2023 (8) TMI 1600 - HC - Income Tax

Commissioner must adopt pragmatic approach when deciding condonation of delay in Form-9A submission applications

The Telangana HC held that the Commissioner of Income Tax should have adopted a more pragmatic approach when deciding the application for condonation of ... Condonation of delay in submission of Form-9A - CBDT had delegated the powers to the Commissioner of Income Tax to consider the application submitted by the assesses seeking for condonation of delay and for submission of Form-9A - HELD THAT:- Considering the motive and intend of the CBDT in issuing the circular, it was necessary for the Commissioner to have taken more pragmatic approach while deciding the application for condonation of delay in submission of Form-9A for the Assessment Year 2016-17. Thus, we are of the considered opinion that the impugned order to the aforesaid extend would not be sustainable and the matter deserves to be remitted back to respondent No. 1 for reconsidering the Form-9A submitted by the petitioner. The petitioner may be permitted to file fresh application with better affidavit for condonation of delay while filing Form-9A. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issues presented and considered in this judgment are:Whether the Commissioner of Income Tax (Exemptions) erred in rejecting the application for condonation of delay in filing Form-9A for the Assessment Year 2016-17.Whether the Central Board of Direct Taxes (CBDT) circulars, which delegated powers to the Commissioner to admit belated applications, were applied correctly.Whether the petitioner provided sufficient reasonable cause for the delay in filing Form-9A.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Rejection of the Application for Condonation of DelayRelevant legal framework and precedents: The legal framework involves Section 11 of the Income Tax Act, 1961, which deals with exemptions for trusts, and the provisions for filing Form-9A. The CBDT issued circulars delegating powers to the Commissioner to condone delays in specific circumstances.Court's interpretation and reasoning: The court noted that the CBDT circulars were intended to accommodate assessees who faced difficulties in filing returns electronically. The court emphasized the need for a pragmatic approach in applying these circulars.Key evidence and findings: The petitioner filed Form-9A belatedly and sought condonation of delay based on the CBDT circulars. The Commissioner rejected the application without adequately considering the circulars' intent.Application of law to facts: The court found that the Commissioner did not apply the circulars correctly, as the intention was to allow belated filings if reasonable cause was shown.Treatment of competing arguments: The petitioner argued for a liberal interpretation of the circulars, while the Department contended that the petitioner failed to justify the delay adequately. The court sided with the petitioner, emphasizing the circulars' intent.Conclusions: The court concluded that the rejection of the application was not sustainable and remitted the matter back to the Commissioner for reconsideration.Issue 2: Application of CBDT CircularsRelevant legal framework and precedents: CBDT Circular Nos. 7/2018, 30/2019, and 6/2020 were issued to address difficulties faced by assessees in filing returns electronically and to delegate powers for condoning delays.Court's interpretation and reasoning: The court interpreted the circulars as being intended to provide relief to assessees facing genuine difficulties in timely filing.Key evidence and findings: The court found that the circulars explicitly allowed for condonation of delay if reasonable cause was demonstrated, which the Commissioner failed to consider adequately.Application of law to facts: The court applied the circulars' provisions to the facts, determining that the petitioner's circumstances warranted reconsideration of the delay.Treatment of competing arguments: The Department argued that the petitioner did not provide sufficient justification for the delay, but the court emphasized the circulars' intent to accommodate assessees.Conclusions: The court concluded that the circulars should have been applied more liberally, and the matter was remitted for further consideration.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'In view of the same, we are of the considered opinion that the impugned order dated 19.08.2020 to the aforesaid extend would not be sustainable and the matter deserves to be remitted back to respondent No. 1 for reconsidering the Form-9A submitted by the petitioner.'Core principles established: The judgment underscores the necessity for tax authorities to adopt a pragmatic approach when applying CBDT circulars intended to provide relief to assessees facing genuine difficulties.Final determinations on each issue: The court determined that the rejection of the application for condonation of delay was not sustainable and remitted the matter back to the Commissioner for reconsideration, allowing the petitioner to file a fresh application with a better affidavit.