Oneness Educational Vs CIT (Exemption) (Orissa High Court)
Orissa High Court ruled in favor of Oneness Educational Trust, an educational and charitable institution registered under Section 12A of the Income Tax Act, 1961. The case arose after the trust’s tax exemption claims were disallowed due to a delay in filing the audit report in Form-10B for Assessment Year (AY) 2021-22. This led to a tax demand of ₹5.47 crore. Additionally, the trust inadvertently failed to claim a past deficit of ₹5.41 crore against its income for AY 2021-22, which would have reduced its tax liability. In an attempt to rectify the error, the trust filed an appeal and a rectification request under Section 154 of the Act. When these efforts were unsuccessful, it applied under Section 119(2)(b) seeking condonation of delay for filing a revised return to claim a refund of ₹21,350. However, the application was rejected by the tax authorities on the grounds that the trust had originally filed its return after due consideration and had sufficient time to submit a revised return earlier.
The High Court found the rejection arbitrary and contrary to the purpose of Section 119(2)(b), which allows for condonation of delays to prevent genuine hardship. The court noted that the First Appellate Authority had acknowledged the trust’s claim regarding the deficit but required it to be pursued through a revised return. Since the trust had followed this recommendation, the rejection of its condonation request was unjustified. The court quashed the tax authority’s order and directed them to take further action in accordance with the law. The ruling reinforces the principle that tax authorities should consider genuine hardships and procedural fairness when assessing condonation requests.
