PRIORITY ONE INDIA vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS)

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WP/18009/2024HC KarnatakaKAHC01037096202424 April 2025Bench: S.R.KRISHNA KUMAR5 pages
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What did the High Court hold?

The High Court of Karnataka allowed the writ petition. It held that the petitioner, a Public Charitable Trust, had demonstrated genuine hardship and circumstances beyond its control that prevented the timely submission of the audit report in Form-10B along with its income tax returns. The Court found that the petitioner had submitted its income tax returns within the prescribed period and that the delay in filing the audit report was due to bonafide reasons and unavoidable circumstances, specifically a fire at the auditor's office. The Court reasoned that the impugned order, passed by the Commissioner of Income Tax (Exemptions), adopted a hyper-technical approach and deserved to be set aside. By adopting a justice-oriented approach, considering the undisputed fact that the petitioner is a Religious and Charitable Trust, the Court deemed it just, proper, and expedient to set aside the impugned order and allow the application for condonation of delay. The Court directed the respondents to accept the income tax returns and the audit report in Form-10B as if they were filed within the due date and to proceed further in accordance with law.

What were the facts?

The petitioner, Priority One India, a registered charitable trust, filed its income tax returns for Assessment Year (AY) 2019-20 on September 30, 2020. The Income Tax Department intimated the petitioner that the mandatory audit report in Form-10B was not submitted with the returns. The petitioner subsequently submitted the audit report on March 6, 2021, and filed an application on March 19, 2021, under Section 119(2)(b) of the Income Tax Act, 1961, seeking condonation of the delay. The petitioner attributed the delay to a fire at their auditor's office, which prevented timely submission. The Commissioner of Income Tax (Exemptions), the first respondent, rejected this application by an order dated February 28, 2024. Aggrieved, the petitioner filed a writ petition before the High Court of Karnataka.

What were the issues?

1. Whether the order passed by the Commissioner of Income Tax (Exemptions) under Section 119(2) of the Income Tax Act, 1961, rejecting the petitioner's application for condonation of delay in filing the audit report in Form-10B for AY 2019-20, is lawful and legal? Assessee's Contention: The petitioner argued that the delay in submitting the audit report was due to bonafide reasons, unavoidable circumstances, and sufficient cause, specifically a fire at the auditor's office. They contended that the impugned order, which rejected their condonation application, was passed on a hyper-technical approach and should be set aside in favour of a justice-oriented approach, given their status as a charitable trust. Revenue's Contention: The learned counsel for the respondents submitted that there was no merit in the petition and that it was liable to be dismissed.

Which sections of the Income-tax Act were involved?

Section 119(2),Section 119(2)(b),Section 143(1)

AI-generated summary — verify with the full judgment below

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NC: 2025:KHC:16836 WP No. 18009 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF APRIL, 2025 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 18009 OF 2024 (T-IT) BETWEEN:

PRIORITY ONE INDIA (A REGISTERED CHARITABLE TRUST) 1, BRAHMAVAR, UDUPI – 576 213, KARNATAKA REPRESENTED BY ITS MANAGING TRUSTEE MR. ROY PHILIP AGED ABOUT 67 YEARS …PETITIONER (BY SRI. K. R. PRASAD AND SRI. ASHOK A. KULAKARNI, ADVOCATES)

AND:

1.

COMMISSIONER OF INCOME TAX (EXEMPTIONS) UNITY BUILDING ANNEXE,

MISSION ROAD,

BENGALURU – 560 027, KARNATAKA

2.

ASSISTANT DIRECTOR OF INCOME TAX CENTRALISED PROCESSING CENTRE INCOME TAX DEPARTMENT BENGALURU – 560 500, KARNATAKA

3.

INCOME TAX OFFICER (EXEMPTIONS) WARD-1 INCOME TAX OFFICES,

CENTRAL REVENUE BUILDING,

NANDIGUDDA ROAD, ATTAVAR,

MANGALURU – 575 001, KARNATAKA …RESPONDENTS (BY SRI. ARAVIND V. CHAVAN, ADVOCATE)

Digitally signed by CHANDANA B M Location: High Court of Karnataka

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NC: 2025:KHC:16836 WP No. 18009 of 2024

THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF CONSTITUTION OF INDIA PRAYING TO QUASH BY AN ORDER WRIT OR DIRECTION IN THE NATURE OF CERTIORARI THE ORDER PASSED U/S 119(2) OF THE ACT BEARING DIN AND ORDER NO. ITBA/COM/F/17/2023-24/1061671610(1) DATED 28.02.2024 FOR THE AY 2019-20 IN ANNEXURE-E PASSED BY THE 1ST RESPONDENT AS UNLAWFUL AND ILLEGAL ALONG WITH THE ATTENDANT ACTIONS AND ETC.

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner seeks the following reliefs:

“a) Quash by an order, writ or direction in the nature of certiorari, the order passed u/s 119(2) of the Act bearing DIN & Order No. ITBA/COM/F/17/2023-24/1061671610(1) dated 28.02.2024 for the AY: 2019-20 in Annexure-"E" passed by the 1st Respondent as unlawful and illegal along with the attendant actions.

b) Quash by an order, writ or direction in the nature of certiorari, the Intimation u/s 143(1) of the Act bearing document Identification No. CPC/1920/A7/2013761316 dated 16.02.2021 for AY: 2019-20 in Annexure-"B" passed by the 2nd Respondent as unlawful and illegal along with the attendant actions.

c) Grant such other relief that this Hon'ble Court may think fit including the cost of this petition in the interest of justice and equity.”

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NC: 2025:KHC:16836 WP No. 18009 of 2024

2.

A perusal of the material on record indicate that the petitioner is a Charitable Trust and submitted its income tax returns for the assessment year 2019-20 on 30.09.2020. The said returns having been processed, the respondents intimated the petitioner that the audit report in Form-10B applicable to the petitioner-Trust had not been submitted along with the income tax returns and called upon the petitioner to submit the same. In response thereto, the petitioner submitted the said audit report in Form-10B on 06.03.2021 and an application dated 19.03.2021 invoking Section 119(2)(b) of the I.T. Act seeking condonation of delay in submitting the said audit report. It was contended that the inability and omission on the part of the petitioner to submit the said audit report along with the income tax returns was due to bonafide reasons, unavoidable circumstances and sufficient cause, since the same was not made available to the petitioner-Trust by its auditor/accountant as there was fire in their office due to short circuit. The said application was considered by the respondent, who declined to condone the delay and accordingly, passed the impugned order dated 28.02.2024, rejecting the application for condonation of delay, aggrieved by which the petitioner is before this Court by way of the present petition.

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NC: 2025:KHC:16836 WP No. 18009 of 2024

3.

Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed.

4.

A perusal of the material on record will indicate that it is an undisputed fact that the petitioner is a Public Charitable Trust carrying on charitable activities. It is also not in dispute that the petitioner had submitted its income tax returns within the prescribed period i.e., on 30.09.2020 as a Trust. Under these circumstances, in the light of the specific assertion on the part of the petitioner that its inability and omission to submit the audit report in From-10B along with its income tax returns was due to bonafide reasons, unavoidable circumstances and sufficient cause, I am of the view that the petitioner had demonstrated and established genuine hardship and circumstances beyond its control, which prevented it from submitting the audit report along with the I.T. returns. Under these circumstances, the impugned order, which proceeds on a hyper technical approach deserves to be set aside and by adopting a justice oriented approach, in the light of the undisputed fact that the petitioner is Religious and Charitable Trust, it would be just, proper and expedient to set aside

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NC: 2025:KHC:16836 WP No. 18009 of 2024

the impugned order and allow the application filed by the petitioner for condonation of delay and issue further directions in this regard.

5.

In the result, the following order is passed :

ORDER

(i) Petition is hereby allowed;

(ii) The impugned order at Annexure-E dated 28.02.2024, passed by respondent No.1, is hereby set aside;

(iii) The application filed by the petitioner under section 119(2)(b) dated 19.03.2021 is hereby allowed and the delay on the part of the petitioner in submitting the audit report in Form-10B is hereby condoned;

(iv) Respondent No.2 is directed to accept the income tax returns as well as Audit Report in Form-10B filed by the petitioner as if it was filed within the due date and proceed further, in accordance with law.

Sd/- (S.R.KRISHNA KUMAR) JUDGE

BMC: List No.: 2 Sl No.: 76

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