2024 (3) TMI 1327 - HC - Income Tax

Exemption u/s 11 - Condonation of delay application in filing Form 10 under Section 119(2)(b) - delay of 361 days in submitting Form 10 - reason given by petitioner as oversight by the trust s management - HELD THAT - Auditor of petitioner Mr. Dedhia explained that since the factum of accumulation of receipts was reported in audit report in Form No. 10B he was under bonafide impression that there was no separate requirement to file a separate statement and that provisions of Section 11(2) of the Act were complied with. He has also stated that due to inadvertence and through oversight he did not consider the provisions of Rule 17 of the Act which required a separate statement in Form No. 10 to be filed apart from the audit report in Form No.10B. Hence, he did not advise petitioner to file Form No. 10. He has also stated that only after the intimation under Section 143(1) of the Act was received on or about 5th June 2020 denying the accumulation and that too during the peak of covid pandemic, Form No. 10 was uploaded on 26th October 2020 and condonation of delay application was filed on 27th October 2020. Therefore, we are satisfied that the delay was not intentional or deliberate. Further, petitioner cannot be prejudiced on account of an ignorance of the Rules admitted by the professional engaged by petitioner. In our view, this explanation by Mr. Dedhia is a reasonable explanation and should be accepted and delay be condoned. Petition disposed. The delay in filing Form No. 10 for Assessment Year 2019-20 shall be treated as condoned.

Summary

Issues: Condonation of delay in filing Form No.10 for Assessment Year 2019-20 under Section 119(2)(b) of the Income Tax Act, 1961.

Summary:
The petitioner, a trust managing a Jain Derasar in Mumbai, filed an application for condonation of delay in submitting Form No.10 for Assessment Year 2019-20. The delay of 361 days in filing Form 10 was due to oversight by the trust's management. The condonation application was rejected by Respondent No.1 citing lack of supporting evidence for a reasonable cause preventing timely filing. The petitioner, an old trust registered in 1987, was expected to be aware of Income Tax Department regulations. However, an additional affidavit by the auditor, Mr. Dedhia, explained that the delay was unintentional and due to inadvertence. Mr. Dedhia admitted his oversight and ignorance of the rules, attributing the delay to the peak of the covid pandemic and subsequent intimation under Section 143(1) of the Act.

The High Court, after considering Mr. Dedhia's explanation and the circumstances, quashed the impugned order dated 3rd November 2023 and condoned the delay in filing Form No. 10 for Assessment Year 2019-20. The Court commended Mr. Dedhia for his candor in admitting the mistake. The petitioner was advised to take necessary steps, including filing an application under Section 154 of the Act for rectification within two weeks from the date of the order upload. It was clarified that no observations were made on the merits of the matter.

The petition was disposed of, and the delay in filing Form No. 10 was treated as condoned.