2024 (1) TMI 317 - HC - Income Tax

Exemption u/s 11 - condonation of delay in filing Form 10 prior to 31.12.2018 i.e., before completion of assessment proceedings for AY 2016-17 - according to the petitioner, the delay in filing Form 10 occurred because their officials failed to notice the amendments in the Act and the Rules - HELD THAT - We are unable to decipher from the impugned order as to what those reasons to believe were which led the respondent to arrive at a conclusion that the petitioner had no intention to file Form 10 within the due date. Mere failure to claim accumulation cannot be read as reasons to believe that the petitioner did not intend to file Form 10. CBDT Circular No. 7/2018 dated 20.12.2018 records that representations had been received qua Forms No. 9A and 10 not having been filed within specified time for AY 2016-17, which was the first year of e-filing qua those forms; and that in supersession of earlier circular in that regard with a view to expedite the disposal of such representations, the CBDT authorized the Commissioners of Income Tax to admit the belated applications in Forms No. 9A and 10 in respect of AY 2016-17 where such forms were filed after expiry of the prescribed period, in case the Commissioners were satisfied that the assessee was prevented by reasonable cause from filing the said forms within the stipulated period. By way of further circular No. 30/2019 dated 17.12.2019, similar directions were issued by CBDT for the AY 2017-18 as well. Subsequently, by way of CBDT Circular No. 03/2020 dated 03.01.2020, the Commissioners were authorized to admit the belated delay condonation applications under Section 119(2) of the Act where delay is upto 365 days. More recently, by way of similar CBDT Circular No. 17/2022 dated 17.07.2022, the Commissioners were authorized to condone delay beyond 365 days upto 03 years in filing Forms 9A and 10 for AY 2018-19. For AY 2017-18 also, the petitioner/assessee had filed a similar application seeking condonation of delay in filing Form 10, which was allowed by the Commissioner Income Tax vide order dated 26.12.2019 correctly, laying emphasis that the mandate of Section 119(2)(b) of the Act is to mitigate the genuine hardship of assessee in certain circumstances and authorization to the Commissioners to admit the belated Form 10. Thus the delay in filing Form 10 in the present case occurred because the amendments went unnoticed by the officials of the petitioner. The assessment year 2016-17 was the first occasion subsequent to those amendments. Therefore, we find no reason to disbelieve the explanation furnished by the petitioner to explain the delay in filing Form 10. Further, we are unable to fathom as to what benefit would accrue to the petitioner by delaying the filing of Form 10. In our opinion the discretion conferred for condoning the delay was not correctly exercised by the Commissioner Income Tax. Petition is allowed and accordingly, the impugned order is set aside and the delay on the part of the petitioner in submission of Form 10 is condoned. Form-10 will be accepted and necessary consequences will follow.

Summary

Issues:
The issues involved in the judgment are the quashing of an order passed by the Commissioner of Income Tax (Exemption) and the condonation of delay in submission of Form No. 10 by the Bar Council of India.

Issue 1: Quashing of Order
The Bar Council of India filed a writ petition under Article 226 of the Constitution of India seeking to quash the order dated 30.01.2019 passed by the Commissioner of Income Tax (Exemption) and for directions to accept Form No. 10 after condoning the delay. The petitioner, a non-commercial organization registered under Section 12A of the Income Tax Act, claimed exemption under Section 10(23A) of the Act for the Assessment Year 2016-17. However, due to amendments in Section 11 and 13 of the Act, the petitioner filed a revised computation seeking exemption under Section 11. The delay in filing Form 10 was attributed to the officials' lack of awareness of the amendments. The respondent dismissed the condonation of delay application, alleging lack of intention to file Form 10 within the due date. The High Court set aside the impugned order, emphasizing that the delay condonation should have been granted, considering similar approvals for other assessment years and the genuine explanation provided by the petitioner.

Issue 2: Interpretation of CBDT Circulars
The respondent rejected the delay condonation application based on the petitioner's failure to claim accumulation under Section 11(2) of the Act and the non-filing of Form 10B. The High Court noted that the failure to claim accumulation does not imply lack of intention to file Form 10. The Court referred to CBDT Circulars, authorizing the condonation of delays in filing Forms No. 9A and 10 for various assessment years, highlighting the intent to mitigate hardships of the assessees. The Court found the respondent's reasoning insufficient and emphasized that the discretion for condoning the delay was not correctly exercised. The Court allowed the petition, setting aside the impugned order and condoning the delay in submitting Form 10 by the petitioner.