2025 (11) TMI 1171 - HC - Income Tax

Condonation of delay under Section 119(2)(b) granted for late Form 9A filing due to Commercial Bare Act misprint

Savitribai Phule Shikshan Prasarak Mandal, Kamlapur Versus Directorate General of Income Tax Investigation (Investigation) Pune & Ors.

HC allowed condonation of delay under Section 119(2)(b) for an assessee who filed Form 9A late due to reliance on a misprint in a widely used Commercial ... Exemption u/s 11 - Condonation of delay in filing Form 9A - proof of genuine hardship” u/s 119(2)(b) - Delay due to misprint in Commercial Bare Act published by Reputed Publication - HELD THAT:- We find that the Petitioner has made out a case for condonation of delay under Section 119(2) (b). We say this because the Taxmann Publication is a renowned Publication in the Taxation field whereby majority of the Tax Practitioners, Advocates, Chartered Accountants, Jurists, etc. refer to the Bare Act of the Income Tax Act published by them. Petitioner or its Tax Advisor would never know that such a publication would carry a mistake as to the date from which an amendment to the Income Tax Act, 1961 has been made applicable. Though we agree with Mr. Kotangle that the Petitioner ought to have been more careful, a bona fide mistake in relying on a misprint contained in such a publication on which almost everyone relies, cannot oust the Petitioner from the beneficial provision of Section 119(2)(b) of the Income-tax Act. Petitioner realised its mistake only during course of assessment proceedings when the contention of the Assessee, based on the Taxmann publication, that the amendment has become effective from the next Assessment Year, was rejected by the AO. Assessee immediately filed Form No. 9A on 30th March 2024. However, the Assessing Officer pointed out the delay in filing Form 9A by the Petitioner and therefore denied the benefit of Sections 11 and 12 to the Petitioner. In view of these facts, we find that the delay in filing Form No. 9A was inadvertent and Respondent No. 1 ought to have condoned the delay. Further, the Petitioner would not be at an advantage or gain any benefit from the delay in filing its Form 9A. In fact, grave hardship would be caused to the Petitioner if the delay in filing Form 9A is not condoned. We are of the view that this is a fit case where Respondent No. 1 ought to have condoned the delay in filing Form 9A. ISSUES PRESENTED AND CONSIDERED 1. Whether delay in filing Form 9A for Assessment Year 2022-23 can be condoned under Section 119(2)(b) of the Income-tax Act where the delay arose from bona fide reliance on a misprint in a widely-used commercial bare-act publication. 2. Whether reliance on a private commercial publication (as opposed to the Finance Act as published in the Official Gazette, CBDT clarifications or ICAI guidance) can constitute 'genuine hardship' or a sufficient cause for exercise of discretion under Section 119(2)(b). 3. Whether the principle ignorantia juris non excusat (ignorance of law is no excuse) precludes condonation where authoritative statutory material and administrative clarifications were publicly available prior to the due date. 4. Whether the Respondent's refusal to condone delay and subsequent rejection of a review application for lack of new facts was justified in the circumstances, including considerations of the petitioner being a charitable trust and the alleged hardship if delay is not condoned. ISSUE-WISE DETAILED ANALYSIS Issue 1: Condonation under Section 119(2)(b) for delay caused by reliance on a misprint in a commercial bare-act publication Legal framework: Section 119(2)(b) empowers the tax authority to condone delay where sufficient cause or genuine hardship is shown; the power is discretionary and exercised on established principles of fairness and reasonableness. Precedent treatment: The Court considered general principles regarding condonation and bona fide mistakes (including the principle that ignorance of law ordinarily does not excuse) but recognized precedents that allow exercise of discretion where genuine hardship or bona fide error is established. The Court treated such authorities as guiding the exercise rather than as absolute bars. Interpretation and reasoning: The Court accepted that the commercial bare-act publication relied upon is a renowned source routinely used by tax practitioners, and that a misprint as to the effective date of an amendment can lead to an honest mistake by a taxpayer and its advisors. The petitioner discovered the mistake during assessment proceedings and promptly filed Form 9A thereafter. The Court weighed the petitioner's bona fides, prompt corrective action upon discovery, absence of any advantage gained from delay, and the potential grave hardship (substantial tax liability) if delay were not condoned. Ratio vs. Obiter: Ratio - where a delay arises from bona fide reliance on a widely relied-upon commercial publication that contains a misprint as to the effective date of statutory amendment, and the taxpayer acts promptly on discovery and gains no benefit by delay, the tax authority may properly exercise discretion under Section 119(2)(b) to condone the delay. Obiter - general comments that taxpayers and advisers ought to verify primary sources and that reliance on secondary publications is risky. Conclusion: The Court found sufficient cause to condone the delay under Section 119(2)(b), quashed the order refusing condonation, and condoned the delay in filing Form 9A for A.Y. 2022-23. Issue 2: Sufficiency of reliance on private publication vs. primary statutory sources and administrative clarifications Legal framework: The authoritative source of law is the Finance Act as enacted and notified in the Official Gazette; administrative clarifications (e.g., CBDT circulars, ICAI communications) are relevant and may eliminate ambiguity as to applicability. Precedent treatment: The Court recognized the established maxim ignorantia juris non excusat and the expectation that assessees and their representatives consult primary sources. Prior decisions treating errors of law or failure to consult official texts as insufficient for condonation were acknowledged. Interpretation and reasoning: The Court balanced the expectation to consult primary sources against the reality that practitioners widely rely upon certain commercial bare-act publications. While admonishing that primary sources are the authoritative reference, the Court concluded that a bona fide reliance on a reputable publication containing a misprint may, in exceptional circumstances, constitute sufficient cause for relief under Section 119(2)(b), particularly where the taxpayer acts without delay once error is discovered and suffers genuine hardship if relief is denied. The Court thus distinguished routine negligence or deliberate non-compliance from honest reliance on a reputable secondary source carrying an erroneous effective-date entry. Ratio vs. Obiter: Ratio - reliance on a reputable commercial publication may, in exceptional circumstances and when accompanied by prompt corrective conduct and absence of gain, amount to sufficient cause for condonation despite the general rule favoring primary sources. Obiter - insistence that reliance on secondary materials without cross-checking statutory text is not good practice and will generally not suffice. Conclusion: Reliance on a private publication is not per se fatal; in the present facts it constituted a bona fide cause warranting condonation, but taxpayers are nonetheless required as a rule to verify statutory amendments from primary authoritative sources. Issue 3: Applicability of ignorantia juris non excusat and availability of CBDT/ICAI clarifications Legal framework: The maxim ignorantia juris non excusat limits excuses based on ignorance of law; where statutory amendments and authoritative clarifications are publicly available, taxpayers are generally expected to be aware. Precedent treatment: The Court acknowledged authorities applying the maxim, and considered the presence of CBDT clarification and ICAI communication as factors weighing against a claim of ignorance. Interpretation and reasoning: The Court accepted that CBDT and ICAI had issued clarifications indicating applicability from A.Y. 2022-23, and that such material was in the public domain. However, the Court reasoned that the existence of such materials did not automatically negate a taxpayer's bona fide reliance on a widely used bare-act publication carrying a misprint. The decisive question was whether the taxpayer's conduct was bona fide, prompt on discovery, and whether refusal of relief would cause disproportionate hardship. The Court therefore applied a contextual and equitable assessment rather than a rigid application of the maxim to foreclose relief. Ratio vs. Obiter: Ratio - presence of official clarifications is a relevant factor but not necessarily determinative where a bona fide, widely shared misapprehension arose from a reputable secondary source and corrective steps were taken promptly. Obiter - reinforcement that primary sources and official clarifications are the preferred and authoritative reference points. Conclusion: Although official clarifications existed, they did not preclude condonation given the particular facts of bona fide reliance, prompt remedial action, absence of benefit, and potential grave hardship. Issue 4: Validity of rejecting the review application for lack of new facts and the role of charitable-institution considerations Legal framework: Review under administrative orders requires demonstration of mistake apparent on the face of the record or new facts; discretion to condone may be informed by equity, including the applicant's status and hardship consequences. Precedent treatment: The Court considered the Review rejection as addressing absence of new facts; it placed emphasis on substantive equities rather than formal strictness when deciding judicially on the writ petition challenging that rejection. Interpretation and reasoning: The Court found that the petitioner had documented the cause of delay (affidavit from the chartered accountant confirming reliance on the misprint) and had shown that the delay was inadvertent and caused no advantage. The Court further took into account that the petitioner was a charitable trust and that substantial tax liability would result if condonation were denied. These factors rendered the impugned rejection of the review and original refusal of condonation unsustainable. The Court construed the discretionary power under Section 119(2)(b) to favour relief in such circumstances. Ratio vs. Obiter: Ratio - where the record discloses a bona fide mistake supported by contemporaneous explanation and the petitioner would suffer grave hardship, a refusal to condone delay and denial of review for lack of new facts may be quashed. Obiter - general statement that discretionary relief should not be extended where delay arises from inexcusable negligence or contrivance. Conclusion: The Court quashed the orders refusing condonation and rejecting review, condoned the delay, and disposed of the petition without costs, holding that the discretionary power under Section 119(2)(b) was rightly exercised in favour of the petitioner in the circumstances described.