Case Note & Summary
The petitioner, Herald Global Ventures Private Limited, a recognized startup incorporated on 10.12.2019 and engaged in the healthcare and lifesciences industry, filed a petition under Article 226 of the Constitution of India challenging an order dated 03.01.2024 passed by the Chief Commissioner of Income Tax-1, Ahmedabad, under Section 119(2)(b) of the Income Tax Act, 1961. The order rejected the petitioner's application for condonation of delay in filing Form 10-IC for Assessment Year 2022-23. The petitioner had been recognized as a startup by the Department for Promotion of Industry and Internal Trade on 28.05.2021 and applied for a certificate of eligible business under Section 80-IAC of the Act before the Inter-Ministerial Board of Certification in August 2021. The Board issued the certificate on 07.10.2022, after the due date for filing Form 10-IC (30.09.2022). The petitioner filed the tax audit report on 28.09.2022 but could not file Form 10-IC without the certificate. The petitioner then applied for condonation of delay, which was rejected by the Chief Commissioner on the ground that the delay was not due to genuine hardship. The High Court, after hearing the parties, held that the rejection was erroneous. The court noted that the delay was solely attributable to the Board's processing time and that the petitioner had substantially complied with the requirements. The court directed the respondent to condone the delay and allow the petitioner to file Form 10-IC, emphasizing that procedural requirements should not defeat substantive rights, especially for startups, and that the authorities should adopt a liberal approach in condoning delays.
Headnote
A) Income Tax - Condonation of Delay - Section 119(2)(b) of Income Tax Act, 1961 - Form 10-IC - The petitioner, a recognized startup, failed to file Form 10-IC within the prescribed time due to delay in obtaining the certificate of eligible business from the Inter-Ministerial Board. The Chief Commissioner rejected the condonation application on the ground that the delay was not due to genuine hardship. The High Court held that the rejection was erroneous as the delay was attributable to the Board's processing time and the petitioner had substantially complied with the requirements. The court directed the respondent to condone the delay and allow the petitioner to file Form 10-IC. (Paras 4-10) B) Income Tax - Substantial Compliance - Section 80-IAC of Income Tax Act, 1961 - The court observed that the petitioner had filed the tax audit report on time and had applied for the certificate well before the due date. The delay in filing Form 10-IC was solely due to the Board's delay in issuing the certificate. The court emphasized that procedural requirements should not defeat substantive rights, especially for startups, and that the authorities should adopt a liberal approach in condoning delays. (Paras 5-9)
Issue of Consideration
Whether the Chief Commissioner of Income Tax erred in rejecting the petitioner's application for condonation of delay in filing Form 10-IC for Assessment Year 2022-23 under Section 119(2)(b) of the Income Tax Act, 1961.
Final Decision
The High Court allowed the petition, quashed the order dated 03.01.2024, and directed the respondent to condone the delay and allow the petitioner to file Form 10-IC for Assessment Year 2022-23.
Law Points
- Condonation of delay
- Section 119(2)(b) of Income Tax Act
- 1961
- Form 10-IC
- Section 80-IAC
- startup tax exemption
- substantial compliance
- procedural requirement
- liberal approach
