2025 (11) TMI 930 - HC - Income Tax

Form No.9A not required for A.Y. 2015-16; option under Explanation to s.11(1) via Form 10B valid, return timely

Swasth Foundation & Anr Versus The Commissioner of Income Tax (Exemptions) & Ors.

HC held that Form No.9A filing was not required for A.Y. 2015-16 because the statutory mandate for electronic/manual filing arose w.e.f. 1 Apr. 2016. The ... Exemption u/s 11(1) - mandatory electronic filing of Form No.9A started from A.Y. 2016-17 onwards, the Petitioner was still required to file Form No.9A manually (for A.Y. 2015-16) regarding the option to be exercised in clause (2) of the Explanation to Section 11(1) HELD THAT:- Petitioner was not required to file the said Form No. 9A for A.Y. 2015-16 for exercising the option referred to in clause (2) of the Explanation to sub-section (1) of Section 11 of the Act as the requirement for filing of the said Form No. 9A was introduced into the statute vide Finance Act, 2015 w.e.f. 1st day of April, 2016. However, the present Petition pertains to the earlier year, i.e. A.Y. 2015-16. For A.Y. 2015-16, there was no prescribed format for exercising the option. We find that the law as it stood during the relevant period, i.e. A.Y. 2015-16, the Petitioner has laid the necessary foundation for exercising the option by stating so in their audit report in Form No. 10B as well as in their return of income which were filed within time. We find that the impugned order has incorrectly held that Form No.9A was required to be filed manually for A.Y. 2015-16. We find that if the reliefs are not granted to the Petitioner, there will be genuine hardship to the Petitioner, inasmuch as the Petitioner would be saddled with a huge demand as raised in the earlier round of assessment proceedings even though it has substantially complied with the requirements of clause (2) of the Explanation to Section 11(1) of the Act. We quash and set aside the impugned passed by Respondent No.1 as there was no requirement to file Form No.9A for A.Y. 2015-16 and therefore it cannot be said that the Petitioner had delayed the filing of Form No.9A. This is simply because the Petitioner had exercised the option referred to in clause (2) of the Explanation to sub-section (1) of Section 11 of the Act within time, as per the law prevalent during A. Y. 2015-16. We direct that the Respondents shall once again process the Petitioner’s return of income for A.Y. 2015-16 in the currently on going de novo assessment proceedings in accordance with law by giving effect to this order on the basis that the Petitioner has exercised the option under clause (2) of the Explanation to sub-section (1) of Section 11 of the Act within time. ISSUES PRESENTED AND CONSIDERED 1. Whether Form No. 9A (prescribed format introduced by Finance Act, 2015 w.e.f. 01.04.2016) was required to be filed for Assessment Year 2015-16 to exercise the option under clause (2) of the Explanation to Section 11(1) of the Income Tax Act. 2. Whether the petitioner's written intimation recorded in the audit report (Form No.10B) and in the return of income filed within time satisfied the statutory requirement of exercising the option under clause (2) of the Explanation to Section 11(1) for AY 2015-16. 3. Whether the respondent was justified in refusing to condone delay (and treating the subsequent filing of Form 9A for AY 2015-16 as belated) and in rejecting the claimed accumulation under clause (2) of the Explanation to Section 11(1). 4. Whether the impugned order rejecting the application and construing Form 9A as required to be filed manually for AY 2015-16 was legally sustainable, and what relief should follow if it was not. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Requirement of Form No. 9A for AY 2015-16 Legal framework: The statutory amendment introducing a prescribed format (Form No. 9A) for exercising the option under clause (2) of the Explanation to Section 11(1) was effected by the Finance Act, 2015 and became effective from 01.04.2016 (i.e. applicable from AY 2016-17 onwards). Precedent treatment: The Court relied on administrative exposition in CBDT Circular No. 19 of 2015 (Explanatory Notes to Finance Act, 2015) which states that no standard format existed for years prior to AY 2016-17 and that the amendment is applicable from AY 2016-17. Interpretation and reasoning: The Court interpreted the effective date of the statutory change as decisive; for AY 2015-16 there was no statutory prescription of Form No. 9A. Consequently, the requirement to file Form No. 9A did not exist for AY 2015-16 and could not be retroactively imposed. Ratio vs. Obiter: Ratio - where a statutory form is introduced with a specified effective date, taxpayers for earlier assessment years cannot be compelled to use that form for compliance occurring before its effective date. Conclusions: Form No. 9A was not required for AY 2015-16 and the impugned order's premise that it had to be filed for that year was incorrect. Issue 2 - Sufficiency of Form No.10B and return of income as written intimation Legal framework: Clause (2) of the Explanation to Section 11(1) required an option in writing/intimation before the expiry of the time allowed under Section 139(1) for filing the return of income; prior to the 2016 amendment no prescribed format was mandated. Precedent treatment: The Court referred to an earlier decision of this Court dealing with related compliance (KSB Care Charitable Trust v. CIT (Exemption)) holding that denial of accumulation benefit is not warranted where accumulated amounts are actually applied within the permitted time and activities are genuine. Interpretation and reasoning: The petitioner filed the audit report in Form No.10B and the return of income within the prescribed time, both explicitly stating the option under clause (2) and the amount to be accumulated. The Court found this constituted sufficient written intimation under the law as it stood for AY 2015-16. The factual record (timely filing and explicit declaration in statutory documents) demonstrated clear intention to accumulate. Ratio vs. Obiter: Ratio - in the absence of a prescribed format, a timely written intimation contained in statutory filings (such as Form 10B and the return) that clearly communicates the option under clause (2) satisfies the requirement of exercising the option in writing for applicable years. Conclusions: The petitioner had exercised the option within time by filing Form 10B and the return; those filings were sufficient to meet the statutory requirement for AY 2015-16. Issue 3 - Reasonable cause / condonation of delay and characterisation of subsequent Form 9A filing Legal framework: Relief by condonation is relevant only if there is a statutory requirement to file a particular form and that requirement was breached; for AY 2015-16 no statutory Form 9A existed. Administrative guidance (CBDT Circular) confirms absence of prescribed format for pre-AY 2016-17. Precedent treatment: The Court treated the denial of benefit as incompatible with principles applied in prior decision(s) where substantive compliance and bona fide application of funds were decisive. Interpretation and reasoning: Because Form 9A was not a statutory requirement for AY 2015-16, the question of reasonable cause for its delayed filing did not arise. The impugned order's refusal to condone delay in filing Form 9A was therefore founded on an incorrect premise. Further, denying benefit would cause genuine hardship by resurrecting a large demand despite demonstrable substantive compliance. Ratio vs. Obiter: Ratio - where no statutory requirement to file a particular form exists for a given assessment year, refusal to condone delay in filing that form (filed after the form was introduced) is untenable; substantive, timely compliance under the law prevailing at the relevant time governs. Conclusions: The respondent's refusal to condone delay and its treatment of the later Form 9A filing as determinative were incorrect; there was no delay to condone for AY 2015-16. Issue 4 - Validity of the impugned order and appropriate relief Legal framework: Writ jurisdiction permits quashing of administrative orders that misapply statutory requirements and direct further proceedings consistent with law. Precedent treatment: The Court followed its prior approach favoring substantive compliance and preventing unjust demands where the statutory scheme was satisfied. Interpretation and reasoning: The impugned order was premised on an erroneous legal requirement (that Form 9A had to be filed for AY 2015-16 and, in particular, that it had to be filed manually). Given the petitioner's timely and clear written intimation in Form 10B and the return, the impugned order was quashed. The Court directed reassessment authorities to process the ongoing de novo assessment giving effect to the petitioner's exercised option under clause (2) of the Explanation to Section 11(1). Ratio vs. Obiter: Ratio - administrative orders imposing obligations not prescribed by law for the relevant period are liable to be set aside; where substantive conditions for a statutory benefit are fulfilled in the manner required at the relevant time, assessing authorities must give effect to the benefit in subsequent proceedings. Conclusions: The impugned order was quashed and set aside; the respondent is directed to process the return in ongoing de novo proceedings in accordance with law recognizing that the option under clause (2) was exercised within time for AY 2015-16. No order as to costs.