KERALA BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE BOARD V. UNION OF INDIA

WP(C)/29554/2023

AI Insights

The Kerala Building and Other Construction Workers Welfare Board, represented by its Secretary, filed a writ petition against various respondents including the Union of India and the Commissioner of Income Tax, challenging the orders and notice related to the Assessment Year 2014-15. The petitioner, a fund established under the Kerala Rules to support construction workers, was assessed to tax despite being exempt under Section 10(23C)(iv) of the Income Tax Act. The core issue revolved around the incorrect application of circulars regarding the condonation of delay in filing an audit report in Form No.10BB, which led to the rejection of the petitioner's rectification application. The court found that the Commissioner had relied on an incorrect circular and thus remanded the matter for a fresh decision based on the correct circulars.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 688549 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 16-10-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: KURYAN THOMAS; M GOPIKRISHNAN NAMBIAR; K MATHAI; JOSON MANAVALAN; PAULOSE ABRAHAM; RAJAN KANNAN
• Keywords: Audit report; Condonation of delay; Form No. 10B; Form No. 10BB; Income tax exemption
• Section: 250; 154; 143(1); 119(2)(b); 139(9); 10(23c)(iv)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 16TH DAY OF OCTOBER 2023 / 24TH ASWINA, 1945 WP(C) NO. 29554 OF 2023 PETITIONER: KERALA BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE BOARD, NIRMAN BHAVAN, METTUKKADA, THYCADU P. O., THIRUVANANTHAPURAM, PIN – 695014, REPRESENTED BY ITS SECRETARY. BY ADVS. SRI. KURYAN THOMAS SRI. M. GOPIKRISHNAN NAMBIAR SRI. K. JOHN MATHAI SRI. JOSON MANAVALAN SRI. PAULOSE C. ABRAHAM SRI. RAJA KANNAN RESPONDENTS: 1 UNION OF INDIA, REPRESENTED BY ITS REVENUE SECRETARY, MINISTRY OF FINANCE, NEW DELHI, PIN – 110004. 2 COMMISSIONER OF INCOME TAX (EXEMPTION), AAYKAR BHAVAN, OLD RAILWAY STATION ROAD, KOCHI, PIN – 682018. 3 THE ASSISTANT COMMISSIONER OF INCOME TAX, EXEMPTION CIRCLE, AAYKAR BHAVAN, 1ST FLOOR, KAWADIYAR P. O., THIRUVANANTHAPURAM, PIN – 695003. 4 THE CENTRALIZED PROCESSING CENTER, INCOME TAX DEPARTMENT, REPRESENTED BY DEPUTY COMMISSIONER OF INCOME TAX, POST BAG NO.2, ELECTRONIC CITY POST OFFICE, BANGALORE, PIN – 560500. 5 THE CENTRAL BOARD OF DIRECT TAXES, REPRESENTED BY ITS CHAIRPERSON, DEPARTMENT OF REVENUE-MINISTRY OF FINANCE, NEW DELHI,PIN – 110001. 6 THE COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI, WP(C) NO. 29554 OF 2023 2 C-BLOCK, 4TH FLOOR, S.P. M. CIVIC CENTER, NEW DELHI, PIN – 110001. BY ADV. SRI. CHRISTOPHER ABRAHAM – SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 29554 OF 2023 3 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No.29554 of 2023 ------------------------- Dated this the 16th day of October, 2023 JUDGMENT 1. The present writ petition has been filed by the petitioner for the following reliefs; (i) call for the records relating to Exts. P5, P11, P16 and P20 Orders and Ext. P22 Notice, issued to the petitioner, and quash the same in for as it relates to the Assessment Year 2014-15, by the issuance of a writ of certiorari or such other writ, order or direction; (ii) issue of writ of mandamus or such other order, writ or direction, commanding the 2nd respondent to forbear from taking further steps against the petitioner on the basis of Exts. P5, P11, P16 and P20 orders and Ext. P22 Notice in for as it relates to the Assessment Year 2014-15; (iii) grant such other identical reliefs as this Honourable Court may deem fit and necessary on the facts and circumstances of this case. 2. The petitioner is a fund established by the State Government under Part V (Chapter XXXI) of the Building and Other Construction Workers (Regulation of Employment and Condition of Service) Kerala Rules, 1998. The fund has been established by the petitioner WP(C) NO. 29554 OF 2023 4 Board to look after the welfare of building and other construction workers in the State of Kerala. Petitioner is an assessee under the provisions of the Income Tax Act, 1961. The petitioner has been approved as a fund falling under Section 10 (23C) (iv) of the Income Tax Act by the Chief Commissioner of Income Tax, Thiruvananthapuram and has been issued order in Exhibit P-1 dated 18.08.2010. The petitioner filed return of its income for the assessment year 2014-15 declaring NIL taxable income. After filing the return, on 08.10.2015 the petitioner received a notice under Section 139 (9) of the Income Tax Act informing that the return filed by the petitioner was defective one. It was said that the details of the fund was not property filled up in Schedule – J of the return of income. The petitioner responded to the said notice and filed fresh return incorporating the Schedule – J. The petitioner’s return was scrutinized and entire income of the petitioner was assessed to tax without considering the exemption available to the petitioner under Section 10 (23C) (iv) of the Income Tax Act. The petitioner filed rectification application on 03.01.2017. During the rectification proceedings, the petitioner was informed orally that audit report filed by the petitioner along with the return in Form No.10B as against From No.10BB. On receiving the said information, the WP(C) NO. 29554 OF 2023 5 petitioner filed audit report in Form No.10BB. However the contents of the earlier audit report and the subsequent audit report filed in From No.10B and Form No.10BB respectively were one and the same. The 3rd respondent however rejected the application for rectification under Section 154 of the Income Tax Act on the ground that the rectification could have been considered only if the delay in Form No.10BB was condoned by the Commissioner of Income Tax as provided under Section 119 (2) (b) of the Income Tax Act. After receiving the Exhibit P-11 order dated 15.11.2021, the petitioner preferred an application before the 2nd respondent requesting for condone the delay in filing the audit report in Form No.10BB. The Commissioner of Income Tax vide Exhibit P-16 order dated 06.09.2022 found the reasons stated by the petitioner for delay in filing the the audit report in Form No.10BB is genuine and stake bonafide mistake. However, relying on the CBDT Circular 9/2015 dated 09.06.2015 was of the opinion that condonation application dated 21.12.2021 was barred by limitation of six years. As the refund in the case was more than Rs.10,000,00/- (Rupees Ten Lakh only) and therefore it was beyond the power of the Commissioner of Income Tax to condone the delay in filing the audit report in Form No.10BB. WP(C) NO. 29554 OF 2023 6 3. The Learned Counsel for the petitioner submits that the 2nd respondent Commissioner has placed reliance on the wrong Circular (Exhibit P-17), which is in respect of refund of the loss. He submits that the correct Circular is Exhibit P-18 Circular No.19/2020 dated 03.11.2020, which is in respect of delay in submitting audit report in Form No.10BB. Learned Counsel for the petitioner submits that Exhibit P-18 Circular dated 03.11.2020 provides that in all cases of belated applications in filing of Form No.10BB for years prior to assessment years 2018-19, the Commissioner of Income Tax is authorised to admit such such applications for condonation of delay under Section 119 (2) (b) of the Act. The said Circular does not provide any limitation of time for preferring the application for condonation of delay in respect of filing in Form No.10BB for the assessment years prior to 2018-19. He further submits that the said Circular has been reiterated in Circular No.15/2022. It is therefore submitted that the order impugned in Exhibit P-16 is liable to be set aside and the matter may be remanded back to the jurisdictional Commissioner to apply the correct Circular and pass a fresh order. 4. Mr. Christopher Abraham, Learned Standing Counsel for the Revenue does not disputed that the correct Circulars are Circular WP(C) NO. 29554 OF 2023 7 No.19/2020 dated 13.11.2020 (Exhibit P-18) and Circular No.15/2022 dated 19.07.2022 (Exhibit P-19). Exhibits P-18 and P-19 Circulars has been issued specifically in respect of condoning the delay in filing in Form No.10BB under Section 119 (2) (b) of the Income Tax Act. Paragraph 3 of Circular No.19/2020 dated 13.11.2020 on reproduction read as under; “4. Accordingly, with a view to expedite the disposal of applications filed by such entities for condoning the delay and in exercise of the powers conferred under section I 19(2) (b) of the Act, the Central Board of Direct Taxes hereby directs that: (i) In all the cases of belated applications in filing of Form No. 10BB for years prior to AY. 2018-19, the Commissioners of Income-tax are authorized to admit such applications for condonation of delay u/s 119(2)(b) of the Act. The Commissioner will while entertaining such applications regarding filing Form No. 10BB shall satisfy themselves that the applicant was prevented by reasonable cause from filing such application within the stipulated time. Further, all such applications shall be disposed of by 31.03.2021. (ii) where there is delay of upto 365 days in filing Form No. 10BB for Assessment Year 2018-19 or for any subsequent Assessment Years, the Commissioners of Income-tax are hereby authorized to admit such belated applications of condonation of delay under section WP(C) NO. 29554 OF 2023 8 119(2) of the Income-tax Act, 1961 and decide on merits.” 5. Considering these circumstances, it appears that the Commissioner has committed mistake relying on Exhibit P-17 Circular 9/2015 dated 09.06.2015 instead of Circular No.19/2020 dated 13.11.2020 (Exhibit P-18) and Circular No.15/2022 dated 19.07.2022 (Exhibit P-19). Thus the present writ petition is allowed and the matter is remitted back to the 2nd respondent Commissioner to decide the application of the petitioner afresh by applying the correct Circular and pass fresh order. 6. Till a decision is taken by the Commissioner on remand, recovery notice Exhibit P-22 shall not be enforced. The Commissioner shall take the decision on the application of the petitioner within a period of one month from today. With the above directions, the present writ petition is finally disposed of. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 29554 OF 2023 9 APPENDIX OF WP(C) 29554/2023 PETITIONER’S EXHIBITS EXHIBIT P1 A TRUE COPY OF THE PROCEEDINGS BEARING F.NO.280/EXEMP/CC-TVM/13/2009-10 DATED 18.08.2010, ALONG WITH THE TYPED COPY OF THE SAME EXHIBIT P2 THE TRUE COPY OF THE ACKNOWLEDGMENT FOR HAVING FILED THE RETURN OF INCOME DATED 25.04.2015 EXHIBIT P3 A TRUE COPY OF THE NOTICE UNDER SECTION 139 (9) DATED 13.09.2015 ALONG WITH TYPED COPY EXHIBIT P4 A TRUE COPY OF THE RELEVANT PAGES OF THE RETURN DATED 17.10.2015 EXHIBIT P5 A TRUE COPY OF THE INTIMATION UNDER SECTION 143(1) DATED 05.01.2017 EXHIBIT P6 A TRUE COPY OF THE PROOF OF HAVING FILED THE RECTIFICATION REQUEST DATED 03.01.2017 EXHIBIT P7 A TRUE COPY OF THE REQUEST DATED 30.01.2018 FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT EXHIBIT P8 A TRUE COPY OF THE REMINDER DATED 20.06.2019 FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER EXHIBIT P9 A TRUE COPY OF THE REQUEST DATED 24.03.2021 FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER EXHIBIT P10 A TRUE COPY OF THE LETTER DATED 06.10.2021 ALONG WITH AUDIT REPORT IN FORM NO. 10BB FILED BEFORE THE 3RD RESPONDENT BY THE PETITIONER EXHIBIT P11 A TRUE COPY OF THE PROCEEDINGS UNDER SECTION 154 DATED 15.11.2021 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER WP(C) NO. 29554 OF 2023 10 EXHIBIT P12 TRUE COPY OF THE APPLICATION FOR CONDONATION OF DELAY DATED 17.12.2021 FILED BEFORE THE 2ND RESPONDENT BY THE PETITIONER EXHIBIT P13 A TRUE COPY OF THE NOTICE DATED 28.02.2022 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER EXHIBIT P14 A TRUE COPY OF THE LETTER DATED 08.03.2022 (WITHOUT ANNEXURES) FILED BY THE PETITIONER EXHIBIT P15 A TRUE COPY OF THE WRITTEN SUBMISSION DATED 08.03.2022 FILED ALONG WITH EXT. P14 LETTER EXHIBIT P16 A TRUE COPY OF THE ORDER DATED 06.09.2022 PASSED BY THE 2ND RESPONDENT UNDER SECTION 119(2)(B) OF THE ACT EXHIBIT P17 A TRUE COPY OF CIRCULAR 9/2015 DATED 09.06.2015 ISSUED BY THE 5TH RESPONDENT EXHIBIT P18 A TRUE COPY OF CIRCULAR NO. 19/2020 DATED 03.11.2020 ISSUED BY THE 5TH RESPONDENT EXHIBIT P19 A TRUE COPY OF CIRCULAR NO. 15/2022 DATED 19.07.2022 ISSUED BY THE 5TH RESPONDENT EXHIBIT P20 A TRUE COPY OF THE ORDER UNDER SECTION 250 OF THE ACT DATED 16.02.2023 PASSED BY THE 6TH RESPONDENT EXHIBIT P21 A TRUE COPY OF FORM NO. 10B DATED 24.04.2015 EXHIBIT P22 A TRUE COPY OF THE NOTICE DATED 25.08.2023, ISSUED BY THE 3RD RESPONDENT EXHIBIT P23 A TRUE COPY OF THE REPLY ALONG WITH ACKNOWLEDGMENT FOR HAVING UPLOADED IN THE PORTAL "