Daroga Family Foundation Vs CIT (Exemption) (ITAT Kolkata)
In the case of Daroga Family Foundation vs. CIT (Exemption), the ITAT Kolkata addressed an appeal related to the assessment year 2021-22. The appeal challenged an order under Section 119(2)(b) of the Income Tax Act, 1961, issued by the Commissioner of Income Tax (Exemption), Kolkata, on 27.07.2023. The dispute centered around the rejection of the appellant’s application for condonation of delay in filing Form-10B, which is crucial for claiming exemption under the Act.
The appellant, a charitable trust, initially filed its return on 02.11.2021. However, a suo motu intimation order dated 07.03.2023 showed a demand due to the non-filing of Form-10B. The trust argued that delays were due to difficulties caused by COVID-19 and issues with electronic filing. The CIT (Exemption) denied the application for condonation, citing insufficient justification for the delay.
On appeal, the ITAT examined whether the delay in filing Form-10B should be excused. It noted that previous ITAT rulings, including those from Ahmedabad and Calcutta High Court, had addressed similar issues, often condoning delays if reasonable grounds were shown. The ITAT decided to follow the precedent set by these rulings, concluding that the delay in filing Form-10B was a procedural lapse rather than a substantial one. ITAT condoned the delay in filing Form-10B in the case of Daroga Family Foundation vs. CIT (Exemption) based on following key factors:
- Reasonable Cause for Delay: The ITAT acknowledged the appellant’s argument that the delay was due to difficulties caused by the COVID-19 pandemic and issues with electronic filing. These difficulties were seen as reasonable grounds for the delay, as the pandemic had created widespread disruptions and challenges for many taxpayers.
- Precedent and Judicial Precedent: The ITAT referenced earlier decisions from other ITAT benches and the Calcutta High Court that had addressed similar issues. These decisions had often allowed for delays in filing Form-10B if the delay was deemed procedural rather than substantial. The ITAT followed this precedent, recognizing that procedural lapses should not prevent the grant of exemptions if reasonable causes are provided.
- Substantive Compliance vs. Procedural Compliance: The ITAT considered the delay in filing Form-10B as a procedural issue rather than a substantive one. They emphasized that the essence of the requirement was to have the audit report available to the assessing officer before the assessment proceedings, which was ultimately achieved. Therefore, the delay in submission was viewed as a minor procedural lapse that should not negate the eligibility for exemption.
The ITAT allowed the appeal, condoning the delay and directing the matter back to the CIT (Exemption) for reconsideration of the exemption claim. This ruling underscores the ITAT’s approach to procedural delays and the importance of considering contextual factors such as the pandemic’s impact.
