Social Security Scheme Of Gicea v. Commissioner Of Income Tax (Exemptions), Ahmedabad ==========================================================Appearance

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 17612 of 2022 ==========================================================SOCIAL SECURITY SCHEME OF GICEA Versus COMMISSIONER OF INCOME TAX (EXEMPTIONS), AHMEDABAD ==========================================================Appearance: MR B S SOPARKAR (6851) for the Petitioner(s) No. 1MS MAITHILI D MEHTA (3206) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANIand HONOURABLE MRS. JUSTICE MAUNA M. BHATT Date: 21/12/2022 ORAL ORDER (PER: HONOURABLE MRS. JUSTICE MAUNA M. BHATT) 1.This petition is filed challenging the order dated12.3.2021,passed by respondent under Section 119(2)(b) ofIncome Tax Act, 1961 (“The Act” for short), whereinapplication of the assessee to condone the delay in e-filing theaudit report in Form No.10B for Assessment Year 2016-17,hasbeen rejected. Facts: 2.Petitioner is a Public Charitable Trust registered with theCharity Commissioner as well as Income-tax authorities.Petitioner is a Social Security Scheme of Gujarat Institute of Civil Engineers and Architects which pools contribution fromregistered civil engineers and architects to disburse to thefamily members in case of death. It is the case of thepetitioner that it has been filing returns of income in timealong with audit report under Section 12A(1)(B) of the Act.For the assessment year 2016-2017, the petitioner obtainedaudit report from Chartered Accountant well before the timelimit. However, though the audit report in Form 10B for A.Y.2016-17 was required to be filed along with return of income,the same could not be uploaded along with return of incomeinadvertently. In absence of any audit report the CentralProcessing Centre had not granted exemption under Section 11of the Act which otherwise was available to it since manyyears and resultantly demand of Rs.16,39,950/- was raised.The petitioner therefore filed a rectification application u/s 154of the Act seeking to place on record audit report to theCentral Processing Centre but the same was rejected vide orderdated 25.1.2019. The reason given in the order dated25.1.2019 was that Form No.10B audit report, was not filed intime. Relying upon instructions of board, the petitioner filedan application before the CBDT to condone the delay in filingForm No.10B audit report. The same has been rejected,aggrieved by which, the present petition is filed. Submissions of the petitioner: 3.Heard Mr. B.S.Soparkar, learned advocate for thepetitioner. He submitted that the order passed by therespondent dated 12.3.2020 is bad in law because as per CBDTcircular No.10 dated 22.5.2019, the Commissioner of Income-tax is required to condone the delay for a reasonable cause.In this case the cause shown by the petitioner is reasonable asit is out of inadvertence, that Form 10B report could not befiled along with return, though the same was obtained beforedue date of return. The petitioner came to know about thedefault in filing Form No.10B audit report upon receipt of theintimation under Section 143(1) rejecting the claim ofexemption under Section 11 of the Act. He further submittedthat merely non-filing of Form No.10B report, for which, theassessing officer could not take up the return filed by thepetitioner in scrutiny could not be a ground for denial ofexemption. In support of his submission, he relied upon thedecision of this Court in the case of Sarvodaya Charitable Trust vs. Income Tax Officer (Exemption) in R/Special CivilApplication No.6097 of 2020 dated 9.12.2020. He furthersubmitted that the petitioner is otherwise a charitableorganization and eligible for exemption u/s 11, as it hasreceived the same benefits since many years. The demand ofRs.16,39,948/- is erroneously raised as the application filed by vs. Income Tax Officer (Exemption) in R/Special CivilApplication No.6097 of 2020 dated 9.12.2020. He furthersubmitted that the petitioner is otherwise a charitableorganization and eligible for exemption u/s 11, as it hasreceived the same benefits since many years. The demand ofRs.16,39,948/- is erroneously raised as the application filed by the petitioner under Section 119(2)(b) of the Act is rejected.He thus submitted that the petition being meritorious, thesame may be allowed and the impugned order may be quashedand set aside. Submissions of the Respondent: 4.Appearing for the respondent, learned senior standingcounsel Mr. Maithali Mehta, submitted that in this case thepetitioner filed its return of income for A.Y.2016-2017, on24.8.2016. The due date for filing of Form No.10B was30.9.2016, which was extended up to 17.10.2016, however, thepetitioner sought to file the same on 28.8.2018 which was lateby 680 days. The petitioner filed an application u/s.119(2)(b)of the Act seeking condonation of delay in filing audit reportin Form No.10B. However, application of the petitioneru/s.119(2)(b) seeking condonation of delay was rejected, asthere was no reasonable cause or genuine hardship justifyingthe belated filing of Form No. 10B. Respondent in the orderdated 12.3.2020 has in detail observed that no reasonablecause has been given to condone the delay. Further it hasbeen observed that inadvertence or ignorance of law cannot bea reasonable ground and, therefore, the application was rightlyrejected vide order dated 12.3.2020. 4.1.She further submitted that the rectification applicationfiled by the petitioner under Section 154 of the Act, wasrejected as the same was not covered under the conditions ofthe Circular No.10 dated 22.5.2019, relied upon by thepetitioner. Admittedly, the petitioner has e-filed Form No.10Bon 28.8.2018 which was much beyond the time specified inthe said circular. 4.2.Distinguishing the decision of this Court in the case ofSarvodaya Charitable Trust vs. Income Tax Officer (Exemption),she submitted that in the present case assessee failed to justifyby placing reasonable cause or the genuine hardship caused.An inadvertence cannot be stated to be sufficient reason and,therefore, the application under Section 119(2)(b) has beenrightly rejected by the respondent. Conclusion: 5.Having heard learned advocates for the respective partiesand having gone through the material on record, the onlyquestion which falls for consideration is whether respondentcommitted an error in passing the order by not condoning thedelay in filing Form No.10B along with the return filed. Inthe decision of this Court in Sarvodaya Charitable Trust vs.Income Tax Officer (Exemption),this Court has observed thatfurnishing of audit report along with return filed is to be Conclusion: 5.Having heard learned advocates for the respective partiesand having gone through the material on record, the onlyquestion which falls for consideration is whether respondentcommitted an error in passing the order by not condoning thedelay in filing Form No.10B along with the return filed. Inthe decision of this Court in Sarvodaya Charitable Trust vs.Income Tax Officer (Exemption),this Court has observed thatfurnishing of audit report along with return filed is to be treated as a procedural requirement. It is though mandatoryin nature the substantial compliance is required to be made.In the case of Sarvodaya Charitable Trust vs. Income TaxOfficer (Exemption) the assessee had produced the audit reportafter processing the return under Section 143(1). This Court inthe said order has observed that the approach of the authorityin these type of cases should be equitable, balancing andjudicious. Technically speaking, respondent No.2 might bejustified in denying the exemption under Section 11 of the Actby rejecting such condonation application, but an assessee,which is a public charitable trust for past 30 years whichsubstantially satisfies the conditions for availing suchexemption, should not be denied the same merely on the barof limitation especially when the legislature has conferred widediscretionary powers to condone such delay . Applying thesaid principle, the petition is allowed. The impugned orderpassed by respondent dated 12.3.2021 is quashed and aside.The impugned order of rectification under Section 154 of theAct dated 25.1.2019 is also quashed and set aside. Theapplication for condonation of delay filed by the petitionerbefore the respondent is allowed. 6.The respondent is now directed to process the return inaccordance with law. It is noticed that no assessment isframed and only an intimation under Section 143(1) of the Act was issued. No scrutiny could be carried out by the respondentsince the audit report under Section 10B was not on record.Learned advocate for the petitioner Mr. B.S.Soparkar fairlysubmitted that the issue of benefit of exemption may beexamined by issuance of notice u/s 143(1)/ 143(2) and thepetitioner shall not object to the said proceedings by takingthe ground of limitations. 7.With this the petition stands disposed of. No costs. (SONIA GOKANI, J) NAIR SMITA V. (MAUNA M. BHATT, J)