2025 (1) TMI 1191 - HC - Income Tax

Delay in filing Form 10B with the original return of income - sufficient cause for condonation of delay given or not? - HELD THAT - The delay in Assessment Year 2021-2022 and 2022-2023 was only 2 and 16 days respectively. So far as Assessment Year 2019-2020 is concerned the Petitioner was under the bona fide delay and they would benefit from the extended timeline for filing a revised return. The return was filed within the extended period. However since Form 10B had to be filed with the original return there is a delay. For this delay the Petitioner has shown sufficient cause. Delay is not mala fide and the Petitioner has not derived any undue advantage from such a delay. Learned counsel for the Respondent submits that the Petitioner is habitually late in such matters. There is no material to sustain this contention. In any event even if we accept this contention we must focus on the cause shown for the relevant Assessment Years. As noted there is sufficient cause for all the three Assessment Years which we must now consider in this Petition. Petitioner is not some business venture but an educational institution. Even this aspect is relevant. The impact of Covid-19 Pandemic on the functioning of the Petitioner is required to be taken into consideration. Thus condone the delay in filing Form 10B for the Assessment Year 2019-2020 2021-2022 and 2022-2023. Further we grant the Petitioner liberty to pursue the issue of condonation for the Assessment Year 2020-2021 before the CBDT.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the delay in filing Form 10B for the Assessment Years 2019-2020, 2021-2022, and 2022-2023 should be condoned.
• Whether the reasons presented by the Petitioner, including the impact of the COVID-19 pandemic, constitute sufficient cause for condonation of delay.
• Whether the nature of the Petitioner as an educational institution affects the consideration of the delay.

ISSUE-WISE DETAILED ANALYSIS

Delay in Filing Form 10B

• Relevant Legal Framework and Precedents: Under the Income Tax Act, Form 10B must be filed along with the original return of income. The Petitioner sought condonation of delay under the provisions allowing for such relief in cases of sufficient cause.
• Court's Interpretation and Reasoning: The Court noted that the delay for Assessment Years 2021-2022 and 2022-2023 was minimal (2 and 16 days, respectively). For Assessment Year 2019-2020, the Petitioner argued that the delay was bona fide due to reliance on an extended timeline for filing revised returns, which was granted due to the pandemic. The Court found this reasoning persuasive, emphasizing that the delay was not intentional or for undue advantage.
• Key Evidence and Findings: The Petitioner cited the COVID-19 pandemic's impact, including staff shortages and operational difficulties, as the primary reasons for the delay. The Court found these reasons credible and sufficient to justify the delay.
• Application of Law to Facts: The Court applied the principle that sufficient cause for delay should be considered in light of the specific circumstances affecting the Petitioner, particularly the pandemic's impact. The educational nature of the institution was also deemed relevant.
• Treatment of Competing Arguments: The Respondent argued that the Petitioner habitually delayed filings. However, the Court found no material evidence to support this claim and focused on the specific causes shown for the relevant years.
• Conclusions: The Court concluded that the Petitioner had shown sufficient cause for the delay in filing Form 10B for the relevant assessment years and thus condoned the delay.

SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court stated, "We believe the above reasons warranted consideration since they constituted sufficient cause."
• Core Principles Established: The judgment reinforced the principle that delays in procedural compliance can be condoned when sufficient cause is shown, particularly when external factors such as a pandemic significantly impact the petitioner's ability to comply.
• Final Determinations on Each Issue: The Court set aside the impugned orders dated 12 October 2023, condoning the delay in filing Form 10B for Assessment Years 2019-2020, 2021-2022, and 2022-2023. The Petitioner was granted liberty to pursue the condonation issue for Assessment Year 2020-2021 before the CBDT.