2024 (9) TMI 217 - HC - Income Tax

Denial of exemption u/s 11 - Assessment of trust - Rejection of application for condonation of delay in filing Form 10B - whether reasons given by the petitioner for delay cannot be considered as genuine hardship ? - petitioner has shown the inadvertent delay on part of the clerical staff of the Chartered Accountant who was suffering from brain tumor - HELD THAT - It is not in dispute that the audit report in Form 10B was obtained on 07.05.2015 that is prior to the date of filing of the return on 26.09.2015. Though the circular No. 2 of 2020 issued by the CBDT provides for condonation of delay in filing Form 10B for Assessment Year 2016-17, is issued for Assessment Years 2016-17 and 2017-18, the same analogy would apply for Assessment Year 2015-16 also and as the petitioner has shown the inadvertent delay on part of the clerical staff of the Chartered Accountant who was suffering from brain tumor, the same cannot be discarded from purview of genuine hardship. The reasons assigned by the respondent are also not proper inasmuch as the respondent has adopted a pedantic approach in rejecting the application to condone the delay. Thus, it is apparent that the respondent instead of considering the technical compliance of filing audit report which was issued by the Chartered Accountant on 07.05.2015 even prior to the due date of filing of the return which could not be uploaded, ought to have condoned the delay. The petition succeeds and accordingly allowed. The impugned order is hereby quashed and set aside and the respondent is directed to pass an order to condone the delay in filing the Form 10B i.e. Audit Report so as to enable the petitioner to get the exemption u/s 11.

Summary

Issues Involved:
1. Condonation of delay in filing Form 10B.
2. Genuine hardship as a reason for delay.
3. Application of CBDT Circulars.
4. Procedural compliance and statutory duty.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Form 10B:
The petitioner challenged the order dated 09.09.2019 by the Commissioner of Income Tax (Exemption) under Section 119(2)(b) of the Income Tax Act, 1961, which rejected the application for condonation of delay in filing Form No.10B for the Assessment Year 2015-16. The petitioner argued that the delay was due to the clerical staff's mistake, who was affected by the Chartered Accountant's prolonged illness and subsequent death. The respondent countered that the delay of 908 days was substantial and lacked genuine hardship, thus justifying the rejection of the condonation application.

2. Genuine Hardship as a Reason for Delay:
The petitioner contended that the delay was not intentional but due to the ill health of the Chartered Accountant, who was suffering from a brain tumor and eventually passed away. The respondent argued that the petitioner did not demonstrate genuine hardship and that the mistake of the clerical staff could not be considered a reasonable cause. The court noted that the petitioner had obtained the audit report before the due date of filing the return, indicating that the delay was inadvertent and should be considered under genuine hardship.

3. Application of CBDT Circulars:
The petitioner relied on CBDT Circular No. 10/2019 and Circular No. 2 of 2020, which authorize the Commissioner to admit belated applications for filing Form 10B if genuine hardship is demonstrated. The court observed that although these circulars were issued for Assessment Years 2016-17 and 2017-18, the same rationale should apply to the Assessment Year 2015-16. The court found that the respondent had adopted a pedantic approach and failed to consider the inadvertent delay as genuine hardship.

4. Procedural Compliance and Statutory Duty:
The respondent emphasized that the petitioner, being an old trust registered under Section 12A since 1979, should have been aware of the statutory requirements and should have ensured timely compliance. The court, however, highlighted that the audit report was obtained before the due date of filing the return, and the delay in uploading the report was a technical lapse. The court concluded that the respondent should have condoned the delay, considering the technical compliance and genuine hardship shown by the petitioner.

Conclusion:
The court allowed the petition, quashing the impugned order dated 09.09.2019, and directed the respondent to pass an order condoning the delay in filing Form 10B. This would enable the petitioner to claim exemption under Section 11 of the Income Tax Act. The court emphasized that the respondent should have adopted a more lenient approach, considering the technical compliance and genuine hardship demonstrated by the petitioner.