2025 (3) TMI 533 - HC - Income Tax

Assessment of charitable trust - applications filed for condonation of delay of 3198 and 3533 days respectively in filing Form 10-B of the Income Tax Act 1961 pertaining to Assessment Years 2015-16 and 2014-15 were rejected - petitioner categorically pleaded that the petitioner is a charitable Trust and in last 45 years without there being any default returns were filed. Thus on two occasions if delay had occurred because of reasons beyond the control of the petitioner a lenient view should have been taken. HELD THAT - As relying on Sarvodaya Charitable Trust 2021 (1) TMI 214 - GUJARAT HIGH COURT and Al Jamai Mohammediyah Education Society 2024 (4) TMI 939 - BOMBAY HIGH COURT it will be clear like noon day that there is lot of similarity amongst these matters. The petitioners before both the High Courts were also Charitable Trusts and delay was occasioned because of compelling reasons. The Courts opined that the assessee is a public Charitable Trust and for last three decades have substantially satisfied the conditions. Denial on the basis of bar of limitation is not justified. The case of the petitioner herein is somewhat on better footing because it has a record of compliance for 45 years. Both the Writ Petitions are allowed by setting aside the impugned rejection orders and consequently the delay of 3198 and 3533 days respectively are condoned.

1. ISSUES PRESENTED and CONSIDERED

The primary issue considered by the Court was whether the substantial delay in filing Form 10-B by the petitioner, a charitable trust, should be condoned. The specific legal question was whether the rejection of the applications for condonation of delays of 3198 and 3533 days for the assessment years 2015-16 and 2014-15, respectively, was justified given the circumstances presented by the petitioner.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The legal framework involved the provisions of the Income Tax Act, 1961, particularly regarding the filing of Form 10-B for claiming exemptions by charitable trusts. The Court considered precedents from the Gujarat High Court in Sarvodaya Charitable Trust v. Income-tax Officer (Exemption) and the Bombay High Court in Al Jamia Mohammediyah Education Society v. Commissioner of Income-tax (Exemptions), which emphasized a lenient approach towards condonation of delay in similar contexts.

Court's interpretation and reasoning:

The Court interpreted the precedents to suggest that while the statutory limitation periods are meant to ensure finality, they should not be applied so rigidly as to cause undue hardship, especially when the legislature has granted discretionary powers to condone delays. The Court noted that the petitioner had a consistent history of compliance over 45 years, which supported the argument for a lenient view.

Key evidence and findings:

The petitioner provided evidence that the delay was due to the illness and subsequent brain surgery of their Chartered Accountant, which was beyond their control. The Court found this explanation credible and consistent with the petitioner's longstanding compliance record.

Application of law to facts:

The Court applied the principles from the cited precedents to the facts of the case, determining that the petitioner's explanation for the delay was reasonable and that the delay should be condoned. The Court emphasized the need for an equitable, balancing, and judicious approach, as highlighted in the precedents.

Treatment of competing arguments:

The Income Tax Department argued that the delay was excessive and that the rejection of the condonation applications was justified. However, the Court found that the reasons provided by the petitioner were compelling and that the precedents supported a more lenient approach in such circumstances.

Conclusions:

The Court concluded that the rejection of the condonation applications was not justified given the petitioner's history and the reasons for the delay. The Court decided to set aside the impugned orders and condoned the delays.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

The Court, citing the Gujarat High Court, noted: "Technically, strictly and liberally speaking, the respondent might be justified in denying the exemption... but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing of such exemption, should not be denied the same merely on the bar of limitation especially when the Legislature has conferred wide discretionary powers to condone such delay on the authorities concerned."

Core principles established:

The Court reinforced the principle that statutory limitations should not be applied so rigidly as to cause undue hardship, particularly when the assessee has a longstanding history of compliance and the delay is due to circumstances beyond their control.

Final determinations on each issue:

The Court allowed both writ petitions, set aside the impugned rejection orders, and condoned the delays of 3198 and 3533 days, directing the respondents to proceed in accordance with the law from that stage. There were no orders as to costs, and any pending miscellaneous applications were closed.

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