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TMI Blog2021 (1) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... stries Limited [ 1992 (9) TMI 67 - GUJARAT HIGH COURT ] wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause. This writ-application succeeds and is hereby allowed. The impugned order passed by the respondent no.2 dated 19th August 2019 (Annexure-A to this writ-application) is hereby quashed and set-aside. The impugned rectification order at page-13 of the paper-book dated 12th February 2020 is also hereby quashed and set-aside. The delay condonation application filed by the writ-applicant before the respondent no.2 is hereby allowed. Writ-applicant is entitled to seek exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the return of income. 5. An order under Section 143(1) came to be passed dated 17th March 2018 rejecting the benefit of exemption to the writ-applicant and a demand notice for ₹ 1,67,41,980=00 came to be issued on 28th August 2018. The notice referred to above stated the reason for demand on account of non e-filing of the audit report in the Form no.10B and suggested that the same may be filed with a request to condone the delay. 6. It is the case of the writ-applicant that the aforesaid notice ultimately brought the fact to their knowledge as regards the non-filing of the audit report. 7. On receipt of the demand notice dated 28th August 2018 referred to above, the writ-applicant e-filed the audit report in the Form no.10B on 2nd September 2018 and requested to condone the delay vide letter dated 5th September 2018 addressed to the respondent no.2. The respondent no.2, vide his reply dated 23rd October 2018, informed the writ-applicant that no ground for condonation of delay was made out and that it was only after the issuance of the demand notice that the writ-applicant had e-filed the audit report. 8. On 12th November 2018, the writ-applicant replied to the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 (Gujarat); (2)Commissioner of Income Tax-IV vs. Xavier Kelavani Mandal (P) Ltd., (2014)41 taxmann.com 184 (Gujarat) 16. In such circumstances referred to above, Mr. Soparkar prays that there being merit in his writ-application, the same may be allowed and the two impugned orders be quashed and set-aside. SUBMISSIONS ON BEHALF OF THE RESPONDENTS : 17. On the other hand, this writ-application has been vehemently opposed by Ms. Mauna Bhatt, the learned senior standing counsel appearing for the Revenue. Ms. Bhatt would submit that no error, not to speak of any error of law, could be said to have been committed by the respondent no.2 in passing the two impugned orders. 18. Ms. Bhatt would submit that although the audit report in the Form no.10B was to be filed along with the return of income, yet the assessee failed in doing so. It is argued that the respondent no.2 has thought fit, in exercise of his discretion, not to condone the delay and such discretion cannot be said to have been exercised arbitrarily or unjudiciously. 19. Ms. Bhatt would submit that in the case on hand, the Commissioner has recorded cogent reasons while declining to condone the delay. She would submit that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. No.AABTS2931H Sir, (1) We are in receipt of your letter dated 23.10.2018 (received on 29.10.2018) seeking the reasons for condonation of delay in filing Form No.10B. In this regard, we submit as under : (2) The assessee is a charitable Trust primarily running a school named Ishvarlal Gulabbhai Desai Vidya Sankul in the name of freedom fighter Late Shri Ishvarlal Gulabbhai Desai to provide education to the children primarily of the slum and those coming from low-level income. Activities of the Trust are attached (Page No.1). (3) The Trust is registered with the Charity Commissioner vide Registration No.E-2357-Surat, as per the Bombay Public Trust Act, 1950 (Page No.2). (4) The Trust is also registered with the Income-tax Act, 1961 u/s.12A (Page No.3) and enjoys recognition u/s.80G(5) of the Act (Page No.4). (5) The Trust has been scrutinized by the Income-tax Department from time to time. Copy of assessment order for A.Y.2010-11 is attached (Page No.5 to 7). (6) With the above, it is clear that the Trust is a bonafide Trust rendering charitable activities, accepted by the department time and again. (7) Form No.10B is required to be filed on on-line as per Rule 17B by the statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m No.10B particularly when the Trust complied with all the other conditions. 24. The respondent no.2, however, declined to condone the delay and rejected the said application by the impugned order dated 19th August 2019 (Annexure-A), assigning the following reasons in the impugned order : ORDER U/S.119(2)(b) OF THE INCOME-TAX ACT, 1961 The applicant, Sarvodaya Charitable Trust has filed an application dated 05.09.2018 in the office on 19.09.2018, for condonation of delay in filing Form No.10B of the I.T. Act, 1961 for the A.Y. 2016-17. The application stated that the assessee received notice of demand of ₹ 1,67,41,980/from CPC, Bangalore under reference no. CPC/1617/C94/1803900360 dated 28.08.2018. The reason provided therein by CPC for raising of demand was non filing of Audit report in Form 10B. The assessee thereafter filed Form 10B on 02.09.2018 and submitted application for Condonation of delay. 2. As no specific reason was given in the application for the delay in filing Audit Report in Form No.10B, show cause notice was issued to the assessee vide letter dated 23.10.2018. In response to the show cause notice the assessee submitted a detailed reply vide letter dated 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m no.10B audit report in Form no. 10B could not be filed is not acceptable. 4. It should be noted the Legislature has provided time limits for certain obligations under the Act and these time limits have to be observed to be able to claim certain deductions, allowances and avoid interest and penalty. If these time limits were to be relaxed in a particular case, mere fact that a default occurred due to some reason is not enough to establish the claim of genuine hardship. Discipline on time limits regarding uploading Audit report in Form no.10B online have to be complied and respected, unless compelling and good reasons are shown and established for grant of extension of time. Extension of time cannot be claimed as a vested right on mere asking and on the basis of vague assertions without proof. 5. In determining whether genuine hardship is caused to the assessee, one has to see whether the delay in filing audit report in Form no.10B electronically was due to a reasonable cause or not. In this case, delay is stated to be attributed to the Auditor. However in such a case one has to see whether the assessee pursued the matter due to diligence to get his audit report in Form no. 10B upl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has attached copy of documents to substantiate its claim. The said application of the assessee was disposed off by an order dated 19.8.2019, by the then Commissioner of Income Tax (Exemptions), Ahmedabad, wherein the application of the assessee was rejected. 2. The assessee vide application dated 9.9.2019 requested for rectification of the order dated 19.8.2019. Accordingly, the assessee was given an opportunity of being heard on 27.11.2019. The assessee requested for adjournment. Accordingly, an another opportunity of being heard was given on 10.12.2019. The assessee again requested for adjournment vide letter dated 10.12.2019. Therefore, a final opportunity was given to the assessee on 9.1.2020. In response the representative of the assessee attended and case discussed. Further, the assessee furnished a letter dated 13.1.2020, wherein it was submitted that Form No.10B was uploaded by the auditor of the assessee in the e-filing portal on 17.10.2016, however, as the trustees were unaware of the procedure they did not approve the Form No.10B by the due date. The Form No.10B was uploaded on 1.9.2018. The assessee has accordingly requested that the delay has occurred due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant paragraphs 11 to 14 and 23 of the said judgment are quoted below for ready reference : 11. The expression 'genuine hardship' came up for consideration of the Supreme Court in the case of B.M.Malani (supra), wherein, by reference to New Collins Concise English Dictionary, the Supreme Court accepted the position that genuine means not fake or counterfeit, real, not pretending (not bogus or merely a ruse). Further, a genuine hardship would, inter alia, mean a genuine difficulty. The ingredients of genuine hardship, must be determined keeping in view the dictionary meaning thereof and legal conspectus attending thereto. For the said purpose, another well known principle, namely, that a person cannot take advantage of his own wrong, may also have to be borne in mind. Compulsion to pay any unjust dues per se would cause hardship. But a question as to whether the default in payment of the amount was due to circumstances beyond the control of the assessee, also bears consideration. 12. In the case of R. Seshammal (supra), the Madras High Court was pleased to observe as under (page 187 of 237 ITR): This is hardly the manner in which the State is expected to deal with the citize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a serious risk. The approach of the authorities should be justice oriented so as to advance the cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund. 14. In the case of Bombay Mercantile Co-operative Bank Ltd.(supra), this court again observed that it is well settled that in matters of condonation of delay highly pedantic approach should be eschewed and a justice-oriented should be adopted. It also observed that a party should not be made to suffer on account of technicalities. 23. In the light of the aforesaid discussion, we are of the opinion that an acceptable explanation was offered by the petitioner and a case of genuine hardship was made out. The refusal by the Central Board of Direct Taxes to condone the delay was a result of adoption of an unduly restrictive approach. The Central Board of Direct Taxes appears to have proceeded on the basis that the delay was deliberate, when from the explanation offered by the petitioner, it is clear that the delay was neither deliberate nor on account of culpable negligence or any mala fides. Therefore, the impugned order dated May 16, 2006, made by the Central Board of Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. If the statute provide that a particular thing should be done, it should be done in the manner prescribed and not in any other way (see para 26). (iv) In the case of B .M.Malani vs. Commissioner of Income Tax and another, (2008) 219 CTR 313), the Court observed : 8. The term 'genuine' as per the New Collins Concise English Dictionary is defined as under : 'Genuine' means not fake or counterfeit, real, not pretending (not bogus or merely a ruse). For interpretation of the aforementioned provision, the principle of purposive construction should be resorted to. Levy of interest although is statutory in nature, inter alia for recompensating the Revenue from loss suffered by non-deposit of tax by the assessee within the time specified therefor. The said principle should also be applied for the purpose of determining as to whether any hardship had been caused or not. A genuine hardship would, inter alia, mean a genuine difficulty. That per se would not lead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the so called reasons assigned by the respondent Central Board of Direct Taxes (CBDT) in the impugned order, on the face of it, do not appear to be whimsical or arbitrary reasons and it is equally true that such investment could be made by assessee very well before the cut off date also when she was physically present in India or even when she had gone back to USA on 20th February 2013. Nonetheless, the delay of six months in the circumstances in which it occurred, especially, in view of the fact that the investment condition was undisputably met by the assessee could have been condoned taking a judicious and holistic view of the facts. The wide powers of the Central Board of Direct Taxes or other higher authorities of the Department to whom such powers can be delegated under Section 119 of the Act, need not always take only a pro revenue approach in such matters. Their approach in such cases should be equitious, balancing and judicious which should reflect the application of mind to the facts of the case and before denying the genuine claim of the assessee on the grounds of mere delay in making such claim, something more than the user of innocuous terms as employed in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion was traveling from India to USA a long distance country where she normally resided and came to India not only to meet her family members, but to sell the immoveable property belonging to her and sought to avail the genuine exemption from such tax liability upon making the investment in the prescribed investment in the form of Bonds of Infrastructure which she did make in the National Highways Authority. 30. We may also refer to and rely upon a decision of the Delhi High Court in the case of G.V. Infosutions Pvt. Ltd. vs. Deputy Commissioner of Income Tax, Circle 10(2) and others, reported in (2019) 261 taxmann.com 482 (Delhi). We may quote the relevant observations thus : 8. The rejection of the petitioner's application under Section 119(2)(b) is only on the ground that according to the Chief Commissioner's opinion the plea of omission by the auditor was not substantiated. This court has difficulty to understand what more plea or proof any assessee could have brought on record, to substantiate the inadvertence of its advisor. The net result of the impugned order is in effect that the petitioner's claim of inadvertent mistake is sought to be characterised as not bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause. 33. In view of the above, this writ-application succeeds and is hereby allowed. The impugned order passed by the respondent no.2 dated 19th August 2019 (Annexure-A to this writ-application) is hereby quashed and set-aside. The impugned rectification order at page-13 of the paper-book dated 12th February 2020 is also hereby quashed and set-aside. The delay condonation application filed by the writ-applicant before the respondent no.2 is hereby allowed. 34. It is declared that the writ-applicant is entitled to seek exemption under Section 12 of the Act. The authorities below are directed to give effect to such exemption to the assessee and pass necessary consequential orders in this regard. However, as fairly submitted by Mr. Soparkar, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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