NDS ART WORLD PRIVATE LIMITED vs. ADDITIONAL COMMISSIONER OF INCOME TAX OSD OT AND WT AND ORS.

Sayyed 2-WP.2930.2024.docx IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2930 OF 2024 WRIT PETITION NO.2930 OF 2024 ND’S Art World Private Limited ND’S Art World Private Limited ...Petitioner ...Petitioner Versus Versus Additional Commissioner of Additional Commissioner of Income Tax (OSD) (OT & WT) & Ors. Income Tax (OSD) (OT & WT) & Ors. ...Respondents ...Respondents _____________________________________________________ Ms. Priyanka Jain a/w Mr. Pankaj Soni i/b. Vaish Associates for the Ms. Priyanka Jain a/w Mr. Pankaj Soni i/b. Vaish Associates for the Petitioner. Petitioner. Mr. P. A. Narayanan for the Respondents. Mr. P. A. Narayanan for the Respondents. _____________________________________________________ CORAM : M. S. Sonak & Jitendra Jain, JJ. DATED: 28 January 2025 ORAL JUDGMENT:- (Per M. S. Sonak, J.) 1. Heard Ms. Jain, learned counsel for the Petitioner and Mr. Heard Ms. Jain, learned counsel for the Petitioner and Mr. Narayanan Narayanan, learned counsel for the Respondents. , learned counsel for the Respondents. 2. Rule. The Rule is made returnable immediately at the request Rule. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties. of and with the consent of the learned counsel for the parties. 3. The Petitioner challenges the order dated 24 January 2024, The Petitioner challenges the order dated 24 January 2024, which dismissed the Petitioner’s application for condonation of a delay which dismissed the Petitioner’s application for condonation of a delay of around 10 months in filing the return of income for the assessment of around 10 months in filing the return of income for the assessment year 2020-2021. year 2020-2021. 4. Ms. Jain submits that the impugned order in this case has Ms. Jain submits that the impugned order in this case has been made by the Additional Commissioner of Income Tax (CIT) been made by the Additional Commissioner of Income Tax (CIT) (OSD) (OSD) (OT & WT) “with the approval of competent authority”. She submits (OT & WT) “with the approval of competent authority”. She submits that the power to consider and dispose of an application for that the power to consider and dispose of an application for condonation of delay is vested in the Central Board of Direct Taxes condonation of delay is vested in the Central Board of Direct Taxes (CBDT) under the provisions of Section 119(2)(b) of the Income Tax (CBDT) under the provisions of Section 119(2)(b) of the Income Tax Page 1 of 6 2025:BHC-OS:1389-DB

Sayyed 2-WP.2930.2024.docx Act, 1961 (“the IT Act”). She submits that the impugned order is neither Act, 1961 (“the IT Act”). She submits that the impugned order is neither by CBDT nor any of its members. There is no clarity about which by CBDT nor any of its members. There is no clarity about which competent authority has approved the making of this order. She submits competent authority has approved the making of this order. She submits that in any event, even if the CBDT or its members approve the order, it that in any event, even if the CBDT or its members approve the order, it cannot be regarded as an order made by the CBDT or its members. She cannot be regarded as an order made by the CBDT or its members. She submits that on this short ground, the impugned order is liable to be set submits that on this short ground, the impugned order is liable to be set aside. She relies on aside. She relies on R. K. Madhani Prakash Engineers J V vs. Union of R. K. Madhani Prakash Engineers J V vs. Union of India India1, Tata Autocomp Gotion Green Energy Solutions (P.) Ltd. vs. , Tata Autocomp Gotion Green Energy Solutions (P.) Ltd. vs. Central Board of Direct Taxes Central Board of Direct Taxes2 and and Bharat Education Society vs. The Bharat Education Society vs. The Assessing Officer, Income Tax Exemption-1(1) Mumbai Assessing Officer, Income Tax Exemption-1(1) Mumbai3 in support of in support of her contention. her contention. 5. Ms. Jain, without prejudice to the above, submits that the Ms. Jain, without prejudice to the above, submits that the Petitioner showed sufficient cause, but without assigning any good Petitioner showed sufficient cause, but without assigning any good reasons, this cause has not been considered. She submits that the period reasons, this cause has not been considered. She submits that the period in question was affected by the COVID-19 pandemic. Genuine hardships in question was affected by the COVID-19 pandemic. Genuine hardships were pleaded and demonstrated. She submits that all these relevant were pleaded and demonstrated. She submits that all these relevant materials were not considered when making the impugned order. materials were not considered when making the impugned order. 6. Mr. Narayanan defends the impugned order based on the Mr. Narayanan defends the impugned order based on the reasoning reflected therein. He refers to the Central Secretariat Manual reasoning reflected therein. He refers to the Central Secretariat Manual for Office Procedure and stresses paragraph 9.3, which deals with the for Office Procedure and stresses paragraph 9.3, which deals with the authentication of Government orders. He also refers to the Central authentication of Government orders. He also refers to the Central Boards of Revenue Act, 1963, to justify making the impugned order by Boards of Revenue Act, 1963, to justify making the impugned order by the the Additional CIT Additional CIT (OSD) (OT & WT). He submits that the Petitioner (OSD) (OT & WT). He submits that the Petitioner was found to be a habitual defaulter when it comes to filing the return was found to be a habitual defaulter when it comes to filing the return of income. For all these reasons, Mr. Narayanan submits that this of income. For all these reasons, Mr. Narayanan submits that this petition may be dismissed. petition may be dismissed. 7. The rival contentions now fall for our determination. The rival contentions now fall for our determination. 1 [2023] 154 taxmann.com 16 (Bombay) 2 [2024] 163 taxmann.com 643 (Bombay) 3 Writ Petition (L) No.21487 of 2024 dtd. 21 January 2025. Page 2 of 6

Sayyed 2-WP.2930.2024.docx 8. As noted earlier, the impugned order has been signed by the As noted earlier, the impugned order has been signed by the Additional CIT Additional CIT (OSD) (OT & WT). The last line states that it was passed (OSD) (OT & WT). The last line states that it was passed “with the approval of competent authority.” “with the approval of competent authority.” 9. The affidavit does not throw much light on the status of The affidavit does not throw much light on the status of competent authority approving the making of this order by the competent authority approving the making of this order by the Additional CIT Additional CIT (OSD) (OT & WT). In any event, this Court had to (OSD) (OT & WT). In any event, this Court had to interfere with similar orders made by officers who neither had any interfere with similar orders made by officers who neither had any authorisation from the CBDT to make such orders nor any authorisation authorisation from the CBDT to make such orders nor any authorisation from CBDT members. This is assuming that the CBDT or its members from CBDT members. This is assuming that the CBDT or its members could have delegated such powers to the officers like could have delegated such powers to the officers like Additional CIT Additional CIT (OSD) (OT & WT). There is a difference between the CBDT or its (OSD) (OT & WT). There is a difference between the CBDT or its authorised member making an order and some other officers making an authorised member making an order and some other officers making an order with the approval, even of the member of the CBDT. order with the approval, even of the member of the CBDT. 10. In In Bharat Education Society (supra) Bharat Education Society (supra), the affidavit was filed on , the affidavit was filed on behalf of the Commissioner of Income Tax (Exemptions), in which an behalf of the Commissioner of Income Tax (Exemptions), in which an order similar to that made in this petition was sought to be justified by order similar to that made in this petition was sought to be justified by contending the following: - contending the following: - “12. In the affidavit filed by Mr Salil Mishra, Commissioner of “12. In the affidavit filed by Mr Salil Mishra, Commissioner of Income Tax (Exemptions), the contention regarding the impugned Income Tax (Exemptions), the contention regarding the impugned order not being made by the CBDT or its Member is answered in order not being made by the CBDT or its Member is answered in paragraph 9, which reads as follows:- paragraph 9, which reads as follows:- “9. Further the petitioner has taken the plea in the writ petition that “9. Further the petitioner has taken the plea in the writ petition that the order has been passed by an officer without jurisdiction, as the the order has been passed by an officer without jurisdiction, as the show cause notice dated 06.07.2023 was issued by the DCIT(OSD) show cause notice dated 06.07.2023 was issued by the DCIT(OSD) (ITA Cell) (ITA Cell) and the condonation order has been passed by the Addl. and the condonation order has been passed by the Addl. CIT (ITACell) with the approval of Member(IT) CIT (ITACell) with the approval of Member(IT). The petitioner has . The petitioner has also contended whether the DCIT(OSD)(ITA Cell) or the Addl.CIT also contended whether the DCIT(OSD)(ITA Cell) or the Addl.CIT (ITA Cell) were competent to issue the show cause notice and pass (ITA Cell) were competent to issue the show cause notice and pass the order and whether the authority as per whose the order and whether the authority as per whose direction/approval the said order has been passed, has applied his direction/approval the said order has been passed, has applied his mind to the issues arising in the case. mind to the issues arising in the case. In this connection, it is submitted that CBDT functions through its In this connection, it is submitted that CBDT functions through its Members and the work allocation has been done amongst the Members and the work allocation has been done amongst the Members. All the Members of the CBDT are the Special Secretaries Members. All the Members of the CBDT are the Special Secretaries to the Govt. of India and have office for processing all the matters to the Govt. of India and have office for processing all the matters dealt by them. Applications/petitions u/s 119(2)(b) of the Income- dealt by them. Applications/petitions u/s 119(2)(b) of the Income- Page 3 of 6

Sayyed 2-WP.2930.2024.docx tax Act, 1961 received in the Board are processed in the office of tax Act, 1961 received in the Board are processed in the office of the concerned Member after proper consideration of facts and the concerned Member after proper consideration of facts and circumstances of each case. circumstances of each case. The work relating to the Order under The work relating to the Order under section 119 of the Income-tax Act, 1961 on matters related to section 119 of the Income-tax Act, 1961 on matters related to Sections 10, 11, 12 & 13 have been assigned to Member (IT) in Sections 10, 11, 12 & 13 have been assigned to Member (IT) in CBDT. The orders in these cases are approved by Member CBDT. The orders in these cases are approved by Member concerned and after approval; these orders are issued with the concerned and after approval; these orders are issued with the signature of the officer, who is not below the rank of Under signature of the officer, who is not below the rank of Under Secretary to Govt. of India, in the office of the Member Secretary to Govt. of India, in the office of the Member. Considering the extant office procedure and practices being Considering the extant office procedure and practices being followed, the Addl. CIT (ITA Cell) has signed the order after taking followed, the Addl. CIT (ITA Cell) has signed the order after taking approval of the Member concerned In last para of the Order, it has approval of the Member concerned In last para of the Order, it has been clearly mentioned that the Order issues with the approval of been clearly mentioned that the Order issues with the approval of Member (IT), CBDT.” Member (IT), CBDT.” 11. The above explanation was not accepted by this Court and the The above explanation was not accepted by this Court and the reasoning in this regard is in paragraph 13, which reads as follows:- reasoning in this regard is in paragraph 13, which reads as follows:- “13. The reply suggests that the CBDT functions through its “13. The reply suggests that the CBDT functions through its Members, and the works are allotted amongst the Members of the Members, and the works are allotted amongst the Members of the CBDT who are Special Secretaries to the Government of India. The CBDT who are Special Secretaries to the Government of India. The affidavit states that the member is allocated the work of affidavit states that the member is allocated the work of considering applications/Petitions under Section 119(2)(b) of the considering applications/Petitions under Section 119(2)(b) of the IT Act to consider the facts and circumstances of each case. There IT Act to consider the facts and circumstances of each case. There is a specific statement in the affidavit that the work relating to is a specific statement in the affidavit that the work relating to orders under Section 119 of the IT Act on matters pertaining to orders under Section 119 of the IT Act on matters pertaining to Sections 10, 11, 12 and 13 have been assigned to Member (IT) in Sections 10, 11, 12 and 13 have been assigned to Member (IT) in the CBDT.” the CBDT.”

Sayyed 2-WP.2930.2024.docx File but it is not sent to the Member on whose approval the said File but it is not sent to the Member on whose approval the said order is supposed to have been passed. In our view, this means the order is supposed to have been passed. In our view, this means the Member has not passed the order but has been passed by the Member has not passed the order but has been passed by the Director. On this ground alone, this order has to be quashed and Director. On this ground alone, this order has to be quashed and set aside.” set aside.” 13. Similar view was taken in Similar view was taken in Tata Autocomp Gotion Green Tata Autocomp Gotion Green Energy Solutions (P.) Ltd. (supra) Energy Solutions (P.) Ltd. (supra) . . 14. Paragraph 9.3 of the Central Secretariat Manual of Office Paragraph 9.3 of the Central Secretariat Manual of Office Procedure only relates to authentication of Government orders. This Procedure only relates to authentication of Government orders. This paragraph does not dispense with the requirement of CBDT or its paragraph does not dispense with the requirement of CBDT or its members making orders on the application seeking condonation of members making orders on the application seeking condonation of delay. Section 119(2)(b) empowers the CBDT to decide such delay. Section 119(2)(b) empowers the CBDT to decide such applications. The CBDT, as a part of its functioning, may have allocated applications. The CBDT, as a part of its functioning, may have allocated the work amongst its members. However, nothing was shown to us the work amongst its members. However, nothing was shown to us regarding any further allocation or delegation to the regarding any further allocation or delegation to the Additional CIT Additional CIT (OSD) (OT & WT). At this stage, we do not make any observations on (OSD) (OT & WT). At this stage, we do not make any observations on the permissibility of any such further delegation. Similarly, there is the permissibility of any such further delegation. Similarly, there is nothing in the Central Boards of Revenue Act, 1963 or at least nothing nothing in the Central Boards of Revenue Act, 1963 or at least nothing was shown to us based upon which the making of the order by the was shown to us based upon which the making of the order by the Additional CIT Additional CIT (OSD) (OT & WT) could be held as valid or validated. (OSD) (OT & WT) could be held as valid or validated. 15. Therefore, by following the previously decided cases, we Therefore, by following the previously decided cases, we quash and set aside the impugned order dated 24 January 2024 and quash and set aside the impugned order dated 24 January 2024 and remand the matter to the CBDT or its duly allocated member to pass an remand the matter to the CBDT or its duly allocated member to pass an order on the Petitioner’s application for condonation of delay. Needless order on the Petitioner’s application for condonation of delay. Needless to add the Petitioner / its representatives must be heard before such an to add the Petitioner / its representatives must be heard before such an order is made. A reasoned order must be communicated to the order is made. A reasoned order must be communicated to the Petitioner. This exercise must be completed within 3 months of Petitioner. This exercise must be completed within 3 months of uploading this order. uploading this order. 16. However, all parties’ contentions on merits are kept open. However, all parties’ contentions on merits are kept open. Page 5 of 6

Sayyed 2-WP.2930.2024.docx 17. The Rule is made absolute in the above terms without any The Rule is made absolute in the above terms without any cost order. cost order. 18. All concerned to act on an authenticated copy of this order. All concerned to act on an authenticated copy of this order.

(Jitendra S. Jain, J.) (M. S. Sonak, J.) Page 6 of 6 Signed by: Sayyed Saeed Ali Designation: PA To Honourable Judge Date: 30/01/2025 14:34:47