2021 (3) TMI 1088 - HC - Income Tax

Exemption u/ 11 - declining to condone the delay in filing Form No.10B - Power of CBDT to condone delay u/s 119 - There was thus delay of more than 365 days in filing Form No.10B Commissioner expressed inability to condone the delay and hence rejected the application for condonation of delay - HELD THAT - No error or infirmity in the view taken by the CBDT vide Circular No.2 / 2020 or by the Commissioner while passing the impugned order dated 19.02.2020. Fixing a period of one year s delay i.e., 365 days of delay for condonation of delay in filing Form No.10B for the assessment year 2018-19 and onwards cannot be said to be arbitrary or irrational. Therefore the general order passed by the CBDT in this regard under section 119(2)(b) cannot be faulted. However, there is also nothing in section 119(2)(b) preventing or precluding CBDT from passing a special order in any given case from condoning the delay in filing Form No.10B beyond 365 days despite passing a general order. That being the position and having regard to the mandate of section 119(2)(b), we feel that even at this stage, petitioner may approach CBDT under the aforesaid provision seeking a special order to the Commissioner of Income Tax (Exemptions), Mumbai to condone the delay in filing Form No.10B for the assessment year 2018-19 which is beyond 365 days and thereafter to deal with the said claim on merit and in accordance with law. Order - Petitioner shall file an application before the CBDT under section 119(2)(b) of the Act to authorize the Commissioner of Income Tax (Exemptions), Mumbai to condone the delay in filing Form No.10B for the assessment year 2018-19 and to deal with the same on merit in accordance with law; If such application is filed by the petitioner within a period of three weeks from today, CBDT shall pass an appropriate order in terms of direction No.1 above within a period of four weeks from the date of receipt of such application with due intimation to the petitioner.

Summary

Issues Involved:
1. Condonation of delay in filing Form No.10B for the assessment year 2018-19.
2. Application of Circular No.2 of 2020 issued by the CBDT.
3. Authority of the Commissioner of Income Tax (Exemptions) to condone delays beyond 365 days.
4. Petitioners' approach to the CBDT for a special order under section 119(2)(b) of the Income Tax Act.

Detailed Analysis:

1. Condonation of Delay in Filing Form No.10B for the Assessment Year 2018-19:
The petitioners, charitable trusts providing education, challenged the orders dated 19.02.2020 by the Commissioner of Income Tax (Exemptions), Mumbai, which declined to condone the delay in filing Form No.10B for the assessment year 2018-19. The delay was attributed to an error by the chartered accountant, who uploaded Form No.10BB instead of Form No.10B. The Centralized Processing Centre (CPC) of the Income Tax Department raised a demand of ?1,46,01,489.00 by denying exemptions under sections 11 and 12 of the Income Tax Act, which the petitioner contested.

2. Application of Circular No.2 of 2020 Issued by the CBDT:
Circular No.2 of 2020, dated 03.01.2020, empowered the Commissioner of Income Tax (Exemptions) to condone delays in filing Form No.10B up to 365 days from the assessment year 2018-19 onwards. The Commissioner requested the petitioner to furnish documents related to the condonation application, which the petitioner complied with. However, the Commissioner rejected the application, stating that the delay exceeded 365 days, thus falling outside the scope of the circular.

3. Authority of the Commissioner of Income Tax (Exemptions) to Condon Delays Beyond 365 Days:
The Commissioner noted that the petitioner filed Form No.10B on 06.11.2019, which was more than 365 days late. The Circular No.2 of 2020 only authorized the Commissioner to condone delays up to 365 days. Consequently, the Commissioner expressed inability to condone the delay and rejected the application. The court found no error in this decision, stating that fixing a period of one year for condonation was neither arbitrary nor irrational.

4. Petitioners' Approach to the CBDT for a Special Order Under Section 119(2)(b) of the Income Tax Act:
Section 119(2)(b) allows the CBDT to issue instructions to avoid genuine hardship, including authorizing condonation of delays beyond specified periods. The court suggested that the petitioner could still approach the CBDT for a special order to condone the delay beyond 365 days. The court directed the petitioner to file an application under section 119(2)(b) to the CBDT within three weeks, and the CBDT was instructed to pass an appropriate order within four weeks from receipt of the application.

Conclusion:
The court disposed of both writ petitions, directing the petitioners to seek a special order from the CBDT for condonation of delay beyond 365 days. The court emphasized the need for substantial justice over technical considerations and provided a pathway for the petitioners to address their grievance through the CBDT.