to the parties bydisposing of the matters on the merits. The expression'genuine' has received a liberal meaning in view of the lawlaid down by the apex court referred to hereinabove andwhile considering this aspect, the authorities are expected tobear in mind that ordinarily the applicant, applying forcondonation of delay does not stand to benefit by lodgingits claim late. Refusing to condone delay can result in ameritorious matter being thrown out at the very thresholdan cause of justice being defeated. As against this, whendelay is condoned the highest that can happen is that acause would be decided on the merits after hearing theparties. When substantial justice and technical considerationsare pitted against each other, the cause of substantial justicedeserves to be preferred for the other side cannot claim tohave a vested right in injustice being done because of anondeliberate delay. There is no presumption that delay isoccasioned deliberately, or on account of culpablenegligence, or on account of mala fides. A litigant does notstand to benefit by resorting to delay. In fact he runs aserious risk. The approach of the authorities should bejustice oriented so as to advance the cause of justice. Ifrefund is legitimately due to the applicant, mere delayshould not defeat the claim for refund.” 14. In the case of Bombay Mercantile Co-operative Bank Ltd.(supra), this court again observed that it is well settled that inmatters of condonation of delay highly pedantic approach shouldbe eschewed and a justice-oriented should be adopted. It alsoobserved that a party should not be made to suffer on account oftechnicalities. 23. In the light of the aforesaid discussion, we are of the opinionthat an acceptable explanation was offered by the petitioner anda case of genuine hardship was made out. The refusal by theCentral Board of Direct Taxes to condone the delay was a resultof adoption of an unduly restrictive approach. The Central Boardof Direct Taxes appears to have proceeded on the basis that thedelay was deliberate, when from the explanation offered by thepetitioner, it is clear that the delay was neither deliberate nor on account of culpable negligence or any mala fides. Therefore, theimpugned order dated May 16, 2006, made by the Central Boardof Direct Taxes refusing to condone the delay in filing the returnof income for the assessment year 1997-98 is liable to be setaside.” (ii) In Jay Vijay Express Carriers vs. Commissioner of Income Tax-III, (2013) 34 taxmann.com.61 (Gujarat), in relevant paragraph 16of the said judgment, this Court held as under : account of culpable negligence or any mala fides. Therefore, theimpugned order dated May 16, 2006, made by the Central Boardof Direct Taxes refusing to condone the delay in filing the returnof income for the assessment year 1997-98 is liable to be setaside.” (ii) In Jay Vijay Express Carriers vs. Commissioner of Income Tax-III, (2013) 34 taxmann.com.61 (Gujarat), in relevant paragraph 16of the said judgment, this Court held as under : “16. In our opinion, in the present case, there would be genuinehardship, if the time limit is not extended as otherwise, theentire claim of Rs.17,84,323/- would be destroyed. The petitionerwould neither get deduction in the assessment year 2005-06 norin the year 2008- 09 as per then prevailing Section 40(a)(ia) ofthe Act. In our opinion, the petitioner was neither lethargic norlacking in bona fides in making the claim beyond the period oflimitation, which should have a relevance to the desirability andexpedience for exercising such power. Before proceeding furtherwe may caution that undoubtedly such powers are not to beexercised in routine manner to extend limitation provided by theAct for various stages. We are conscious that such routineexercise of powers would neither be expedient nor desirable,since the entire machinery of tax calculation, processing ofassessment and further recoveries or refunds, would get thrownout of gear, if such powers are routinely exercised withoutconsidering its desirability and expedience to do so for avoidinggenuine hardship. In the present case, however, consideringspecial facts, we are of the opinion that the Commissioner oughtto have exercised such powers. It is true that the AppellateCommissioner recorded that the petitioner did not remain presentin the appellate proceedings. However that by itself would nottake away the petitioner's case for genuine hardship nor contraryto what is vehemently contended before us by the counsel forthe Revenue, convince us to hold that filing of revised returnbeyond limitation lacked bona fides.” (iii) In the case of State of Jharkhand and others vs. AmbayCements and another, (2005 Sales Tax Cases Vol.129). The relevantextract of the said judgment is quoted from the Head Note belowfor ready reference: “An exception or an exempting provision in a taxing statuteshould be construed strictly. If the condition under which anexemption is granted stands changed on account of anysubsequent event the exemption would not operate. (see paras 23and 24) Whenever the statute prescribes that a particular act is to bedone in a particular manner and also lays down that failure tocomply with the said requirement leads to severe consequences,such requirement would be mandatory. If the statute provide thata particular thing should be done, it should be done in themanner prescribed and not in any other way (see para 26).” (iv) In the case of B.M.Malani vs. Commissioner of Income Tax and another, (2008) 219 CTR 313), the Court observed : “8. The term 'genuine' as per the New Collins Concise EnglishDictionary is defined as under: “'Genuine' means not fake or counterfeit, real, notpretending (not bogus or merely a ruse).” For interpretation of the aforementioned provision, the principleof purposive construction should be resorted to. Levy of interestalthough is statutory in nature, inter alia for recompensating theRevenue from loss suffered by non-deposit of tax by the assesseewithin the time specified therefor. The said principle should alsobe applied for the purpose of determining as to whether anyhardship had been caused or not. A genuine hardship would,inter alia, mean a genuine difficulty. That per se would not leadto a conclusion that a person having large assets would never bein difficulty as he can sell those assets and pay the amount ofinterest levied. “'Genuine' means not fake or counterfeit, real, notpretending (not bogus or merely a ruse).” For interpretation of the aforementioned provision, the principleof purposive construction should be resorted to. Levy of interestalthough is statutory in nature, inter alia for recompensating theRevenue from loss suffered by non-deposit of tax by the assesseewithin the time specified therefor. The said principle should alsobe applied for the purpose of determining as to whether anyhardship had been caused or not. A genuine hardship would,inter alia, mean a genuine difficulty. That per se would not leadto a conclusion that a person having large assets would never bein difficulty as he can sell those assets and pay the amount ofinterest levied. The ingredients of genuine hardship must be determined keepingin view the dictionary meaning thereof and the legal conspectusattending thereto. For the said purpose, another well-knownprinciple, namely, a person cannot take advantage of his ownwrong, may also have to be borne in mind. The said principle, itis conceded, has not been applied by the Courts below in thiscase, but we may take note of a few precedents operating in thefield to highlight the aforementioned proposition of law. (SeePriyanka Overseas (P) Ltd. & Anr. Vs. Union of India & Ors.1991 Suppl.(1)SCC 102, para 39, Union of India & Ors. Vs. Maj.Gen.(Retd.) Madan Lal Yadav (1996)4 SCC 127 at 142, paras 28 and29, Ashok Kapil Vs. Sana Ullah (dead) & Ors. (1996) 6 SCC 342at 345, para 7, Sushil Kumar vs. Rakesh Kumar (2003) 8 SCC673 at 692, para 65, first sentence, Kusheshwar Prasad Singh vs.State of Bihar & Ors. (2007) 11 SCC 447, paras 13, 14 and 16).” 6.Section-119 of the Act is couched in very wide terms. Thesame is quoted below for ready reference : Instructions to subordinate authorities: “119. (1) the Board may, from time to time, issue such orders,instructions and directions to other income- tax authorities as itmay deem fit for the proper administration of this Act, and suchauthorities and all other persons employed in the execution ofthis Act shall observe and follow such orders, instructions anddirections of the Board: xxx xxx xxx (2) Without prejudice to the generality of the foregoing power:- (a) xxx xxx xxx (b) the Board may, if it considers it desirable or expedient so todo for avoiding genuine hardship in any case or class of cases,by general or special order, authorize any income-tax authority,not being a Commissioner (Appeals) to admit an application orclaim for any exemption, deduction, refund or any other reliefunder this Act after the expiry of the period specified by orunder this Act for making such application or claim and dealwith the same on merits in accordance with law:” 7.We may also refer to a decision of the Karnataka High Courtin the case of Dr. (Smt.) Sujatha Ramesh vs. Central Board ofDirect Taxes, New Delhi, (2017)87 taxmann.com 228 (Karnataka),wherein the Court has observed as under : “12. It is true that the so called reasons assigned by therespondent Central Board of Direct Taxes (CBDT) in theimpugned order, on the face of it, do not appear to be whimsical 7.We may also refer to a decision of the Karnataka High Courtin the case of Dr. (Smt.) Sujatha Ramesh vs. Central Board ofDirect Taxes, New Delhi, (2017)87 taxmann.com 228 (Karnataka),wherein the Court has observed as under : “12. It is true that the so called reasons assigned by therespondent Central Board of Direct Taxes (CBDT) in theimpugned order, on the face of it, do not appear to be whimsical or arbitrary reasons and it is equally true that such investmentcould be made by assessee very well before the cut off date alsowhen she was physically present in India or even when she hadgone back to USA on 20[th] February 2013. Nonetheless, the delayof six months in the circumstances in which it occurred,especially, in view of the fact that the investment condition wasundisputably met by the assessee could have been condonedtaking a judicious and holistic view of the facts. The widepowers of the Central Board of Direct Taxes or other higherauthorities of the Department to whom such powers can bedelegated under Section 119 of the Act, need not always takeonly a pro revenue approach in such matters. Their approach insuch cases should be equitious, balancing and judicious whichshould reflect the application of mind to the facts of the caseand before denying the genuine claim of the assessee on thegrounds of mere delay in making such claim, something morethan the user of innocuous terms as employed in the presentcase, should be forthcoming. Technically, strictly and literallyspeaking, the Board might be justified in denying the exemptionfrom capital gains tax by rejecting such condonation application,but an assessee, who substantially satisfies the condition foravailing such exemption should not be denied the same, merelyon the bar of limitation, especially, when the legislature hasconferred wide discretionary powers to condone such delay onthe highest executive authority of the Central Board of DirectTaxes under the Act. 13. The general and wide powers given to the Board in thisregard, “if it considers it desirable or expedient so to do foravoiding genuine hardship in any case.....”, not only gives widepowers to the Board, but confers upon it a obligation to considerfacts relevant for condonation of delay as well as the merit ofthe claim simultaneously. If the claim of exemption or otherclaim on merits is eminently a fit case for making such claim, itshould not normally be defeated on the bar of limitation,particularly, when the delay or the time period for whichcondonation is sought is not abnormally large. It will of coursedepend upon the facts of the each case, where such a timeperiod or the merit of the claim deserves such exercise ofdiscretion in favour of the assessee under Section 119(2)(b) of theAct or not and therefore, no straight jacket formula or guidelinescan be laid down in this regard. However, such orders passed bythe Central Board of Direct Taxes being a quasi-judicial order isalways open to judicial review by the higher constitutionalcourts. If the good conscience of the Courts is pricked, eventhough such orders rejecting the claims on the bar of limitation may appear to be prima facie tenable, the Courts may exercisetheir jurisdiction to set aside such orders and allow the claims onmerits, setting aside the bar of limitation. may appear to be prima facie tenable, the Courts may exercisetheir jurisdiction to set aside such orders and allow the claims onmerits, setting aside the bar of limitation. 14. The present case is one of such nature, where the Court findsthat the substantial conditions for claiming the exemption fromcapital gain tax stood satisfied and the prescribed investment wasmade by the assessee in the Bonds of the National HighwaysAuthority, for the minimum lock-in period of three years also isan undisputed fact, and therefore, the delay in making suchinvestment of six months deserved to be condoned, in view ofthe fact that, the assessee-petitioner, a Doctor by profession wastraveling from India to USA a long distance country where shenormally resided and came to India not only to meet her familymembers, but to sell the immoveable property belonging to herand sought to avail the genuine exemption from such tax liabilityupon making the investment in the prescribed investment in theform of Bonds of Infrastructure which she did make in theNational Highways Authority.” 8.We may also refer to and rely upon a decision of the DelhiHigh Court in the case of G.V. Infosutions Pvt. Ltd. vs. DeputyCommissioner of Income Tax, Circle 10(2) and others, reported in(2019) 261 taxmann.com 482 (Delhi). We may quote the relevantobservations thus : “8. The rejection of the petitioner's application under Section119(2)(b) is only on the ground that according to the ChiefCommissioner's opinion the plea of omission by the auditor wasnot substantiated. This court has difficulty to understand whatmore plea or proof any assessee could have brought on record,to substantiate the inadvertence of its advisor. The net result ofthe impugned order is in effect that the petitioner's claim ofinadvertent mistake is sought to be characterised as not bonafide.The court is of the opinion that an assessee has to take leave ofits senses if it deliberately wishes to forego a substantial amountas the assessee is ascribed to have in the circumstances of thiscase. "Bonafide" is to be understood in the context of thecircumstance of any case. Beyond a plea of the sort thepetitioner raises (concededly belatedly), there can not necessarilybe independent proof or material to establish that the auditor infact acted without diligence. The petitioner did not urge any other grounds such as illness of someone etc., which couldreasonably have been substantiated by independent material. Inthe circumstances of the case, the petitioner, in our opinion, wasable to show bonafide reasons why the refund claim could not bemade in time. 9. The statute or period of limitation prescribed in provisions oflaw meant to attach finality, and in that sense are statutes ofrepose; however, wherever the legislature intends relief againsthardship in cases where such statutes lead to hardships, theconcerned authorities - including Revenue Authorities have toconstrue them in a reasonable manner. That was the effect andpurport of this court's decision in Indglonal Investment & FinanceLtd. (supra). This court is of the opinion that a similar approachis to be adopted in the circumstances of the case.” 9.In view of the aforesaid, this writ-application succeeds and ishereby allowed. The impugned order passed by the respondentdated 17.06.2021 is hereby quashed and set aside. The delaycondone application filed by the writ-applicant is hereby allowed. (J. B. PARDIWALA, J) A. B. VAGHELA (NISHA M. THAKORE,J)