Case Note & Summary
The petitioners, Little Angels Education Society and Rev. C. F. Andrews Education Society, are charitable trusts running schools in Mumbai and assessed under the Income Tax Act, 1961. For the assessment year 2018-2019, they filed their income tax returns on 25.07.2018 declaring nil income. The required audit report in Form No.10B was obtained on 15.08.2018 but due to a mistake by their chartered accountant, Form No.10BB was uploaded instead of Form No.10B on the income tax portal. Subsequently, the Centralized Processing Centre (CPC) issued an intimation under section 143(1) on 17.10.2019 raising a demand of Rs.1,46,01,489.00 by denying exemptions under sections 11 and 12 of the Act. The petitioners challenged this demand in appeal before the Commissioner of Income Tax (Appeals). Meanwhile, they filed Form No.10B belatedly and applied to the Commissioner of Income Tax (Exemptions) for condonation of delay under section 119(2)(b). The Commissioner rejected the application on 19.02.2020, holding that the mistake of the chartered accountant was not a sufficient cause. The petitioners filed writ petitions challenging the rejection. The High Court heard both petitions together. The court observed that the petitioners had acted bona fide and the delay was due to a genuine mistake by the chartered accountant, which constitutes a sufficient cause for condonation. The court held that the Commissioner ought to have exercised the discretion under section 119(2)(b) liberally to condone the delay, as the petitioners were charitable trusts and the denial of exemption would cause undue hardship. The court set aside the impugned orders and directed the Commissioner to condone the delay and process Form No.10B for the assessment year 2018-2019. The writ petitions were allowed.
Headnote
A) Income Tax - Condonation of Delay - Sufficient Cause - Mistake of Chartered Accountant - Income Tax Act, 1961, Section 119(2)(b) - The petitioners, charitable trusts, filed Form No.10BB instead of Form No.10B due to a mistake by their chartered accountant. The Commissioner declined to condone the delay. The High Court held that the mistake of the chartered accountant constitutes a sufficient cause for condonation of delay, as the petitioners acted bona fide and there was no malafide intention. The court directed the Commissioner to condone the delay and process the forms. (Paras 1-12) B) Income Tax - Exemption under Sections 11 and 12 - Requirement of Filing Form No.10B - Income Tax Act, 1961, Sections 11, 12, 143(1) - The denial of exemptions under sections 11 and 12 by the CPC due to non-filing of Form No.10B was challenged. The court noted that the petitioners had filed Form No.10B belatedly due to a mistake, and the delay was not intentional. The court held that the Commissioner should have exercised discretion under Section 119(2)(b) to condone the delay. (Paras 7-12)
Issue of Consideration
Whether the Commissioner of Income Tax (Exemptions) erred in declining to condone the delay in filing Form No.10B under the Income Tax Act, 1961, for the assessment year 2018-2019, when the delay was caused by a mistake of the chartered accountant.
Final Decision
The High Court allowed the writ petitions, set aside the impugned orders dated 19.02.2020, and directed the Commissioner of Income Tax (Exemptions) to condone the delay in filing Form No.10B for the assessment year 2018-2019 and process the forms accordingly.
Law Points
- Condonation of delay
- Sufficient cause
- Mistake of chartered accountant
- Form No.10B
- Income Tax Act
- 1961
- Section 119(2)(b)
- Charitable trust exemption
