Sanjay Godhawat University , ... vs The Commissioner Of Income Tax ...
2021 Latest Caselaw 1838 Bom

                   (14)-WPST-94842-20.doc.

                          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                  CIVIL APPELLATE JURISDICTION

                            WRIT PETITION (STAMP) NO.94842 OF 2020
Balaji G.
Panchal
                   Sanjay Ghodawat University, Kolhapur           ..Petitioner
Digitally signed
by Balaji G.
                        Versus
Panchal            Commissioner of Income Tax (Exemptions),
Date: 2021.01.28
13:19:29 +0530     Pune & Ors.                                    ..Respondents

                   Mr. Mihir Naniwadekar i/by Ms. Farzeen Khambatta, Advoate for
                   the Petitioner.
                   Mr. Sham Walve, Advocate for the Respondents.

                                      CORAM : UJJAL BHUYAN &
                                               ABHAY AHUJA, JJ.

RESERVED ON : 8th DECEMBER 2020 PRONOUNCED ON : 28th JANUARY 2021

JUDGMENT AND ORDER (Per Ujjal Bhuyan, J)

Heard Mr. Mihir Naniwadekar, learned counsel for the petitioner and Mr. Sham Walve, learned standing counsel revenue for the respondents.

2. By fling this petition under Articles 226/227 of the Constitution of India, petitioner seeks quashing of order dated 29.09.2020 passed by the Commissioner of Income Tax (Exemptions), Pune rejecting the application of the petitioner dated 31.10.2019 for exemption under section 10(23C)(vi) of the Income Tax Act, 1961 for the assessment year 2019-20 onwards and further seeks a direction to the respondents to consider the said application on merit and thereafter to allow the same.

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3. Case of the petitioner is that it is a university called Sanjay Ghodawat University, Kolhapur established by an act of the State Legislature of Maharashtra and which became operational on and from 13.07.2017.

4. It is stated that because of heavy rainfall and resultant flood in diferent parts of the country, Central Board of Diirect Taxes (CBDiT) passed an order dated 27.09.2019 under section 119 of the Income Tax Act, 1961 (briefly "the act" herein-after) extending the due date for fling of income tax returns as well as reports of audit for the assessment year 2019-20 from 30.09.2019 to 31.10.2019.

5. With a view to avail exemption under section 10(23C)(vi) of the act for the assessment year 2019-20 and onwards, petitioner fled the related application in Form No.56Di before Commissioner of Income Tax (Exemptions), Pune i.e. respondent No.1 on 31.10.2019. Petitioner has explained that due to exceptional situation prevailing in Kolhapur region because of flood, it was not possible to complete the audit of the accounts of the petitioner before the said date which caused delay in fling the application.

6. Responding to letter dated 26.06.2020 of respondent No.1, petitioner submitted a detailed reply providing all the details and documents as sought for vide its reply dated 29.06.2020.

7. However, notice dated 15.09.2020 was issued to the

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petitioner by respondent No.1 informing the petitioner that its application fled on 31.10.2019 was not within the prescribed time limit; such application was required to be fled on or before 30th September of the relevant assessment year from which exemption was sought. However, referring to the earlier letter dated 26.06.2020 it was stated that the same was not complied with and therefore petitioner was called upon to furnish the details on or before 18.09.2020 which was duly complied with by the petitioner by fling detailed reply dated 18.09.2020. It was contended that though the time limit for fling application seeking exemption under section 10(23C)(vi) of the act was till 30.09.2019 the same stood extended till 31.10.2019 in terms of CBDiT order dated 27.09.2019. Referring to the earlier letter dated 26.06.2020 petitioner pointed out that it had responded to the said letter by furnishing the required particulars.

8. However, by the impugned order dated 29.09.2020 respondent No.1 rejected the said application of the petitioner on the ground that the application was fled beyond the prescribed time limit and that respondent No.1 had no jurisdiction to condone the delay in the fling of such delayed application.

9. Aggrieved, present Writ Petition has been fled seeking the reliefs as indicated above.

10. In the hearing held on 05.11.2020 learned counsel for the petitioner had produced before us a copy of Circular

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No.19/2020 dated 03.11.2020 issued by CBDiT and had contended that by the said circular power of condonation of delay had been delegated by the CBDiT to the Commissioners. However, Mr. Walve, learned standing counsel revenue had contended that the said circular was not applicable to the case in hand. Thereafter the matter was heard. In the hearing clarifcation of the CBDiT dated 07.12.2020 regarding Circular No.19/2020 dated 03.11.2020 was also produced. Both the said Circular No.19/2020 dated 03.11.2020 and the clarifcation dated 07.12.2020 have been taken on record.

11. Respondents have fled a common afdavit through Shri. Niraj Bansal, Commissioner of Income Tax (Exemptions), Pune. Stand taken in the afdavit is that assessee i.e. the petitioner had fled its application in Form No.56Di of grant of exemption under section 10(23C)(vi) of the act on 31.10.2019 on and from the assessment year 2019-20. Though the application was fled in proper format, it was not fled within the time limit. Referring to the 16th proviso to section 10(23C)(vi) of the act, it is contended that an application for exemption or continuance of exemption under section 10(23C)(vi) of the act has to be fled on or before the 30th day of September of the relevant assessment year from which the exemption is sought which date in the instant case would be on or before 30.09.2019. However, there is no provision for condonation of delay in the event of belated fling of such application. Therefore, request of the petitioner to condone the delay in fling the application in Form No.56Di could not be considered. It is for such reason that

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the application of the petitioner fled in Form No.56Di on 31.10.2019 for grant of exemption under section 10(23C)(vi) of the act for the assessment year 2019-20 onwards had to be rejected vide the order dated 29.09.2020.

11.1 In this connection reliance has been placed on the decisions of the Orissa High Court in the case of Roland Educational and Charitable Trust Vs. Chief Commissioner of Income Tax, (2009) 309 ITR 50 as well as two other decisions of the Andhra Pradesh High Court and Madras High Court.

11.2 It is further contended that it is not within the powers and jurisdiction of the Commissioner of Income Tax to condone the delay in fling of Form No.56Di unless the CBDiT confers such powers to the Commissioner of Income Tax which has not been done till date.

11.3 Referring to the CBDiT order dated 27.09.2019 relied upon by the petitioner it is contended that by the said order CBDiT had extended the time limit for fling of income tax returns and audit reports pertaining to assessment year 2019- 20 from 30.09.2019 to 31.10.2019. This order does not confer jurisdiction on respondent No.1 to condone the delay in fling application in Form No.56Di seeking exemption under section 10(23C) (vi) of the act.

11.4 In so far CBDiT Circular No.19/2020 dated 03.11.2020 is concerned, respondents have contended that reliance placed thereon by the petitioner is misplaced. The said circular is

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applicable for condonation of delay in fling of Form No.10BB for assessment year 2016-17 and subsequent years and not in fling of Form No.56Di.

11.5 It is submitted by the respondents that petitioner has an efcacious alternative statutory remedy by way of appeal under section 253(1)(f) of the act to assail the legality and validity of the order dated 29.09.2020. Therefore, the court may not entertain the writ petition fled without availing the alternative remedy.

12. Learned counsel for the petitioner at the outset has referred to section 253 of the act, more particularly to clause (f) of sub-section (1) thereof, and submits that an appeal to the Income Tax Appellate Tribunal would lie under the said provision against an order passed by the prescribed authority under sub- clause (vi) of clause (23C) of section 10. Elaborating further he submits that if by such an order an assessee is denied exemption on merit and he is aggrieved by the same, he may appeal to the Income Tax Appellate Tribunal against such an order under the said provision. But in the instant case, no such order has been passed by respondent No.1. Application for exemption fled by the petitioner in Form No.56Di has been rejected as being time barred. Such an order is not amenable to the appellate jurisdiction of the Income Tax Appellate Tribunal. There being no alternative remedy under the statute, petitioner has invoked the writ jurisdiction of the High Court.

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12.1    Learned counsel for the petitioner has referred to section

10(23C)(vi) of the act as well as to the 16 th proviso thereto and submits that by Circular No.19/2020 dated 03.11.2020 CBDiT has made the position clear by authorizing Commissioners of Income Tax to admit belated applications prior to the assessment year 2018-19 or where there is delay of upto 365 days in fling applications for the assessment year 2018-19 or for any subsequent assessment years and decide such application on merit. Therefore, learned counsel would contend that respondent No.1 was not justifed in rejecting the application of the petitioner as being time barred.

13. Learned counsel for the respondents frstly submits that contention of the petitioner that the impugned order is not amenable to appellate jurisdiction of the Income Tax Appellate Tribunal is not correct. An order rejecting an application for exemption under section 10(23C)(vi) of the act as being time- barred would be an order within the meaning of section 253(1)(f) of the act and, therefore, such an order can be appealled against before the Income Tax Appellate Tribunal.

13.1 Referring to the CBDiT Circular No.19/2020 dated 03.11.2020 he submits that this circular is not at all applicable in the case of the petitioner as it deals with belated fling of audit report in Form No.10BB which has been explained by the CBDiT itself vide subsequent clarifcation dated 07.12.2020.

13.2    Without prejudice to his above contentions, Mr. Walve


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submits that petitioner may approach the CBDiT under section 119(2)(b) of the act and seek an order for condoning the delay in fling the related application.

14. In his reply submissions, learned counsel for the petitioner while reiterating what he had submitted earlier has argued that the application of the petitioner was for exemption on and from the assessment year 2019-20 onwards. Even if stand of respondent No.1 vis-a-vis the application for the assessment year 2019-20 being time-barred is accepted, there is no delay in so far the assessment years subsequent to assessment year 2019-20 are concerned. Respondent No.1 was duty bound to consider the application for such subsequent assessment years. Failure to do so has caused injustice to the petitioner besides amounting to failure to discharge lawful duty by respondent No.1.

15. Submissions made by learned counsel for the parties have been duly considered. Also perused the materials on record.

16. At the outset, we may advert to section 10(23C) of the act. Section 10 deals with incomes not included in total income. Section 10 says that in computing the total income of a previous year of any person any income falling within any of the clauses mentioned therein shall not be included. Clause (23C)(vi) deals with any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of proft,

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other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority. As per the 10th proviso, where the total income of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub- clause (via), without giving efect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defned in the explanation below sub- section (2) of section 288 and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form duly signed and verifed by such accountant and setting forth such particulars as may be prescribed. As per the 16 th proviso, in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the frst proviso makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be made on or before the 30 th day of September of the relevant assessment year from which the exemption is sought. For ready reference, the above provisions are quoted hereunder :-

"Incomes not included in total income.

10. In computing the total income of a previous

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year of any person, any income falling within any of the following clauses shall not be included -

* * * * *

(23C) any income received by any person on behalf of -

* * * * *

(vi) any university or other educational institution existing solely for educational purposes and not for purposes of proft, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad) and which may be approved by the prescribed authority;

* * * * *

Provided also that where the total income, of the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), without giving efect to the provisions of the said sub-clauses, exceeds the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defned in the Explanation below sub-section (2) of section 288 and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form duly signed and verifed by such accountant and setting forth such particulars as may be prescribed:

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        *           *          *          *             *

Provided also that in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the frst proviso makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be made on or before the 30th day of September of the relevant assessment year from which the exemption is sought:"

17. Thus from the above, it is seen that in computing the total income of a previous year of any person, any income received by any person on behalf of any university or other educational institution existing solely for educational purposes and not for the purposes of proft shall not be included. As per the 10 th proviso, where the total income of such university or other educational institution etc. exceeds the maximum amount which is not chargeable to tax in any previous year, such university or other educational institution etc. shall get its accounts audited in respect of that year by an accountant as defned and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form duly signed and verifed by such accountant and setting forth such particulars as may be prescribed. Proceeding to the 16th proviso, we fnd that in case any university or other educational institution etc. makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application

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shall be made on or before the 30 th day of September of the relevant assessment year from which the exemption is sought.

18. Adverting to the 10th proviso, we fnd therefrom that furnishing of the report of audit in the prescribed form has to be along with the return of income for the relevant assessment year. So such audit report has to accompany a return on income for the relevant assessment year. On the other hand, as per the 16th proviso, in the event of an university or other educational institution etc. seeking exemption under section 10(23C)(vi) of the act, such an application post 01.06.2006 would have to be made on or before the 30 th day of September of the relevant assessment year from which the exemption is sought. In the instant case, the relevant assessment year is the assessment year 2019-20. So the cut of date or the date of limitation was 30.09.2019.

19. To complete the narrative, it may be mentioned that the 10th proviso to clause (23C) of section 10 is referred to in rule 16CC of the Income Tax Rules, 1962 (briefly "the Rules" hereinafter) which says that the report of such audit which is required to be furnished under the 10 th proviso to clause (23C) of section 10 shall be in Form No.10BB. Format of Form No.10BB is provided in the Rules.

20. Rule 2CA of the Rules lays down the guidelines for approval under sub-clauses (vi) and (via) of clause (23C) of section 10. As per sub-rule (1), the prescribed authority under

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sub-clauses (vi) and (via) of clause (23C) of section 10 shall be the Chief Commissioner or Diirector General. As per the frst proviso, on or after the specifed date the prescribed authority under sub-clauses (vi) and (via) of clause (23C) of section 10 shall be the Principal Commissioner or Commissioner. With efect from 15.11.2014, prescribed authority is Commissioner of Income Tax (Exemptions). Sub-rule (2) is relevant. Sub-rule (2) says that an application for approval shall be made in Form No.56Di by any university or other educational institution etc. referred to in sub-clause (vi) or sub clause (via) of clause (23C) of section 10. Format of Form No.56Di is provided in the Rules.

21. From a careful analysis of the above, we fnd that there is a signifcant diference between Form No.10BB and Form No.56Di. While Form No.10BB, which is the report of audit, is required to be fled along with the income tax return, Form No.56Di, which is the application seeking approval for exemption under section 10(23C)(vi) of the act, is required to be fled within 30th September of the relevant assessment year.

22. Before reverting back to the facts of the case, we may briefly refer to provisions of section 119 of the act which confers power upon the Central Board of Diirect Taxes (already referred to as "the CBDiT" hereinabove) to issue instructions and directions to other income tax authorities as it may deem ft for proper administration of the act which are required to be observed and followed by the income tax authorities. Section 119(2)(b) is relevant and the same is extracted hereunder :-

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        "Section 119(2)

        (a) ...................

(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 any income-tax authority, not being 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 specifed by or under this Act for making such application or claim and deal with the same on merits in accordance with law."

23. From the above, we fnd that CBDiT 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 any income tax authority, not being a Commissioner (Appeals), to admit an application or claim for any exemption, deduction, refund or any other relief under the act after the expiry of the period specifed under the act for making such application or claim and deal with the same on merit in accordance with law. Thus, in an appropriate case CBDiT can pass a general order or a special order; by such an order it can authorise any income tax authority not being a Commissioner (Appeals) which would include Commissioner of Income Tax (Exemptions); to admit an application or claim for any exemption etc. after expiry of the period specifed under the act; and to deal with the same on merit in accordance with law.

24. Having noticed the above, we may now examine the order

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dated 27.09.2019 passed by the CBDiT. It is an order under section 119 of the act. On going through the same, we fnd that it is concerned with assessment year 2019-20 for which year the due date for fling income tax return was 30.09.2019 in respect of assessees covered under clause (a) of explanation 2 to sub-section (1) of section 139. After considering the representations received from various stakeholders facing difculties in fling reports of audit and returns for various reasons, the due date for fling income tax returns as well as reports of audit for such category of assessees was extended from 30.09.2019 to 31.10.2019.

25. In Circular No.19/2020 dated 03.11.2020, CBDiT notifed that in cases of delayed fling of Form No.10BB for years prior to assessment year 2018-19, Commissioners of Income Tax have been authorized to admit such applications by condoning the delay under section 119(2)(b) of the act. In those cases where there is delay of upto 365 days in fling Form No.10BB for assessment year 2018-19 or for any subsequent assessment years, Commissioners of Income Tax have been authorized to admit such belated applications by condoning the delay under section 119(2) of the act and to decide the same on merit. This position has been clarifed by the CBDiT itself when it issued the clarifcation dated 07.12.2020 to the efect that the Circular dated 03.11.2020 pertains to condonation of delay in fling Form No.10BB (audit report).

26. From a conjoint reading of the order dated 27.09.2019 and

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Circular No.19/2020 dated 03.11.2020, it is evident that CBDiT has exercised its powers under section 119(2)(b) of the act in respect of fling of income tax returns and furnishing of reports of audit under the 10th proviso to sub-clause (vi) of clause (23C) of section 10 for a category of assessees. Commissioners of Income Tax have been authorized to admit applications for condonation of delay in fling Form No.10BB for years prior to assessment year 2018-19 and to admit applications for condonation of delay for assessment year 2018-19 or for any subsequent years where the delay is upto 365 days. Neither of the two i.e. the order dated 27.09.2019 and the Circular dated 03.11.2020 deal with an application for exemption under section 10(23C)(vi) of the act in Form No.56Di which has a defnite time line i.e., upto 30th September of the relevant assessment year, in the instant case 30 th September 2019. We do not fnd any provision for extending the time limit beyond 30.09.2019 though such a power is available with the CBDiT.

27. Therefore, there is no provision for extension of the limitation period or for condonation of delay in fling the application for grant of exemption under section 10(23C)(vi) of the act by the Commissioner of Income Tax (Exemption) To that extent respondent No.1 was justifed in rejecting the application for the assessment year 2019-20. However, as per the version of the respondents themselves the application for exemption of the petitioner was not confned to assessment year 2019-20 only. It was an application for grant of exemption from the assessment year 2019-20 onwards. While respondent

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No.1 was correct in rejecting the application for the assessment year 2019-20 as being time-barred, it certainly fell in error in not considering the said application for subsequent assessment years i.e. for assessment year 2020-2021 and onwards. Because even if the application was fled on 31.10.2019 which was belated for the assessment year 2019-20, it was before the prescribed date for the subsequent assessment year i.e. assessment year 2020-2021 and thereafter as it had been fled much before the cut of date of 30.09.2020.

28. That apart, we feel that even at this stage petitioner may approach CBDiT under section 119(2)(b) seeking a special order to respondent No.1 to condone the delay in fling the application for exemption under section 10(23C)(vi) of the Act for the assessment year 2019-20, there being admitted delay of 31 days in fling the application for the said assessment year, and thereafter to deal with the said application/ claim on merit in accordance with law.

29. Since we have taken the above view, it may not be necessary to deal with the contention relating to alternative remedy.

30. Thus, having regard to the above and upon thorough consideration of the matter, we deem it appropriate to issue the following directions :-

I) Petitioner shall fle an application before the CBDiT under section 119(2)(b) to authorize respondent No.1 to condone the delay in fling its application dated 31.10.2019 for exemption under section

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10(23C)(vi) of the act, for the assessment year 2019-20 and to deal with the same on merit in accordance with law ;

II) If such application is fled by the petitioner within a period of three weeks from today, CBDiT shall pass an appropriate order in accordance with law within a period of four weeks thereafter with due intimation to the petitioner;

III) Respondent No.1 shall consider the application of the petitioner dated 31.10.2019 for grant of exemption under section 10(23C)(vi) of the act for the assessment year 2020-21 onwards in accordance with law within a period of eight weeks from the date of receipt of a copy of this order;

31. Ordered accordingly.

32. Impugned order dated 29.09.2020 passed by respondent No.1 (Exh.A to the Writ Petition) is interfered herewith to the above extent.

33. Writ Petition is accordingly disposed of. However, there shall be no order as to cost.

34. This order will be digitally signed by the Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.

ABHAY AHUJA, J.                                    UJJAL BHUYAN, J.


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