2024 (1) TMI 1445 - HC - Income Tax

Revenue's Appeal Dismissed; Delay in Filing Form 10B Condoned Under Section 260A, Emphasizing CBDT Circular Compliance.

Commissioner of Income Tax Exemptions Kolkata Versus M/s. Indian Sugar Mills Association

The HC of Calcutta dismissed the revenue's appeal under Section 260A of the Income Tax Act, 1961, upholding the Tribunal's decision to condone the delay ... Denying exemption u/s 11 - statutory requirement of filing the form No. 10B on or before the filing of return of income was not fulfilled by the assessee trust - condonation of delay in filing of Form 10B was rejected - whether PCIT (Appeals), NFAC was justified in allowing the appeal filed by the assessee thereby condoning the delay in filing the Form 10B? - HELD THAT:- The revenue has not dealt with the said circular nor anything has been brought on record to show that Circular No. 16 of 2022 dated 19-07-2022 cannot be applied to the case on hand. CIT(Exemptions) while rejecting the application for condonation of delay by order dated 17-08-2020 has referred to the Circular No. 2 of 2020 dated 3.1.2020 which admittedly gives power to condone the delay in filing Form 10B up to a period of 365 days. CIT (Appeals), NFAC also took note of a decision of Gujarat Oil And Allied Industries [1992 (9) TMI 67 - GUJARAT HIGH COURT] wherein it was held that the filing of the auditor’s report along with return of income has to be treated as procedural provision and therefore, directory in nature. Thus we find that there is no error committed by the Tribunal in dismissing the appeal filed by the revenue. Decided against revenue. The High Court of Calcutta considered an appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 against an order passed by the Income Tax Appellate Tribunal. The main issue at hand was whether the Principal Commissioner of Income Tax (Appeals) was justified in allowing the appeal filed by the assessee by condoning the delay in filing Form 10B of the Act. The revenue raised three substantial questions of law for consideration, focusing on the denial of exemption under Section 11 of the Income Tax Act due to failure to file Form 10B, the rejection of condonation of delay by the CIT (Exemptions) Kolkata, and the application of Circulars issued by the CBDT regarding the condonation of delay in filing Form 10B.The Court first addressed the delay of 44 days in filing the appeal and allowed the application for condonation of delay, finding sufficient cause for the delay. The Court then delved into the core issue of whether the Tribunal was correct in allowing the assessee's appeal by condoning the delay in filing Form 10B. The Tribunal had considered Circular No. 16 of 2022 issued under Section 119(2)(b), which delegated powers to condone the delay in filing Form 10B beyond 365 days up to 3 years from the relevant assessment year. The Tribunal applied this circular and affirmed the order passed by the CIT (Appeals) in the case.The revenue failed to address Circular No. 16 of 2022 or provide any evidence to show that it could not be applied in the present case. The Court noted that the CIT (Exemptions) had rejected the application for condonation of delay based on Circular No. 2 of 2020, which allowed condonation of delay in filing Form 10B up to 365 days. Additionally, the Court considered a decision of the High Court of Gujarat, which held that the filing of the auditor's report along with the return of income is a procedural provision and directory in nature.Ultimately, the Court found no error in the Tribunal's decision to dismiss the revenue's appeal. The Court concluded that the substantial questions of law were answered against the revenue, and accordingly, the appeal was dismissed. The core principle established in this judgment is the importance of complying with procedural requirements and the application of relevant Circulars issued by the CBDT in determining the condonation of delay in filing Form 10B.