Bombay High Court
Nav Chetna Charitable Trust vs Commissioner Of Income Tax Exemptions … on 20 December, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-OS:21249-DB
NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCX
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 470 OF 2024
Nav Chetna Charitable Trust
Having its registered office at
C/O D. G. Khetan International School,
Off. S. V. Road, Sunder Nagar,
Malad (W), Mumbai - 400 064.
... Petitioner
PAN No: AAATN5098F
Versus
1. Commissioner of Income Tax (Exemption)
Room no.601, 6th Floor,
Cumballa Hill MTNL TE Building,
Peddar Road, Mumbai - 400 026.
2. Assistant Commissioner of Income Tax,
Exemption Circle 2, Mumbai
Room no.603, 6th Floor,
Cumballa Hill MTNL TE Building,
Peddar Road, Mumbai - 400 026.
3. The Central Board of Direct Taxes,
Room no.13, 5th Floor,
Jeevan Vihar Building, Sansad Marg,
New Delhi - 110001. ... Respondents
Mr. Ajay Singh, for the petitioner.
Mr. Dinesh R. Gulabani, for respondents.
_______________________
CORAM: G. S. KULKARNI &
Digitally signed
by PALLAVI
ADVAIT M. SETHNA, JJ.
MAHENDRA
PALLAVI WARGAONKAR
MAHENDRA
WARGAONKAR Date:
2024.12.21
11:33:35
+0530 RESERVED ON : 18 November 2024
PRONOUNCED ON: 20 December 2024
_______________________Judgment (Per Advait M. Sethna, J.)
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1. Rule, made returnable forthwith. Respondents waive service. By
consent of the parties, heard finally.
2. This is a petition filed by the petitioner under Article 226 of the
Constitution of India. It challenges an order dated 28 September 2023
(“impugned order ” for short) passed by the Commissioner of Income Tax
(Exemption) i.e., respondent no.1. The substantive prayers in the petition are
reproduced below:
“a. that this Hon’ble Court may be pleased to issue under Article 226 of
the Constitution of India an appropriate direction, order or a writ,
calling for the records of the case and after satisfying itself as to the
legality thereof quash and set aside the order dated 28.09.2023
passed by the Respondent No. 1 under section 119(2)(b) of the
Income tax Act, 1961, being Ex.- ‘K’ and admit/accept the Form no
9A (Exh: ‘E’)hereto;
b. that this Hon’ble Court may be pleased to issue under Article 226 of
the Constitution of India an appropriate direction, order or a writ,
calling for the records of the case and after satisfying itself as to the
legality thereof quash and set aside the order passed by the
Respondent No. 1 dated 28/09/2023, being Ex.- ‘K’ and direct the
Respondents 1 & 2 to admit/accept the Form no 9A (Exh:
‘E’))hereto.”
A) Issue before the Court:-
3. The issue that arises for consideration in this petition is whether
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NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCXthe respondent No.1 was legally justified in rejecting the application for
condonation of delay of 799 days filed by the petitioner in filing Form 9A
for the Assessment Year (“A.Y.” for short) 2017-2018, when there is a power
coupled with statutory discretion conferred upon the
commissioners/competent authority under Section 119(2)(b), of the Income
Tax Act, 1961 (“IT Act” for short) authorizing them to admit belated filing
of Form 9A.
B) Factual Matrix:-
The relevant facts necessary for adjudication of the present proceedings are:
4. The petitioner is a trust registered with the Charity
Commissioner, Mumbai vide registration No. E-2145, dated 1 January 2004
under section 12A of the IT Act, also having another registration No. INS-
TR 38017, dated 29 January 2004. The respondent No.1 is the
Commissioner of Income Tax (Exemption) who passed the impugned order.
5. The objects as stipulated in the Trust Deed dated 17 October
2003 of the petitioner concerns activities to establish, promote, set up, run,
maintain and grant-aid and other financial assistance to educational
institutions for development of human knowledge. In furtherance of such
objects of the trust, the petitioner established D. G. Khetan International
School, B. H. Gadia International School, B. K. Gadia, A Level Junior
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College and J. Kumar International School at Malad (West) in the year 2006.
Since the year 2006, respondents have accepted the petitioner’s status as a
charitable institution.
6. The petitioner trust filed its Nil return of income dated 12
October 2017 under Section 139(1) of the IT Act along with Form 10B for
the A.Y. 2017-2018, after claiming exemption under Section 11 of the IT
Act. The petitioner also filed its revised return on 29 December 2018,
claiming exemption under Section 11 of the IT Act.
7. During the course of assessment proceedings, the petitioner
uploaded a revised computation of income dated 09 November 2019 with a
view to rectify certain computation mistakes namely (i) Claim of
depreciation of Rs. 19,25,787 on fixed assets under Section 11(6) of the IT
Act; (ii) Expenses claimed towards capital expenditure along with deduction
of Rs. 57,28,869/- i.e., by way of exercising option under clause (2) to
‘Explanation 1’ to Section 11(1) of the IT Act, being interest amount accrued
but not received. The assessment in the petitioner’s case was completed on
11 December 2019 resulting in the assessment order of the said date.
8. The petitioner filed Form 9A on 20 December 2019 on the
Income Tax portal, alongwith an application for condonation of delay in
filing the said Form 9A. According to the petitioner, it was able to file the
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said Form 9A only on 20 December 2019 due to change in procedure, from
manual to electronic filing which was the main reason for such delay. In this
regard, the petitioner was guided by Central Board of Direct Taxes (” CBDT”
for short) Circular No. 7 of 2018, dated 20 December 2018 for the A.Y.
2016-2017 issued under Section 119(2)(b) of the IT Act. The said provision
empowers the Commissioner to admit belated application for condonation of
delay in filing Form 9A and decide such application on merits, in situations
where the assessee was prevented by reasonable cause from filing such
applications in Form 9A and Form 10, within the stipulated time. Following
the above, the CBDT issued another Circular No. 30 of 2019 under Section
119 (2)(b) of the IT Act dated 17 December 2019 extending the applicability
of the earlier Circular to the assessment year in question i.e. A.Y. 2017-2018.
In fact Form 9A in the present case was filed by the petitioner on 20
December 2019 on the Income Tax portal i.e., just after 3 days of the
issuance of the CBDT Circular dated 17 December 2020. Further the CBDT
then issued Circular No. 6 of 2019, dated 19 February 2020 in the context of
condonation of delay under Section 119(2)(b) of the IT Act applicable for
the A.Y. 2018-2019. This was on similar reasoning/basis set out in the earlier
CBDT Circulars applicable for A.Y. 2016-2017 and A.Y. 2017-2018,
respectively.
9. Pursuant to the above, the petitioner filed its submission before
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the respondent No.1 on 30 January 2023, 13 September 2023 and 21
September 2023 along with the following details, as sought for by the
respondents.
"a. Copy of Registration certificates u/s 12A; b. Copy of Trust Deed. c. Copy of audit reports in Form 10B. d. Copy of Form no. 9A submitted electronically on 20/12/2019. e. Copy of Resolution passed in meeting of the trustees held on
01/10/2017 through which decision of accumulation is taken.
f. Affidavit of Shri Purshottam Khetan (Trustee).
g. All the investments made out of income accumulated in the form
of fixed deposits with the banks were also submitted.”
10. Further to the above, the impugned order dated 28 September
2023 passed under section 119(2)(b) of the IT Act for the A.Y. 2017-2018
was passed by the respondent No.1 rejecting the application of the petitioner
for condonation of delay in filing Form 9A. Such rejection by the said
respondent was mainly on the ground that (a) wrong claim was made by the
petitioner in the return of income dated 12 October 2017 filed under Section
139(1) of the IT Act in regard to depreciation of Rs. 19,25,787 and capital
expenditure which was accordingly disallowed to the extent of
Rs.57,28,869/- as claimed by the petitioner under Section 11(1)-clause 2 of
‘Explanation 1’ of the IT Act; (b) Form 9A along with application for
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condonation of delay were filed belatedly in respect of the petitioner’s return
of income filed on 12 October 2017; (c) such delay in filing Form 9A was not
mere procedural lapse on the part of the petitioner that lead to belated filing
of Form 9A.
11. The petitioner being aggrieved by the impugned order filed the
present petition before this Court on 19 December 2023, praying for setting
aside the impugned order passed by the jurisdictional assessing officer dated
28 September 2023 in the light of the facts and grounds set out in the
petition and the submissions advanced before us.
C) Rival submissions:-
Case of the Petitioner:
12. Mr. Ajay Singh, learned counsel for the petitioner at the very
outset, submitted that the impugned order which rejected the case of the
petitioner in filing Form 9A belatedly and also disallowing the claims made
by the petitioner, is irrational, unfair, unjust and illegal.
13. Mr. Singh would then place reliance on the revised computation
of income submitted by the petitioner on 9 November 2019, during the
course of assessment proceedings, to respondent no. 2. By this, the petitioner
attempted to rectify certain computation mistakes namely claim of
depreciation of Rs. 19,25,787/- on fixed assets under section 11 (6) of the IT
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NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCXAct; expenses claimed towards capital expenditure, as also deduction claimed
of Rs. 57,28,869/- (in exercise of option under clause (2) of Explanation (1)
to section 11(1) of the IT Act) being interest accrued but not received.
However, due to change of procedure in filing Form 9A, the above facts
couldn’t be placed by the petitioner within time. Mr. Singh would urge that
the petitioner’s claim of deduction under section 11(1) explanation arose
subsequent to rectification of incorrect claim made in the return of income of
depreciation and capital expenditure. At that juncture, time limit for
submission of Form 9A had expired, though the claim was raised by the
petitioner by filing revised computation before the assessing officer. It was
solely due to change in procedure from manual to electronic filing, that
prevented petitioner from filing Form 9A on time. Thus, the Petitioner’s
bona fides are evident. It is apparent that the petitioner had no intent to not
disclose the above, but for the delay in filing Form 9A was neither deliberate
nor intentional, which the assessing officer in the impugned order failed to
take cognizance of.
14. Mr. Singh would contend that the impugned order has completely
misconstrued and misinterpreted the Circulars issued by CBDT, under
section 119(2)(b) of the IT Act, from time to time. In this regard, he would
place reliance on Circular No.7 dated 20 December 2018 issued by the
CBDT, whereby the belated Form 9A was directed to be admitted for A.Y.
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2016-2017, considering the fact that the assesses were unable to file the said
Form within the reasonable time as stipulated under the provisions of IT Act.
15. Mr. Singh then placed reliance on another Circular of CBDT No.
30/2019 dated 17 December 2019 which also extended the time limit for
filing Form 9A, in respect of AY 2017-2018. So also, the CBDT vide Circular
No.6 of 2020 dated 19 February 2020 extended such time limit for A.Y.
2018-2019 including powers authorizing the commissioner of income tax to
consider application of condonation of delay in filing such Form 9A & 10 for
the respective years. Relying on the said Circular issued by the CBDT from
time to time, he would urge that the said Circulars specifically authorised the
Commissioners of Income Tax to admit belated application in Form 9A and
Form 10, in respect of such assessment years as stated in the said Circulars.
This was in situations where such Form 9A was filed after expiry of the time
allowed under the relevant provisions of the IT Act. He would submit that
the impugned order completely fails to address this vital aspect and hence
suffers from non-application of mind.
16. Mr. Singh would then submit that the impugned order is wholly
unjust, unfair let alone improper and untenable. This is in as much as it fails
to consider that Form 9A along with application for condonation of delay
was, in fact, filed by the petitioner on 20 December 2019 on the Income Tax
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Portal, pursuant to CBDT Circular No.30 of 2019 dated 17 December 2019,
which extended the benefit of filing belated returns, for A.Y. 2017-2018. Mr.
Singh would contend that the said Form 9A was filed by the petitioner
within just 3 days from the extension granted vide Circular No.30 of 2019
dated 17 December 2019. According to him, had the impugned order
considered this aspect which clearly bring about the bona fides of the
petitioner to comply with the belated filing of Form 9A would not have been
rejected in such summary manner.
17. Mr. Singh would then refer to and rely upon Section 119(2)(b) of
the IT Act in support of his reliance on the aforementioned Circulars issued
by the CBDT from time to time. He points out that there is clear reference to
Section 119(2)(b) in all of the Circulars of CBDT mentioned ( Supra). This is
to contend that the said Section specifically empowers the income tax
authorities to consider any application or claim which would include return
of income filed for any exemption after expiry of the stipulated period. This
is to mitigate the genuine hardship caused to the assessees in appropriate
situations and circumstances. Thus, the impugned order passed under
section 119(2)(b) rejecting the case of the petitioner for condonation of delay
in filing Form 9A, failed to correctly construe and interpret such statutory
provisions under Section 119(2)(b) of the IT Act, causing irreparable
prejudice to the petitioner-Trust.
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18. Mr. Singh would further submit grievance of the petitioner is
genuine and bona fide for the respondent No.1 to have exercise its discretion
duly conferred under Section 119(2) of the IT Act in condoning delay of the
petitioner in filing Form 9A. In this context, Mr. Singh would rely on a chart
submitted during the course of hearing, which reads thus:
Sr. Particulars As per As per Reference
No. assessment revised
order computation
by Assessee
1 Total Income as per Income 206220844 206220844 0
& Expenditure
2 Interest accrued - Amount -5728869 Note No 1
deemed to be applied during
previous year - clause (2) of
'Explanation 1' to section
11(1)
Net Total Income 206220844 200491975
3 Revenue Expenditure
Rs. 158354099/-
Less: Depreciation of -156428312 -156428312 Note No 2
Rs. 19,25,787/-
4 Capital Expenditure -12860530 -12860530 Note No 3
(Rs. 1,95,20,255/-)
Less : Disallowed
Rs.66,59,725/-
Gross total Income 36932002 31203133
5 Less : Accumulated U/s 11(1) 30933127 30933127
@ 15%
Taxable Income 5998875 270006
Note Deduction claimed for the Page No. 70
No.1 interest accrued on FDR not
received during the year u/s
11(1) of the Income Tax Act
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Note Depreciation on the cost of Page No. 70
No.2 assets claimed as application
withdrawn
Note The amount capital Page No. 70]
No.3 expenditure claimed Rs.
19520,255/- (utilization of
Rs. 66,59,725/- included of
earlier year) instead of Rs.
1,28,60,530/-.
In support of the above, he would submit that had the assessing
officer taken a view to condone delay in filing Form 9A of the petitioner, the
total taxable income would have reduced from Rs.59,98,875/- to Rs.
2,70,006/-. Further, such reduction in the petitioner’s taxable income is
justified, taking into account the interest on Fixed Deposit Receipt accrued
during the previous year, depreciation on the cost of asset claimed by the
petitioner and deduction in respect of the capital expenditure, all of which
were wrongly disallowed by the respondents. This was not considered by the
assessing officer in the impugned order as such delay in filing Form 9A by
the petitioner was intentional, deliberate and not a mere procedural lapse.
19. Mr. Singh in support of the petitioner’s case would rely on a
judgment of the Delhi High Court in the case of Bar Council of India vs.
Commissioner of Income Tax (Exemption)1. He placed reliance on
paragraphs 6 to 9 of the said decision which relied upon the Circulars of
CBDT dated 17 December 2019 and 31 January 2020 to contend that the
1
[2024] 158 taxmann. Com 311 (Delhi).
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Commissioner of Income Tax was authorized to admit belated delay
condonation application under Section 119(2) of the IT Act where the delay
is upto 365 days. He would thus submit that the respondents in the present
case have failed to exercise such discretion statutorily conferred, to condone
delay of the petitioner in filing its Form 9A, contrary to such decision of the
Bar Council of India (Supra).
20. The petitioner would then refer to the decision of the coordinate
bench of this Court in the case of Al Jamia Mohammediyah Education
Society v. Commissioner of Income-tax (Exemptions) 2. In the said case, this
Court was dealing with a situation where the assessee-trust belatedly
submitted Form 10B along with its return on account of oversight by their
Chartered Accountant. This Court considered the Instructions issued by the
CBDT to its subordinate authorities, in this regard. In view thereof, for the
AY 2016-2017, this Court was pleased to condone the delay of approximately
1257 days in filing Form 10B, mainly on the ground that the petitioner did
not appear to have been lethargic or lacking in bona fides in making the
claim beyond the period of limitation which should have a direct bearing on
the discretion to be exercised by the income tax authorities. According to Mr.
Singh said judgment would clearly apply to the facts of the present case. On
the basis of which the impugned order should be set aside.
2
[2024] 298 Taxman 650 (Bombay).
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21. Mr. Singh would then rely on the decision of a coordinate bench
of this Court in the case of Shree Jain Swetamber Murtipujak Tapagachha
Sangh vs. CIT (Exemption)3. In similar facts and circumstances, this Court in
the said case considered that the assesee-trust filed Form 10B beyond due
date. The assessee’s auditor admitted to such oversight on the ground that he
did not consider provision of Rule 17 of the Income Tax Rules, 1962. He
was under a bona fide impression that since the fact of accumulation of
receipts was reported in audit report in Form 10B, a separate statement was
not required. The Court held that in view of the fact that the delay was not
intentional, the assesse could not be prejudiced on account of ignorance of
rules of procedure admitted by the professional engaged by the assessee, to
condone the delay on part of that assessee. Mr. Singh would submit that the
said decision would squarely apply to the given case.
Submission of the Respondents:-
22. On the other hand, Mr. Dinesh Gulabani, learned counsel for the
respondents supported the impugned order and vehemently opposed all
contentions urged on behalf of the petitioner. In this regard, he placed
reliance on the affidavit-in-reply dated 03 April 2024 filed by one Mr. C. V.
Pavana Kumar, Commissioner of Income Tax, where the case of the
respondents had been elaborately dealt with.
3
2024] taxmann.coom 114 (Bombay).
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23. Mr. Gulabani would submit that in the original and revised return
of income filed by the petitioner, it had not claimed any deduction in respect
of the amount deemed to be applied as per clause 2 of ‘Explanation 1’ to
Section 11(1) for which filing of Form 9A is mandatory. Also, under the
Income Tax Rules it is mandatory for petitioner-trust to apply 85% of its
income for charitable/religious purposes every year. In the event, the trust is
unable to do so, it has the option of deemed application for certain type of
income. Accordingly, in terms of ‘Explanation 2’ to Section 11(1) if in the
previous year, a charitable trust is not able to utilize its 85% of its income due
to the fact that such income has not been received in the previous year or for
any other reason, then the trust has the option to apply such income in the
year of receipt or in the year immediately following the year of approval of
income. Rule 17 of the IT Rules stipulates that the option for deemed
application ought to be exercised by the petitioner in Form 9A, which was to
be furnished electronically, before the due date specified under Section
139(1) of the IT Act. In the instant case, the petitioner has neither
determined nor claimed such amount of deemed application in its audit
report furnished in Form 10B, return of income so filed by it, nor
electronically filed Form 9A before filing its return of income on 12 October
2017. Resultantly, the petitioner’s case was rightly selected for scrutiny by the
respondents.
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24. It was further submitted that during the assessment proceedings,
the assessing officer specifically enquired as to whether the petitioner had
filed the Form 9A electronically and not manually as mandated by change of
procedure. The petitioner had filed its Form 9A on 20 December 2019 along
with an application for condonation of delay in respect of its return of
income filed on 12 October 2017 under Section 139(1) of the IT Act. Thus,
there was a gross delay of 799 days attributable to the petitioner in
submitting Form 9A, to be filed electronically as per the change in
procedure. The said affidavit-in-reply of the respondents does not controvert
the fact that the petitioner on becoming aware of its mistake in filing its
return manually, it was so filed on the income tax portal on 20 December
2019, at the earliest opportunity.
25. The respondents in support of the impugned order contend that
the petitioner had accepted the mistake in respect of claiming depreciation
amounting to Rs.19,25,787/- which was thus correctly disallowed. Further,
the petitioner in a query raised by the respondents in regard to furnishing
details of capital expenditure amounting to Rs.1,95,20,255/- the petitioner
responded that the actual capital expenditure was revised to
Rs.1,28,60,530/-. In view thereof, according to the respondents, the assessing
officer correctly disallowed the capital expenditure amounting to
Rs.66,59,725/- and consequently rightly initiated the penalty proceedings
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under Section 270A of the IT Act for misreporting of income by the
petitioner-trust. According to the respondents, the approach of the petitioner
towards compliance under the IT Act is extremely casual.
26. Accordingly to the respondents, the petitioner was not taking the
compliance under the IT Act seriously. It was that the petitioner had failed to
furnish any proof, documentary or otherwise in support of its case for
condonation of delay in filing Form 9A. The petitioner failed to even file the
said Form 9A within time, electronically, as required due to change in
procedure. It sat over such compliance and filed it belatedly on 20 December
2019 after a gross delay of 799 days. In this context, the case of the petitioner
that the delay is, at the highest, a procedural lapse, is not acceptable in the
facts of the present case. This is in as much as, the petitioner neither
determined nor claimed such amount of deemed application in its audit
report in Form 10B nor electronically Form 9A belatedly until 20 December
2019 in respect of return of income which was already filed on 12 October
2017. The petitioner had claimed such deduction only during the course of
assessment proceedings, only when the assessing officer, specifically asked for
the same, which lacks bonafides.
27. Mr. Gulabani then emphatically urged that the reliance of the
petitioner on the Circulars issued by the CBDT from time to time cited
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(Supra) are of no assistance to the petitioner. This is in as much as the
petitioner failed to produce all the relevant documents/information sought
by the respondents from the petitioner to enable the respondents to arrive at
the requisite satisfaction about the reasonableness and genuineness of the
petitioner’s case. Further, the petitioner omitted to provide any plausible
explanation to condone such gross delay of 799 days in filing Form 9A.
Moreover, even in the petition there is no ground to support genuine
hardship which prevented the petitioner from filing Form 9A in time. Thus,
the petitioner failed to furnish any justification whatsoever to condone the
colossal delay of 799 days in filing Form 9A as result of which the impugned
order against the petitioner was correctly passed, in accordance with law.
E) Rejoinder of the Petitioner:-
28. To summarize this, Mr. Singh would rely on an affidavit-in-
rejoinder dated 4 July 2024 of one Mr. Suresh Keshavdeo Bhageria, Trustee
of the petitioner which is on record. He would adopt the contents of the
rejoinder. The impugned order should be read and interpreted as it stands.
The case of the respondents cannot be propped up and or improved by way
of an affidavit and/or pleadings. He would thus submit that the reply
affidavit of the respondent does not take the case of the petitioner, any
further and would support rejection of the impugned order and thus prays
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for grant of reliefs as set out in the petition.
F) Analysis and Conclusion:-
29. On the factual conspectus of the present case, we have noticed
that the petitioner Trust had filed its Nil return of income along with Form
10B for the assessment year in question, i.e., 2017-2018 on 12 October 2017,
claiming exemption under section 11 of the IT Act. Thereafter, the petitioner
filed a revised return on 29 December 2018 which was selected for scrutiny,
pursuant to which the respondent No.1 issued a notice dated 10 October
2019 to the petitioner under Section 142(1) of the IT Act along with an
annexure of requisition of details, from the petitioner. In the said revised
return of income the petitioner claimed depreciation of Rs. 19,25,787/- on
assets purchased during the year and claimed it as an application of its
income. Similarly, expenses towards capital expenditure was revised to
Rs.1,28,60,530/-. It is pertinent to note that the petitioner during the
assessment proceeding for A.Y. 2017-2018 uploaded a revised note dated 9
November 2019 on the Income Tax Portal along with revised computation of
income rectifying the mistake in such computation, namely claim of
depreciation of Rs.19,25,787/- on fixed assets under Section 11(6) of the IT
Act; expenses towards capital expenditure was revised to Rs. 1,28,60,530/-
along with deduction under Section 11(1) ‘Explanation 1’ clause (2) of
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Rs.57,28,869/- being interest income accrued but not received. We find that
such note of revised computation of income duly furnished/uploaded by the
petitioner on 9 November 2019. However, it was not considered in the
impugned assessment order. The jurisdictional assessing officer completely
lost sight of the fact that at the time when the petitioner claimed deductions
towards depreciation and capital expenditure under Section 11(1) of the IT
Act by filing the said revised computation, the time limit for submission of
Form 9A had lapsed, due to change of procedure. The petitioner filed |Form
9A though belatedly for reasons not attributable to the petitioner. It appears
from the impugned order that the jurisdictional assessing officer wrongly
linked and mixed up such issue of belated filing of Form 9A with
disallowance of the petitioners claim of deduction towards depreciation and
capital expenditure under Section 11 (1) of the IT act, made by the petitioner
in the assessment proceedings.
30. A perusal of record reveals that the petitioner had filed Form 9A
dated 20 December 2019 under Rule 17(1) of the Income Tax Rules, 1962
under the heading “Application for exercise of option under clause (2) of
Explanation to sub-section (1) of Section 11 of the IT Act”. Rule 17(1) of the
Income Tax Rules, 1962 reads thus:-
“17(1) The option to be exercised in accordance with the provisions
of the Explanation to sub-section (1) of section 11 of the Act inMayur Adane, PA
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NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCXrespect of income of any previous year relevant to the assessment
year beginning on or after the 1st day of April, 2016 shall be in
Form No. 9A and shall be furnished before the expiry of the time
allowed under sub-section (1) of section 139 of the Act for
furnishing the return of income of the relevant assessment year.”
Pursuant to the filing of such Form 9A under Rule 17(1), by the
petitioners though belatedly, it had duly submitted letters dated 30 January
2023, 13 September 2023 and 21 September 2023 addressed to the
respondent no.1 justifying such delay. However, a perusal of the Impugned
Order for the A.Y. 2017-2018 dated 20 September 2023 indicates that the
jurisdictional assessing officer has totally lost sight of the first two letters of
the petitioner dated 30 January 2023 and 13 September 2023. Though the
Impugned Order refers to the letter of the petitioner dated 21 September
2023, there is no finding much less reasoning reflected in the order except to
harp on the issue that the delay in filing Form 9A belatedly, was not a
procedural lapse and thus, cannot be condoned. We do not find force in such
hyper technical approach taken by the assessing officer in rejecting the
belated filing of Form 9A by the petitioner, for the reasons which are
deliberated in our judgment hereinafter.
31. We find that in the impugned order, the jurisdictional assessing
officer failed to take note of a crucial fact the application for condoning delay
in filing Form 9A, was filed on 20 December 2019. The petitioner adopted
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this course pursuant to the CBDT Circular No. 30/2019 dated 17 December
2019, extending the relief for condoning delay in filing such Form 9A, also
for the assessment year in question i.e. 2017-2018. Thus, the assessing officer
ought to have applied his mind to the fact that merely within 3 days from
date of extension granted to file such Form 9A vide the CBDT Circular cited
(Supra) the petitioner did file it on 20 December 2019, along with its
application for delay condonation. It is further pertinent to note that the
insistence in the impugned order seeking actual proof from the petitioner in
filing Form 9A before the assessing officer, was itself legally unfounded as
such requirement was itself done away with under Rule 17 w.e.f. 1 April
2016. The Impugned Order dated 28 September 2023, thus suffers from
perversity on account of non-consideration of such fundamental factual and
legal position, though available before him, when he passed the said order.
32. We have perused Section 119(2)(b) of the IT Act which deals
Extracted below is the said section.
“(a)….
119(2)(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, authorise any income-tax authority, not being
88[a Joint Commissioner (Appeals) or] a Commissioner (Appeals) 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
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by or under this Act for making such application or claim and deal
with the same on merits in accordance with law”
33. A perusal of the above statutory provision makes it clear that the
legislature has specifically conferred power to the Commissioner of Income
Tax to admit an application to claim any exemption, refund or relief after the
expiry of the specified period under the IT Act which shall be dealt with in
accordance with law. We may note that such provision has been introduced
with a view to avoid genuine hardship to the assesses who have come forward
with an intent to pay tax and abide by the mandate of the IT Act, but for
reasons beyond control are prevented from adhering to statutory timelines.
We have also carefully perused the Circular of CBDT No. 7 of 2018 dated 20
December 2018 referring to the Finance Act 2015 amending sections 11 and
13 of the IT Act with effect from 1 April 2016, i.e, A.Y. 2016-2017. The
relevant portion of the said Circular dated 20 December 2018 which was
issued with a view to condone delay applications filed by trusts under Section
119(2)(b) of the IT Act reads thus:
“5.Accordingly, in supersession of earlier Circular/Instruction issued in
this regard, with a view to expedite the disposal of applications filed
by trusts for condoning the delay and in exercise of the powers
conferred under section 119(2)(b) of the Act, the Central Board of
Direct Taxes hereby authorizes the Commissioners of Income-tax,
to admit belated applications in Form No. 9A and Form No.10 in
respect of AY 2016-17 where such Form No. 9A and Form No.10
are filed after the expiry of the time allowed under the relevantMayur Adane, PA
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NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCXprovisions of the Act.
6. The Commissioners will, while entertaining such belated
applications in Form No. 9A and Form No.10, satisfy themselves
that the assessee was prevented by reasonable cause from fling of
applications in Form No. 9A and Form No.10 within the stipulated
time. Further, in respect of Form No. 10 the Commissioners shall
also satisfy themselves that the amount accumulated or set apart has
been invested or deposited in any one or more of the forms or
modes specified in sub-section (5) of section 11 of the Act.”
34. The above Circular issued by way of delegated legislation
empowered Commissioner of Income Tax to consider and condone
applications for delay in filing Form 9A within time, on ground of sufficient
cause. We may also refer to another Circular of CBDT Circular No. 30 of
2019 dated 17 December 2019 which reads thus:
“Sub: Condonation of delay u/s 119(2)(b) of the Act in filing of
Form.9A and Form No.10 for Assessment Year 2017-18- extension of
applicability of Circular No.7 of 2018- Reg.
In partial modification of this office Circular No.7 of 2018, dated 20 th
December, 2018 issued vide F No. 197/155/2018-ITA-I on the above
mentioned subject, it is decided to extend the applicability of this
Circular to Assessment Year 2017-18.”
35. A perusal of the above unequivocally brings out clear legislative
intent to extend the applicability of the earlier Circular dated 20 December
2018 for A.Y. 2016-2017 to assessment year in question i.e., A.Y. 2017-2018.
Thus, even under the said Circular No. 30 of 2019, dated 17 December 2019
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the delay in filing Form 9A and Form 10 for A.Y. 2017-2018, could be
condoned. This followed issuance of another Circular No. 6 of 2020 dated
19 February 2020 applicable to A.Y. 2018-2019, relevant portion of which
reads thus:
“2. Accordingly, in continuation of earlier Circulars issued in this
regard, with the riew to prevent hardship to the assessee and in exercise
of powers conferred under section 119(2)(b) of the Act, the CBDT has
decided that where the application for condonation of delay in filing
Form 9A and Form 10 has been filed, and the Return of Income has
been file on or before 31st March of the respective assessment years i.e.
Assessment Years 2016-17, 2017-18 and 2018-19, the Commissioners
of Income-tax (Exemptions) are authorised u/s 119(2)(b) of the Act, to
admit such belated applications for condonation of delay in filing
Return of Income and decide on merit.”
36. The above re-enforces the legislative intent to permit condonation
of delay in filing Form 9A and 10 under Section 119(2)(b) authorizing
Commissioners of Income Tax to admit such applications and decide on
merit, in cases where the assesses were prevented to file the said forms in
time, after showing sufficient cause. Thus, the legislative intent discernible
from above Circulars of CBDT issued from time to time under Section
119(2)(b), providing for condonation of delay in filing Form 9A and 10 by
the assesses with unambiguous language and purport to avoid, prevent,
mitigate hardship to them. It is on such basis that the petitioner addressed
letters/application to the respondent No. 1, dated 30 January 2023,
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13 September 2023, 21 September 2023 ( Supra) to condone delay in filing
Form 9A under section 119(2)(b) of the IT Act. However, the reasoning and
justification of the petitioner brought out in the said letters have been
overlooked by the jurisdictional assessing officer in his order impugned dated
28 September 2023, mainly on the ground that non filing of Form 9A is not
a procedural lapse. We do not subscribe to such pedantic and narrow
approach of the assessing officer that runs contrary to Section 119(2)(b) of
the IT Act read with the CBDT Circulars cited ( Supra). Such approach of the
respondents as in this case, would in fact, instead of mitigating hardship to
assesses in genuine cases, would augment the same. Such approach would
discourage genuine assesses from coming forward to file their return of
income, if their genuine applications, like the present one, are rejected in
such arbitrary manner on mere ipse dixit of the assessing officer. The
reasoning in the impugned order, in our view, is not in sync, harmony with
the clear legislative intent to avoid hardship under Section 119 (2)(b) and the
Circulars issued under the said provision.
37. In the context of the above, we would refer to the decision of this
Court dated 4 September 2024 passed in the case of Jyotsna M. Mehta vs.
Principal Commissioner of Income-tax 19 & Ors. 4 of which one of the
member (G.S.Kulkarni, J.) was a member. Analyzing the provision of Section
4
. 2024 SCC OnLine Bom 2946.
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119 of the IT Act, this Court had made an elaborate observation that a bona
fide delay on the part of the Chartered Accountant which prevented him
from filing return of the petitioner was accepted by the Court to be sufficient
ground for condoning delay, under the statutory provision. The relevant
observations in this regard to be noted are in paragraphs 6, 7 and 8 of the
judgment in Jyotsna Mehta Ors. (Supra) which read thus :-
“6. In our opinion, the approach of PCIT appears to be quite
mechanical, who ought to have been more sensitive to the cause which
was brought before him when the petitioner prayed for condonation of
delay. In such context, we may observe that it can never be that
technicalities and rigidity of rules of law would not recognize genuine
human problems of such nature, which may prevent a person from
achieving such compliances. It is to cater to such situations the
legislature has made a provision conferring a power to condone delay.
These are all human issues and which may prevent the assessee who is
otherwise diligent in filing returns, within the prescribed time. We may
also observe that the PCIT is not consistent in the reasons when the
cause which the petitioners has urged in their application for
condonation of delay was common.
7. We may observe that it would have been quite different if there
were reasons available on record of the PCIT that the case on delay in
filing returns as urged by the petitioners was false, and/or totally
unacceptable. It needs no elaboration that in matters of maintaining
accounts and filing of returns, the assessees are most likely to depend
on the professional services of their Chartered Accountants. Once a
Chartered Accountant is engaged and there is a genuine dependence
on his services, such as in the present case, whose personal difficulties
had caused a delay in filing of the petitioners returns, was certainly aMayur Adane, PA
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NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCXcause beyond the control of the petitioners / assessees. In these
circumstances, the assessee, being at no fault, should have been the
primary consideration of the PCIT. It also cannot be overlooked that
any professional, for reasons which are not within the confines of
human control, by sheer necessity of the situation can be kept away
from the professional work and despite his best efforts, it may not be
possible for him to attend the same. The reasons can be manifold like
illness either of himself or his family members, as a result of which he
was unable to timely discharge his professional obligation. There could
also be a likelihood that for such reasons, of impossibility of any
services being provided/performed for his clients when tested on
acceptable materials. Such human factors necessarily require a due
consideration when it comes to compliances of the time limits even
under the Income Tax Act. The situation in hand is akin to what a
Court would consider in legal proceedings before it, in condoning
delay in filing of proceedings. In dealing with such situations, the
Courts would not discard an empathetic /humane view of the matter in
condoning the delay in filing legal proceedings, when law confers
powers to condone the delay in the litigant pursuing Court
proceedings. This of course on testing the bonafides of such plea as
may be urged. In our opinion, such principles which are quite
paramount and jurisprudentially accepted are certainly applicable,
when the assessee seeks condonation of delay in filing income tax
returns, so as to remove the prejudice being caused to him, so as to
regularise his returns. In fact, in this situation, to not permit an assessee
to file his returns, is quite counter productive to the very object and
purpose, the tax laws intend to achieve. In this view of the matter, we
have no manner of doubt that the delay which is sufficiently explained
in the present case would be required to be condoned.
8. Resultantly, the impugned order is quashed and set aside. The
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NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCXwithout penalty, fees and interest, if any, within a period of two weeks
from today. All contentions of the parties on the merits of the returns
are expressly kept open.”
In so far as the present case is concerned, there is undoubtedly a
delay in filing Form 9A on part of the petitioner, however, as observed by us
above, such delay appears to be completely bona fide. The principles which
are paramount and jurisprudentially accepted in the case of Jyotsna Mehta
(Supra) in our opinion mandates their application in the present facts in
condoning delay under the umbrella of section 119 (2)(b) of the IT Act. It is
pertinent to reiterate that in a fact situation as the present, to dissuade an
assessee to file return can be counter-productive to the very object and
purpose, the tax laws intend to accomplish. In cases such as this, where the
delay is sufficiently explained the same ought to be condoned.
38. We also note a decision of this Court in the case of M/s. Neumec
Builders Pvt. Ltd. vs. the C.B.D.T., New Delhi & Ors. 5, dated 8 October
2024 of which one of us (G.S. Kulkarni, J.) was a member, adopted the view
taken by this Court in the case of Jyotsna Mehta cited (Supra). Neumec
Builders cited (Supra) was a case where this Court was confronted with an
issue of delayed filing of Form 10-IC within the prescribed period by the
petitioner along with an application for condonation of delay, which was not
decided by the assessing officer. In similar facts, this Court adopted the
5
. 2024 SCC OnLine Bom 2946.
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decision of Jyotsna Mehta cited (Supra) and condoned the delay of the
petitioner. In the facts and circumstances of the given case, we find no reason
to take a different view, as in the decisions referred to above, in deciding the
issue of condonation of delay on the part of the petitioner, in filing Form 9A
which was rejected by the impugned order of the jurisdictional assessing
officer 28 September 2023.
39. We would now advert to the decision cited by Mr. Singh in the
case of Bar Council of India cited (Supra). The relevant portion of the said
judgment as applicable to the present case read thus :-
” 7. The CBDT Circular No. 7/2018 dated 20-12-2018 records that
representations had been received qua Forms No. 9A and 10 not
having been filed within specified time for AY 2016-17, which was the
first year of e- filing qua those forms; and that in supersession of earlier
circular in that regard with a view to expedite the disposal of such
representations, the CBDT authorized the Commissioners of Income-
tax to admit the belated applications in Forms No. 9A and 10 in
respect of AY 2016-17 where such forms were filed after expiry of the
prescribed period, in case the Commissioners were satisfied that the
assessee was prevented by reasonable cause from filing the said forms
within the stipulated period.
7.1 By way of further circular No. 30/2019 dated 17-12-2019, similar
directions were issued by CBDT for the AY 2017-18 as well.
Subsequently, by way of CBDT Circular No. 03/2020 dated 3-1-2020,
the Commissioners were authorized to admit the belated delay
condonation applications under section 119(2) of the Act where delay
is upto 365 days.
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NAV CHETNA TRUST IT JMENT 20 DEC 24.DOCX7.2 More recently, by way of similar CBDT Circular No. 17/2022
dated 17-7-2022, the Commissioners were authorized to condone
delay beyond 365 days upto 03 years in filing Forms 9A and 10 for AY
2018-19.
8. For AY 2017-18 also, the petitioner/assessee had filed a similar
application seeking condonation of delay in filing Form 10, which was
allowed by the Commissioner Income-tax vide order dated 26-12-2019
correctly, laying emphasis that the mandate of Section 119(2)(b) of the
Act is to mitigate the genuine hardship of assessee in certain
circumstances and authorization to the Commissioners to admit the
belated Form 10. In the said order dated 26-12-2019, the
Commissioner Income-tax condoned the delay in filing Form 10
(which was electronically filed on 5-3-2019) for AY 2017-18. Similarly
for AY 2018-19 also, delay on the part of the petitioner in filing Form
10 was condoned in view of the underlying principle of the above
mentioned circulars to liberally condone such delays in order to
mitigate hardships of the assessees.
9. As mentioned above, the delay in filing Form 10 in the present case
occurred because the amendments went unnoticed by the officials of
the petitioner. The assessment year 2016-17 was the first occasion
subsequent to those amendments. Therefore, we find no reason to
disbelieve the explanation furnished by the petitioner to explain the
delay in filing Form 10. Further, we are unable to fathom as to what
benefit would accrue to the petitioner by delaying the filing of Form
10. In our opinion the discretion conferred for condoning the delay
was not correctly exercised by the Commissioner Income Tax.”
40. In our view, the above decision would squarely apply as far as the
principles made applicable to the issue of an application for condonation of
delay by the assessee is concerned. As held in that case, in the facts of the
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present case we are unable to fathom as to what benefit would accrue to the
petitioner by the belated filing of Form 9A and or what harm it would cause
to respondent revenue. Moreover, as held by the Delhi High Court in (para
7.2) the CBDT by a recent Circular No.17 of 2022 dated 17 July 2022,
provided that the Commissioners were authorised to condone delay beyond
365 days upto 3 years in filing Form 9A and 10 for the A.Y. 2018-19. In the
present case, the delay is of 799 days on the part of the petitioner in filing
Form 9A supported by sufficient cause, deserves to be condoned. We have
noted the reliance of Mr. Singh on the decisions of coordinate benches of this
Court also in Al Jamia Mohammediyah Education Society cited (Supra) and
Shree Jain Swetamber Murtipujak Tapagachha Sangh cited (Supra) where the
Court was, in similar facts and legal principles pleased to condone the delay
in filing Form 10. This was particularly when such delay was not deliberate
and condoning such delay would cause no prejudice to the respondents.
41. We are afraid that we are not able to accept the submissions
advanced by Mr. Gulabani for the respondents, as accepting it would run
contrary to the pith and substance of Section 119(2)(b) of the IT Act
dovetailed with the statutory scheme in the context of CBDT Circulars cited
(Supra) issued from time to time under Section 119(2)(b) of IT Act. Also, the
only primary reason in the impugned order that belated filing of Form 9A by
the petitioner-trust is not a procedural lapse, is in the present facts a hyper
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technical and pedantic approach which cannot be countenanced. Such would
be paradoxical to the clear intent of the legislature as evident from Section
119(2)(b) of the IT Act read with the Circulars issued by CBDT cited ( Supra)
aimed that mitigating, preventing hardship to the genuine assesses, in such
situations.
42. In our view, the powers and statutory discretion conferred on the
commissioners to condone delay under Section 119(2)(b) of the IT Act
ought to be judiciously exercised so that undue hardship to the assessee is
avoided. Instead, the impugned order makes it evident that the assessing
officer has mixed up issues of the petitioner claiming deductions towards
deprecation and capital expenditure made and duly disclosed by it during the
assessment proceedings with intentional delay in belated filing of Form 9A
attributed to the petitioner. In fact the chart relied on by the petitioner
reproduced (Supra) setting out the revised computation of income by the
assessee of Rs. 2,70,006/- as against that of Rs. 59,98,875/- not being
accepted by the respondents in light of delayed filing of Form 9A by the
petitioner, would lead to undue financial burden, hardship foisted upon the
petitioner-trust. Such vital aspect ought to have weighed with the
respondents in considering and deciding the aspect of hardship, while
rejecting its application for condonation of delay.
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43. Thus, we find that the decisions relied upon by the petitioner
cited (Supra) could not be distinguished by Mr. Gulabani for the respondents
in their applicability to the present case. In fact, the legal, jurisprudential
principles reiterated in the said decisions, in our opinion, are clearly
applicable to the case in hand. A contrary view would militate against the
true meaning, purport and language of Section 119(2)(b) of the IT Act which
aims at mitigating hardships and ensuring substantial justice to genuine
assessee who should not be non-suited purely on hyper technical ground and
ipse dixit of the assessing officer. It is thus not possible for us to sustain the
impugned order of the jurisdictional assessing officer dated 28 September
2023.
44. In light of the above discussion, we are inclined to allow this
petition. Accordingly, the petition is required to be allowed.
45. Rule is made absolute in terms of prayer clauses (a) and (b). No
order as to costs.
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