Mahernagar Co-Op Housing Service Society Limited Vs Chief Commissioner of Income Tax (Gujarat High Court)
The Gujarat High Court considered a writ petition filed by a cooperative housing society seeking to quash two orders of the Income Tax Department: (i) the order dated 27 June 2024 refusing to condone a delay of 29 days in filing the return of income for Assessment Year (AY) 2018-19, and (ii) the intimation order dated 16 May 2019 issued under section 143(1). The society also sought permission to file a fresh return for AY 2018-19.
The petitioner argued that the delay was caused due to circumstances beyond its control. The Sub-auditor of Cooperative Societies, Surat, did not appoint an auditor until 31 October 2018, resulting in the audit for the period 01 April 2014 to 31 March 2018 being completed only on 6 March 2019. The society filed its return on 29 November 2018 on the advice of its tax consultant, even though the audit was pending. However, the Department later issued an intimation under section 143(1) determining the gross total income at Rs. 3,62,115 and disallowing deduction under section 80P. The society subsequently filed an application on 1 February 2024 seeking condonation of delay under section 119(2)(b), which was rejected.
The Department opposed the petition, arguing that the society was a habitual late filer and that the delay could not be attributed to genuine hardship. It submitted that the return had already been filed and assessed, and that the petitioner had failed to demonstrate sufficient cause to warrant condonation.
The Court examined section 119(2)(b), which empowers the CBDT to authorise condonation of delay to avoid genuine hardship. It noted that the audit report, covering four years, was prepared only on 6 March 2019, and that the society’s explanation regarding late appointment of the auditor had not been disputed by the Department. The Court held that in such circumstances, the Department ought to have allowed the condonation application.
The Court also relied on Circular No. 13 of 2023 dated 26 July 2023, particularly paragraph 6(ii), which requires authorities to consider delays caused due to late completion of statutory audits while deciding applications for condonation of delay in filing returns. It held that the petitioner’s situation fell squarely within this provision. The delayed audit by the state-appointed Sub-auditor constituted a genuine predicament, and therefore, the petitioner’s application deserved to be allowed.
Consequently, the Court set aside the order dated 27 June 2024 rejecting the condonation request and also quashed the intimation under section 143(1) dated 16 May 2019. The Department was directed to permit the society to file a fresh return of income for AY 2018-19 within one month. The writ petition was allowed, and rule was made absolute.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Amendment filed by learned advocate Gandhi is allowed in terms of draft. The same shall be carried out forthwith.
2. In view of a short question involved in the present writ petition, the same is taken for final hearing
3. RULE. Learned advocate Sanghani waives service of notice of rule for and on behalf of the respondent-Department.
4. In the present writ petition, the petitioner- Society has made following prayers:
“11. (A) The Hon’ ble Court may be pleased to quash and set aside the order dated 27/06/2024 (Annexure A) passed by the Respondent and condone the delay of 29 days in filing return of income for A. Y. 2018-19.
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(D) . The Hon’ ble Court may be pleased to quash and set-aside the intimation order dated 16/05/2019 passed u/s 143( 1) ( annexure D) and permit the petitioner to file fresh return of income within 1 month for A. Y. 2018-19. ”
5. Learned advocate Gandhi appearing for the petitioner-Society has submitted that by the impugned order, the respondent-Department has denied to condone delay of 29 days caused in filing the return of income under the provision of section 139(1) of the Income Tax Act, 1961 ( for short “the Act”) for the Assessment Year 2018-19. In support of his submissions, he has placed reliance on the Circular No. 13 of 2023 dated 26. 07. 2023, which deals with the condonation of delay in filing the return of income for the purpose of permitting deduction under section 80P of the Act.
6. Learned advocate Gandhi has also pointed out the Audit Report dated 06. 03. 2019 prepared by the Sub-auditor of the Cooperative Societies, Surat for the period from 01. 04. 2014 to 31.03.2018 and it is admitted that the Sub- auditor of the Cooperative Societies did not make any appointment of the Auditor till 31. 10. 2018 and hence, the Return of Income (ROI) was not filed within prescribed time limit. He has submitted that subsequently, on an advice of the Income Tax Consultant, the petitioner-Society filed return of income on 29. 11. 2018, without waiting further for completion of audit however, the respondent-Department issued intimation order under section 143(1) of the Act dated 16. 05. 2019 holding that the gross total income in the hand of the petitioner-Society is Rs. 3, 62, 115/- and thereafter, disallowed deduction under section 80P of the Act. It is submitted that the petitioner-Society filed an application on 01. 02.2024 for the purpose of condoning delay under section 119(2) (b) of the Act for filing return of income for the Assessment Year 2018-19 and also to claim deduction under section 80P of the Act, however, the same has been rejected by the impugned order.
7. Learned advocate Gandhi has submitted that the aforesaid facts of non-appointment of the Auditor and the filing of the Audit Report in the year 2019 is not denied by the respondent- Department and hence, the impugned order may be quashed and set aside and the respondents may be directed to re-examine the application of the petitioner-Society seeking condonation of delay and also set aside the order dated 16. 05. 2019 passed under section 143(1) of the Act and they may be allowed to file a fresh return of income.
8. In response to the aforesaid submissions, learned Senior Standing Counsel Sanghani appearing for the respondent-Department has submitted that the present writ petition may not be allowed since unquestionably, the petitioner- Society has filed its return and the same is further also assessed. It is submitted that shelter taken by the petitioner-Society under the Audit Report is inappropriate since the petitioner-Society is a habitual late filer of the return of income. He has referred to the contents of the affidavit-in-reply and has submitted that it was the duty of the petitioner- Society to get its account audited in time and file its return within a due time limit and since it has failed to establish that, the order under section 119(2) (b) of the Act may not be set aside. He has submitted that it cannot be said that the petitioner-Society has faced genuine hardships on merits.
9. We have heard the learned advocates appearing for the respective parties at length and also perused the documents, as pointed out by
10. The entire case of the respective parties hinges on the provisions of Section 119(2) (b) of the The same are as under:
“119. Instructions to subordinate authorities
(2) Without prejudice to the generality of the foregoing power,—
(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise 11[ any income-tax authority, not being [ a Joint Commissioner ( Appeals) or] a Commissioner ( Appeals) ] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;”
11. It is not in dispute that the Audit Report of the Sub-auditor of Cooperative Societies, Surat is dated 03. 2019 and Audit is undertaken for the period from 01. 04. 2014 to 31. 03. 2018, which is apparent from the said report. Thus, for the consolidated four years’ Audit Report has been prepared on 06. 03. 2019. The petitioner-Society in the writ petition more particularly, in paragraph Nos. 3 and 4 has categorically stated on affidavit that the Sub-auditor of Cooperative Societies did not make the appointment of the Auditor till 31.10.2018 and on the advice of the Income Tax Consultant, the petitioner-Society filed its return of income on 29. 11. 2018. Such assertions made in the writ petition have not been denied by the respondent-department. Thus, in wake of the fact that the Auditor Report is of the year 2019, the respondent-department ought to have allowed the application filed by the petitioner-Society for condonation of delay instead of rejecting the same.
12. At this stage, we may refer to the provisions of the Circular 13 of 2023 dated 26. 07. 2023 more particularly, paragraph No. 6(ii) . The same are as under:
“6. In the content of para-5 above, the CCsIT/DGsIT while deciding such applications for condonation of delay in furnishing return of income, shall satisfy themselves that the applicant’ s case is a fit case for condonation under the existing provisions of the Act. The CCsIT/DGsIT shall examine the following while deciding such applications-
(i) *** *** ***
(ii) where delay in furnishing return of income was caused due to delay in getting the accounts audited by statutory auditors appointed under the respective state Law under which such person is required to get his accounts audited, the date of completion of audit vis-a-vis the due date of furnishing the return of income under sub-section (1) of section 139 of the Act; and”
13. In our considered opinion, paragraph 6(ii) of the Circular dated 26. 07. 2023 will come to the rescue of the petitioner-society. The delay of getting the accounts audited and filing of Audit Report belatedly by the Sub-auditor appointed by the State will come within the purview of the provisions of paragraph No. 6( ii) of the said Circular. Thus, the respondent-Department was supposed to invoke the provisions of the aforesaid Circular and in wake of the undisputed fact of the Audit Report having been prepared in the year 2019, the petitioner’ s application was ought to be allowed as indubitably, filing of the report in the year 2019 belatedly by the Sub- auditor can be said to be genuine predicament.
14. Hence, we hereby quash and set aside the order dated 06. 2024 rejecting the application of the petitioner-Society seeking condonation of delay of 29 days caused in filing the return of income. As a sequel thereof, we quash and set aside the intimation order dated 16. 05. 2019 passed by the respondent-Department under section 143(1) of the Act. The respondent-Department shall allow the petitioner-Society to file a fresh return of income within a period of one month for the Assessment Year 2018-19, as per section 139(1) of the Act.
15. The present writ petition stands allowed. Rule made absolute.
