Bombay High Court
The Borivli Education Society vs Commissioner Of Income Tax (Exemption) on 17 February, 2025
Author: M. S. Sonak
Bench: M. S. Sonak
2025:BHC-OS:2691-DB
Sayyed 22-WP.5420.2024.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.5420 OF 2024
The Borivli Education Society ...Petitioner
Versus
Commissioner of Income-Tax
(Exemption), Mumbai & Ors. ...Respondents
_____________________________________________________
Dr. K. Shivaram, Senior Counsel a/w Mr. Rahul Hakani and Ms. Neelam
C. Jadhav for the Petitioner.
Mr. Dinesh R. Gulabani a/w Ms. Vibha D. Gulabani for the Respondents.
_____________________________________________________
CORAM : M. S. Sonak &
Jitendra Jain, JJ.
DATED : 17 February 2025
ORAL JUDGMENT (Per M. S. Sonak, J.):-
1. Heard learned counsel for the parties.
2. Rule. The Rule is made returnable immediately at the request
of and with the consent of the learned counsel for the parties.
3. This petition concerns assessment year 2014-2015. The
Petitioner challenges the impugned orders dated 10 October 2024 and
13 November 2024 made by the first respondent rejecting the
Petitioner's application for condonation of delay of 2732 days in filing
Form 10B for claiming exemption under Section 11 of the Income Tax
Act, 1961 ("IT Act").
4. Admittedly, the Petitioner had obtained and filed Form 10B
manually within the prescribed period. Mr. Gulabani, learned counsel
for the Revenue, did not dispute this position fairly. Even otherwise, the
records support this position.
Sayyed 22-WP.5420.2024.docx
5. At the same time, the records also bear out, and Dr. Shivaram,
senior advocate for the Petitioner, admitted that this Form 10B
remained to be uploaded electronically. The Petitioner was established
to administer educational institutions from 1954 to 1955. The
Chartered Accountant representing the Petitioner accepted that she was
under the bona fide impression that electronic filing was not mandatory.
The Chartered Accountant has also filed an affidavit in this regard.
6. The third respondent issued an intimation under Section
143(1) dated 16 March 2016, denying the Petitioner's claim for
exemption under Section 11. However, this intimation gave no reasons
for the denial of exemption. The Petitioner has alleged that even this
intimation was without issuing the mandatorily required show cause
notice.
7. Upon enquiries, the Petitioner was informed that the
exemption was rejected due to the non-filing of Form 10B electronically.
Soon thereafter, the Petitioner, by way of abundant caution, filed online
rectification applications dated 25 May 2016 and 6 March 2017. These
were summarily rejected, again, without even minimum compliance
with principles of natural justice. The Petitioner applied Section 154
before the Jurisdictional Assessing Officer on 2 July 2018 and has
pleaded that this application is pending to date.
8. The Petitioner was also served with a notice under Section
139(9) on 8 January 2016 regarding the alleged non-disclosure of
corpus and non-corpus fund in schedule J. To remedy this, the
Petitioner again filed a return of income on 16 January 2019, and in
this return, the Petitioner disclosed that the audit report in Form 10B
was physically filed within time. All this shows that the Petitioner, based
upon the bona fide advice of their Chartered Accountant, believed that
Sayyed 22-WP.5420.2024.docx
the filing of Form 10B manually or physically was substantial
compliance with the law.
9. At the hearing on the rectification application, the Assessing
Officer informed the Petitioner about the requirement of uploading
Form 10B electronically on the portal. Immediately, i.e. on 24 March
2022, the Petitioner uploaded Form 10B on the portal. As a matter of
abundant caution, an application for condonation of delay was filed.
Along with this application, the Chartered Accountant filed her affidavit
regarding the bona fide impression that she carried and the advice that
she tendered to the Petitioner based upon this bona fide impression.
10. The TRO (Exemption) issued notice dated 24 July 2024 to the
Petitioner requesting certain particulars. The Petitioner complied with
this via a letter dated 29 July 2024. Even this time, without compliance
with principles of natural justice, the Petitioner's application was
rejected by an order dated 10 October 2024. The Petitioner again filed a
rectification application on 12 November 2024, which was also
dismissed on 13 November 2024 without any opportunity of hearing to
the Petitioner or its representative.
11. Based on the aforesaid facts and circumstances, we are
satisfied that the Petitioner filed Form 10B manually or physically
within the prescribed period. True, Form 10B was not uploaded
electronically. At the same time, the Petitioner was not intimated for a
long time that this was the requirement for which the exemption was
being denied. Belatedly, the Petitioner was informed that this was one of
the reasons. Therefore, the Petitioner took expedient steps.
12. The Petitioner also explained that she had nothing to gain
from non-compliance. The non-compliance, if any, was due to the
advice of a professional Chartered Accountant. Even the Chartered
Sayyed 22-WP.5420.2024.docx
Accountant filed an affidavit explaining her bona fides and the factum
of the advice. After the Petitioner became aware of the reasons, she took
several steps and ultimately uploaded Form 10B electronically. Still, the
application for condonation of delay has been rejected without
adequate compliance with the principles of natural justice and fair play.
13. In all such matters, there is bound to be some lapse on the
part of the assessee seeking condonation. However, the delay should be
condoned as long as such lapse is not mala fide and the assessee has not
derived any undue advantage out of his own lapse. Besides, in such
matters, though the length of the delay is one of the considerations, it is
not sole consideration. The quality of the explanation offered is crucial,
and the focus must be the quality of the cause shown in the
explanation.
14. Besides, in this case, though the delay appears considerable,
there is some merit in Dr. Shivaram's contentions that the delay should
be construed from the day Petitioner was informed of the real reason for
the denial of exemption. After it was informed of the real reason, the
Petitioner's conduct cannot be said to be either informed with lethargy
or indolence. The Petitioner took several steps and time and again
pointed out that Form 10B was already filed manually within the
prescribed time.
15. We note that even before the CIT (Exemption), the Petitioner
categorically pleaded and made good their submissions about Form 10B
being filed manually within the prescribed time limit. This was a crucial
circumstance when considering the Petitioner's conduct and its
application for condonation of delay. The possession of the certification
is a mandatory requirement. The mode of proof may not always be. In
any event, no dispute is raised about the Petitioner submitting the
Sayyed 22-WP.5420.2024.docx
prescribed form within the prescribed period manually or physically.
The impugned order, however, takes no cognisance of this crucial
circumstances.
16. For all the above reasons and upon cumulative consideration
of the facts and circumstances of the about which there was no serious
dispute, we are satisfied that discretion should have been exercised, and
the delay should be condoned.
17. Accordingly, we set aside the impugned orders dated 10
October 2024 and 13 November 2024 and condone the delay in
electronically uploading Form 10B after noting that his form was
already filed in the physical form within the prescribed period, i.e. on
30 September 2014, about which there is no dispute whatsoever.
18. The Rule is made absolute in the above terms without any
cost order. All concerned are to act on an authenticated copy of this
order.
(Jitendra Jain, J.) (M. S. Sonak, J.)
Signed by: Sayyed Saeed Ali
Date: 18/02/2025 16:19:28
