2021 (1) TMI 1090 - HC - Income Tax

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 ... Condone delay in fling the application for exemption u/s 10(23C)(vi) - extension of the limitation period - HELD THAT:- Neither of the two i.e. the order dated 27.09.2019 and the Circular dated 03.11.2020 deal with an application for exemption under section 10(23C)(vi) of the act in Form No.56D which has a definite time line i.e., upto 30th September of the relevant assessment year, in the instant case 30th September 2019. We do not find any provision for extending the time limit beyond 30.09.2019 though such a power is available with the CBDT. There is no provision for extension of the limitation period or for condonation of delay in fling the application for grant of exemption under section 10(23C)(vi) of the act by the CIT (Exemption) To that extent respondent No.1 was justified in rejecting the application for the assessment year 2019-20. As per the version of the respondents themselves the application for exemption of the petitioner was not confined to assessment year 2019-20 only. An application for grant of exemption from the assessment year 2019-20 onwards. While respondent No.1 was correct in rejecting the application for the assessment year 2019-20 as being time-barred, it certainly fell in error in not considering the said application for subsequent assessment years i.e. for assessment year 2020-2021 and onwards. Because even if the application was fled on 31.10.2019 which was belated for the assessment year 2019-20, it was before the prescribed date for the subsequent assessment year i.e. assessment year 2020-2021 and thereafter as it had been fled much before the cut of date of 30.09.2020. We feel that even at this stage petitioner may approach CBDT under section 119(2)(b) seeking a special order to respondent No.1 to condone the delay in fling the application for exemption under section 10(23C)(vi) of the Act for the assessment year 2019-20, there being admitted delay of 31 days in fling the application for the said assessment year, and thereafter to deal with the said application/ claim on merit in accordance with law. Since we have taken the above view, it may not be necessary to deal with the contention relating to alternative remedy. Having regard to the above and upon thorough consideration of the matter, we deem it appropriate to issue the following directions :- I) Petitioner shall file an application before the CBDT under section 119(2)(b) to authorize respondent No.1 to condone the delay in fling its application dated 31.10.2019 for exemption under section 10(23C)(vi) of the act, for the assessment year 2019-20 and to deal with the same on merit in accordance with law ; II) If such application is fled by the petitioner within a period of three weeks from today, CBDT shall pass an appropriate order in accordance with law within a period of four weeks thereafter with due intimation to the petitioner; III) Respondent No.1 shall consider the application of the petitioner dated 31.10.2019 for grant of exemption under section 10(23C)(vi) of the act for the assessment year 2020-21 onwards in accordance with law within a period of eight weeks from the date of receipt of a copy of this order; 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.