Allowed¶96

Bhagini Mandal (trust) v. Principal Chief Commissioner of Income Tax

Telangana HC17 Feb 2025WP/2998/2025

Case brief

AI extract

What is this about?

condonation of delay; Form 10-B; Income Tax Act 1961; charitable trust; AY 2014-15; AY 2015-16; delay of 3198 days; delay of 3533 days; Principal Chief Commissioner of Income Tax; writ of mandamus; Article 226; Articles 14, 19 and 265; natural justice; Section 151 CPC stay; Sarvodaya Charitable Trust (Guj); Al Jamia Mohammediyah Education Society (Bom); G.V. Infosolutions (Delhi); Gujarat Oil and Allied Industries; bar of limitation; exemption denial; ITBA/COM/F order dated 13.01.2025; Telangana High Court common order.

What did the court decide?

Impugned rejection orders dated 13.01.2025 set aside; delay of 3198 days (AY 2015-16) and 3533 days (AY 2014-15) in filing Form 10-B condoned; respondents directed to proceed in accordance with law from that stage; no order as to costs. ¶96

Bhagini Mandal (trust) Vs Principal Chief Commissioner of… — Income Tax | Telangana HC (2025)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the common orders dated 13.01.2025 rejecting the petitioner's applications for condonation of delay of 3198 days (Form 10-B, AY 2015-16) and 3533 days (Form 10-B, AY 2014-15) were arbitrary, illegal and liable to be set aside, and whether the delays deserved to be condoned.

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Court's answer

Both writ petitions are allowed: the impugned rejection orders dated 13.01.2025 are set aside and the delays of 3198 and 3533 days in filing Form 10-B for AY 2015-16 and AY 2014-15 respectively are condoned; the respondents are directed to proceed in accordance with law from that stage; there shall be no order as to costs.

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Ratio / Principle

A public charitable trust with a long unblemished record of compliance (returns filed in time for 45 years) whose delay was occasioned by compelling reasons beyond its control should not be denied exemption merely on the bar of limitation; the authority's wide discretionary power to condone delay ought to have been exercised leniently, in line with Sarvodaya Charitable Trust (Guj) and Al Jamia Mohammediyah Education Society (Bom), the petitioner's case being on a better footing given its 45-year record.

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Detailed headnote1 paragraphs

Telangana High Court (Acting Chief Justice Sujoy Paul and Justice Renuka Yara), common order in W.P. Nos. 2837 and 2998 of 2025 (decided 17-02-2025): Writ petitions under Article 226 allowed. Bhagini Mandal (Trust), a public charitable trust, challenged the Principal Chief Commissioner of Income Tax's common orders dated 13.01.2025 rejecting its applications for condonation of delay of 3198 days (Form 10-B, AY 2015-16) and 3533 days (Form 10-B, AY 2014-15) under the Income Tax Act, 1961. The Trust had filed returns in time for the last 45 years; the delay occurred because its Chartered Accountant was unwell and underwent brain surgery. Relying on Sarvodaya Charitable Trust v. ITO (Exemption) (Guj) and Al Jamia Mohammediyah Education Society v. CIT (Exemptions) (Bom), the Court held that denial of exemption to a public charitable trust which has substantially satisfied the conditions, merely on the bar of limitation, is not justified, particularly where the Legislature has conferred wide discretionary powers to condone delay; the petitioner's case was on a better footing given its 45-year record of compliance. Impugned rejection orders set aside; delays of 3198 and 3533 days condoned; respondents directed to proceed in accordance with law from that stage. No order as to costs.

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[³⁴⁴⁶¹

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IN THE^{HIGH COURT FORTHE STATE OF TELANGANA} AT HYDERABAD (Special Original Jurisdiction)

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MONDAY, THE SEVENTEENTH^{DAY OF FFBRUARY} TWQ THOUSAND^{ANP TWENTYFIVE}

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PRESENT

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THE HONOURABLE^TtlE AClll'lC^{chllEFJUSTICE SUJOYPAUL} AND' THE HONQURABLE^{SMT JU$TICERENUKAYARA}

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RIT PETITIO N :2837 & 2998 0F²⁰²⁵

.P.N .2837 0F 20⁵

,t:'9

Between:

Reo bv it^president Mrs.Seema^{HipplgaonkarO/o4-1-8 Tilak} Bhaqini Mandal^(trust)' Road, Barkatpura,^S.O Udmp'atty,^{HYderabad- 500027}

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...PETITIONER

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AND

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1 Principal Chief^{Commissigner of lncomeTax, Norlh Biock'NewDelhi} I The lncome^{Tax Department,lDeomeTax Departmgnt'Hy{erabad} J Assessment^{Unit, E.Ramp Jawaharlal Nehru Stadium New Delhi}

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.,.RESPONDENTS

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'Petition under Article 226 of the C9nstitution of lndia praying that in the circumstances^{statedin the affidavit filed therewith' the High Court may bq} pleased to issue a^{Writ of Mandamus o1 qny otherappropriateWrit Orderor} Direction declaring^{the order passedbv the 1st Respondent in DIN and qrderNg'} ITBA/QoM/F/1712024-2511072127904(1)dated13-01-2025fortheAY2015.10 rejecting^{the Condqnationof delayapplicqtion as arbitraryillegal bad in law'} violativeoftheprinciplesofnaturaljusticeapartfrombeingviolativeofArticles l4,lggand265oftheCQnstitutionoflndiaandconsequentlysetasidethesamB ln the interests^of .iustice.

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t- ,: 1r

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IA NO:1^{0F 2025}

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Petltion^{underSiection 151 CPC praying that in the circumstances statedin} the^{affidavitfiledin s;upportof the petition, the High Court may be p pasedplqqse} direct the^{regpondenls to stay all fu(her proceedings'including any reQovqfy'} pqrguant tq the^{qrder issued by} t!" tSt^{Regpondent' DIN and order !!fo'} lTBtucoM/F/1^{7t20242511072127.gQh(t} ) Cated^{13''01-2Q25'tor the fssessmen!} Year 2Q15-16,^{pending disposalof the Main Writ fetition}

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Counse!^for lhe^{Petitioner: ME.HIMANGINI SANGHI}

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Counsel^{for the Respondents:SRI A'RAM+KRISHNAREDOY' SC FOR lT DEPT}

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6* w.P.No.2998 OE 0 5

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Between:

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BhaoiniManda|(tlust),RepbyltpresidentMrsS.e.e-maHipplgaonkarrf/o4.1-STilak Roaf . Barkatpura,^{S.(). Nampally, Hyderabad'5UUuz/}

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...PETlTlONER(S)

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AND

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. Principal^{Chief Commissioner of income Tax, North Block' New Delhi}

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The lncome^{Tax Department, lncome Tax Departnrent'Hyderabad}

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3.AssessmenttJnit'RoomNo4Ql.2ndFloqr,E-RarlpJawaharlalNehru Siadium, New^Delhi

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...RESPONDENTS

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Petition under^{Article 226 of the constitutionof lndiaprayingthat in the} circumstances^{stated in the affidavit filedtherewith, the High court nray be pleased} toissueaWritofMandamusoranyotherappropriate{ritordarorDirection declaring the^{orcjerr passedby the 1st Respondentin DIN and order No-} lTBfuCoM/Fi171201|.4.2511072128180(1)dated13-01-2025fortheAY2014-15 rejecting the Condoration^{of delayapplication as arbitraryillegal bad in law'} violative of the^{principlesof natural justice apart from being violative of Articles}

J-

-"ar

-&,,,

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14,199 and 265 of the constitution^{of lndiaand consequentlyset aside the samein} the interests of^justice and to^{pass in the interestof justice.}

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IA NO:^'l OF 2025

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Petition un_dq( seqtion^{151 CPC prqyingthat in the circumstances statedin} the affi{pvit filed in Eupport^of the^petilion, the^{High cq-u( m4ybe plgase{plqagg} direct -^--__':- the respondents -:r tq^stav i^{all further proceqdings, including any tecovery,} pursuant tq lhe or{er issued by the^{'!et ResponQent,plN} el9^o1.@erNo ITBAiCQ[//E/17120e4-25t1072128180(1)^{datqd 1Q'01-2Q25,for the Aseessmenl} Year 2014-15, Pelqlns diqpos4l^of thq Main Wlit^Pglitio.ry'

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Counsql for the Petitio[er^: ME.H|MANGlNl^SANGHI

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Counsel for lhe Reqponlents:^{SRI A.RAMAKRISHNA} BEDDY'^{SC FPR lT DEPT} The Cqurt nlade the following:^cOMMoNORPER

&'r^" 'jt

lta!

THE HONOURABLE THE ACTING^CHIEF WSTICE^{SUJOY PAUL} AND THE HONOURABLE SMT. JUSTICE RENUKA^YARA

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WRIT PETITION Nos.2837 and.2998 of2O2$

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COMMON ORDER: (Per Hon'ble The Acting Chief Justice)

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With tl-re consent finally heard. Ms. Himangrni Sanghi,

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learned coun s,e1 for the petitioner and Sri A. Ramakrishna^Reddy, learned Standing Counsel for the Income Tax Department,^for re spondents

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Regard L,eing had to the similitude of the questio'rs involved on the joint request of the parties, these matters were analogously heard ald decicled by this common order.

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In W.P.l\os.2837 and 2998 of 2025, the orrlers dated 13.01.2025, vrhereby the applications frled for coni.onation of delay of 3198 zLnd 3533 days respectively in filing Fo':m 10-B of the Income Tax Act, 1961, pertaining to Assessment Years 201516 and 20L4 15;, were rejected

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Learned counsel for the petitioner submits that pretitioner is a charitable Trtrst. By placing reliance on additional affidavit, it is submitted that apart from the aforesaid two years, th,: petitioner submitted retllrns in time for last 45 years. The delzLy occurred because the Chartered Accountant of the petitioner's Trust was

a unwell and has undergone brain surgery. In this backdrop, lenient view should have been taken, when ample power was there with competent authority. The impugned rejection orders run contrary to the^judgments of the Guj arat and Bombay High Courts 1n Sanrodaya Charitable Trust v. Income-tax Officer (Exemption)r and AI Jamia Mohammediyah Education Society v. Commissioner of Income-tax (Exemptionsf2 respectively.

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Learned Standing Counsel for the Income Tax Department submits that in view of enormous delay on the part of the petitioner, no fault cal be found in the impugned orders.

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The parties have confined their arguments tb the extent indicated above.

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Learned counsel for the petitioner categorically pleaded that the petitioner is a charitable Trust and in last 45 years without there being any default, returns were filed. Thus, on two occasions if delay had occurred because of reasons beyond the control of the petitioner, a lenient view should have been taken.

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'1zozt1^{t8 ttn-oLzs3} 'lzozs;^{a8u ttn ar}

,-d'il

k- .ral-

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The Gr-rj ar'rt^{High Court inSarvodaYaCharitableTrust} (supra) recorded^{a's under:}

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t'3o. We meLy^{also refer to and rely} 'p9'^{tdecision of the} olit l nigtt'j,rurt^{in the case of G' V' Infosutions (P') Ltd v'} 5"."iif?",,"tred^{in 12ole) 13 ITR-oL 164 (Delhi) ; l2()l9l} +42 tb.rhii'^{we mav quote the rerevant} ;di ;;;:;;; Jt,""*^tion"^{thus (page 17Oof 13 ITR-OL):}

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"8. l'he rejection^{of the petitioner'sapplication} under s,:ctitn^{1l9{2}(b) is only on the ground tnal} ".".,t*g^{," the CliiefCommissioner'sopinionthe} pi.^-,rr" omission^{by theauditor was not} This court^has -^diffrcultvto i rt",rlr,i.,.a a"o,tma^{wfLatmoreplea qr proof:} Tl: ?;=?slfl -.rf a f-,r:"" U-ught ""^{t"tttd' t'} r.]"au"i,""-."^{ot-its-edy1!q.The net result} .ol^the ffi i" i,, "rlect^{that the petitioner's} clairn- "^{';;=-;__--r.-"r} of^{inadvertentmistake issought tobe} as not bona^{frde The court is of the} .t ooinion rr ",,t".i""d Lhat^{an assessee has to take leave of iLs} "!ns.s^{if itdeliberatelywishes .tofollgo, .'} substantial^{amount as the assessee ls ascrloeoLL)} have in^{the circumstances of this case 'Bona fide'} i" ,-" t. understood^{in the context ofthe} circurnsLance^{of any case Beyond a pleaoI the.sort} the pelitioner^{raises(concededlybelatedlyl'trlere} ..t.i,t t-t".""sari1y^{teindependent proof or} "I"i"r:af^{to establishthat the auditorin factacted} without diligence.^{The petitioner did not urge any} oth,,. 13aorr-rd"^{such as illness of someoneetc} ' *trr"it^{-.Jareasonablyhave been substaltiated} material ln^{the circumstancesof} ;;";l";;J""t tt" "',,,t", the^{petitioner,in our opinion' was ableto} sho,"r, trona^{hde reasonswhy the refund claim could} not be made^{in time.}

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ThLe statute^{for period of limitation prescribedin} i.or.i";o.t*^{of law meant to attach frnality' and in} that sense^{are statutesofrepose;} -however' *h"."'r". the^{Legislature intends reliefagainst} ;;;;ri; ';;;i;i; i., """."= where^{such statutes lead.to} =;,h.^{lor'""..'edauthorities' includingthe} n".ra"". authorities^{have to construeth^em in a} ."l"or-r"Uf"^{marrner. That was theeffect} -^anc of this court's^{decision inIndglonal} ;;;;;i

il ll

Investment arrd Finance Ltd. v. ITO [2012] S43 ITR a4 (Delhi). This court is of the opinion that a similar approach is to be adopted in th; circumstances of the case.,,

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We.may also refer to the decision of this court in CIT v. Gujarat Oil and Allied Industries [19931 201 ITR 32S (cuj], wherein it is held that the provision regarding furnishine ;i audit report with the return has to be treated as a prgcedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This court took the view that the benefit of exemption should not be denied merelv on account of delay in furnishing the same ana ii is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Ofhcer or before the appellate authorit5r by assigning sufficient cause.,,

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(trmphasis Supplied)

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The aforesaid judgment was considered by the Bombay High Court in AI Jamai Mohammediyah Education

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Society (supra) and it was held as under:

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Admittedl oner is a charitable trust. Admittedl/.^{y, the} the petitioner^petiti has been hlins its returns and form 10B for the assessment year 2015-2016 , for the

)

assessment vear 20^{1 7} -2OlA^{to assessment year 2021-2022} within the due dates On^this ound alone, in our^vieu the delav contlonatron^{application shouldhave beenall,:wed} because ttre failure to frle^{returns for the assessment vear} 2076-20 t 7'^,:ould be onlv due^{to humanerrorEven in the} impugned o:rder, the^{re is no alleqation of maia hdes. As held} try the Gr,rjarat High Court^{in SaruodayaChanta ble} Ttustv. lTr)^(Exemption) l(2O21<sup>18 ITR-OL 253 (Guj);2020 SCC Onl,ine Guj 3597;^{(2021\125 taxmann.com 75 (Guj).1,} the approach in the cases of the^{present type shou d be} equitous, bzrlancing and^{judicious.Technically,strictll' and} libera1ly speaking, respondent No.^{1 mightbe justifir:din} denying the exemption by rejecting^{such condonation} application, but an assessee. a^{public charitable trust with} almost over thirty^y ears, which^{otherwise satisfiesr the} COndition for availing of such exemotion.^{shouldnot be} denied the same merelv on^{the bar of limitationespecially} when the Legislature has conferred^{widediscretionary} powers to condone such delav on the authorities concerned. Paragraphs 3O and 3l of Saruodaya^{Chaitoble Tntst','.ITO} (Exemptiort) l(2o21]r 1'8 ITR-OL 253 (Guj); 2020 SCC Online Guj 3597; (2021) 125 taxmann.com^{Z5 (Guj).] reacls as} under (page 271 of 18 ITR-OL):

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"3O. iVe may also refer to and rely upon a decision^of the Delhi High Court in the case of G.V.^{Infostttion:;} Put. t.td. v. Dg. CIT [(2019) 13 ITR-OL^{164 (Delhi);} 2019 SCC Onl-ine De1 6861;^{(2019) 1O:l} taxmimn.com 397 (Delhi);^{(2019\261 Taxmart 48il} (Delhi).] We may quote the relevant observation:; thus ipage 170 of 13 ITR-OL):..."

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(trmphas s Supplied)

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If the factua,l backdrop of the^{presentcase is considered,in} the light of aforr:said^judgments of the^Guj arat^{and BorrbayHigh} Courts, it will be clear like noon day that there^{is lot ol similarity} amongst these matters. The petitioners before both the^High Courts were also Charitable Trusts and delay was lccasioned because of compelling reasons. The Courts opinecl that the

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assessee is a public Charitable Trust and^{for last threedecades} have substantia,lly satisfred the conditions.^{Denial on the basis of} bar of limitation is not^{justified.The case of the petitioner herein} is somewhat on better footing^{because ithas arecord of} compliance for 45 years.

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I 1. In this backdrop, both^{the Writ Petitions are allowedby} setting aside the impugned^{rejection ordersdated 13.01'2025 and} consequently, the delay of 3198^{and 3533days respectivelyare} condoned, The respondents^{are directed to proceed in accordance} with law from that stage. There^{sha1lbe no order as to costs'}

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Miscellaneous applications,^{if any, pending shall stand closed'}

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orr,rrtfi-I'*'lolt?ftEF /

To,

/ffRUE^COPY'/

ECTION^OFFICER

The Principal^{Chief Commissionerof lncome Tax'North Block' New Delhi}

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1. The The Assessment^{lncome Tax Department' Unit' E-Ramp Jawaharlal Nehru lncomeTax Depafiment Stadium' HyderabadNew Delhi} 4. One^{CC to Ms HIMANGINI SANGHI' Advocate tOPUCl}

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