Rajamahendri Educational Society V. The Union of India,

WP/11521/2020

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The case revolves around the petitioner's application for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961, which was initially rejected by the 2nd respondent on the grounds of being filed beyond the permissible time limit. The petitioner, an educational society, argued that their application was timely and pertained to the assessment year 2019-2020, despite the financial year 2018-2019 being mentioned in the Form 56D due to the timing of the application. The court found that the 2nd respondent misread the application and failed to consider it on merits, leading to the decision to set aside the rejection and direct a fresh consideration.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 688338 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 01-10-2020
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Applicant
• Court: HIGH COURT
• Department Lawyers: M KIRANMAYEE
• Assessee Lawyers: N VIJAY
• Keywords: Application rejection; Educational institution; Exemption; Financial year; Income Tax
• Section: 10(23C)(vi)

Judgement Text

"THE HON’BLE SRI JUSTICE C.PRAVEEN KUMAR AND THE HON’BLE SRI JUSTICE B.KRISHNA MOHAN WRIT PETITION NO.11521 OF 2020 ORDER: (per the Hon’ble Sri Justice Krishna Mohan) This Writ Petition is filed questioning the proceedings of the 2nd respondent in File No.CIT(E)/Hyd/10(23C)/46/2018-19, dated 23.03.2020 in not considering the application of the petitioner, dated 26.03.2019 for exemption under Section 10 (23C) (vi) of the Income Tax Act,1961 for the assessment year 2019- 2020. 2. Heard the learned counsel for the petitioner Sri N.Vijay and the learned Standing Counsel for the respondents Smt.M.Kiranmayee. 3. It is the case of the petitioner that the petitioner is an Educational Society running an educational college for Intermediate, Degree and Post Graduation courses for women at Rajahmandry in East Godavari District. The petitioner filed an application, dated 26.03.2019 seeking grant of exemption for the Assessment year 2019-2020, as the gross receipts of the petitioner exceeds Rs.1 Crore in the financial year 2018-2019 under Section 10(23C) (vi) of the Income Tax Act, 1961. 4. It is also the case of the petitioner that as per the provisions of Section 10(23C)(vi) of the Income Tax Act, 1961, when the aggregate annual receipts of an Educational Society of institution exceeds Rs.1 Crore in a financial year, then the said institution shall make an application to the prescribed authority i.e., the 2nd 2 respondent herein for grant of exemption. The due date for filing the application seeking exemption under the above said provision is on or before 30th September of the succeeding financial year. 5. It is also the case of the petitioner that while so, the 2nd respondent addressed a letter to the petitioner on 23.01.2020, directing the petitioner to appear before the authority on 12.02.2010 at 3.30 p.m., with all the relevant documents. Accordingly, the authorized representative of the petitioner appeared before the 2nd respondent on 12.02.2020 and furnished all the details as required by the 2nd respondent. The petitioner informed the 2nd respondent that since the application, dated 26.03.2019 was filed before the completion of the financial year 2018-2019 (01.04.2018 to 31.03.2019), the Form 56D filed, mentioned it as assessment year 2018-2019, but the information filed on the basis of estimated basis pertained to the financial year 2018-2019 only in order to consider the exemption for the assessment year 2019-2020 only basing upon the representation of the petitioner, dated 26.03.2019. The petitioner also informed that the Income Tax returns for the financial year 2017-2018 was filed and the assessment for the year 2018-2019 has already been completed. The petitioner also requested the 2nd respondent, vide letter, dated 13.02.2020 to consider the application of the petitioner, dated 26.03.2019 for exemption for the assessment year 2019-2020 covering the financial year 2018-2019. 6. It is the further case of the petitioner that the 2nd respondent once again addressed a letter, dated 28.02.2020, directing the petitioner to appear before him on 09.03.2020 at 11.00 a.m., 3 accordingly, the petitioner appeared before the 2nd respondent and submitted the required information. Subsequently, the 2nd respondent, vide proceedings in File No. CIT(E)/Hyd/10(23C)/46/2018-19, dated 23.03.2020, rejected the application of the petitioner for grant of exemption on the ground that the application was filed beyond the permissible time limit. 7. Sri N.Vijay, learned counsel for the petitioner contended that the application filed by the petitioner is relating to the assessment year 2019-2020 only and the information furnished in the personal hearing before the 2nd respondent was pertaining to the financial year 2018-2019. The petitioner seeks exemption under Section 10(23C)(vi) of the Income Tax Act,1961 for the financial year 2018- 2019 only. The Income Tax returns for the financial year 2017- 2018 was already filed on 17.10.2018 and the assessment was completed for the assessment year 2018-2019. The learned counsel for the petitioner further contended that since the application of the petitioner, dated 26.03.2019 is before the completion of the financial year 2018-2019 (01.04.2018 to 31.03.2019), the Form 56D enclosed with the said application though shown as for the year 2018-2019, it shall be construed as financial year only, but not the assessment year. It is also contended that the impugned proceedings of the 2nd respondent, dated 23.03.2020 is due to non-application of mind and non- consideration of the documents and the application filed by the petitioner. It is further contended that the exemption can be granted to an Educational institution, the moment the receipts exceeds Rs.1 Crore and as such, the exemption sought for is well 4 within the time and the 2nd respondent erroneously rejected the same as barred by time. 8. In reply to the same, Smt. M.Kirnamayee, learned Standing Counsel for the respondents contended that the impugned proceedings of the 2nd respondent, dated 26.03.2020 is a speaking order and it is just and proper. The petitioner has sought for approval under Section 10(23C)(vi) of the Income Tax Act,1961 for the assessment year 2018-2019 and the acknowledgement receipt for the said application was duly issued to the petitioner indicating that the application has been filed for exemption for the assessment year 2018-2019 and Form 56D specifically mentions that it was made for the assessment year 2018-2019. The petitioner also filed a letter, dated 13.02.2020, requesting the 2nd respondent to consider the application filed by him on 26.03.2019 in Form 56D for the assessment year 2019-2020 and in the absence of any specific provision under the Act, with reference to the same, the 2nd respondent has rightly rejected the request of the petitioner. She further contended that the petitioner should have filed another application for the assessment year 2019-2020 which would have been considered by the 2nd respondent. 9. Having regard to the facts and circumstances, it is to be noted that the 16th proviso to Section 10(23C) (vi) of the Income Tax Act,1961 prior to its omission by the Finance Act 2020 reads as follows: “Provided also that in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the first proviso makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be 5 made on or before the 30th day of September of the relevant assessment year from which the exemption is sought :”1 10. In this case, the petitioner made an application, dated 26.03.2019 seeking exemption under the above said provision furnishing the relevant information in Form 56D of the Income Tax Act for the financial year 2018-2019, to be considered for the assessment year 2019-2020 well before 30.09.2019, since its gross receipts exceeded Rs.1 Crore, by that time in the financial year 2018-2019 entitling for consideration of exemption in the assessment year 2019-2020 only. The 2nd respondent erroneously read for the year 2018-2019 as assessment year instead of financial year which was printed in Form 56D enclosed by the petitioner in the heading column of Form 56D. In all fairness, the 2nd respondent ought to have treated the application of the petitioner, dated 26.03.2019 for the assessment year of 2019-2020 only. 11. It is a well settled law that mere wrong quotation of law or non-mentioning of the relevant provision of law or a typographical mistake does not disentitle a person/individual/ an institution from any relief, if otherwise he or she/individual/institution is entitled to. 12. The 2nd respondent cannot desist from exercising his power by mis-reading on the face of it without going into the merits of the application of the petitioner and the documents furnished along with it in spite of giving personal hearing opportunity for the petitioner’s representative to represent his case, it is nothing but 1 Sixteenth proviso omi.by the Act No.12 of 2020, w.e.f 01.06.2020 6 non-application of mind and refusal to exercise his discretion, though obligated under law to pass an appropriate order on merits. Instead of suggesting to file a fresh application, the 2nd respondent ought to have considered the above said application of the petitioner, dated 26.03.2019 on merits by treating it for the financial year 2018-2019 and the assessment year 2019-2020 only instead of rejecting it as barred by time. 13. Therefore, we are of the considered view that the impugned proceedings of the 2nd respondent, dated 23.03.2020 cannot be sustained on any ground and as such, it is set aside. The application of the petitioner, dated 26.03.2019 and Form 56D submitted by the petitioner shall be treated for the financial year 2018-2019 in the assessment year 2019-2020 and the exemption sought for by the petitioner shall be considered afresh on merits as per law as expeditiously as possible, preferably on or before 31st day of December, 2020. 14. Accordingly, the Writ Petition is allowed. There shall be no order as to costs of the Writ Petition. Consequently, miscellaneous applications pending if any in the Writ Petition, shall stand closed. _______________________________ JUSTICE C.PRAVEEN KUMAR _______________________________ JUSTICE B.KRISHNA MOHAN Dated: 01.10.2020 MP "