Bhagini Mandal (trust) vs. Principal Chief Commissioner of Income Tax
What did the High Court hold?
The High Court allowed both writ petitions, setting aside the impugned rejection orders dated January 13, 2025. The Court condoned the delay of 3198 days for AY 2015-16 and 3533 days for AY 2014-15. The reasoning was based on the petitioner being a charitable trust with a long history of compliance (45 years). The Court found significant similarity with the cases decided by the Gujarat and Bombay High Courts, where similar delays caused by compelling reasons in respect of charitable trusts were condoned. The Courts in those precedents emphasized an equitable, balancing, and judicious approach, stating that denial of exemption merely on the bar of limitation, especially when the legislature has conferred wide discretionary powers to condone delays, is not justified. The petitioner's case was considered to be on a better footing due to their 45-year compliance record. The respondents were directed to proceed in accordance with law from the stage after condonation of delay. No order as to costs was made.
What were the facts?
The petitioner, Bhagini Mandal (Trust), a charitable trust, filed two writ petitions before the High Court of Telangana at Hyderabad. The petitions challenged orders dated January 13, 2025, passed by the Principal Chief Commissioner of Income Tax, rejecting applications for condonation of delay in filing Form 10B. The delays were 3198 days for Assessment Year (AY) 2015-16 and 3533 days for AY 2014-15. The petitioner contended that the delay was due to the illness and brain surgery of their Chartered Accountant. They highlighted their consistent compliance for the past 45 years and relied on High Court judgments. The Revenue argued that the delay was enormous and the rejection orders were justified.
What were the issues?
1. Whether the rejection of the petitioner's application for condonation of delay in filing Form 10B for AY 2015-16 and AY 2014-15, under Section 119(2)(b) of the Income Tax Act, 1961, was arbitrary, illegal, and violative of natural justice and constitutional provisions (Articles 14, 19, and 265). Assessee's Arguments: - The petitioner is a charitable trust with a consistent compliance record for 45 years. - The delay was caused by unavoidable circumstances, specifically the illness and surgery of their Chartered Accountant. - A lenient view should have been taken by the competent authority, given the ample power vested in them. - The rejection orders are contrary to the judgments of the Gujarat High Court in Sarvodaya Charitable Trust v. Income-tax Officer (Exemption) and the Bombay High Court in AI Jamia Mohammediyah Education Society v. Commissioner of Income-tax (Exemptions). Revenue's Arguments: - The delay was enormous, and therefore, no fault can be found with the impugned rejection orders.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
COMMON ORDER: (Per Hon'ble The Acting Chief Justice) With tl-re consent finally heard. Ms. Himangrni Sanghi, learned coun s,e1 for the petitioner and Sri A. Ramakrishna Reddy, learned Standing Counsel for the Income Tax Department, for re spondents
Regard L,eing had to the similitude of the questio'rs involved I' on the joint request of the parties, these matters were analogously heard ald decicled by this common order.
In W.P.l\os.2837 and 2998 of 2025, the orrlers dated 13.01.2025, vrhereby the applications frled for coni.onation of delay of 3198 zLnd 3533 days respectively in filing Fo':m 10-B of the Income Tax Act, 1961, pertaining to Assessment Years 2015- 16 and 20L4 15;, were rejected
Learned counsel for the petitioner submits that pretitioner is a charitable Trtrst. By placing reliance on additional affidavit, it is submitted that apart from the aforesaid two years, th,: petitioner submitted retllrns in time for last 45 years. The delzLy occurred because the Chartered Accountant of the petitioner's Trust was ,
t 2 '* ., unwell and has undergone brain surgery. In this backdrop, a lenient view should have been taken, when ample power was there with competent authority. The impugned rejection orders run contrary to the judgments of the Guj arat and Bombay High Courts 1n Sanrodaya Charitable Trust v. Income-tax Officer (Exemption)r and AI Jamia Mohammediyah Education Society v. Commissioner of Income-tax (Exemptionsf2 respectively.
Learned Standing Counsel for the Income Tax Department submits that in view of enormous delay on the part of the petitioner, no fault cal be found in the impugned orders.
The parties have confined their arguments tb the extent indicated above.
Learned counsel for the petitioner categorically pleaded that the petitioner is a charitable Trust and in last 45 years without there being any default, returns were filed. Thus, on two occasions if delay had occurred because of reasons beyond the control of the petitioner, a lenient view should have been taken. '1zozt1 t8 ttn-oL zs3 'lzozs; a8u ttn ar d'il,- I k- .ral-
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The Gr-rj ar'rt High Court in SarvodaYa Charitable Trust (supra) recorded a's under: t'3o. We meLy also refer to and rely 'p9' t decision of the olit l nigtt'j,rurt in the case of G' V' Infosutions (P') Ltd v' 5"."iif?",,"tred in 12ole) 13 ITR-oL 164 (Delhi) ; l2()l9l ;di ;;;:;;; +42 tb.rhii' we mav quote the rerevant Jt,""*^tion" thus (page 17O of 13 ITR-OL) :
"8. l'he rejection of the petitioner's application under s,:ctitn 1l9{2}(b) is only on the ground tnal ".".,t*g ," the Cliief Commissioner's opinion the pi. -,rr" omission by the auditor was not i rt",rlr,i.,.a This court has - diffrcultv to *a"o,tma wfLat more plea qr proof: Tl: ?;=?slfl -.rf a f-,r:"" U-ught "" t"tttd' t' r.]"au"i,""-." ot-its-edy1!q. The net result .ol the ffi* " ';;=-;__--r.-"r i" i,, "rlect that the petitioner's clairn- of inadvertent mistake is sought to be .t rr ",,t".i""d as not bona frde The court is of the ooinion Lhat an assessee has to take leave of iLs "!ns.s if it deliberately wishes .to follgo, .' substantial amount as the assessee ls ascrloeo LL) have in the circumstances of this case 'Bona fide' i" ,-" t. understood in the context of the circurnsLance of any case Beyond a plea oI the.sort the pelitioner raises (concededly belatedlyl' trlere ..t.i,t t-t".""sari1y te independent proof or "I"i"r:af to establish that the auditor in fact acted without diligence. The petitioner did not urge any oth,,. 13aorr-rd" such as illness of someone etc ' *trr"it -.Ja reasonably have been substaltiated ;;";l";;J""t material ln the circumstances of tt" "',,,t", the petitioner, in our opinion' was able to sho,"r, trona hde reasons why the refund claim could not be made in time.
ThLe statute for period of limitation prescribed in i.or.i";o.t* of law meant to attach frnality' and in that sense are statutes of repose ; -however' *h"."'r". the Legislature intends relief against ;;;;ri; i., """."= where such statutes lead.to ';;;i;i; =;,h. lor'""..'ed authoritie s' including the n".ra"". authorities have to construe th^em in a ."l"or-r"Uf" marrner. That was the effect - anc ;;;;;i of this court's decision in Indglonal \ il ll I
4 Investment arrd Finance Ltd. v. ITO [2012] S43 ITR a4 (Delhi). This court is of the opinion that a similar approach is to be adopted in th; circumstances of the case.,,
We.may also refer to the decision of this court in CIT v. Gujarat Oil and Allied Industries [19931 201 ITR 32S (cuj], wherein it is held that the provision regarding furnishine ;i audit report with the return has to be treated as a prgcedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This court took the view that the benefit of exemption should not be denied merelv on account of delay in furnishing the same ana ii is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Ofhcer or before the appellate authorit5r by assigning sufficient cause.,, (trmphasis Supplied)
The aforesaid judgment was considered by the Bombay High Court in AI Jamai Mohammediyah Education Society (supra) and it was held as under:
Ad oner has Admittedl mittedl\/. y, the petiti the petitioner is a charitable trust. been hlins its returns and , for the t' \ form 10B for the assessment year 2015-2016
) assessment vear 20 1 7 -2OlA to assessment year 2021-2022 within the due dates On this und alone, in our vieu the o delav contlonatron application should have been all,:wed because ttre failure to frle returns for the assessment vear 2076-20 t 7' ,:ould be onlv due to human error Even in the impugned o:rder, there is no alleqation of maia hdes. As held try the Gr,rjarat High Court in Saruodaya Chanta ble Ttustv. lTr) (Exemption) l(2O21\ 18 ITR-OL 253 (Guj); 2020 SCC Onl,ine Guj 3597; (2021\ 125 taxmann.com 75 (Guj).1 , the approach in the cases of the present type shou d be equitous, bzrlancing and judicious. Technically, strictll' and libera1ly speaking, respondent No. 1 might be justifir:d in denying the exemption by rejecting such condonation application, but an assessee. a public charitable trust with almost over thirty years, which otherwise satisfiesr the ndition for availing of such exemotion. should not be CO ! ! denied the same merelv on the bar of limitation especially when the Legislature has conferred wide discretionary powers to condone such delav on the authorities concerned. Paragraphs 3O and 3l of Saruodaya Chaitoble Tntst','. ITO (Exemptiort) l(2o21]r 1'8 ITR-OL 253 (Guj); 2020 SCC Online Guj 3597; (2021) 125 taxmann.com Z5 (Guj).] reacls as under ( ITR-OL): "3O. iVe may also refer to and rely upon a decision of the Delhi High Court in the case of G.V. Infostttion:; Put. t.td. v. Dg. CIT [(2019) 13 ITR-OL 164 (Delhi); 2019 SCC Onl-ine De1 6861; (2019) 1O:l taxmimn.com 397 (Delhi); (2019\ 261 Taxmart 48il (Delhi).] We may quote the relevant observation:; thus i ITR-OL):..." (trmphas s Supplied)
If the factua,l backdrop of the present case is considered, in the light of aforr:said judgments of the Guj arat and Borrbay High Courts, it will be clear like noon day that there is lot ol similarity amongst these matters. The petitioners before both the High Courts were also Charitable Trusts and delay was lccasioned because of compelling reasons. The Courts opinecl that the t I
I 6 assessee is a public Charitable Trust and for last three decades have substantia,lly satisfred the conditions. Denial on the basis of bar of limitation is not justified. The case of the petitioner herein is somewhat on better footing because it has a record of compliance for 45 years. I 1. In this backdrop, both the Writ Petitions are allowed by setting aside the impugned rejection orders dated 13.01'2025 and consequently, the delay of 3198 and 3533 days respectively are condoned, The respondents are directed to proceed in accordance with law from that stage. There sha1l be no order as to costs' Miscellaneous applications, if any, pending shall stand closed' orr,rrtfi-I'*'lolt?ftEF / /ffRUE COPY'/ ECTION OFFICER To, The Principal Chief Commissioner of lncome Tax' North Block' New Delhi The lncome Tax Department' lncome Tax Depafiment Hyderabad The Assessment Unit' E-Ramp Jawaharlal Nehru Stadium' New Delhi One CC to Ms HIMANGINI SANGHI' Advocate tOPUCl One CQ to SBI A RAMAKRISHNA REDDY SC for lncome Tax Department loPucl 1. 2. 4. 5
Two CP CoPies BSK ,- L FS l l l
I HIGH COURT DATED:17102t2025 COMMON ORDER WP.No.2837 & 2998 ot 2025 ALLOWING THE WRIT PETITIONS WITHOUT COSTS $f- ..14 ,' , ijl u ) at 2 0 t'Ait 2025 a T t cr-. B /"b /L / -"r'' 11 t j:.
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