JUDGMENT
Pranav Trivedi, J.- Heard learned advocate Mr. Hardik Vora for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel Ms. Maithili Mehta waives service of notice of rule for and on behalf of the respondent.
3. Considering the controversy arising in this petition which is in narrow compass, with the consent of the learned advocates for the respective parties, the petition is taken up for hearing today.
4. By this petition under Article 226/227 of the Constitution of India, the petitioner has challenged the Order dated 17.10.2023 passed by the respondent under Section 119(2)(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for short) by which application preferred by the petitioner for condonation of delay caused in filing Form-10B of the Act was rejected.
5. The brief facts leading to the filing of the present writ petition are as under:
5.1 The petitioner is a registered Charitable Trust engaged in various activities and registered under the Bombay Trust Act, 1950 vide Registration No. E/1736/SURAT with effect from 30.8.1979. The petitioner is also registered under Section 12A of the Act with effect from 27.8.1984 and further registered under the provisions of Section 12AA of the Act for Assessment year 2023-24 to Assessment Year 2025-26.
5.2 It is the case of the petitioner that the return of income along with Form-10 came to be filed on 20.10.2018 for A.Y 2018-19 declaring total income at ‘NIL’. The return of income was processed under Section 143(1) of the Act vide order dated 26.9.2019 determining assessed income at Rs.87,26,081/-. The intimation under Section 143(1) of the Act was issued on the e-filing Portal on email ID “bcj ariwalact@gmail.com”. It is the case of the petitioner that it is a religious trust and does not require to use its email ID for its routine operations and objectives. Further, none of the Trustees regularly access or operates this email address. Therefore, the petitioner was completely unaware of such intimation under Section 143 communicated through email ID.
5.3 It is the case of the petitioner that they had allotted the work of filing of various forms and tax compliances to Chartered Accountant. Thereafter, in the year 2022, the petitioner changed its Auditors and conducted routine compliance check wherein it came to the knowledge of the petitioner that there was outstanding demand of Rs.30,95,448/- for A.Y. 2018-19.
5.4 It is the case of the petitioner that upon knowing the outstanding demand and reviewing the Income Tax Return for Assessment Year 2018-19 on e-filing portal and after taking the details of the audit report and concerned Chartered Accountant, it came to the knowledge of the petitioner that along with Audit Report, Form 10B had inadvertently not being filed by the Chartered Accountant along with Income Tax Return. On knowing the discrepancy, the petitioner approached its previous Auditors who, upon scrutinizing the details, confirmed the fact that Audit report was signed and uploaded by the concerned Chartered Account. However, due to impending due dates and overwhelming workload, an inadvertent oversight had occurred in not filing Form 10B.
5.5 In these facts and circumstances of the case, the petitioner immediately filed Form 10B on 18.10.2022 and subsequently on 4.11.2022, an application for condonation of delay under Section 119(2)(b) came to be preferred by the petitioner before the respondent.
5.6 It was informed by the respondent to the petitioner that as the delay in filing Form 10B was more than 365 days, the delay condonation application had to be filed before the PCCIT/CCIT. Therefore, another application for condonation of delay came to be preferred by the petitioner under Section 119(2)(b) of the Act on 8.12.2022. In view of the application preferred by the petitioner, the respondent issued a showcause notice on 22.9.2023, asking the petitioner as to show cause as to why application for condonation of delay should not be rejected. The petitioner gave a response on 9.10.2023 explaining unintentional and oversight mistake of the concerned Chartered Accountant. However, the respondent rejected the plea of the petitioner to condone the delay by way of interim order dated 17.10.2023 which is impugned in the present writ-petition.
6. Learned advocate Mr. Hardik Vora for the petitioner submitted that the petitioner is a religious charitable trust, dedicated in running Aadinath Jain Derasar for over 40 years and is actively engaged in various activities aimed at promoting the philosophy of Jainism. Petitioner has filed Form 10 along with its return of income for A.Y. 2018-19 on 20.10.2018. Further, the details of audit report viz. name of CA, membership no., name and PAN of audit firm and date of report were duly mentioned in column J of ITR. Having no detailed knowledge of filing in taxation matters, the petitioner had allotted work of all the tax compliances to its Chartered Accountant and was under the bonafide belief that all the tax compliances must have been made along with filing of return.
6.1 It was further submitted by learned advocate Mr. Vora that the petitioner changed the auditor in the year of 2022 and while checking the routine compliances, it was brought to trustees’ notice that huge demand of Rs. 30,95,448/- is outstanding for A.Y. 2018-19. On perusal of the same, it was observed that, old auditor had not filed Form 10B along with Return of Income and due to the such oversight, deductions claimed by the petitioner trust were not allowed and huge demand of Rs. 30,95,448/- was raised. On coming to know about the same, the petitioner immediately submitted Form 10B and also filed the application for condonation of delay.
6.2 Learned advocate Mr. Vora further submitted that regarding non-filing of Form 10B along with the income tax return, the former Chartered Accountant clarified that although the audit report had been signed and was intended for upload along with the return, due to overwhelming workload involving audits and income tax returns, inadvertently only income tax return was uploaded before the due date. This mistake resulted from an oversight and there was no malicious intent behind the delay.
6.3 Learned advocate for the petitioner Mr. Vora further submitted that the respondent has rejected the application on the ground that as the delay was of 1448 days, the petitioner had no intention to comply and had a casual attitude. The learned advocate for the petitioner submitted that email address through which the intimation u/s 143(1) of the Act was issued is not frequently used by the petitioner. The petitioner asserts that for the routine operations and objectives of the trust, use of an email address is not a necessity. As a result, since none of the trustees or members regularly accesses this email ID, no one within the organization was aware of the intimation. It was only brought to the attention of the trustees when the new auditor conducted routine compliance checks.
7. Per contra, learned Senior Standing Counsel Ms. Maithili Mehta for the respondent relying on the affidavit-in-reply submitted that the contention raised by the petitioner that the mistake had occurred due to inadvertent mistake of the Chartered Accountant which resulted into delay of 1448 days, is not tenable inasmuch as the petitioner had filed the audit report and the consent form in all the preceding years. Therefore, merely making an averment that there is a huge delay of 3 years due to inadvertent mistake of the Chartered Accountant is not tenable. It was further submitted that merely putting weight on Chartered Accountant would not be a justifiable cause for delay in filing Form 10B. In wake of such submission, Ms. Mehta has requested to dismiss the present writ-petition.
8. Therefore, the narrow controversy is whether the respondent ought to have allowed delay condonation application in filing Form-10B.
9. This Court in case of Navjeevan Charitable Trust v. CIT (Exemption) (Gujarat) in SCA No. 10353 of 2024 has categorically observed that Circular No. 10 dated 22.5.2019 has given direction and specification that Form 10B ought to have been obtained before filing of the return of income so as to have benefit of clause 4(i). Therefore, the authority has wrongly considered the word ‘filed’ instead of ‘obtained’. This Hon’ble Court, in Para-9, has observed as under:
“9. So as to decide the aforesaid question, in our view, the relevant portion of Circular No.10 dated 22nd May, 2019 deserves to be quoted.
“3. Representations have been received by the Board/field authorities stating that Form No. 10B could not be filed along with the return of income for AY 2016 17 and AY 2017-18. It has been requested that the delay in filing of Form No. 10B may be condoned. Previously, vide instruction in F.No. 267/482/77-IT(part), dated 9-2-1978, the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay he occurred for reasons beyond the control of the assessee.
4. Accordingly, in supersession of earlier Circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trusts or institutions for condoning the delay in filing Form No. 10B and in exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes hereby directs that:
(i) The delay in filing of Form No. 10B for AY 2016 17 and AY 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned.
(ii) In all other cases of belated applications in filing Form No. 10B for years prior to AY 2018-19, the Commissioners of Income-tax are authorized to admit such applications for condonation of delay under section 119(2)(b) of the Act. The Commissioners will while entertaining such belated applications in filing Form No. 10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time.
Further, all such pending applications as well as applications received henceforth shall be disposed off preferably within three months from the end of the month in which the application is received.”
9.1 Having considered the direction in clause 4(i), it appears that the Central Board of Direct Taxes directed the authorities to condone the delay caused in filing Form 10B in the cases where the audit report for the previous year has been obtained before filing of return of income. However, the interpretation made by the authority while passing the impugned order would reveal that the authority has held that Form 10B should have been filed on or before 31st March, 2018. In our considered opinion, the interpretation of the authority with regard to clause 4(i) is ex facie fault. We say so because as per the plain language of the Circular No.10, CBDT, in no uncertain terms, has directed that delay in cases where Form 10B obtained before filing of return of income is specified, meaning thereby, Form 10B ought to have been obtained before filing return of income so as to have the benefit of clause 4(i), whereas while passing the impugned order; instead of word “obtained”, the authority considered it as “filed”. Therefore, this being a basic factual understanding and interpretation of the Circular, in our view, based on such interpretation; the impugned order cannot be said to be in accordance with law and the Circular No.10 dated 22nd May, 2019.”
10. In view of the settled position laid down by this Court, the petition deserves to be allowed and is hereby allowed by quashing and setting aside the impugned order dated 17.10.2023 passed by the respondent under Section 119(2)(b)of the Act with all other consequential and incidental reliefs. Rule is made absolute to the aforesaid extent. No order as to costs.