Case Law Details
Manav Seva Samiti Vs PCIT (Exemptions) (Rajasthan High Court)
The Rajasthan High Court has provided relief to a public charitable trust, ruling that a significant delay in filing a statutory form should be condoned due to genuine hardship. In the case of Manav Seva Samiti vs. PCIT (Exemptions), the court set aside an order by the Principal Commissioner of Income Tax that had rejected the trust’s application to condone a 700-day delay in filing Form 10B. The trust argued that the delay was a result of the ill health of its president, who had suffered a severe brain stroke and was hospitalized for an extended period before his death. The court found that there was no lack of bona fide intention on the part of the trust and that the tax authorities should have adopted a more judicious and equitable approach.
The petitioner, a charitable trust registered under the Rajasthan Public Charitable Trusts Act, 1959, was managed by its president, Anandi Lal Mehta. After Mr. Mehta suffered a debilitating brain stroke, the trust’s day-to-day affairs, including the timely filing of its income tax documents, were severely affected. As a result, the audit for Assessment Year 2018-19 was delayed by 115 days, and the auditor-uploaded Form 10B was filed 700 days past the due date. The trust subsequently filed an application under Section 119(2)(b) of the Income Tax Act, 1961, which grants the authorities discretionary power to condone delays. However, this application was rejected, with the respondent arguing that in the absence of the president, a vice-president should have assumed the responsibilities.
The Rajasthan High Court disagreed with the tax authorities’ reasoning, stating that the respondent had taken a “very casual” approach in rejecting the application. The court noted that there was no allegation of any malicious or deliberate intent to delay the filing. The court emphasized that the petitioner was a legitimate charitable organization engaged in activities like distributing food to the poor and providing free ambulance services, which could be easily verified from its financial records. It held that while the respondent might have been technically correct in their strict interpretation of the law, a public charitable trust should not be denied an exemption on a mere technicality, especially when the legislature has provided a mechanism for condoning such delays.
The court’s decision was supported by prior judicial precedents, including a judgment by the Bombay High Court in Al Jamia Muhammadiyah Education Society vs. Commissioner of Income Tax (Exemptions). In that case, the Bombay High Court had condoned a delay for a similar charitable trust that had a history of timely filings, attributing the singular lapse to a “human error.” The judgment reiterated that the approach in such cases should be “equitous, balancing and judicious” and that rejecting a condonation application without any allegation of malafide intent is not justified. The Rajasthan High Court also referenced a Gujarat High Court decision in Sarvodaya Charitable Trust and a Delhi High Court decision in G.V. Infosutions (P) Ltd., both of which similarly advocated for a lenient interpretation of procedural delays when there are no questions regarding the taxpayer’s bona fide intentions.
The final verdict of the Rajasthan High Court was to condone the delay, quash the impugned order of the Principal Commissioner, and allow the petitioner’s application. This judgment reinforces the principle that procedural lapses, particularly for non-profit entities with a history of compliance, should not be a ground for denying a substantive benefit, provided that the reasons for the delay are genuine and there is no evidence of a fraudulent or dishonest motive. The court’s decision serves as a reminder to tax authorities to exercise their discretionary powers under Section 119 with a fair and reasonable perspective, taking into account the specific circumstances of each case.
For Petitioner : Mr. Siddharth Ranka, Adv. through VC, Mr. K.P. Raj Deora, Advocate
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. Petitioner impugns an order dated 17th August 2023 passed under Section 119(2)(b) of the Income Tax Act, 1961. The matter pertains to Assessment Year 2018-2019.
2. Rule, made returnable forthwith. Shri K.K. Bissa appears for respondent.
3. Petitioner is a public charitable trust registered under Rajasthan Public Charitable Trusts Act, 1959. Petitioner-trust was being maintained by one Anandi Lal Mehta, who was the then President of Trust. The said Anandi Lal Mehta suffered a severe brain stroke and was consequently hospitalized for an extended period of time. Due to his medical condition, accounts of petitioner for Assessment Year 2018-2019 got audited on 23rd February 2019 after a delay of 115 days and the auditor of petitioner uploaded Form 10B on income tax e-portal only on 20th September 2020 with a delay of 700 days after the due date. The said Anandi Lal Mehta unfortunately also died later on 27th November 2022. In his absence, the day to day affairs of petitioner had also come to a grinding halt resulting in inordinate delay. Petitioner, therefore, filed application under Section 119 of the Act, which came to be rejected by impugned order dated 17th August 2023.
4. Counsel for petitioner Shri Siddharth Ranka submitted that petitioner is a bona fide charitable trust running charitable activities, distributing food to poor and also free ambulance facilities. He submitted that all these activities are easily verifiable from various income and expenditure accounts of petitioner.
5. It was submitted by Shri Ranka that respondent, in a very casual manner, has rejected application for condonation of delay by stating that, in absence of trust’s President, a Vice-President shall be responsible for all duties of President and therefore, the fact that President not being well is a bona fide reason for seeking condonation.
6. We agree with Shri Ranka that there is no allegation of lack of bona fide in filing Form 10B and uploading the same belatedly. He submitted that, therefore, delay should have been condoned and present petition be allowed.
7. Counsel for respondent Shri K.K. Bissa reiterated what was stated in impugned order.
8. The fact that there was any mala fide intention in filing Form 10B belatedly is not alleged in impugned order. The fact that petitioner is a charitable trust is also not denied. Looking at the charitable activities itself, in our view, delay condonation application should have been allowed. Courts have repeatedly held that such approach in the cases of present type should be equitious, balancing and judicious. Even though technically and strictly and liberally speaking, respondent might be justified in rejecting application but the assessee, a public charitable trust, with so many years of charitable activities, which otherwise satisfies the condition for availing such exemption should not be denied the same merely due on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
9. We find support for this view of ours in the judgment of Bombay High Court in Al Jamia Muhammadiyah Education Society vs. Commissioner of Income Tax (Exemptions) Mumbai, Union of India1 which was authored by one of us (the Chief Justice) where paragraph 6 reads as under:
“6. Admittedly, Petitioner is a charitable trust. Admittedly, Petitioner has been filing its returns and Form 10B for AY 201516, for AY 2017-18 to AY 2021-22 within the due dates. On this ground alone, in our view, delay condonation application should have been allowed because the failure to file returns for AY 2016-17 could be only due to human error. Even in the impugned order, there is no allegation of malafide. As held by the Gujarat High Court in Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) MANU/GJ/1687/2020: [2021] 125 taxmann.com 75 (Gujarat), the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, Respondent No.1 might be justified in denying the exemption by rejecting such condonation application, but an assessee, a public charitable trust with almost over thirty years, which otherwise satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. Paragraphs 30 and 31 of Sarvodaya Charitable Trust (Supra) reads as under:
“30. We may also refer to and rely upon a decision of the Delhi High Court in the case of G.V. Infosutions (P) Ltd. v. Dy: CIT [2019] 102 taxmann.com 397/261 Taxman 482. We may quote the relevant observations thus:
“8. The rejection of the petitioner’s application under section 119(2)(b) is only on the ground that according to the Chief Commissioner’s opinion the plea of omission by the auditor was not substantiated. This court has difficulty to understand what more plea or proof any assessee could have brought on record, to substantiate the inadvertence of its advisor. The net result of the impugned order is in effect that the petitioner’s claim of inadvertent mistake is sought to be characterised as not bona fide. The court is of the opinion that an assessee has to take leave of its senses if it deliberately wishes to forego a substantial amount as the assessee is ascribed to have in the circumstances of this case.
“Bona fide” is to be understood in the context of the circumstance of any case. Beyond a plea of the sort the petitioner raises (concededly belatedly), there can not necessarily be independent proof or material to establish that the auditor in fact acted without diligence. The petitioner did not urge any other grounds such as illness of someone etc., which could reasonably have been substantiated by independent material. In the circumstances of the case, the petitioner, in our opinion, was able to show bona fide reasons why the refund claim could not be made in time.
9. The statute or period of limitation prescribed in provisions of law meant to attach finality, and in that sense are statutes of repose; however, wherever the legislature intends relief against hardship in cases where such statutes lead to hardships, the concerned authorities-including Revenue Authorities have to construe them in a reasonable manner. That was the effect and purport of this court’s decision in Indglonal Investment & Finance Ltd. (supra). This court is of the opinion that a similar approach is to be adopted in the circumstances of the case.”
31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no. 2 might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.”
10. In our view also, it does not appear that assessee petitioner was lethargic or lacked bona fide in making claim beyond the period of limitation. In fact, we do not understand why would any party, who is entitled to claim, would intentionally delay in uploading the required documents.
11. A similar view was taken in Shree Jain Swetamber Murtipujak Tapagachha Sangh Vs. Commissioner of Income Tax (Exemption) and Anr.2
12. In our view, therefore, petition has to be allowed. We hereby condone delay. Rule made absolute in terms of prayer Clause (a), which reads as under:
“(a) Quash and set aside the impugned order dated 17.08.2023 (Annexure 8) passed under Section 119(2) (b) of the Act and consequently allow the petitioners application seeking condonation of delay in filing of Form 10B for the assessment year 2018-2019;”
13. Petition disposed.
Notes:
1 2024 (4) TMI 939; [2025] 482 ITR 41 (Bom)
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