2017 (1) TMI 515 - HC - Income Tax

Exemption u/s 11 - Condonation of delay for extending the due date of filing of the return of the income and for giving notice to deposit accumulated amount - delay could be condoned for filing Form No.10, since the deposit of accumulation is made under Section 11(2), there is no provision in the circular to condone the delay - Held that - When there is a specific provision enabling the Commissioner to condone delay even in respect of investment of the money in the prescribed securities if it is found to be on account of oversight, necessarily, the Commissioner can exercise the power under Section 119 (2)(b) of the Act. It is not confined to failure to give notice to the Income Tax Officer under Section 11(2) alone. Even under Clause (d) as extracted above, time can be extended under Section 11(2). There is no prohibition for condoning delay even if the deposit is made belatedly. Under such circumstances, it of the view that there is justification on the part of the petitioner to challenge Ext.P5. Accordingly, this writ petition is allowed. Ext.P5 is set aside and the 3rd respondent is directed to reconsider the matter afresh in the light of the observations made above and an order may be passed within a period of two months from the date of receipt of a copy of this judgment.

Summary

Issues:
Challenge to Ext.P5 issued by Commissioner of Income Tax denying condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961.

Analysis:
The petitioner challenged Ext.P5 issued by the Commissioner of Income Tax, which denied condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner had accumulated funds for future application under Section 11(2) for the assessment year 2010-11. The return was submitted before the extended deadline, but a reassessment was ordered later, resulting in a tax demand. The petitioner sought condonation of delay for extending the due date of filing the return and depositing the accumulated amount, citing Circular No.273. The rejection of the condonation by Ext.P5 was based on the absence of a provision in the circular to condone the delay for depositing accumulation under Section 11(2).

The petitioner relied on clauses (b) and (d) of Circular No.273, which empowered Commissioners to entertain applications to condone delays related to investment of money in prescribed securities under Section 11(2) in cases of oversight. The standing counsel supported the Commissioner's decision. However, the court noted that the Commissioner could condone delays even in the case of belated deposits, as the circular allowed for condonation related to investment of money in prescribed securities. The court found justification for the petitioner's challenge to Ext.P5 and allowed the writ petition, setting aside Ext.P5 and directing the 3rd respondent to reconsider the matter in light of the observations made within two months from the date of the judgment.