Wp(C)/1663/2023 Of Sanathana Dharma Trust v. Commissioner Of Income Tax (Exemption)

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. WEDNESDAY, THE 18 DAY OF JANUARY 2023 / 28TH POUSHA, 1944 WP(C) NO. 1663 OF 2023 PETITIONER/S: SANATHANA DHARMA TRUST, REG. NO. 238/IV/2009, FIRST FLOOR, THANTHRI TOWER, DIWAN'S ROAD, ERNAKULAM, KOCHI , REPRESENTED BY ITS TRUSTEE -DR. CIJITH, PIN - 682016BY ADVS.K.I.MAYANKUTTY MATHERS.PARVATHIUTHARA ASOKAN RESPONDENT/S: 1COMMISSIONER OF INCOME TAX (EXEMPTION)2ND FLOOR, SANJUAN TOWER, BEHIND CR BUILDING, 2ND FLOOR, SANJUAN TOWER, BEHIND CR BUILDING, ERNAKULAM NORTH P.O, KOCHI , PIN - 682018 2THE ADDITIONAL COMMISSIONER OF INCOME TAX (EXEMPTION)2ND FLOOR, SANJUAN TOWER, BEHIND CR BUILDING, 2ND FLOOR, SANJUAN TOWER, BEHIND CR BUILDING, ERNAKULAM NORTH P.O, KOCHI , PIN - 682018 3THE INCOME TAX OFFICER (EXEMPTION)2ND FLOOR, SANJUAN TOWER, BEHIND CR BUILDING, ERNAKULAM NORTH P.O, KOCHI , PIN - 6820182ND FLOOR, SANJUAN TOWER, BEHIND CR BUILDING, ERNAKULAM NORTH P.O, KOCHI , PIN - 6820184INCOME TAX OFFICERNATIONAL E-ASSESSMENT CENTER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL STADIUM, NEW DELHI, PIN - 110003NATIONAL E-ASSESSMENT CENTER, INCOME TAX DEPARTMENT, MINISTRY OF FINANCE, ROOM NO. 401, 2ND FLOOR, E-RAMP, JAWAHARLAL STADIUM, NEW DELHI, PIN - 110003 5THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAXCENTRAL REVENUE BUILDING, I.S. PRESS ROAD, ERNAKULAM NORTH P.O., KOCHI , PIN - 682018BY ADV JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALACENTRAL REVENUE BUILDING, I.S. PRESS ROAD, ERNAKULAM NORTH P.O., KOCHI , PIN - 682018BY ADV JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA ADV. CHRISTOPHER ABRAHAM (SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON18.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 1663 OF 2023 2 JUDGMENT Petitioner is a Charitable Trust entitled to exemption interms of the provisions contained in Section 80G(5)(vi) of theIncome Tax Act, 1961. It also has a registration under Section12AA(1)(b)(i) of the Income Tax Act, 1961 as well asregistration on the Foreign Contribution (Regulation) Act, 2010to accept foreign contributions to the Trust. 2. The petitioner has been filing regular returns ofincome since the assessment year 2009-10 and has beenavailing the benefit of exemption. For the assessment year2018-19, petitioner has been denied exemption on the groundthat the petitioner failed to upload the audit report in FormNo.10B of the Income Tax Act. Petitioner, thereupon, filed anapplication under Section 119(2)(b) of the Income Tax Act,1961, for condonation of delay and for permission to upload theaudit report in Form No.10B of the Act for the assessment year2018-19. The said application of the petitioner has beenrejected by Ext.P18 order and the said order is now underchallenge before this Court. 3. Learned Standing Counsel appearing for therespondent department submits that there is absolutely no 3. Learned Standing Counsel appearing for therespondent department submits that there is absolutely no illegality in Ext.P18 order and the 1[st] respondent has properlyconsidered the application filed for condonation of delay andhas rejected the same on the ground that no properexplanation for condonation of delay has been made by thepetitioner. It is submitted that the return of the petitioner, forthe assessment year 2018-19, was processed under Section143(1) of the Income Tax Act and it was then noticed that thepetitioner had not uploaded the audit report in Form No.10B ofthe Income Taxt Act, which is mandatory for claimingexemption. It is submitted that the petitioner is, therefore, notentitled to claim any exemption in respect of his income for theassessment year 2018-19. However, it is very fairly pointed outby the learned Standing Counsel that in terms of CircularNo.16 of 2022 dated 19.07.2022, the Central Board of DirectTaxes has issued instructions in respect of failure to file auditreport in Form No. 10B of the Income Tax Act , in respect ofthe assessment year 2018-19 and has directed that, for genuinereasons, the delay may be condoned provided the delay is uptoa maximum period of three years. It is submitted that the auditreport for the assessment year 2018-19 was uploaded by thepetitioner on 31.03.2021 and therefore, the petitioner fallswithin the terms of Circular No.16 of 2022. 4.Learned counsel appearing for the petitioner, inreply, submits that there was genuine cause for failure toupload audit report in Form No.10B of the Income Tax Act as isevident from a reading of Ext.P18 order itself. It is submittedthat the reason is genuine and therefore, the delay ought tohave been condoned in terms of the instructions contained inCircular No.16 of 2022 dated 19.07.2022. 5.Having heard the learned counsel appearing for thepetitioner and the learned Standing counsel appearing for therespondent-Department, I am of the view that since thepetitioner has uploaded its audit report in Form No.10B of theIncome Tax Act, on 31.03.2021, the same was within theperiod specified in the aforesaid Circular No.16 of 2022, whichto the extent it is relevant, reads as follows:- ‘’In exercise of the powers conferred under section119(2) of the Income-tax Act, 1961 (hereinafter referred to as'Act'), the Central Board of Direct Taxes (CBDT) by CircularNO.2 /2020 [F.No.197/55/2018-ITA-I] dated 03.01.2020authorized the Commissioners of Income-tax to admitapplications of condonation of delay in filing Form No. l0B for AY2018-19 or for any subsequent Assessment Years where there isdelay of upto 365 days and decide on merits. 119(2) of the Income-tax Act, 1961 (hereinafter referred to as'Act'), the Central Board of Direct Taxes (CBDT) by CircularNO.2 /2020 [F.No.197/55/2018-ITA-I] dated 03.01.2020authorized the Commissioners of Income-tax to admitapplications of condonation of delay in filing Form No. l0B for AY2018-19 or for any subsequent Assessment Years where there isdelay of upto 365 days and decide on merits. 2. Further to the powers delegated to Commissioners ofIncome-tax as discussed above, the CBDT hereby directs thatwhere there is delay of beyond 365 days upto three years infiling Form No. 10B for Assessment Year 2018- 19 or for anysubsequent Assessment Years, the Pr. Chief Commissioners ofIncome-tax/Chief Commissioners of Income-tax are authorized toadmit such applications of condonation of delay under section119(2) of the Act and decide on merits. 3. The Pr. Chief Commissioner/Chief Commissioner orCommissioners of Income-tax, as the case may be, while entertaining such applications for condonation of delay in filingForm No. l0B, shall satisfy themselves that the applicant wasprevented by reasonable causefrom filing such Form within thestipulated time.’’ The reasons stated by the petitioner for delay in uploading the 3. The Pr. Chief Commissioner/Chief Commissioner orCommissioners of Income-tax, as the case may be, while entertaining such applications for condonation of delay in filingForm No. l0B, shall satisfy themselves that the applicant wasprevented by reasonable causefrom filing such Form within thestipulated time.’’ The reasons stated by the petitioner for delay in uploading the audit report also, in my view, qualifies for the condonation ofdelay as specified in Circular No.16 of 2022. 6.In the light of the above finding, Ext.P18 is quashed.The application for condonation of delay filed by the petitioner(Ext.P13) shall be reconsidered in the light of the stipulationscontained in Circular No.16 of 2022 dated 19.07.2022, issuedby the Central Board of Direct Taxes and taking intoconsideration the observations contained above. Any demandpursuant to the assessment order issued for the assessmentyear 2018-19, shall be kept in abeyance till the matter isreconsidered as above. The 1[st] respondent shall endeavour toreconsider the matter and pass fresh orders within a period ofthree months from the date of receipt of a certified copy of thisjudgment. The writ petition is disposed of as above. sd/- GOPINATH P., JUDGE WP(C) NO. 1663 OF 2023 6 APPENDIX OF WP(C) 1663/2023 PETITIONER EXHIBITS Exhibit P1A TRUE COPY OF THE PROCEEDINGS OF THE COMMISSIONER INCOME TAX -I, KOCHI DATED 27.03.2013 GRANTING REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961.Exhibit P2A TRUE COPY OF THE APPROVAL GIVEN BY THE COMMISSIONER OF INCOME TAX -I, KOCHI DATED 29.11.2013 UNDER SECTION 80G(5)(VI) OF THE INCOME TAX ACT, 1961Exhibit P3A TRUE COPY OF THE REGISTRATION CERTIFICATE OBTAINED FROM THE MINISTRY OF HOME AFFAIRS, FOREIGNERS DIVISION (FCRA WING), NEW DELHI DATED 07.09.2020Exhibit P4A TRUE COPY OF THE RETURN FILED FOR AY-2017-18 DATED 30.03.2018 ALONG WITH AUDIT REPORT IN FORM 10B DATED 30.09.2017Exhibit P5A TRUE COPY OF THE ACKNOWLEDGMENT OF FILING OF RETURN DATED 17.02.2022 ALONG WITH FORM 10B AUDIT REPORT DATED 15.02.2022 FOR AY- 2021-22Exhibit P6TRUE COPY OF THE ACKNOWLEDGMENT OF FILING OF RETURN DATED 06.10.2022 ALONG WITH FORM 10B AUDIT REPORT DATED 06.10.2022 FOR AY- 2022-23Exhibit P7TRUE COPY OF THE RETURN FILED BY THE PETITIONER ONLINE FOR THE AY-2018-2019 DATED 31.03.2019Exhibit P8TRUE COPY OF THE AUDIT REPORT IN FORM 10B DATED 30.9.2018 FOR AY-2018-2019Exhibit P9TRUE COPY OF THE COMMUNICATION ISSUED BY THE ASSISTANT DIRECTOR OF INCOME TAX, CPC TO THE PETITIONER DATED 23.02.2021Exhibit P10TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 3RD RESPONDENT DATED 09.07.2021Exhibit P11TRUE COPY OF THE ONLINE RESPONSE GIVEN BY THEPETITIONER TO EXT.P10Exhibit P12TRUE COPY OF THE FIRST REMINDER NOTICE (ONLINE) DATED 08.09.2021 ISSUED BY THE 3RD RESPONDENTExhibit P13TRUE COPY OF THE REQUEST FOR CONDONATION OF DELAY PUT IN BY THE PETITIONER BEFORE THE 1STRESPONDENT DATED 15.09.2021Exhibit P14TRUE COPY OF THE CIRCULAR NO.10/2019 (F.NO.197/55/2018/-ITA-1) DATED 22.05.2019 Exhibit P15TRUE COPY OF THE CIRCULAR NO.2/2020 (F.NO.197/55/2018/-ITA-1) DATED 03.01.2020Exhibit P16TRUE COPY OF THE COMMUNICATION OF THE 1ST RESPONDENT TO THE PETITIONER DATED 22.10.2021Exhibit P17TRUE COPY OF THE ONLINE ACKNOWLEDGMENT EVIDENCING SUBMISSION OF THE DOCUMENTS BY THEPETITIONER DATED 22.10.2021Exhibit P18TRUE COPY OF THE ORDER ISSUED BY THE 1ST RESPONDENT DATED 06.12.2022