2025 (9) TMI 1695 - HC - Income Tax

Appeal allowed: challenge to CIT (Exemption) order held not maintainable; s.119(2)(b) delay did not validate Form 10B

The HC allowed the appeal, holding the appeal before the Tribunal challenging the CIT (Exemption) order for AY 2018-19 was not maintainable; consequently ... Condonation of delay u/s 119(2)(b) in filing Form 10B - delay of 16 days for filing the Form 10B - HELD THAT:- We allow the appeal and set aside the order passed by the ITAT as the appeal filed by the respondent before the ITAT challenging the order for the AY 2018-19 of the CIT (Exemption) was not maintainable and as such the Tribunal could not have entertained the appeal and decided the same in the manner it has done. Consequentially, the order passed by the ITAT on the merits of the issue raised by the respondent in the appeal is also set aside. Accordingly, the appeal is allowed. The substantial questions of law are decided in favour of the appellant/revenue and against the respondent. ISSUES PRESENTED AND CONSIDERED 1. Whether an appeal to the Income Tax Appellate Tribunal was maintainable against an order of the Commissioner (Exemption) rejecting a condonation application under Section 119(2)(b) for delay in filing Form 10B. 2. Whether the Tribunal had jurisdiction under Section 253 of the Income Tax Act to entertain and decide an appeal against the Commissioner (Exemption)'s rejection order under Section 119(2)(b). 3. Whether, if the appeal was not maintainable, the Tribunal's condonation of delay and consequential directions on the merits could be sustained. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of appeal to the Tribunal against a Commissioner (Exemption) order rejecting condonation under Section 119(2)(b) Legal framework: The statutory scheme prescribes the types of orders that are appealable to the Tribunal. Orders passed by the Commissioner in exercise of suo motu or discretionary powers under Section 119(2)(b) affect procedural relief (condonation of delay) and are subject to the appealability regime set out in the Act. Precedent Treatment: The Court treated the question of appealability as determinative of the Tribunal's jurisdiction and applied the statutory appealability test rather than adjudicating the merits of the condonation request. No contrary authority was held to validate the Tribunal's entertainment of the appeal in the present facts. Interpretation and reasoning: The Court examined whether the order rejecting the condonation application fell within the class of orders which Parliament intended to be appealable to the Tribunal. Finding that the order was not an appealable order under the relevant appealability provision, the Court concluded the appeal to the Tribunal was not maintainable. The reasoning emphasizes the limits of appellate jurisdiction: a tribunal can only entertain appeals as authorized by statute, and jurisdictional defects cannot be cured merely because a party sought and obtained relief on the merits below. Ratio vs. Obiter: Ratio - The Tribunal lacked jurisdiction to entertain an appeal against the Commissioner (Exemption)'s order rejecting condonation under Section 119(2)(b) where that order is not within the statutory list of appealable orders. Conclusions: The appeal before the Tribunal was not maintainable; therefore the Tribunal had no power to hear or decide the matter on merits. Issue 2 - Tribunal's jurisdiction under Section 253 to entertain appeal against Commissioner (Exemption)'s rejection of condonation Legal framework: Section 253 (appeal to Tribunal) delineates which orders are appealable. Jurisdiction of the Tribunal is confined to those orders enumerated; discretionary administrative orders not encompassed by the provision do not attract appellate remedy before the Tribunal. Precedent Treatment: The Court relied on the statutory construction of appeal provisions rather than extending the Tribunal's jurisdiction by judicial gloss. The analysis disallowed treating the Tribunal as a general forum for all grievances against Commissioners' discretionary orders. Interpretation and reasoning: The Court determined that the order under Section 119(2)(b) rejecting condonation for delay in filing Form 10B was not an appealable order under Section 253. Consequently, the Tribunal could not acquire jurisdiction and its acceptance of the appeal was erroneous. The Court treated jurisdictional appealability as a threshold question; because the threshold was not crossed, subsequent adjudication on merits by the Tribunal was vitiated. Ratio vs. Obiter: Ratio - Jurisdiction under Section 253 is strictly limited to statutorily appealable orders; a Commissioner (Exemption) order rejecting condonation under Section 119(2)(b) that is not included in the appealability list cannot be challenged before the Tribunal. Conclusions: The Tribunal erred in assuming jurisdiction under Section 253; the appeal ought not to have been admitted or decided by the Tribunal. Issue 3 - Validity of Tribunal's merits decision (condonation and directions) where appeal is not maintainable Legal framework: When a tribunal or appellate body acts without jurisdiction, its decisions on merits are void and subject to being set aside by a superior court. The remedial scheme permits the aggrieved party to pursue such remedies as are legitimately available in law. Precedent Treatment: The Court set aside the Tribunal's orders on the ground of want of jurisdiction and did not address the substantive correctness of the Tribunal's condonation of delay; instead it left open legal avenues available to the petitioner. Interpretation and reasoning: Because the appeal was not maintainable, the Tribunal's condonation of the 16-day delay and consequential directive to the assessing authority were consequences of an exercise in excess of jurisdiction. The Court therefore nullified the Tribunal's merits order in its entirety rather than remitting solely on factual grounds. The Court clarified that the petitioner has liberty to seek available remedies consistent with law (i.e., to pursue appropriate fora or procedures for the condonation application or other relief). Ratio vs. Obiter: Ratio - Orders passed by a tribunal in excess of jurisdiction are liable to be set aside; jurisdictional deficiency renders merits decisions void. Conclusions: The tribunal's merits order condoning delay and directing consideration of Form 10B is set aside for want of maintainability of the appeal; the petitioner is granted liberty to pursue remedies available in law. Ancillary procedural points and directions Interpretation and reasoning: The Court condoned institutional delays in filing the present appeal/writ (three days re-filing, 56 days overall) for reasons presented in the applications and directed that the period during which the respondent prosecuted the invalid appeal before the Tribunal and this writ petition shall not be counted for computing limitation, delay, or laches in subsequent proceedings. Ratio vs. Obiter: Ratio - Where a party has pursued relief before a forum without jurisdiction, a court may, in the exercise of equity and fairness, exclude the period of such pursuit from limitation calculations when permitting the aggrieved party to seek available remedies. Conclusions: Delay in refiling and filing the present challenge was condoned; time spent prosecuting the non-maintainable appeal and the present proceedings will be excluded for computation of limitation in any fresh proceedings initiated by the petitioner.