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2025 (3) TMI 1012 - HC - Income TaxDenial of exemption u/s 11 - rejecting the application for condonation of delay in filing Form No. 10 - HELD THAT - It is not in dispute that the petitioner has explained in detail the cause for late filing of Form 10B. In similar circumstances this Court in case of Parshwanath Bhakti Vihar Jain Trust 2024 (9) TMI 292 - GUJARAT HIGH COURT relying upon the decision in case of Sarvodaya Chaitable Trust 2021 (1) TMI 214 - GUJARAT HIGH COURT held that furnishing of audit report along with refund filed is to be treated as procedural requirement though it is mandatory in nature but substantial compliance is required to be made. It was further observed that the approach of the authority in such type of case should be equitable and judicious. It is also not in dispute that the petitioner trust for past many years has substantially satisfied the conditions for claiming the exemption which should not be denied for non filing of Form 10B in time. The petitioner has explained the reason for delay in filing Form 10B due to illness of the Accountant who was on leave for a long time due to medical reasons. Petition is allowed. The impugned orders are quashed and set aside. The matter is remanded back to the respondent to pass appropriate order to condone the delay in filing the Form 10B for AY 2017-2018 by the petitioner.
1. ISSUES PRESENTED and CONSIDERED
The core legal issue considered in this judgment is whether the petitioner, a charitable trust, is entitled to have the delay in filing Form No. 10B for the Assessment Year 2017-2018 condoned under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner sought to quash and set aside the order rejecting the condonation of delay, which had resulted in the denial of tax benefits under Sections 11 and 12 of the Act. 2. ISSUE-WISE DETAILED ANALYSIS - Relevant legal framework and precedents: The legal framework involves Section 119(2)(b) of the Income Tax Act, which allows for the condonation of delay in certain circumstances, and Sections 11 and 12, which provide tax exemptions for charitable trusts. The petitioner relied on precedents such as CIT v. Mayur Foundation and decisions in Sarvodaya Charitable Trust and Parshwanath Bhakti Vihar Jain Trust, which discuss the procedural nature of filing requirements and the equitable approach needed in such cases. - Court's interpretation and reasoning: The Court interpreted the requirement of filing Form No. 10B as procedural, despite being mandatory. It emphasized the need for a judicious and equitable approach, particularly when the substantive rights of the petitioner, such as tax exemptions for charitable activities, are at stake. The Court noted that the petitioner had provided an explanation for the delay, citing internal administrative issues and the illness of an accountant. - Key evidence and findings: The petitioner had filed Form No. 10B late due to internal administrative problems and the illness of an accountant. The Court noted that similar cases had been resolved in favor of the petitioner, where delays were condoned due to procedural lapses. The petitioner had a history of compliance with Sections 11 and 12, which supported their claim for condonation. - Application of law to facts: The Court applied the principle that procedural requirements should not override substantive rights, especially when the petitioner has shown substantial compliance and provided reasonable explanations for delays. The Court found the respondent's rejection of the condonation application to be overly technical and not in line with the equitable treatment required in such cases. - Treatment of competing arguments: The respondent argued that the delay was unjustified and unsupported by evidence, citing strict adherence to procedural requirements as necessary. However, the Court found this approach to be overly rigid, especially in light of precedents that favored a more lenient interpretation when substantive rights are involved. - Conclusions: The Court concluded that the delay in filing Form No. 10B should be condoned, as the petitioner had provided a reasonable explanation, and the denial of tax benefits was disproportionate to the procedural lapse. 3. SIGNIFICANT HOLDINGS - Preserve verbatim quotes of crucial legal reasoning: "It is well settled principle of law that substantive exemption cannot be withdrawn because of minor technical lapse and delayed compliance of such requirements which are purely procedural and directory in nature." - Core principles established: The judgment reinforces the principle that procedural requirements should not negate substantive rights, particularly when a petitioner has demonstrated substantial compliance and provided reasonable explanations for procedural lapses. - Final determinations on each issue: The Court quashed the impugned orders and remanded the matter back to the respondent to pass an appropriate order to condone the delay in filing Form No. 10B for AY 2017-2018. The respondent was directed to complete this exercise within twelve weeks.
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