2025 (3) TMI 1385 - HC - Income Tax

Assessment of trust - Petitioner s application for condonation of delay in filing Form-10 rejected - HELD THAT - The record shows that the Petitioner is a small charitable trust engaged inter-alia in awarding scholarships for educational purposes. The returns were filed for AY 2021-2022 during the extended period due to the COVID-19 pandemic. This means that the COVID-19 pandemic had just ended and during this pandemic it must have been challenging for Petitioner-Trust to have its documentation in order. The record also shows that the Petitioner has been diligent and punctual in filing the necessary Form-10 along with its returns for the previous years. Petitioner in its application for condonation of delay has relied upon a precedent thereby suggesting that the circumstances referred to in the precedent were not qualitatively different from those in the Petitioner s case. There are no mala fides involved and it is not as if the Petitioner has gained any undue advantage on account of the delay in submitting Form-10. In this case the return was filed within the prescribed period but Form-10 did not accompany it. After this lacuna was pointed out the same was rectified but with some delay. From the Application for condonation of delay it appears that the Petitioner did not have any professional assistance. This position was affirmed by Mr. Jain learned counsel for the Petitioner. Thus we think sufficient cause has been shown for the condonation of delay.

ISSUES PRESENTED and CONSIDERED

The primary issue considered in this judgment is whether the Petitioner, a charitable trust, demonstrated sufficient cause for the condonation of delay in filing Form-10 for the Assessment Year 2021-2022 under the Income Tax Act, 1961. This issue involves examining the reasons for the delay and evaluating whether these reasons justify the condonation under the relevant legal framework.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework governing the filing of Form-10 is encapsulated in the provisions of the Income Tax Act, 1961. The Act mandates the timely filing of returns and accompanying forms to claim exemptions or deductions. The Petitioner sought condonation of delay under the discretionary powers generally vested in authorities to condone delays where sufficient cause is shown. The Petitioner referenced a precedent to support its application, arguing that its circumstances were not qualitatively different from those in the precedent.

Court's Interpretation and Reasoning

The Court acknowledged that the Petitioner's application for condonation of delay did not extensively elaborate on the reasons for the delay. However, it emphasized the importance of considering the surrounding circumstances, particularly the impact of the COVID-19 pandemic, which posed significant challenges in maintaining timely documentation. The Court noted that the Petitioner had consistently been diligent in previous years, suggesting a lack of mala fides or intent to gain undue advantage from the delay.

Key Evidence and Findings

The Court found that the Petitioner had filed its returns within the extended period due to the pandemic, although Form-10 was submitted later. The lack of professional assistance was highlighted as a contributing factor to the delay. The Petitioner's history of timely compliance in previous years was deemed significant in assessing the bona fides of the delay.

Application of Law to Facts

The Court applied the principle that condonation of delay requires an acceptable and plausible explanation, particularly when the delay is not accompanied by any mala fide intent or undue advantage. The Court concluded that the Petitioner's explanation, when viewed in light of the pandemic and its operational challenges, was plausible and acceptable.

Treatment of Competing Arguments

The Revenue's argument, presented by Mr. Saxena, emphasized the insufficiency of reasons provided by the Petitioner for the delay. However, the Court balanced this by considering the broader context and the Petitioner's historical compliance, ultimately finding in favor of the Petitioner.

Conclusions

The Court concluded that sufficient cause was shown for the condonation of delay, setting aside the impugned order and allowing the Petitioner's application. This decision enables the Petitioner to proceed with filing consequential applications.

SIGNIFICANT HOLDINGS

The Court held that in matters of condonation of delay, the explanation provided must be acceptable and plausible. The absence of mala fide intent or undue advantage strengthens the case for condonation. The Court stated, "In such matters, there is bound to be some lapse on the part of the party seeking condonation. However, suppose the explanation is acceptable and plausible and further. In that case, the Applicant has not acted mala fide or derived some undue advantage from such delay; the cause shown could be accepted."

The core principle established is that courts must consider the totality of circumstances, including historical compliance and external challenges such as the COVID-19 pandemic, when deciding on applications for condonation of delay.

The final determination was to set aside the impugned communication/order dated 08 August 2024, allowing the Petitioner's application for condonation of delay, thereby making the rule absolute without costs.

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