Court quashes tax exemption denial due to natural calamity delay, directs condonation process

The court quashed the order rejecting the university's application for tax exemption due to a delay in filing caused by natural calamities. It clarified the jurisdiction to condone delays, noting the inapplicability of a specific circular. While acknowledging an alternative remedy, the court directed the university to seek authorization for delay condonation for the initial assessment year and ordered consideration of subsequent years' applications. The impugned order was interfered with, and the petition was disposed of without costs.

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Issues Involved:
1. Quashing of the order rejecting the application for exemption under section 10(23C)(vi) of the Income Tax Act, 1961.
2. Jurisdiction and power of the Commissioner of Income Tax (Exemptions) to condone delay in filing the application.
3. Applicability of CBDT Circular No.19/2020 dated 03.11.2020.
4. Availability of alternative statutory remedy.
5. Consideration of the application for subsequent assessment years.

Detailed Analysis:

1. Quashing of the Order Rejecting the Application for Exemption:
The petitioner, a university established by an act of the State Legislature of Maharashtra, sought quashing of the order dated 29.09.2020 passed by the Commissioner of Income Tax (Exemptions), Pune, which rejected their application dated 31.10.2019 for exemption under section 10(23C)(vi) of the Income Tax Act, 1961, for the assessment year 2019-20 onwards. The petitioner contended that due to heavy rainfall and resultant flood, they could not complete the audit of accounts before the due date, causing a delay in filing the application.

2. Jurisdiction and Power to Condon Delay:
The Commissioner of Income Tax (Exemptions) rejected the application on the grounds that it was filed beyond the prescribed time limit and that they had no jurisdiction to condone the delay. The respondents argued that as per the 16th proviso to section 10(23C)(vi) of the Act, the application had to be filed on or before 30th September of the relevant assessment year, which in this case was 30.09.2019. They further contended that there was no provision for condonation of delay unless authorized by the CBDT.

3. Applicability of CBDT Circular No.19/2020:
The petitioner referred to CBDT Circular No.19/2020 dated 03.11.2020, which delegated the power of condonation of delay to the Commissioners. However, the respondents contended that this circular was not applicable to the case at hand as it dealt with the condonation of delay in filing Form No.10BB, not Form No.56D. The court clarified that neither the order dated 27.09.2019 nor the Circular dated 03.11.2020 dealt with an application for exemption under section 10(23C)(vi) in Form No.56D, which had a definite timeline of 30th September of the relevant assessment year.

4. Availability of Alternative Statutory Remedy:
The respondents argued that the petitioner had an alternative statutory remedy by way of appeal under section 253(1)(f) of the Act. However, the petitioner contended that the order rejecting the application as time-barred was not amenable to the appellate jurisdiction of the Income Tax Appellate Tribunal. The court, while acknowledging the alternative remedy, did not find it necessary to delve into this issue given the other findings.

5. Consideration of the Application for Subsequent Assessment Years:
The court found that while the Commissioner was correct in rejecting the application for the assessment year 2019-20 as time-barred, the application should have been considered for subsequent assessment years (2020-21 onwards) as it was filed before the prescribed date for those years. The failure to consider the application for subsequent years was an error.

Conclusion and Directions:
The court directed the petitioner to file an application before the CBDT under section 119(2)(b) to authorize the Commissioner to condone the delay for the assessment year 2019-20. If such an application is filed within three weeks, the CBDT should pass an appropriate order within four weeks. The Commissioner was also directed to consider the application for the assessment year 2020-21 onwards within eight weeks. The impugned order dated 29.09.2020 was interfered with to the extent mentioned above, and the writ petition was disposed of without any order as to cost.

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