Case Note & Summary
The petitioner, Shri Jain Dehrasar Upasraya Ane Sadharan, is a charitable trust registered under the Gujarat Public Trusts Act, 1950, engaged in running a Jain derasar and promoting Jainism for over 45 years. It is also registered under Section 12A of the Income Tax Act, 1961 for Assessment Years 2022-23 to 2026-27. For A.Y. 2021-22, the due date for filing the audit report in Form 10B was extended to 15.02.2022 and for filing the return of income to 15.03.2022 vide Circular No. 01/2022 dated 11.01.2022. The trust's auditor filed the audit report on 21.12.2021, and the return of income was filed on 28.01.2022 declaring total income of Rs. 1,86,570/- after claiming exemption under Section 11 amounting to Rs. 7,84,608/-. The audit report was accepted/approved by the trust on 29.03.2022. The return was processed under Section 143(1) on 10.08.2022 accepting the returned income. However, the Assessing Officer passed a suo-moto rectification order under Section 154 on 07.03.2023, disallowing the exemption claimed and determining total income at Rs. 9,71,176/-, raising a demand of Rs. 1,35,480/-. The reason for disallowance was that fresh registration under Section 12AB was not obtained. The trust filed an application for condonation of delay under Section 119(2)(b) on 16.03.2023, contending that the audit report was filed before the due date but there was a delay in approval due to a technical glitch. The respondent Commissioner rejected the application on 31.01.2024, stating that the delay was not properly explained. The trust then filed the present writ petition under Article 226/227 of the Constitution seeking quashing of the rejection order and direction to condone the delay and allow the exemption. The High Court held that the Commissioner ought to have considered the application liberally, as the trust had substantially complied with the requirements and the delay was minimal and technical. The court set aside the impugned order, condoned the delay, and directed the respondent to allow the claim of exemption under Section 11.
Headnote
A) Income Tax - Condonation of Delay - Section 119(2)(b) Income Tax Act, 1961 - Charitable Trust - The petitioner trust filed audit report in Form 10B before due date but approval was granted after due date due to technical glitch - Commissioner rejected condonation application on ground that delay was not explained - Court held that the Commissioner ought to have considered the application liberally as the trust had complied with substantive requirements and the delay was minimal and technical - Held that the rejection was unsustainable and the delay deserves to be condoned (Paras 1-7). B) Income Tax - Exemption under Section 11 - Form 10B - Section 12A, Section 12AB Income Tax Act, 1961 - The trust had obtained registration under Section 12A for A.Y. 2022-23 to 2026-27 and had filed audit report on time - The Assessing Officer disallowed exemption under Section 11 on ground that fresh registration under Section 12AB was not obtained - Court noted that the trust had applied for condonation and the defect was curable - Held that once delay is condoned, the exemption under Section 11 should be allowed (Paras 4-7).
Issue of Consideration
Whether the respondent Commissioner was justified in rejecting the petitioner's application for condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961 for filing Form 10B approval for A.Y. 2021-22, and whether the petitioner is entitled to exemption under Section 11 of the Act.
Final Decision
The High Court allowed the writ petition, set aside the order dated 31.01.2024, condoned the delay in filing Form 10B approval, and directed the respondent to allow the claim of exemption under Section 11 of the Income Tax Act, 1961.
Law Points
- Condonation of delay
- Section 119(2)(b) Income Tax Act
- 1961
- Charitable trust exemption
- Form 10B
- Section 11
- Section 12A
- Section 12AB
- Section 154
- Liberal approach
- Technical defect
