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2025 (4) TMI 1365 - HC - Income TaxRejection of application for condonation of delay in filing Form-10B - HELD THAT - Suppose the Petitioner wishes to file a supplementary affidavit in support of the application for condonation of delay. In that case the same should be filed within 15 days from today and forwarded to the CBDT. CBDT must consider this additional affidavit if filed within 15 days from today and dispose of the Petitioner s application for condonation of delay on its own merits and in accordance with law. We clarify that we have not examined whether the Petitioner has made out any sufficient cause. CBDT will have to examine these matters in the first instance. Accordingly all parties contentions are left open. We are sure that the CBDT will afford an opportunity of hearing to the Petitioner and the Department before disposing of the Petitioner s application for condonation of delay. A reasoned order must be communicated to the Petitioner within four months of producing an authenticated copy of this order. Rule is made absolute in the above terms without any cost order. The proceedings for the restoration of this petition do not survive as it is pointed out that this petition was already restored.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court were:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Competency of CIT(Exemptions) to decide condonation application where delay exceeds one year Relevant legal framework and precedents: The Income Tax Act, 1961, and the procedural rules for filing Form-10B prescribe timelines and authorities competent to condone delays. The Central Board of Direct Taxes (CBDT) is vested with the power to consider condonation applications where the delay exceeds one year, especially when it surpasses three years. Court's interpretation and reasoning: The Court relied heavily on the affidavit filed by the Commissioner of Income-tax (Exemptions), Mumbai, which explicitly stated that since the delay in filing Form-10B was more than three years, only the CBDT had the jurisdiction to consider and decide the condonation application. The CIT(Exemptions) had forwarded the petitioner's application to the CBDT vide letter dated 11 April 2022, acknowledging its lack of authority in this matter. Key evidence and findings: Paragraph 5.14 of the affidavit by CIT(Exemptions) was pivotal, stating: "The CBDT is the Competent Authority where there is delay in filing beyond three years to decide the application on merit." This admission undermined the authority of the CIT(Exemptions) to reject the application on merits. Application of law to facts: Since the delay was more than three years, the CIT(Exemptions) was not empowered to consider or reject the condonation application. The rejection order dated 9 December 2021 was thus legally untenable. Treatment of competing arguments: The petitioner contended that the CIT(Exemptions) wrongly rejected the application. The respondent supported the position that CIT(Exemptions) lacked jurisdiction. The Court accepted the latter, based on the affidavit and statutory scheme. Conclusions: The Court concluded that the CIT(Exemptions) was not the appropriate authority to decide the condonation application where delay exceeded one year, particularly beyond three years. Issue 2: Validity of the impugned order rejecting condonation application Relevant legal framework and precedents: Procedural fairness and jurisdictional competence are fundamental in administrative decisions. An order passed by an authority lacking jurisdiction is liable to be quashed. Court's interpretation and reasoning: Given the CIT(Exemptions) lacked jurisdiction, the impugned order rejecting the condonation application was quashed and set aside. The Court emphasized that the order could not stand as the authority itself admitted its lack of power to deal with the matter. Key evidence and findings: The affidavit and the letter forwarding the application to CBDT were decisive. The Court noted that the petitioner prematurely filed a writ petition instead of awaiting the CBDT's decision. Application of law to facts: The Court applied the principle that jurisdictional errors render orders void and ordered the quashing of the impugned order. Treatment of competing arguments: The respondent argued that the CIT(Exemptions) was not the correct authority, which the Court accepted, leading to setting aside the order. Conclusions: The impugned order dated 9 December 2021 was quashed as it was passed without jurisdiction. Issue 3: Appropriate authority and procedure for condonation application with delay exceeding one year Relevant legal framework and precedents: The Income Tax Act and CBDT's administrative instructions provide that the CBDT is the competent authority to deal with condonation applications involving delay beyond one year, especially beyond three years. Court's interpretation and reasoning: The Court directed that since the petitioner's application was forwarded to the CBDT, the Board must consider and dispose of the application on merits within four months of receiving an authenticated copy of the Court's order. Key evidence and findings: The forwarding letter dated 11 April 2022 and the affidavit by CIT(Exemptions) confirmed the procedural route. Application of law to facts: The Court mandated that the CBDT must afford the petitioner an opportunity of hearing, consider any supplementary affidavit filed within 15 days, and pass a reasoned order. Treatment of competing arguments: The petitioner sought condonation on merits; the respondent maintained procedural correctness. The Court balanced both by ensuring the application is considered by the correct authority. Conclusions: The CBDT is the appropriate authority to decide the condonation application on merits, following due procedure and within a stipulated timeframe. Issue 4: Consideration of merits and sufficiency of cause for delay Relevant legal framework and precedents: Applications for condonation of delay must demonstrate sufficient cause for delay. The authority empowered to decide must examine the reasons and evidence presented. Court's interpretation and reasoning: The Court explicitly refrained from expressing any opinion on the sufficiency of cause for delay. It left the merits open for the CBDT to decide afresh. Key evidence and findings: No examination of merits was undertaken by the Court; the matter was remitted entirely to the CBDT. Application of law to facts: The Court's role was limited to jurisdictional and procedural correctness, not substantive adjudication. Treatment of competing arguments: All contentions on merits were left open for the CBDT's consideration. Conclusions: The CBDT must decide the application on merits after hearing parties and considering
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