LOYOLA HIGH SCHOOL,KOLKATA vs. ITO (EXEMPTION), WARD - 1(4), KOLKATA, KOLKATA
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Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Shri Rajesh Kumar
Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School Faceless Appeal Centre (NFAC), Delhi dated 30.05.2022 passed for A.Y. 2016-17.
The Registry has pointed out that the appeal is time barred by 24 days. In order to explain the delay, the assessee has filed an application and pleaded that the impugned order was passed by the ld. CIT(Appeals) and intimated to the assessee through e-mail. Due to communication gap between the ld. Authorized Representative, whose e-mail was mentioned in Form 35, vis-à-vis with the assessee, the assessee could not lay its hand on the impugned order well in time. Therefore, a brief delay of 24 days is being prayed for condonation.
On the other hand, ld. D.R. submitted that the assessee should be more vigilant with its tax litigation. The impugned order was duly served upon the assessee on the e-mail given before the ld. 1st Appellate Authority.
With the assistance of the ld. Representatives, we have gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Honble High Court as well as before the Honble Supreme Court, then, Honble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
"Every day’s delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
Similarly, we would like to make reference to authoritative pronouncement of Honble Supreme Court in the case of N. Balakrisknan Vs. M. Krishnamurtky (supra). It reads as under: “Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so 4
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.
We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions.
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School It is suffice to say that the Honble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the condonation of delay, then such reasons are to be construed with a justice oriented approach. 7. In the light of the above, we are of the view that while making this appeal time barred, the assessee will not gain anything. The delay has not been adopted by the assessee as a strategy to litigate with the Revenue. Therefore, we condone the delay in filing the appeal and proceed to decide the appeal on merit.
The assessee has raised four grounds of appeal, out of this Ground No. 4 is a general ground, which does not call for recording of any specific finding.
The grievances pleaded in Grounds No. 1 to 3 revolve around a single issue, namely whether assessee is entitled to accumulate the surplus fund under section 11(2) of the Income Tax Act or not.
Brief facts of the case are that the assessee has filed its return of income on 30.03.2017. The case of the assessee was selected for scrutiny assessment and notices under section 143(2) and 142(1) were issued and served upon the assessee. On scrutiny of the accounts, it revealed to the ld. Assessing Officer that though the assessee has filed Form No. 10 claiming benefit of accumulation under section 11(2) on 17.10.2016 i.e. before the due date of filing of the return under section 139(1), but the return was not filed
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School within the time limit provided under section 139(1). It was filed belatedly under section 139(4) on 31.03.2017. The ld. Assessing Officer took cognizance of section 11 and observed that the assessee failed to fulfil the twin conditions, i.e. submission of Form No. 10 as well as filing of the return within time limit under section 139(1) of the Income Tax Act. Therefore, the assessee is not entitled for the benefit of accumulation under section 11(2) of the Income Tax Act. In this way, ld. Assessing Officer has disallowed the claim of the assessee.
Appeal to the ld. CIT(Appeals) did not bring any relief to the assessee.
Ld. Counsel for the assessee, at the very outset, submitted that CBDT has condoned the delay in filing Form No. 9A and 10 as well as filing of the return within the due date for three Assessment Years, i.e. 2016-17, 2017-18 and 2018-19. He drew our attention towards CBDT Circular No. F. No. 197/55/2018- ITA-1 dated 19.02.2020. According to him, the Circular No. 6 of 2020 contemplates that if delay in filing the return under section 139(1) has occurred, that delay is to be condoned by the authorities and benefit of accumulation is to be granted.
On the other hand, ld. D.R. submitted that as per Section 119(2)(b), the assessee ought to have approached ld. Commissioner for condonation of delay in filing the return and thereafter benefit of section 11(2) would be granted to the assessee.
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School 14. We have duly considered the rival contentions and gone through the record carefully. Section 11(2) would contemplate that where 85% of the income referred to in Clause (a) or Clause (b) of sub-section (1) read with Explanation is not applied or is not deemed to be applied to Charitable or religious purposes, then, the assessee could set apart either in whole or in part the income for future application on the objectives of the Society/Trust. In order to avail this benefit for future application of the income, assessee has to make deposits. It was required to submit Form No. 10 to the ld. Assessing Officer. It has to file return under section 139(1) within due date. This claim of the assessee was rejected by the ld. Assessing Officer on the ground that the assessee failed to file the return within the due date provided under section 139(1) of the Income Tax Act. However, we find that CBDT has considered this aspect in Circular No. 6 of 2020, which reads as under:-
“Circular No. 6 /2020 F. No 197,55/2018-ITA-I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, the 19 February. 2020 Sub. Condonation of delay under section I 19(2 Rh) of the Income tax Act. 1961 in filing of Return of Income for A Y 2016-17, 2017- 18 and 2018 19 and Form No 9A and Form No 10-Reg. Representations have been received seeking condonation of delay in filing Return of Income by the Charitable Institutions for the Assessment Year 2016-17 onwards on the grounds of hardship. The Board has issued Circulars authorizing the Commissioners of Income lax to admit belated applications of Form 9A and Form 10 and to decide on merit the condonation of delay u/s 119(2)(b) of the Income-tax Act, 1961 (Act) However, in those cases where the Income Tax Returns have also been filed beyond the due date presented under section 119( 8
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School 1 ) of the Act the condonation of delay in filing of Form 9A & Form 10 by the Commissioners is not of any help to the assessee as section 13(9) of the Act, inserted w.e.f. 01.04.2016, stipulates twin conditions of filing of Form 9A/ Form10 and also of filing Return of Income before the due date. 2. Accordingly, in continuation of earlier Circulars issued in this regard, with the view in prevent hardship to the assessee and in exercise of powers conferred under section 119(2)(b) of the Act, the CBDI has decided that where the application for condonation of delay in filing form 9A and Form 10 has been filed, and the Return of Income has been filed on or before 31st March of the respective assessment years i.e. Assessment Years 2016-17, 2017- 18 and 2018-19, the Commissioners of Income Tax (Exemptions) are authorized u/s 119(2)(b) of the Act to admit such belated applications for condonation of delay in filing Return of Income and decide on merit. 3. For all other application for condonation of delay not mentioned above, the power of condonation of delay u/s . 119(2)(b) of the Act will continue with the respective authorities as per the extant Rules and Practice.
Sd/- 19.02.2020 (Gulzar Ahmad Wani) Under Secretary (ITA-1)”.
Ld. Counsel for the assessee also drew our attention towards the judgment of the ITAT, ‘SMC’ Bench, Delhi in ITA No. 2161/DEL/2022 in the case of Conference of Religious India-vs.- Ward Exemption 1(3), New Delhi, where identical situation arose and the Tribunal has allowed accumulation of income to the assessee. He placed on record copy of the Tribunal’s order.
On due consideration of the above facts and circumstances, we are of the view that the claim of the assessee falls within the ambit of Circular issued by the CBDT and it is to be construed that the delay in filing the return is to be condoned and if the delay in filing the return is condoned, then, the assessee would fulfil all
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School ingredients of section 11(2) for claiming accumulation. In other words, it has filed form 10 within due date of filing return u/s 139(1). This is the first condition. The second condition is that return should be filed within due date u/s 139(1). This delay stands condoned by the above Circular. Therefore, it is to be treated in time. This exhibits that both conditions are fulfilled. Therefore, accumulation is to be allowed. In view of the above, appeal of the assessee is allowed. The ld. Assessing Officer is directed to give benefit under section 11(2) of the Act to the assessee of accumulated funds submitted in Form No. 10.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 20/03/2024.
Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 20th day of March, 2024
Copies to :(1) Loyola High School, C/o. Subash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata-700069
(2) Income Tax Officer (Exemption), Ward-1(4), Kolkata, 10B, Middleton Row, Kolkata-700071 (3) Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi;
ITA No. 472/KOL/2022 (A.Y. 2016-2017) Loyola High School
(4) CIT- , Kolkata (5) The Departmental Representative; (6) Guard File TRUE COPY By order
Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.
