2024 (5) TMI 1171 - HC - Income Tax

Rejection of application u/s 119(2)(b) - delay on the part of the petitioner in furnishing the Form 10B along with the Auditor s report - Exemption u/s 12A - HELD THAT - Admittedly the petitioner is an establishment which has got exemption under Section 12A of the Act. It is in operation for the last 25 years. There does not seem to be any default on the part of the petitioner for all these years for some reason for the Assessment Year 2018-19 Form 10B could not be submitted within the stipulated period and there was a delay of 161 days in filing of the same. Similarly for the AY 2020-21 also certain unavoidable circumstances Form 10B could not be furnished within the stipulated period and there was a delay of 3 days in the submission of the same. For both the aforesaid years the petitioner has submitted Form 10B and subsequently also moved an appropriate application under Section 119 (2)(b) of the Act seeking for condonation of the delay in the submission of the Form 10B. The plain reading of Clause 5 of the said Circular in very categorical terms reflects that this CBDT had conferred/authorized Commissioners of Income Tax for entertaining the application under Section 119 (2)(b) of the act seeking condonation of delay in filing Form 10B if the delay was less than 365 days. The reading of the aforesaid clause 5 also gives a clear indication that the said power stands conferred/authorized upon the Commissioners of Income Tax with a specific purpose of entering the applications u/s 119 (2)(b) of the act in a more liberal and pragmatic manner provided a reasonable clause and plausible explanation has been provided by the assessee. Keeping in view the aforesaid instructions of the CBDT if now looking into the impugned order what is apparent is that the impugned order does not indicate anything in respect of the contents of the application u/s 119(2)(b) of the act filed by the petitioner seeking for condonation of delay. There is no discussion on the explanation so provided being provided in Column Nos. 14 and 15 of the said application u/s 119 (2)(b) of the act. Once when the assessee provides for an explanation it is incumbent upon the authorities concerned to consider the explanation and give a specific finding whether the explanation so provided is satisfactory or whether the explanation provides reasonable cause which prevented the petitioner in filing Form 10B within the stipulated period of time. Thus the order to be set aside the delay on the part of the petitioner in submitting Form 10B is ordered to be condoned and the matter stands remitted back to the 1st respondent who in turn is directed to pass appropriate orders on merits.

Summary

Issues Involved:
1. Rejection of application u/s 119(2)(b) of the Income Tax Act, 1961.
2. Delay in submission of Form 10B for Assessment Years 2018-19 and 2020-21.
3. Non-consideration of explanations provided by the petitioner.
4. Applicability of CBDT Circular No. 2/2020.

Summary:

Issue 1: Rejection of application u/s 119(2)(b) of the Income Tax Act, 1961
The petitioner challenged the order dated 12.01.2024 by the 1st respondent, which rejected their application u/s 119(2)(b) of the Income Tax Act, 1961, seeking condonation of delay in filing Form 10B.

Issue 2: Delay in submission of Form 10B for Assessment Years 2018-19 and 2020-21
The petitioner, a non-profit society exempted u/s 12A of the Act, faced delays in submitting Form 10B for AY 2018-19 (161 days) and AY 2020-21 (3 days). The delays were attributed to the Chartered Accountant's office and professional pressures due to Covid-19, respectively.

Issue 3: Non-consideration of explanations provided by the petitioner
The petitioner argued that the impugned order was mechanical and lacked discussion on the explanations provided for the delays. The petitioner cited CBDT Circular No. 2/2020, which allows condonation of delays up to 365 days, a point not addressed by the 1st respondent.

Issue 4: Applicability of CBDT Circular No. 2/2020
The court noted that the CBDT Circular No. 2/2020 empowers Commissioners of Income Tax to condone delays up to 365 days in filing Form 10B. The impugned order failed to consider this circular and the explanations provided by the petitioner.

Judgment:
The court found that the impugned order did not discuss the explanations provided by the petitioner and failed to consider the CBDT Circular No. 2/2020. The court referenced a similar case, M/s. Shilparamam Arts, Crafts and Cultural Society, where the delay was condoned. The court set aside the impugned order, condoned the delay, and remitted the matter back to the 1st respondent for a decision on merits. The writ petition was allowed, and no costs were ordered.