AI Insights
The case involves M/s Shilparamam Arts, Crafts & Cultural Society, Hyderabad, which filed a writ petition against the orders of the Income Tax Department concerning the rejection of their application for condonation of delay in filing Form 10B for the assessment year 2017-18. The petitioner argued that the delay was due to technical issues and that the filing of the audit report in Form 10B is directory and not mandatory. The Income Tax Department contended that notices were duly served and the application for condonation of delay was rightly rejected. The court examined the merits of the case, considering the submissions and the relevant legal provisions, and decided in favor of the petitioner.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 819887 (HC-TELANGANA)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
24-11-2023
Assessment Year
misc
Judgement Text
"[ 337s I HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Origanal Jurisdiction) FRIDAY, THE TWENTY FOURTH DAY OF NOVEMBER TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITION NO: 31360 OF 2023 Between: M/s Shilparamam Arts, Crafts & Cultural Society, Hyderabad, Survey No.64M, Shilparamam, ftIadhapur, Hyderabad - 500 033, Telangana. Represented by its General Manager, Mr. G.Anjaiah, S/o Mr. G.Gangaram. .....PETITIONER AND 1. Additional / Joint / Deputy / Assistant Commissioner of lncome Tax /lncome Tax Officer, , National Faceless Assessment Center / National e-assessment Center, New Delhi, Room No.401, 2nd Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 1 10 003. 2. The Commissioner of lncome Tax, (Appeals), National Faceless Appeal Centre (NFAC), lncome Tax Department, Delhi - 1 10 003. 3. The Commissioner of lncome-Tax, (Exemptrons), Andhra Pradesh, Telangana and Odisha,2\"d Floor, Aayakar Bhawan, Opposite LB Sladium, Basheerbagh, Hyderabad - 500 004. .....RESPONDENTS Petition Under Arlicle 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ of Mandamus or any other appropflate Writ, Order or Direction, declaring, that. a. the order dated 31-07 -2023 (not served on the Petrtioner till date), passed by the 3'd Respondent, rejecting the petition filed by the Petitioner for condoning the delay, in filing Form 108, for the Assessment Yea( 2017 - '18, and b. tlre order dated 01-06-2023 (not served on the Petitioner till date), passed u/s 250 of the lncome Tax Act, 196'l . bearing DtN and Notice No.lTBA/NFAC/ Sl25Ot2023-2411053384545( 1), by the 2\" Respondent, for the Assessment Year ?017-18, as arbitrary, mechanical, illegal, bad in law, violative of the principles of natural iustice apart from being violatlve of Articles 14, 19(1)(g) and 265 of the Constitutron of tndia and the lncome Tax Act, 1961. and consequently set astde the same tn the interests of justice. l.A.NO:1 OF 2023 Petrtion under section 151 cpc praying that in the circumstances stated in the affrdavit filed in support of the petitton. the High court may be pleased to stay all further proceedings, rncluding any recovery, pursuant to the order dated o1-06-2023 (not served on lhe Petrtioner trll date), passed u/s 250 of the lncome Tax Act. 1961 bearing DIN and Notice No.lIBA/NFAC/S/250/2023-24t1o53384s45(1), by the 2\"d Respondent, for the Assessment Year 2017 - 18, pending disposal of the above writ petition Counsel for the Petitioner : SRI A.V.A.SIVA KARTIKEYA Counsel for: the Respondents : SRI A.RAMAKRISHNA REDDY The Court made the fo owing ORDER THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE N.TUKARAIUJI WRIT PETITION No.3136O of 2o23 ORDER Itt'r [1ott ltle .Srr , /rrst rcc P.S,Al]f KOSIIYT 'lhe prcsent writ pctition is frlcd tl thc pctitioncr assailing the impugncd order dated 31.O7.2023 passcd by the respondent a.i n No.3/The Commrssioncr of Income-Tax (Exemptions) and the subsequent consequential orders passcd thereon- 2. Hcard Sri A.V.A. Siva Kartikeva, leilrned counsel lor the petitioner and Sri A. Ramakrishna Rt:ddr,, lcarrncd counscl for the respondcn t- Dcpartm(in t 3. Vide thc said impugned order, the respondent No.3 had rejected application for conrionaLion of de la! in filing F-me Tax (Appeals). The responclent No 2 had issucd ..ticc on the said appear and the mattcr is still under co.rsidt'ration before thc respondcnt No.2. While the matter ,as scizcd bi' tltc rcspondent No.2. thc petitioner filed an application 3 belore rhe IOB lor thc Asscssrncnt year 2017_lg 7. [t u,as the further conten tion o[ the learned counsel for the respondent No.3 on 14.O.2.2023 liling the audir rcporl in F-orm [o condone the dclav in of procecdings so far as denial of of the Act. It is this application for pcurloner that non filing of the audit report in Form IOB u,ould not be so fatal requrring initiation cxemption under Section I I cor-rdonation of delay in filing of the audit report which stands rejected vide the impugned order dated 31.O7.2023 which rs under challenge in the present writ petition. 8. The contention of the learned counscl lor the petrtioner all along u'as that filing of the audit report in Form l0B is only a directory and not mandatory in nature. Non-filing of the same cannoI be fatar to the excmprion which the petitioner is otherwise entitled under Section l1 ol the Act. it was further contended there was no as such a default on the part of the petitioner except fcrr the fact that the audit report could not be brought on record. According to the learned counsel for the petitioner, there is no clispute to the fact that within the prescribed period itserf the petitioner had submitted returns and even the audit reporr ^'as prepared in time i.e. on 2O.O9.2O17 Because of technical with the authorities reasons, rt could not be uploaded and filed cotlcerned and the same was ultimatel], uploaded on 1O.04.2019. The lact that it was uploaded on 10.04.20 19 gccs to sho$,. that uploading of thc audit report ras done about 2.5 years bcrore the assessment 4 order 'as passccl and Lhe same also stood uploadecl u'el[ before the 24 .og .2021. In the grven assessmcnL order as passed on circumstances t'1k111!l tnLo consideration the provlstons of the audit rePort of Section i 19(2)(b) of the Act' the authoritY concerned ought to have taken a liberal approach ancl should have condoned the delay caused in filing g. . According to the learned counsel ior the petitioner' the impugned ordcr p:tsscd bl thc respondcnt No 3 is totally arbitrary' q,ithout propcr:rpplir:ation oI mind ancl bcing passed in a mechanical manner. lt n'as spccifrcall1' contended that the aulhority concerned has not dealt u'ith it ln any manner or discussed upon any of the groundsraiscdintheapplicationunderSectionllg(2)(b)oftheACt. For the said reasot.t, thc pra]'cr o[ the pctitioner was for issuance of an appropriate Writ in the nature of Mandamus declaring the impugned order clated 31 07'2023 rejecting the application under Section 1 19(2)(b) o[ the Act to be arbitrary' bad in law and for an appropriale direction to holci lhat the consequential decisions taken also to be bad in law. tn support ol his contentions' learned counsel for the petitioncr relied upon the decisions in the case of MADHU DADHA vs' ASSISTANT COMMISSIONER OF INCOME Td(l' COMMISSIONER OF CUSTOMS {IMPORTI, MUMBAI VERSUS M/S. DITIP KUMAR '1zoos1:rz ,TR 4s8 (Nrad) 5 AND COMPANY & ORS.2 so also the case of M/s. Myadam Kishan Rao Charitable Establishment vs. The Commissioner of Income Tax (Exemption)3 of tt-ris Court on the questron of alternative remedy. 1O. Per contra, Iearned counscl for the respondent-Department re fcrring Lo the assessme nt order dated 24.O9 .2021 for thc Assessmcnt Ycar 2Ol7-18 contended that the petitioner lYas issued u'ith thc. noticcs at every stage of the proceedings. In addition, apart Irom issuzrnce and serving of notices through e-mail through thc Incomc'l'erx Busincss Application (ITBA) portal, all these notices were also rssr-rcd and served upon the petitioner through speed post. Thus, thc contcntion o[ the petitioner that they are not being served cffcctivelv is not worth accepting and is far from truth deserving rele( ti{)r'r ,rl the said contcntion. 11. It u'as the contention o[ the learned counsel lor Lhe respondent- Dcpartmcnt that the pctitioncr n'as issucd and served with thc noticcs both elcctronicatly and also physically and if the petitioner chose not io contest the case or to respond to any of the notices so issued. the petitioner cannot be permitted to agitate the same at this belated stage and having done at this inordinately belated stage without any justil-rczttion and plausible explanation, the respondent-Department ' CIVIL APPEAL NO.3321 ol 2OO1 ot Supreme Court of lr'ldra 'WP 24005 of 2023 dated 30.08.2023 ot High Court for the Sta(e of lelangana - 6 cannot bc blamed [r;r having rr. jt:ctccl the application for condonation oI delal'. 12. Learncd counst'l lirr rhc rcspondent-Dcpartmcnt rcferring to the impugned ordr)r conrcrtrlcd thzrt the :ruthoritl. concerned has rightl1,. considercd thc application on irs ou'n mcrits and keeping in view the circulars ol the (]o'ernn)('lrt oI I,rlia so lar as delay and condonatron of delay is concerned arrd thc impugned order cannoL be found fault with. In the atrsencc ,[ zrnr represcntation by the petitioner before the authorit]' concerncd ancl etlso in the absence o[ anv response lrom the petitioner side and arso rr ithour rhere being e nough materiars available for thc authorirr c()ncerned, they could not have done anything but u hat has becr-r clone rvhile dismissing the application undcr Section I19(2)(b) ol rirc Acr. According to the learned counsel lor the respondcnt l)cpartntcnr, the pctitloner had ample opportunity if he wanted to upload or made ar.ailable the audit report ancl having not done so goes ro establish the lact that the petitioner has deliberately not shou.r.r ar-N. kecn interest on the proceedings so drau,n. Thus, hc,\"r'ould n.r bc c'rtitlccl for any sympathetic treatment or a._vthrng as slrch. Firr thc :rhrrcserid rcason, the learned counsel for the responde'n t- Depart mcnt pra'cd for rejection of thc writ pe[ition holding it ro bc dt.void ,,f mt'rirs. 13. Lcarncd counscl lrrr thc rcspondcn r_ Departmen t in support of his contentiorrs had rt:li.d lrpot-l th. dccisions in thc cascs o[ 7 ASSISANT COMMISSIONER (CT) LTU, KAKINADA Versus GLAXO SMITH KLINE CONSUMER HEALTH CARE4 and yet another decision of thc Division Bench of this Court in M/s' Zoos and Parks Authority of Telangana vs' The Commissioner of Income Tax (Exemptionsls to bc adoPted in an appropriate case t4.Har,inghcardLheContentionsputrorthoneithersideandon perusal or records, lor proper adjudicating thc dispute raised in the presenI u,rit petitiolr, it u'ould be relevant at this juncture to take no[e of the contents ol thc impugncd order itself which for ready relerence is reproduced hercin under: \" With refcrencc to the assessee's application for condonation of delaf in filing Form I0B tor the A-Y 2017- I8' citcd undc. rclercttcc I above, it is to state that the assessee nor- nt..t l'u.- I0B bclatedly The assessee .has been ..qr..t.a lo tlrnisl.r ccrtain information vide above cited ;;i;.;;\"\" 2. justrlving its application ror condon-ation of delav t-torr'.t\".. th. ,..\"t... has not submitted sufl-rcient reason *hi.h p.\".'\",,,\"d rhc assessec trom hling the same' within the due date. As per Board's circular' \" The Commissioner of ..lnc.ome-tax are authirized lo adml and dispose off such app.lications for ,inAiiation of delay u/s.119(2)(b) of the Act v'rhere' lhe assessee iit -pir\"nt\"o by 'reasonabie' cause from filing such application wlhin the stiqulated time is hcrcbl rejected ' (:o2ol l9 suP,e.e court cd c) b8l 'wp 879a of 2023 dated 04 04 2023 of High Cou(t for the State of TelanBana ln view o[ above reasons, it is conc]uded- that the applicatior.r filed b1' the irssessee for condonation of delay u/s ;i6irIb) in titing horm loB for the assessment vear 2ol7-18 --- E ll ive look into the contents of thc zrbor.c szrid impugned order, what is apparentll-reflected is that rltc impugrrcd ordcr is cryptic. Crvptic to the cxtent that thc rtrdcr is toIi.tlh unrc:rsonccl ancl notr-speaking order. 15. Further to deal r,r,it h issr-tr'. it r.oulcl nou, be necessarv to take note of the statuton' pro'isi.ns clc:rli.g * ith thc condonation of delay which stands decided lt_r. thc rcsponrlc.t-Dcpartmcnt and u,hich is under challcngc in thc prcscnr .nL pctirion. Scctron 1lg(2)(b) of the Act empo,r'e.s the Commissi,nc.r to elltcrtain an application for condonation .[ delay whicr'r rcr r r.trd-r rr.rcrence is being reproduced herein under: \"Section 119(2[bl Thc f]oarcl rn:l.. i[ considers it desirable or expcdicnt so to clo lrrr;noi<1ing gcnuutc hardship. In any casc or class of cases .llt qcrrcral or- spccial order, authorise any income-ta-'i aurhoritr'. to admit an application or clalm for aly excmption. decluction. refund or any other relief under this Act after the c pin,of the period specified under this Act for making strch altplication or claim and deal with the same on merits in accordancc urth la,a,.,' A plain readir-rg of the afore said pro'isior.r oI lau. r,r,ourd clearry indicate that the intention of the framcrs of rhe la*' 4'as to provide a libera] approach rt,herc the rc is a dclar ocr-ur.rt.cl. What rs necessary to be considered at rhis juncturc :rlscr is ritc [act that the petitioner is a registered establishme,t under Sccti.r.r lf A or the Act. section 12A of the Act provid,.s li]-x ex(.mpti{)n to r.1111;j1.,1r1.. trust lhat is registered u'ith thc lncome Ta_r Dcpartmcn t. So [:rr as registration is concerned, I there no quarrel oo the s;1ry1g. The dispute in the present case is only in respect of the assessment order for the Assessment year 20lZ_lg. 16. The admittcd facrLl2l rn:l1p'x lrom thc facts of the case is that the return of income rr as fllccl b,r. rhe petitioner lbr the Assessment Year 2017-18 on 02_ I l.20t7.I3etore tiling ot the said return irself, the accounts of the pctition(,r .crc got audited and the audit report was prepareQ well in rime on 2O.Og.2Ol7. return was on or before 3l_10.2017 an The due dare for filing of the d the petitioner herein drd file his return on 31.1O.2Oll Hor\"r.ever, on account of certain defects u'as returned and revised return was filed on detectcd, the same 02. 1 1 .2017 Th submitred within the time. Howevgl, there was a rcquirement lor uploading of the audit report e audit report mcanr hilc lr.:rs uploaded though at a belated stage Thus, the reIurn stands noncthclcss thc uploading of the audit report . .,as .r'ears) the assessment order dated is in this factual backdrop that the on 21.02.2019, much before (be fore 25 24.O9.2021 was passed. It application for condonarion of delay filed by the petitioner ought to have been de cidcd b_r,. Ihe au thoritv concerned 17. Now if u,e look inro the s[:lLuton. provisions, what is reflected is that the provisions under Secrion t 19(2)(b) has been enacted with a specific purpose empou,ering thc allthorities concerned to condone the delay on the pzrrt of thc assessee in furnishing or in submitting of the returns or an approprlare irpplication ,r.ithin a reasonable period of time. The s period o[ time needs to be hled The said Provlston that genuine hardshiP t'hich an aid provision of lau' does not provide srithin rvhich the appiicarion for cond 10 Court of Gujarat has occurred and for anl' sPecific onation of delaY an approPriate has:rlso been enacted [o ensure assessec mzrr facc czrn be avoidcd by condoning the delaY if anY that application seeking for condonation of dclal is tiled in the case ol Satoodaga 18. The High Clnd;d:to;bte Trust similar issue unde held as under: 1). Income Tax OJJicer' (Exemption)6 deaiing with r the provisions ol laq 1l1 paragraph Nos 3 1 and 32 .31.Havingci*\":1,-.*'-\".\"':iili'ili.:1.'^\",il:'},\",i;1\".'.T'l aspects of the matter' *.\" lj.\"rn;,,,n lre cqrritirus. balancing it,. .r..= of thc Pre-sen1,]t11,n,ir\"r,,,o lrberall speaking. the ard 1 udiciou s. T:tl\"lL''-i ii,'-i, i,\"\"i.-, i\",,|,,,,' q r he cxemption rcsptndent no 2 mrghl. o\".' , - -..r-.. !;, o *rr, h cond.nation unic. s..tion l2 \"l lh\" l:,1. ? n;i,i,: '.i,.;rdbt(.-rrusr past ipotll?i\"J;.tll i.l,-Xiiiii' ;'\"'ri\"'' r\"' on d It io n ror availins iJ Jn ?*. oi,\"n'n o' rd'l!\"lli, \" :l il i| ll;'i[,\".'I;;:';: :::,j.f..':'Xl'jij:?:,' fi '#' ;:i'\" .'' \"'' u\" a o'i\" su ch derav ir'l- tt .,,-,tt-totities concerned 32. we mav .r\"9 ::l:','3-'li.l\":l'';.,1' 1l$'.i\"rti \"+fTr? Gujarat oil and 1:\"\",1 '::o rhar rhe provision reg-archng ffi#;;' #\".Tli'it'\"i]\"ilin in'' \" i*'.''t.'\"' to be tre'a ted as \"'' p.... a'.,. \"t- p')l': ^ t :..i :,0; t'.'ir.;,:: t i:'ii'rl*\"\"T:,il: lXL=13\"'fl\"0\",Ii'iffi.X;','; u'Ji' '\"po,.' arong wilh the return of incomc but ftoa\"t\"a thc same ' bel?re the completion of the asscssm!\"i ff-'it Collrt took the view that the bencfit oI exemptror.l should not be denicd merely on accour-rt or delay in furnishing thc same and it is permissible u [ZOltl iZq taxrnann com 75 (GujaraL) 71, for the assessee to produce the auclit rcport at a later stagc either before the lncome-tas Offir:cr or before the appellate authoritv bv assigning sufllcicnt <:ause.' 19, The High Court ol (iularar lurthcr in the case of COMIITISSIOJVER OF INCOME-TAX u. GUJARAT OIL AND ALLIED IIVD US ?RIES 7 held as undcr: \"ln our view, rhe aforesaid reasonrng of the Allahabad High Court and the Patna High Court u'ould squarely apply to the facts of the present casc. 'l'hc provision about furnishing of the auditors'report along .ith thc return has to be treated as a procedural provision. clircctorv in nature, and its substantial compliance should sulflce, meaning thereby that such report shouid bc madt' ar ailuble by the assessee to the Assessing Officer latcst u hen thc question of framing of assessment is t:rken r-rp lrl thc Incomc tax O{Iicer and when he applies his mind to thc claim ol-thc asscssee and if by that time, the asscssee hits ptrt his house in order and has furnished the report of thc aurlitor [or- supporting the return, he can be said to havc satisllt'cl the rcquirement of sectton 80.1(6A) of the Act. ' 20, A similar view is availablc lrom the High Court of Punjab and Haryana in the case o[ COMMISSIONER OF INCOME TAX v' SHAHZEDANANDCHARITYTRUST8,rvhcreagaintheDivision Bench of High Court ol Punjab ancl IJan 'rna dealing with similar facts and circumstances of the casc rclcrring to the circular of the [ncome Tax Department itsetf held as urldcr: \"The provisions of scctron 8O'i(6A) a,nd section l2A of the Act are pan maictint The rutio ol th-c law laid down in CIT v. Jaidcep Industrics I 19891 l8OITR 8I (P & Itl *orta f''u\" uitn applrcabie to th: fl:t= of [he presenl case as *'ett f'al -it-,tt 'i\"\"ttal Board of Direct Taxes not 't19931 201 rrR 32s (Gui) u zza trR zsz(P&H) ---I 21. 1,2 respondcn t_Dcpartmcnt, t lr osc dccisions issuecl thc circulzrr darcd I.'cbruarl 9, 197g, rcpr oduc:ccl in the earlier part of thc judgmcni. As pcr. rhc circulerr it is nor mandaron. undcr sccrior-r l2A(bi rc lilc rhc ar-rdit report along r,l rth the rcturn of incornc. Norrnall_r , a charitable or religious trust or insritution ls expcctcd to filc thc auditor's report etlong u.ith thc rcturu but in cascs whcre for reasons be-vond the con(rol of the asscssee some delay has occurred in filing tht: said report, the Incomc tax Officer, lor reas
Other Referred Cases
MADHU DADHA vs. ASSISTANT COMMISSIONER OF INCOME TAX, COMMISSIONER OF CUSTOMS (IMPORT) vs. M/S. DITIP KUMAR & ORS., M/s. Myadam Kishan Rao Charitable Establishment vs. The Commissioner of Income Tax (Exemption), ASSISTANT COMMISSIONER (CT) LTU, KAKINADA vs. GLAXO SMITH KLINE CONSUMER HEALTH CARE, M/s. Zoos and Parks Authority of Telangana vs. The Commissioner of Income Tax (Exemptions), COMMISSIONER OF INCOME-TAX vs. GUJARAT OIL AND ALLIED INDUSTRIES, COMMISSIONER OF INCOME TAX vs. SHAHZEDANAND CHARITY TRUST
Laws Referred To
Income Tax Act, 1961, Constitution of India
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Initial LLP Agreement
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Stress Management policy Letter
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