2025 (2) TMI 776 - HC - Income Tax

Denial of exemption u/s 11 - delay in electronically uploading Form 10B but filed it manually within the prescribed period - HELD THAT - We are satisfied that the Petitioner filed Form 10B manually or physically within the prescribed period. True Form 10B was not uploaded electronically. Petitioner was not intimated for a long time that this was the requirement for which the exemption was being denied. Belatedly the Petitioner was informed that this was one of the reasons. Therefore the Petitioner took expedient steps. Petitioner also explained that she had nothing to gain from non-compliance. The non-compliance if any was due to the advice of a professional Chartered Accountant. Even the Chartered Accountant filed an affidavit explaining her bona fides and the factum of the advice. After the Petitioner became aware of the reasons she took several steps and ultimately uploaded Form 10B electronically. Still the application for condonation of delay has been rejected without adequate compliance with the principles of natural justice and fair play. The delay should be condoned as long as such lapse is not mala fide and the assessee has not derived any undue advantage out of his own lapse. Besides in this case though the delay appears considerable there is some merit contentions that the delay should be construed from the day Petitioner was informed of the real reason for the denial of exemption. After it was informed of the real reason the Petitioner s conduct cannot be said to be either informed with lethargy or indolence. The Petitioner took several steps and time and again pointed out that Form 10B was already filed manually within the prescribed time. That even before the CIT (Exemption) the Petitioner categorically pleaded and made good their submissions about Form 10B being filed manually within the prescribed time limit. This was a crucial circumstance when considering the Petitioner s conduct and its application for condonation of delay. The possession of the certification is a mandatory requirement. The mode of proof may not always be. In any event no dispute is raised about the Petitioner submitting the prescribed form within the prescribed period manually or physically. The impugned order however takes no cognisance of this crucial circumstances. We are satisfied that discretion should have been exercised and the delay should be condoned. We condone the delay in electronically uploading Form 10B after noting that his form was already filed in the physical form within the prescribed period i.e. on 30 September 2014 about which there is no dispute whatsoever.

Summary

The judgment by the Bombay High Court pertains to a petition challenging the rejection of the petitioner's application for condonation of delay in filing Form 10B for claiming exemption under Section 11 of the Income Tax Act, 1961 for the assessment year 2014-2015. The key issues considered in this case are the delay in electronically uploading Form 10B, the reasons for the delay, the bona fide belief of the petitioner, compliance with principles of natural justice, and the exercise of discretion in condoning the delay.The Court noted that the petitioner had filed Form 10B manually within the prescribed period but failed to upload it electronically. The petitioner claimed that they were under the bona fide impression that electronic filing was not mandatory based on advice from their Chartered Accountant. The rejection of the exemption claim was communicated without issuing a show cause notice, and subsequent rectification applications were summarily rejected without adherence to principles of natural justice.The Court considered the petitioner's explanations, including the steps taken upon becoming aware of the requirement for electronic filing. It emphasized that the delay should be condoned as long as it was not mala fide and the petitioner did not derive any undue advantage from the lapse. The quality of the explanation offered was deemed crucial, and the focus was on the cause shown in the explanation.The Court acknowledged the petitioner's efforts to rectify the situation, including uploading Form 10B electronically after being informed of the reason for the denial of exemption. It highlighted the petitioner's compliance with filing the form manually within the prescribed time limit as a crucial circumstance. The Court found merit in the petitioner's contentions that the delay should be calculated from the date they were informed of the real reason for the denial of exemption.Ultimately, the Court exercised its discretion and set aside the impugned orders, condoning the delay in electronically uploading Form 10B. It emphasized that the form had been filed in physical form within the prescribed period, and therefore, the delay should be excused. The Court directed all concerned parties to act on an authenticated copy of the order.In conclusion, the Court's decision focused on the petitioner's bona fide belief, compliance efforts, adherence to principles of natural justice, and the exercise of discretion in condoning the delay. The judgment established the principle that delay should be excused if not mala fide and the petitioner did not benefit from the delay, emphasizing the importance of the quality of the explanation provided.