2020 (10) TMI 625 - HC - Income Tax

Exemption u/s 10 (23C) (vi) - application has been filed for exemption for the assessment year 2018-2019 and Form 56D specifically mentions that it was made for the assessment year 2018-2019. The petitioner also filed a letter, dated 13.02.2020, requesting the 2nd respondent to consider the application filed by him on 26.03.2019 in Form 56D for the assessment year 2019-2020 and in the absence of any specific provision under the Act, with reference to the same, the 2nd respondent has rightly rejected the request of the petitioner - HELD THAT - Mere wrong quotation of law or non-mentioning of the relevant provision of law or a typographical mistake does not disentitle a person/individual/ an institution from any relief, if otherwise he or she/individual/institution is entitled to. 2nd respondent cannot desist from exercising his power by mis-reading on the face of it without going into the merits of the application of the petitioner and the documents furnished along with it in spite of giving personal hearing opportunity for the petitioner s representative to represent his case, it is nothing but 1 Sixteenth proviso omi.by the Act No.12 of 2020, w.e.f 01.06.2020 non-application of mind and refusal to exercise his discretion, though obligated under law to pass an appropriate order on merits. Instead of suggesting to file a fresh application, the 2nd respondent ought to have considered the above said application of the petitioner, dated 26.03.2019 on merits by treating it for the financial year 2018-2019 and the assessment year 2019-2020 only instead of rejecting it as barred by time. Impugned proceedings of the 2nd respondent, dated 23.03.2020 cannot be sustained on any ground and as such, it is set aside. The application of the petitioner, dated 26.03.2019 and Form 56D submitted by the petitioner shall be treated for the financial year 2018-2019 in the assessment year 2019-2020 and the exemption sought for by the petitioner shall be considered afresh on merits.

Summary

Issues:
1. Petitioner's application for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961.
2. Consideration of application by the 2nd respondent.
3. Rejection of the application by the 2nd respondent as being beyond the permissible time limit.
4. Interpretation of the application and Form 56D by the 2nd respondent.
5. Legal implications of misreading the application and refusal to exercise discretion.

Analysis:
The Writ Petition challenges the 2nd respondent's decision not to consider the petitioner's application for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961 for the assessment year 2019-2020. The petitioner, an Educational Society, sought exemption as its gross receipts exceeded ?1 Crore in the financial year 2018-2019. The petitioner contended that the application was timely filed before the completion of the financial year and should be considered for the assessment year 2019-2020. The 2nd respondent initially directed the petitioner to appear and submit documents, but later rejected the application as time-barred.

The petitioner argued that the application was for the financial year 2018-2019 and the 2nd respondent erred in treating it as an application for the assessment year. The petitioner emphasized that the exemption could be granted once receipts exceeded ?1 Crore and that the rejection was unjustified. The Standing Counsel for the respondents, however, maintained that the rejection was proper as the application was specifically for the assessment year 2018-2019. The counsel suggested that a separate application for the assessment year 2019-2020 should have been filed.

The Court examined the relevant provision of Section 10(23C)(vi) and noted that the petitioner's application was filed well before the deadline and should have been considered for the assessment year 2019-2020. The Court emphasized that a mere technical error in the application should not deprive the petitioner of rightful relief. It criticized the 2nd respondent for not exercising discretion and misinterpreting the application, leading to an unjust rejection. The Court set aside the 2nd respondent's decision and directed a fresh consideration of the application for the financial year 2018-2019 in the assessment year 2019-2020.

In conclusion, the Writ Petition was allowed, and no costs were awarded. The Court instructed the 2nd respondent to reevaluate the petitioner's application promptly and in accordance with the law, preferably by the end of December 2020. Any related pending applications were deemed closed.