Case Note & Summary
The petitioner, Sanjay Ghodawat University, Kolhapur, is a university established by an act of the State Legislature of Maharashtra, which became operational on 13.07.2017. The university sought exemption under section 10(23C)(vi) of the Income Tax Act, 1961 for the assessment year 2019-20 onwards. Due to heavy rainfall and floods in various parts of the country, the Central Board of Direct Taxes (CBDT) issued an order dated 27.09.2019 under section 119 of the Act, extending the due date for filing income tax returns and audit reports for assessment year 2019-20 from 30.09.2019 to 31.10.2019. Relying on this circular, the petitioner filed its application for exemption in Form No.56D before the Commissioner of Income Tax (Exemptions), Pune on 31.10.2019. The Commissioner, by order dated 29.09.2020, rejected the application solely on the ground that it was filed beyond the statutory time limit of 30.09.2019, holding that the CBDT circular did not extend the time for filing exemption applications under section 10(23C)(vi). The petitioner challenged this order by way of a writ petition under Articles 226/227 of the Constitution of India. The High Court examined the CBDT circular and found that it extended the due date for filing returns and audit reports for assessment year 2019-20 to 31.10.2019. The court held that the circular, issued under section 119 of the Act, is binding on all income tax authorities and must be given effect. The application filed on 31.10.2019 was within the extended time and could not be rejected as time-barred. The court also noted that the impugned order was passed without affording any opportunity of hearing to the petitioner, which violated principles of natural justice. Accordingly, the court quashed the order dated 29.09.2020 and directed the Commissioner to consider the petitioner's application afresh on merits, after giving the petitioner an opportunity of hearing, and to pass a reasoned order within eight weeks.
Headnote
A) Income Tax - Exemption under Section 10(23C)(vi) - Time Limit for Filing Application - CBDT Circular Extending Due Date - The petitioner, a university established by State Act, filed application for exemption under section 10(23C)(vi) on 31.10.2019, relying on CBDT circular dated 27.09.2019 extending the due date from 30.09.2019 to 31.10.2019 due to floods. The Commissioner rejected the application as time-barred, holding that the circular did not extend the time for filing exemption applications. The High Court held that the CBDT circular under section 119 is binding on all income tax authorities and must be given effect; the application filed within the extended time could not be rejected as time-barred. The court also noted that the rejection was without affording opportunity of hearing, violating principles of natural justice. (Paras 2-10) B) Income Tax - CBDT Circular - Binding Nature - Section 119 of Income Tax Act, 1961 - The CBDT circular dated 27.09.2019 extended the due date for filing returns and audit reports for assessment year 2019-20 from 30.09.2019 to 31.10.2019. The court held that such circulars are binding on income tax authorities and must be implemented in letter and spirit. The Commissioner's interpretation that the circular did not apply to exemption applications under section 10(23C)(vi) was erroneous. (Paras 4-8) C) Income Tax - Principles of Natural Justice - Opportunity of Hearing - The impugned order rejecting the exemption application was passed without giving any opportunity of hearing to the petitioner. The court held that such rejection without hearing violates principles of natural justice and fair play. (Para 9)
Issue of Consideration
Whether the Commissioner of Income Tax (Exemptions) was justified in rejecting the petitioner's application under section 10(23C)(vi) of the Income Tax Act, 1961 for the assessment year 2019-20 as time-barred, despite the CBDT circular extending the due date from 30.09.2019 to 31.10.2019.
Final Decision
The impugned order dated 29.09.2020 is quashed and set aside. The Commissioner of Income Tax (Exemptions), Pune is directed to consider the petitioner's application dated 31.10.2019 afresh on merits, after giving the petitioner an opportunity of hearing, and to pass a reasoned order within eight weeks from the date of receipt of the order.
Law Points
- CBDT circular under section 119 is binding on income tax authorities
- extension of due date for filing application under section 10(23C)(vi) must be given effect
- application filed within extended time cannot be rejected as time-barred
- principles of natural justice require opportunity of hearing before rejection
