TMI Blog2024 (4) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... deficit been claimed as application of income, the petitioner would have entitled to a refund The time limit for filing revised return under Section 139(5) of the I.T. Act for the assessment year 2021-22 was 31.12.2022. The petitioner, after receipt of the intimation order under Section 143(1) of the I.T. Act for the assessment year 2021-22, initially filed an application under Section 154 of the I.T. Act before the Assessing Officer-opposite party no.2 for rectification on account of mistake of the total income being chargeable to tax without setting off the past deficit, which is apparent from the record. But the Assessing Officer-opposite party no.2, vide order rejected the said application. The petitioner assailed the intimation order under Section 143(1) of the I.T. Act as well as the order passed under Section 154 of the I.T. Act before the First Appellate Authority under Section 250 of the I.T. Act, which was dismissed, with an observation that the petitioner has the remedy of making application under Section 119(2)(b) of the I.T. Act. Thereby, finding no other alternative, the petitioner approached opposite party no.1 by filing an application under Section 119(2)(b) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The factual matrix of the case, in brief, is that the petitioner is an educational and charitable trust constituted by execution of trust deed dated 16.08.2008 for educational and charitable purposes. It has been duly registered under Section 12A(1)(aa) of the Income Tax Act, 1961 (for short I.T. Act ), as per registration certificate dated 30.06.2017 and the said registration has been renewed from time to time. In terms of the said registration, the petitioner is entitled to get exemption under Sections 10(23C), 11 12 of the I.T. Act and subjected to nil taxable income and such exemptions have been granted to the petitioner since the date of registration. 2.1. For the assessment year 2021-22, the petitioner had filed its return of income on 15.03.2022 claiming exemption/deduction as available under Section 11 of the I.T. Act. While processing the return of income under Section 143(1) of I.T. Act, the exemption claimed by the petitioner was disallowed on the ground of delay in filling audit report in Form-10B, which was to be done before one month from the due date of filling of return of income and, thereby, a demand of Rs. 5,47,24,100/-was raised by issuing order under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order dated 23.08.2023 passed by opposite party no.1, rectified the demand raised in the intimation under Section 143(1) of the IT Act by reducing it from Rs. 5,47,24,000/- to Rs. 3,29,30,185/- vide rectification order dated 30.08.2023. 2.3. The petitioner took additional grounds regarding rejection of the rectification application before the First Appellate Authority by filing grounds of appeal agitating about not allowing the set off of past deficit as application of income. The petitioner further stated about its inadvertent mistake in claiming the past deficit of Rs. 5,41,52,906.70 against the current year's income under Section 11(1) of the I.T. Act. It highlighted that a bare look at its audited statement for the Financial Year 2019-20 2020-21 would reveal that the petitioner has complied with the requirement under Section 11(1) of the I.T. Act and it also referred to the judgments of the Supreme Court governing the field. But, the Appellate Authority, however, failed to consider this aspect of the matter and dismissed the appeal by observing that the claim of the petitioner, that in the return it had not set off the past years' deficit against the income on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome claiming refund of Rs. 21.350/- for the assessment year 2021-22 by annexing comparative statement of computation as per the original return filed and proposed revised return. 2.6. Opposite party no.1 in utter disregard to the statutory provisions under Section 119(2)(b) of the I.T. Act as well as the governing circulars, vide order dated 22.01.2024 under Annexure-1, rejected the application filed by the petitioner for condonation of delay in filing the revised return stating that the petitioner having filed the original return of income after due consideration with an undertaking that the said information is correct and in spite of enough time, no revised return of income having been filed, the genuine hardship for non-filing of revised return of income is not justified. Hence, this writ petition. 3. Mr. G.M. Rath, learned counsel along with Mr. S.S. Padhy, learned counsel appearing for the petitioner vehemently contended that the order dated 22.01.2024 under Annexure-1 passed by opposite party no.1 in rejecting application for condonation of delay in filing the revised return is in utter disregard to the statutory provision contained in Section 119(2)(b) of the I.T. Act as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income. Further, if such past years' deficit of Rs. 5,41,52,906/- is claimed as an application of income, then the next surplus would be 9.24% of the total income, which is within the mandated 15% as per Section 11(1) of the I.T. Act. Therefore, it is contended that the order dated 22.01.2024 under Annexure-1 passed by opposite party no.1 rejecting the application of the petitioner for condonation of delay in filing the revised return is arbitrary, unreasonable and illegal, which warrants interference of this Court at this stage. To substantiate his contentions, learned counsel for the petitioner has relied upon Commissioner of Income Tax (Exemptions) v. Subros Educational Society , (2018) 11 ITR-OL 468; Shree Maharaja Agrasen Seva Sansthan v. Commissioner of Income Tax (Exem), MANU/GJ/3206/2022; Dr. Sujatha Ramesh v. Central Board of Direct Taxes and Anr ., 2017 SCC OnLine Kar 6868 and G.V. Infosutions Pvt. Ltd. v. Deputy Commissioner of Income-tax and Anr ., 2019 SCC OnLine Del 6861. 4. Mr. S.C. Mohanty, learned Senior Standing Counsel appearing for the opposite parties, while justifying the order dated 22.01.2024 passed by opposite party no.1, contended that no i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Mr. S.C. Mohanty, learned Senior Standing Counsel appearing for the opposite parties in hybrid mode. Pleadings have been exchanged between the parties and with the consent of learned counsel for the parties, the writ petition is being disposed of finally at the stage of admission. 6. Before delving into the merits of the case, for better appreciation, certain provisions of Income Tax Act and circulars are extracted hereunder. Section 119(2)(b) of the Income Tax Act reads as follows:- 119. Instructions to subordinate authorities . 1. xxxxx xxxxx xxxx 2. Without prejudice to the generality of the foregoing power:- a) xxxx xxxx xxxx b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorize to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law; Clause Nos.3 to 5 of Circular No.09 of 2015 (F.No.312/22/2015-OT) dated 09.06.2015 issued by CBDT read as follows:- 3. No condon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the application of the petitioner for condonation of delay in filing the revised return of income, vide impugned order dated 22.01.2024 under Annexure-1, assigned reasons to the following effect:- After careful consideration of the submission made by you regarding condonation for filling or revised return, the original return of income was filed by you after due consideration and you have undertaken that, all the information filed as verified and correct and it is hence concluded that, genuine hardship for non-filling of revised return of income is not justified. Moreover, the assessee had enough time to file the revised return of income, but you chose not to file revised return of income in time. In view of the aforesaid provisions, the petitioner having made out a case of genuine hardship in its favour, the rejection of application filed for condonation of delay in filing of revised return of income, vide order dated 22.01.2024, has no justification. 8. In paragraph-10 of the counter affidavit, the opposite parties have stated as follows:- 10. That the averments made in paragraphs 15, 16 and 17 of the Writ Petition are wrong and hence denied. It is submitted that the Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Ors ., 2016 (II) OLR 237, in which one of us (Dr. B.R. Sarangi, J.) is a Member. 12. In view of law laid down by the apex Court, the reasons which have been assigned in the counter affidavit cannot be sustained in the eye of law and accordingly the same are not accepted. 13. On perusal of the provisions contained in Section 119(2)(b) of the Income Tax Act read with circular no.09/2015 dated 09.06.2015 issued by CBDT, it appears that genuine hardship which the petitioner is required to establish is the hardship that would be caused to the petitioner if the delay is not condoned or the time limit is not extended. In other words, at the time of considering the application under Section 119(2)(b) of the I.T. Act, the statutory authority is to ensure that the income/loss declared and/or refund claimed by the assessee is correct and genuine and the same will cause genuine hardship to the assessee unless the time limit is extended. 14. The petitioner has clearly stated in its application filed under Section 119(2)(b) of the I.T. Act under Annexure-11 that at the time of filing of its return of income for assessment year 2021-22, it has inadvertently erred in claiming the past years defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a few precedents operating in the field to highlight the aforementioned proposition of law. [See Priyanka Overseas (P) Ltd. v. Union of India [1991 supp (1) SCC 102] (SCC at pp. 122-23, para 39); Union of India v. Major General Madan Lal Yadav ( Retd. ) [(1996) 4 SCC 127 : 1996 SCC (Cri) 592] (SCC at p. 142, paras 28- 29); Ashok Kapil v. Sana Ullah [(1996) 6 SCC 342] ( SCC at p. 345, para 7); Sushil Kumar v. Rakesh Kumar [(2003) 8 SCC 673] ( SCC at 9.692, para 65, first sentence); Kusheswar Prasad Singh v. State of Bihar [(2007) 11 SCC 447 ] (SCC at pp. 451-52, paras 13-14 and 16).] 16. If considered from other angle, opposite party no.1 has neither in the impugned order dated 22.01.2024 nor in the counter affidavit filed on their behalf denied the entitlement of the petitioner to claim such set off of past years deficit. Rather, the Commissioner of Income Tax (Appeals) in its order dated 27.12.2023 has acknowledged the entitlement of the petitioner to such claim. Thereby, the petitioner has established the requirement of genuine hardship , as enumerated under Section 119(2)(b) of the I.T. Act. As such, the finding of opposite party no.1, that the petitioner has failed to demonstra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner filed application indicating its genuine hardship , opposite party no. 1 could have considered the same in proper perspective, but, without doing so, it rejected such application vide impugned order dated 22.01.2024 which cannot be sustained in the eye of law. 18. In G.V. Infosutions Pvt. Ltd . (supra), the High Court of Delhi in paragraphs-8, 9 and 10 held as follows:- 8. The rejection of the petitioner s application under section 119(2) (b) I sonly 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 characterized as not bonafide. The court is of the opinion that an assessee has to take leave of its senses if it deliberately wishes to forego a substantial amount as the assessee is ascribed to have in the circumstances of this case. Bona fide is to be understood in the context of the circumstance of any case. Beyond a plea of the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar of limitation may appear to be prima fade tenable, the courts may exercise their jurisdiction to set aside such orders and allow the claims on merits, setting aside the bar of limitation. 20. In Shree Maharaja Agrasen Seva Sansthan (supra), the High Court of Gujarat, referring to the judgment of the apex Court in B.M. Maiani (supra) and taking into consideration the meaning of genuine and also the judgment of the High Court of Delhi in G.V. Infosutions Pvt. Ltd (supra), quashed the impugned order dated 17.06.2021 and allowed the delay condone application filed by the assessee therein. 21. In Subros Educational Society (supra), the apex Court in paragraphs 1 2 of the said judgment held as follows:- 1. In this application filed by the Income-tax Department it is stated that Civil Appeal No. 5171 of 2016 arises out of Special Leave Petition (C)... . CC No. 8982/2016 was tagged with other appeals and the batch matters were decided by this court on December 13, 2017. However, the following question was also raised in the instant appeal which was not the subject matter of those appeals. (a) Whether any excess expenditure incurred by the trust/charitable institution in earlier assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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