Bombay High CourtWP/5420/2024absolute

The Borivli Education Society v. Commissioner Of Income Tax (Exemption)

2025-02-17Hon'Ble Shri Justice Jitendra Shantilal Jain , Hon'Ble Shri Justice M.S. Sonak5 pages

2025:BHC-OS:2691-DB Sayyed 22-WP.5420.2024.docx IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.5420 OF 2024 WRIT PETITION NO.5420 OF 2024 The Borivli Education Society The Borivli Education Society

...Petitioner

Versus

Commissioner of Income-Tax Commissioner of Income-Tax (Exemption), Mumbai & Ors.

(Exemption), Mumbai & Ors.

...Respondents

_____________________________________________________ Dr. K. Shivaram, Senior Counsel a/w Mr. Rahul Hakani and Ms. Neelam Dr. K. Shivaram, Senior Counsel a/w Mr. Rahul Hakani and Ms. Neelam C. Jadhav for the Petitioner.

C. Jadhav for the Petitioner.

Mr. Dinesh R. Gulabani a/w Ms. Vibha D. Gulabani for the Respondents. Mr. Dinesh R. Gulabani a/w Ms. Vibha D. Gulabani for the Respondents. _____________________________________________________ CORAM :

M. S. Sonak & Jitendra Jain, JJ.

DATED : 17 February 2025 ORAL JUDGMENT (Per M. S. Sonak, J.):- 1.

Heard learned counsel for the parties.

Rule. The Rule is made returnable immediately at the request Rule. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties. of and with the consent of the learned counsel for the parties. 3.

This petition concerns assessment year 2014-2015. The This petition concerns assessment year 2014-2015. The Petitioner challenges the impugned orders dated 10 October 2024 and Petitioner challenges the impugned orders dated 10 October 2024 and 13 November 2024 made by the first respondent rejecting the 13 November 2024 made by the first respondent rejecting the Petitioner's application for condonation of delay of 2732 days in filing Petitioner's application for condonation of delay of 2732 days in filing Form 10B for claiming exemption under Section 11 of the Income Tax Form 10B for claiming exemption under Section 11 of the Income Tax Act, 1961 ("IT Act").

Act, 1961 ("IT Act").

Admittedly, the Petitioner had obtained and filed Form 10B Admittedly, the Petitioner had obtained and filed Form 10B manually within the prescribed period. Mr.

manually within the prescribed period. Mr. Gulabani, learned counsel Gulabani, learned counsel for the Revenue, did not dispute this position fairly. Even otherwise, the for the Revenue, did not dispute this position fairly. Even otherwise, the records support this position.

records support this position.

Sayyed 22-WP.5420.2024.docx 5.

At the same time, the records also bear out, and Dr. Shivaram, At the same time, the records also bear out, and Dr. Shivaram, senior advocate for the Petitioner, admitted that this Form 10B senior advocate for the Petitioner, admitted that this Form 10B remained to be uploaded electronically. The Petitioner was established remained to be uploaded electronically. The Petitioner was established to administer educational institutions from 1954 to 1955. The to administer educational institutions from 1954 to 1955. The Chartered Accountant representing the Petitioner accepted that she was Chartered Accountant representing the Petitioner accepted that she was under the under the bona fide bona fide impression that electronic filing was not mandatory. impression that electronic filing was not mandatory. The Chartered Accountant has also filed an affidavit in this regard. The Chartered Accountant has also filed an affidavit in this regard. 6.

The third respondent issued an intimation under Section The third respondent issued an intimation under Section 143(1) dated 16 March 2016, denying the Petitioner's claim for 143(1) dated 16 March 2016, denying the Petitioner's claim for exemption under Section 11. However, this intimation gave no reasons exemption under Section 11. However, this intimation gave no reasons for the denial of exemption. The Petitioner has alleged that even this for the denial of exemption. The Petitioner has alleged that even this intimation was without issuing the mandatorily required show cause intimation was without issuing the mandatorily required show cause notice.

notice.

Upon enquiries, the Petitioner was informed that the Upon enquiries, the Petitioner was informed that the exemption was rejected due to the non-filing of Form 10B electronically. exemption was rejected due to the non-filing of Form 10B electronically. Soon thereafter, the Petitioner, by way of abundant caution, filed online Soon thereafter, the Petitioner, by way of abundant caution, filed online rectification applications dated 25 May 2016 and 6 March 2017. These rectification applications dated 25 May 2016 and 6 March 2017. These were summarily rejected, again, without even minimum compliance were summarily rejected, again, without even minimum compliance with principles of natural justice. The Petitioner applied Section 154 with principles of natural justice. The Petitioner applied Section 154 before the Jurisdictional Assessing Officer on 2 July 2018 and has before the Jurisdictional Assessing Officer on 2 July 2018 and has pleaded that this application is pending to date. pleaded that this application is pending to date. 8.

The Petitioner was also served with a notice under Section The Petitioner was also served with a notice under Section 139(9) on 8 January 2016 regarding the alleged non-disclosure of 139(9) on 8 January 2016 regarding the alleged non-disclosure of corpus and non-corpus fund in schedule J. To remedy this, the corpus and non-corpus fund in schedule J. To remedy this, the Petitioner again filed a return of income on 16 January 2019, and in Petitioner again filed a return of income on 16 January 2019, and in this return, the Petitioner disclosed that the audit report in Form 10B this return, the Petitioner disclosed that the audit report in Form 10B was physically filed within time. All this shows that the Petitioner, based was physically filed within time. All this shows that the Petitioner, based upon the upon the bona fide bona fide advice of their Chartered Accountant, believed that advice of their Chartered Accountant, believed that

Sayyed 22-WP.5420.2024.docx the filing of Form 10B manually or physically was substantial the filing of Form 10B manually or physically was substantial compliance with the law.

compliance with the law.

At the hearing on the rectification application, the Assessing At the hearing on the rectification application, the Assessing Officer informed the Petitioner about the requirement of uploading Officer informed the Petitioner about the requirement of uploading Form 10B electronically on the portal. Immediately, i.e. on 24 March Form 10B electronically on the portal. Immediately, i.e. on 24 March 2022, the Petitioner uploaded Form 10B on the portal. As a matter of 2022, the Petitioner uploaded Form 10B on the portal. As a matter of abundant caution, an application for condonation of delay was filed. abundant caution, an application for condonation of delay was filed. Along with this application, the Chartered Accountant filed her affidavit Along with this application, the Chartered Accountant filed her affidavit regarding the regarding the bona fide bona fide impression that she carried and the advice that impression that she carried and the advice that she tendered to the Petitioner based upon this she tendered to the Petitioner based upon this bona fide bona fide impression.

impression.

10.

The TRO (Exemption) issued notice dated 24 July 2024 to the The TRO (Exemption) issued notice dated 24 July 2024 to the Petitioner requesting certain particulars. The Petitioner complied with Petitioner requesting certain particulars. The Petitioner complied with this via a letter dated 29 July 2024. Even this time, without compliance this via a letter dated 29 July 2024. Even this time, without compliance with principles of natural justice, the Petitioner's application was with principles of natural justice, the Petitioner's application was rejected by an order dated 10 October 2024. The Petitioner again filed a rejected by an order dated 10 October 2024. The Petitioner again filed a rectification application on 12 November 2024, which was also rectification application on 12 November 2024, which was also dismissed on 13 November 2024 without any opportunity of hearing to dismissed on 13 November 2024 without any opportunity of hearing to the Petitioner or its representative.

the Petitioner or its representative.

11.

Based on the aforesaid facts and circumstances, we are Based on the aforesaid facts and circumstances, we are satisfied that the Petitioner filed Form 10B manually or physically satisfied that the Petitioner filed Form 10B manually or physically within the prescribed period. True, Form 10B was not uploaded within the prescribed period. True, Form 10B was not uploaded electronically. At the same time, the Petitioner was not intimated for a electronically. At the same time, the Petitioner was not intimated for a long time that this was the requirement for which the exemption was long time that this was the requirement for which the exemption was being denied. Belatedly, the Petitioner was informed that this was one of being denied. Belatedly, the Petitioner was informed that this was one of the reasons. Therefore, the Petitioner took expedient steps. the reasons. Therefore, the Petitioner took expedient steps. 12.

The Petitioner also explained that she had nothing to gain The Petitioner also explained that she had nothing to gain from non-compliance. The non-compliance, if any, was due to the from non-compliance. The non-compliance, if any, was due to the advice of a professional Chartered Accountant. Even the Chartered advice of a professional Chartered Accountant. Even the Chartered

Sayyed 22-WP.5420.2024.docx Accountant filed an affidavit explaining her Accountant filed an affidavit explaining her bona fides bona fides and the factum and the factum of the advice. After the Petitioner became aware of the reasons, she took of the advice. After the Petitioner became aware of the reasons, she took several steps and ultimately uploaded Form 10B electronically. Still, the several steps and ultimately uploaded Form 10B electronically. Still, the application for condonation of delay has been rejected without application for condonation of delay has been rejected without adequate compliance with the principles of natural justice and fair play. adequate compliance with the principles of natural justice and fair play. 13.

In all such matters, there is bound to be some lapse on the In all such matters, there is bound to be some lapse on the part of the assessee seeking condonation. However, the delay should be part of the assessee seeking condonation. However, the delay should be condoned as long as such lapse is not condoned as long as such lapse is not mala fide mala fide and the assessee has not and the assessee has not derived any undue advantage out of his own lapse. Besides, in such derived any undue advantage out of his own lapse. Besides, in such matters, though the length of the delay is one of the considerations, it is matters, though the length of the delay is one of the considerations, it is not sole consideration. The quality of the explanation offered is crucial, not sole consideration. The quality of the explanation offered is crucial, and the focus must be the quality of the cause shown in the and the focus must be the quality of the cause shown in the explanation.

explanation.

14.

Besides, in this case, though the delay appears considerable, Besides, in this case, though the delay appears considerable, there is some merit in Dr. Shivaram's contentions that the delay should there is some merit in Dr. Shivaram's contentions that the delay should be construed from the day Petitioner was informed of the real reason for be construed from the day Petitioner was informed of the real reason for the denial of exemption. After it was informed of the real reason, the the denial of exemption. After it was informed of the real reason, the Petitioner's conduct cannot be said to be either informed with lethargy Petitioner's conduct cannot be said to be either informed with lethargy or indolence. The Petitioner took several steps and time and again or indolence. The Petitioner took several steps and time and again pointed out that Form 10B was already filed manually within the pointed out that Form 10B was already filed manually within the prescribed time.

prescribed time.

15.

We note that even before the CIT (Exemption), the Petitioner We note that even before the CIT (Exemption), the Petitioner categorically pleaded and made good their submissions about Form 10B categorically pleaded and made good their submissions about Form 10B being filed manually within the prescribed time limit. This was a crucial being filed manually within the prescribed time limit. This was a crucial circumstance when considering the Petitioner's conduct and its circumstance when considering the Petitioner's conduct and its application for condonation of delay. The possession of the certification application for condonation of delay. The possession of the certification is a mandatory requirement. The mode of proof may not always be. In is a mandatory requirement. The mode of proof may not always be. In any event, no dispute is raised about the Petitioner submitting the any event, no dispute is raised about the Petitioner submitting the

Sayyed 22-WP.5420.2024.docx prescribed form within the prescribed period manually or physically. prescribed form within the prescribed period manually or physically. The impugned order, however, takes no cognisance of this crucial The impugned order, however, takes no cognisance of this crucial circumstances.

circumstances.

16.

For all the above reasons and upon cumulative consideration For all the above reasons and upon cumulative consideration of the facts and circumstances of the about which there was no serious of the facts and circumstances of the about which there was no serious dispute, we are satisfied that discretion should have been exercised, and dispute, we are satisfied that discretion should have been exercised, and the delay should be condoned.

the delay should be condoned.

17.

Accordingly, we set aside the impugned orders dated 10 Accordingly, we set aside the impugned orders dated 10 October 2024 and 13 November 2024 and condone the delay in October 2024 and 13 November 2024 and condone the delay in electronically uploading Form 10B after noting that his form was electronically uploading Form 10B after noting that his form was already filed in the physical form within the prescribed period, i.e. on already filed in the physical form within the prescribed period, i.e. on 30 September 2014, about which there is no dispute whatsoever. 30 September 2014, about which there is no dispute whatsoever. 18.

The Rule is made absolute in the above terms without any The Rule is made absolute in the above terms without any cost order. All concerned are to act on an authenticated copy of this cost order. All concerned are to act on an authenticated copy of this order.

order.

(Jitendra Jain, J.) (M. S. Sonak, J.) Signed by: Sayyed Saeed Ali Designation: PA To Honourable Judge Date: 18/02/2025 16:19:28