Case Note & Summary
The petitioner, Nav Chetna Charitable Trust, is a trust registered under Section 12A of the Income Tax Act, 1961, and runs educational institutions. For Assessment Year 2017-2018, the trust filed its return of income on 12 October 2017 claiming exemption under Section 11, along with Form 10B. Subsequently, on 29 December 2018, it filed a revised return. During assessment proceedings, on 9 November 2019, the trust uploaded a revised computation of income to rectify mistakes: claiming depreciation of Rs. 19,25,787 under Section 11(6) and a deduction of Rs. 57,28,869 under clause (2) of Explanation 1 to Section 11(1) for interest accrued but not received. The assessment was completed on 11 December 2019. The trust filed Form 9A on 20 December 2019, along with an application for condonation of delay of 799 days, citing the change from manual to electronic filing as the reason. The trust relied on CBDT Circular No. 7 of 2018 dated 20 December 2018 for A.Y. 2016-2017, Circular No. 30 of 2019 dated 17 December 2019 extending the benefit to A.Y. 2017-2018, and Circular No. 6 of 2020 dated 19 February 2020 for A.Y. 2018-2019, all issued under Section 119(2)(b). The Commissioner of Income Tax (Exemption) rejected the application on 28 September 2023, primarily on the grounds that the trust had made wrong claims in the original return and that the delay was not a mere procedural lapse. Aggrieved, the trust filed a writ petition under Article 226 of the Constitution of India. The court framed the issue as whether the Commissioner was legally justified in rejecting the condonation of delay application. The petitioner argued that the delay was due to the change in procedure and that the CBDT circulars mandated a liberal approach. The respondents contended that the delay was inordinate and the trust had not shown sufficient cause. The court analyzed the CBDT circulars and held that they are beneficial in nature and must be liberally construed to advance the object of granting relief to assessees prevented by reasonable cause. The court found that the change from manual to electronic filing constituted a reasonable cause, and the trust's bona fides were evident from its prompt filing of the revised computation and Form 9A soon after the circular. The court also noted that the Commissioner had not considered the circulars properly and had imposed a hyper-technical view. Consequently, the court quashed the impugned order and directed the respondents to accept Form 9A and process the trust's claim for accumulation of income in accordance with law.
Headnote
A) Income Tax - Condonation of Delay - Section 119(2)(b) of Income Tax Act, 1961 - CBDT Circulars - The issue was whether the Commissioner was justified in rejecting the condonation of delay application for filing Form 9A for A.Y. 2017-2018. The court held that the CBDT circulars under Section 119(2)(b) must be liberally construed to advance the object of granting relief to assessees prevented by reasonable cause from filing forms within time. The Commissioner's rejection was set aside as it failed to consider the change in procedure from manual to electronic filing as a reasonable cause. (Paras 3, 13, 15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34) B) Income Tax - Charitable Trust - Sections 11, 12A, 139(1) of Income Tax Act, 1961 - Form 9A - The petitioner trust filed its return of income and later revised computation claiming depreciation and deduction under Section 11(1) Explanation 1 clause (2). The delay in filing Form 9A was due to change from manual to electronic filing. The court held that the delay was neither deliberate nor intentional, and the Commissioner ought to have condoned the delay in light of CBDT circulars. (Paras 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34)
Issue of Consideration
Whether the Commissioner of Income Tax (Exemption) was legally justified in rejecting the application for condonation of delay of 799 days in filing Form 9A for A.Y. 2017-2018, when power under Section 119(2)(b) of the Income Tax Act, 1961 exists to admit belated filing.
Final Decision
The impugned order dated 28 September 2023 is quashed and set aside. The respondents are directed to accept Form 9A filed by the petitioner and process the claim for accumulation of income in accordance with law. Rule is made absolute accordingly.
Law Points
- Condonation of delay
- Section 119(2)(b) of Income Tax Act
- 1961
- Form 9A
- Charitable trust
- CBDT circulars
- Liberal construction
- Reasonable cause
