2019 (10) TMI 744 - HC - Income Tax

Benefit u/s 12AA - petitioner received contribution from the public for providing funds to the people - petitioner made application for condonation of delay in filing such Form 10 before the first respondent - HELD THAT - The petitioner is a Trust, seems to have been formed for rehabilitating the victims of communal violence in the city of Coimbatore during November-December 1997. It seems that the petitioner received contribution from the public for providing funds to the people. Though the petitioner did not get such registration u/s 12AA during the relevant assessment year 1998-99, such registration was subsequently granted to the petitioner by an order dated 02.02.2005 with retrospective effect from 10.12.1997 onwards. There is no dispute to the above said fact. Therefore, for all practical purposes, it is to be construed that for the AY 1998-99 also, the petitioner was enjoying the benefit u/s 12AA on getting such registration with effect from 10.12.1997. No doubt, for filing Form No.10, the due date is the last date for filing the return of income for the relevant assessment year. In this case, the relevant assessment year 1998-99 and the last date for filing such return was 31.10.1998. Consequently, the Form 10 ought to have been filed on or before 31.10.1998. But in any event, filing of Form No.10 would arise only when the petitioner enjoys the benefit of registration under Section 12AA. Admittedly, on the last date viz., 31.10.1998, the petitioner was not enjoying such benefit, however such benefit was granted with retrospective effect by order dated 02.02.2005. Once such an order is passed, the petitioner made application for condonation of delay in filing such Form 10 before the first respondent. Petitioner has explained the delay in filing the Form 10 satisfactorily. Therefore, the first respondent is not justified in rejecting the application for condonation of delay, simply by saying that the petitioner has not satisfactorily explained the delay. As rightly pointed out by the learned counsel for the Revenue, though the delay is condonable, it is for the petitioner to establish before the first respondent that accumulated income was utilised for the subsequent years only for the purpose for which the petitioner Trust was established. Therefore, such liability exists on the petitioner, which they have to discharge before the first respondent. Accordingly this writ petition is allowed and the impugned order of the first respondent is set aside. Consequently, the matter is remitted back to the first respondent with a direction to take Form 10 on file and thereafter, to conduct an enquiry as to whether the accumulated interest was utilised for the succeeding years by the petitioner for the purpose for which the petitioner Trust was established. Such exercise shall be made by the first respondent within a period of eight weeks from the date of receipt of a copy of this order

Summary

Issues:
Delay in filing Form-10 for accumulation of income under Section 11(2) of the Income Tax Act, 1961 for Assessment Year 1998-1999.

Analysis:
The petitioner, a Trust formed to provide rehabilitation to victims of communal violence, filed a writ petition against the rejection of their application for condonation of delay in filing Form-10. The petitioner filed the return of income for the assessment year 1998-99 on 18.09.2001, without registration under Section 12AA initially. Registration was granted retrospectively from 10.12.1997 by the Tribunal's order dated 02.02.2005. The petitioner filed Form-10 belatedly on 27.04.2005, seeking to accumulate funds for systematic disbursement to riot victims. The first respondent rejected the condonation citing unsatisfactory delay explanation.

The respondent's counter-affidavit highlighted the belated filing of Form-10 post-registration under Section 12AA and emphasized the necessity to file it before the due date as per Section 11(2). The petitioner justified the delay as non-willful, filing Form-10 promptly after the retrospective registration. The learned counsel argued that since registration was granted retrospectively, the due date for Form-10 did not apply, and the delay explanation was satisfactory. The Revenue's counsel stressed the need for the petitioner to prove fund utilization for Trust purposes in subsequent years.

The Court acknowledged the Trust's formation post-communal violence, its receipt of public contributions, and the retrospective registration under Section 12AA. It noted that the petitioner enjoyed Section 12AA benefits from 10.12.1997, despite not having it on the due date for Form-10 filing (31.10.1998). The Court found the delay explanation satisfactory and criticized the first respondent's rejection based on unsatisfactory delay explanation. However, it emphasized the petitioner's obligation to demonstrate fund utilization for Trust objectives in subsequent years.

The Court allowed the writ petition, setting aside the first respondent's order and remitting the matter back for Form-10 processing and verification of fund utilization within eight weeks. The petitioner was directed to cooperate and provide evidence of fund utilization. No costs were awarded, and the miscellaneous petition was closed.