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TMI Blog2024 (5) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Women and Child Welfare. It has a capacity of 50 children and provides for all basic needs for foster holistic development of the children. The petitioner is an establishment, which has received the tax exemption under Section 12A of the act. It is a society, which is in operation for about 20 years now. 3. Given the fact that the petitioner is exempted under Section 12A of the act, they were required to submit Form 10B along with the Auditor's Report. For the aforesaid two Assessment Years 2018-19 and 2020-21, there were certain delay on the part of the petitioner in furnishing the aforesaid Form 10B along with the Auditor's report. For the Assessment Year 2018-19, the delay was 161 days and for the Assessment year 2020-21, the delay was only of 3 days. The petitioner immediately upon getting the Auditor's report, submitted Form 10B along with an application under Section 119(2)(b) of the act, seeking for condonation of delay in the submission of Form 10B. Along with the application for condonation of delay under Section 119(2)(b) of the act, the petitioner specifically had mentioned that for the Assessment Year 2018-19, where there was a delay of 161 days, the delay occur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the petitioner, where the reason for the delay has been attributed upon the office of the Chartered Accountant or the office of the Audit entrusted with the accounts of the petitioner's establishment. It does not appear to be any plausible explanation justifying the delay that occurred in the submission of Form 10B on the part of the petitioner. He further contends that the impugned order itself would reveal that the authority concerned has taken note of certain judicial precedents on the issue and have found explanation not to be satisfactory while rejecting the said application and thus, prayed for rejection of the writ petition. 7. Having heard the contentions put forth by the parties and on perusal of the record, 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 Assessment Year 2020-21 also, certain unavoidable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plications in filing Form No. 10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. 5. In addition to the above, it has also been decided by the CBDT that where there is delay of upto 365 days in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the Commissioners of Income-tax are hereby authorized to admit such belated applications of condonation of delay under section 119(2) of the IT Act and decide on merits. 6. The Commissioners of Income-tax shall, while entertaining such belated applications in filing Form No. 10B, satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time." 9. 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/au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent No. 2 might be justified in denying the exemption under section 12 of The Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. 32. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.)., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the exemption available to the trust under section 11 may not be denied merely on account of delay in furnishing the auditor's report. The word "shall" occurring in section 12A cannot, under the circumstances, be read as a "must" making it mandatory for the trust to furnish the auditor's report along with the filing of the return. If for certain unavoidable circumstances, the assessee is unable to furnish the auditor's report along with return then the same can be furnished at a later date with the permission of the Assessing Officer who may permit the assessee to do so after recording his reasons for so doing. Counsel appearing for the Revenue then argued that as per the circular, the auditor's report could only be furnished up to the stage of framing of assessment as the power to condone the delay for accepting the auditor's report at a later date has only been given to the Income-tax Officer and not thereafter, i.e., at the appellate stage. We find no merit in this submission. The Central Board of Direct Taxes by issuing the circular dated February 9, 1978, has treated the provisions regarding furnishing of the auditor's report along with the return to be proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only of meager 3 days. We are surprised more particularly for the reasons 2020-21 was the period when the entire universe was under the influence of the Covid-19 pandemic. In the given circumstances, if the power which otherwise is conferred upon the Commissioner of Income Tax for condonation of delay of 365 days is not entertained in a more pragmatic manner, there could not have been a better case available with the department for condoning the said delay. This further forces this Bench to draw an inference that the impugned order has been passed in a mechanical manner and without proper application of mind and in the process, they have also not considered the explanation provided.
16. For all the said reasons, the order dated 12.01.2024 Annexure P1 is ordered 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.
17. The Writ Petition for the aforesaid extent stands allowed. No order as to costs. Consequently, miscellaneous applications, if any pending shall stand closed. X X X X Extracts X X X X X X X X Extracts X X X X
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