Gujarat High Court
Shri Parul Mahila Pragati Mandal vs Income Tax Officer (Exemption) on 30 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 13200 of 2021
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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SHRI PARUL MAHILA PRAGATI MANDAL
Versus
INCOME TAX OFFICER (EXEMPTION) & ANR.
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Appearance:
KUMAR H TRIVEDI(9364) for the Petitioner(s) No. 1
MS.SHRUNJAL SHAH, AGP FOR MR. RAJ S TANNA(10010) for the
Petitioner(s) No. 1
MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 30/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard learned advocate Ms.Shrunjal T. Shah for learned
advocate Mr. Raj S. Tanna for the Petitioner and learned Senior
Standing Counsel Ms. Maithili D. Mehta for the Respondents.
2. Rule returnable forthwith. Learned Senior Standing Counsel
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Ms. Maithili D. Mehta waives service of notice of rule for the
Respondents. With the consent of learned advocates for the
respective parties, the matter is taken up for hearing, as the issue
involved is very short.
3. The brief facts of the case are as follows:
3.1 The Petitioner is a public charitable trust duly constituted in
the year 1996 and registered under the provisions of the Bombay
Public Trusts Act, 1950. The case of the Petitioner, in nuce, is that,
the Petitioner, for the Assessment Year 2016-17, has caused its
accounts to be audited and obtained the requisite audit report dated
25.09.2016, well within the due date prescribed for filing of the
return of income. The due date for filing such return stood extended
from 30.09.2016 to 17.10.2016, in view of the general relaxation
granted vide order dated 09.09.2016 issued under Section 119 of the
Income Tax Act, 1961.
3.2 The Petitioner further states that although the audit report was
duly obtained on 25.09.2016, as mandated under the Act, the same
required confirmation and uploading through the designated online
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portal using the credentials of the authorized trustee. However,
owing to an inadvertent administrative lapse and oversight, the said
confirmation and e-filing could not be effectuated. Consequently, the
audit report was not electronically filed along with the return of
income for the relevant assessment year.
3.3 The Centralized Processing Centre (CPC), Bangalore passed
an intimation under Section 143(1) of the Income Tax Act, 1961, on
10.02.2018, disallowing the exemption amounting to ₹1,17,54,076/-,1,17,54,076/-,
which the Petitioner claims it was otherwise entitled to under the
provisions of the Act.
3.4 The Petitioner asserts that it became aware of the said
omission for the first time only upon receipt of the above intimation.
The lapse, according to the Petitioner, was purely inadvertent and
attributable to bona fide human error, which was neither deliberate
nor within the control of the Trust. Upon acquiring knowledge of the
said omission, prompt remedial action was taken, and on
03.07.2018, the auditor of the Trust filed Form 10B electronically in
accordance with the requirements of Section 12A(1)(b) of the Act.
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3.5 Thereafter, the Petitioner addressed a representation dated
23.02.2021 to the Commissioner of Income Tax (Exemption),
seeking condonation of delay in filing the audit report. It was
submitted therein that the lapse was inadvertent and occurred due to
reasonable cause. The Petitioner urged that the pragmatic approach
be adopted to prevent disproportionate hardship, especially
considering the charitable nature of the Trust's activities.
3.6 The CIT (Exemption) vide order dated 31.03.2021 rejected the
application/letter Condonation of Delay filed by for the Petitioner.
3.7 On 23.04.2021, the Petitioner filed a review application before
CIT (Exemption) Under Section 119 (2) (b) of the Act, 1961 for
considering the application for Condonation of Delay. Thereafter,
vide Order dated 30.04.2021 passed through online portal of Income
Tax, the review application filed by the Petitioner was also rejected
without mentioning any reasons or explanation.
3.8 The Respondent No. 1 issued demand notice to the Petitioner
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of Rs. 50,06,270/- dated 06.05.2021 for the Assessment Year 2016-
17 pursuant to rejection of application for Condonation of delay and
the review application filed by the Petitioner.
4. This petition has been filed under Article 226 of the
Constitution of India challenging the impugned order passed by the
Respondent No. 2 under Section 119 (2) of the Income Tax Act,
1961 dated 31.03.2021 with the following prayers:
"A) To admit and allow this petition;
B) To issue any appropriate writ, order or direction to quash and
set aside the Impugned orders at Annexure-A to this petition and
direct the respondent No.2 to condone the delay;
C) To issue any appropriate writ, order, or direction to quash and
set aside the impugned orders at Annexure-1 rejecting the review
application filed by petitioner;
D) Pending hearing, admission, and/or final disposal of this
petition, Your Lordships may be pleased to stay the
implementation and operation of the impugned demand notice
06.05.2021 at Annexure-J;
E) To pass any such other and further orders as Your Lordships
may deem, just, fit in the interest of justice;"
5. Ms.Shrunjal T.Shah, learned advocate appearing for the
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Petitioner has submitted that the Petitioner-Trust had obtained the
Audit Report in Form 10B within the due date as prescribed under
the Act/Notified by the CBDT. In such circumstances, the non-
filing of the same due to a bonafide error would deprive the Trust of
the benefit of exemption under Sections 11 and 12 of the Act and
would burden the Trust, which is admittedly functioning solely for
the betterment of the lot of widowed women, by imparting various
vocational training to such needy individuals. She further submitted
that the very purpose of the provisions of Section 119(2)(b) of the
Act was to use the discretion to remove the hardship that would be
caused to the Petitioner and therefore, the impugned Orders passed
by the Respondent -Department deserve to be set aside.
6. Per contra, Ms. Maithili Mehta, learned Senior Standing
Counsel appearing for the Department submitted that the Petitioner
has adopted a lethargic and casual approach inasmuch as, although
Form 10B was filed Online on 03.07.2018, the application under
Section 119(2)(b) of the Act came to be filed only on 23.02.2021
and therefore, the Department has rightly rejected such application
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as well as the review thereof.
7. DISCUSSION & FINDINGS :-
7.1 In Association of Indian Panel Board Manufacturers Vs.
DCIT, reported in (2023) 157 taxmann.com 550 (Gujarat), this
Court has categorically held that filing of Form 10B is only a
procedural requirement and the failure to file Form 10B along with
the return of income cannot be treated as mandatory requirement for
the purpose of claiming exemption under Section 11 and 12 of the
Act and even if such Form is filed at a later stage, the Assessee will
still be entitled to claim exemption. The aforesaid decision in the
case of Association of Indian Panel Board (Supra) has been
followed by this Court in case of CIT (Exemption) Vs. Anjana
Foundation reported in (2024) 168 taxmann.com 462 (Gujarat).
Thus, it will be seen that the Petitioner-Assessee could not be denied
the exemption merely because Form 10B was not filed within time.
In such circumstances, the denial on the part of the Department to
condone the delay in complying with the procedural requirement on
the part of the Assessee would result in denial of a substantive right
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of the Assessee to claim an exemption, which would in turn, result in
the Assessee having to pay the demanded amount, thereby unjustly
enriching the Department.In such view of the matter in our opinion,
the Petitioner would have been caused undue hardship which the
Department could have alleviated by allowing the Assessee's
application under Section 119(2)(b) of the Act, which is rejected
only on the technical grounds.
7.2 This Court in several recent decisions, namely in the case of
M/s. Royal Led Equipments Pvt. Ltd. Vs. Chief Commissioner
of Income Tax, Valsad & Ors. (Special Civil Application No.
14786 of 2024) and in the case of Surat Smart City Development
Limited Vs. Principal Commissioner of Income Tax, Surat-1 &
Anr. (Special Civil Application No. 10397 of 2024) has directed
the Department to consider the Assessee's applications under
Section 119(2)(b) of the Act to ensure that the purpose for which the
said provision remains on the statute book is carried out and the said
provision is not rendered illusory or becomes a dead letter.
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8. In view of the aforesaid discussion, the present Petition
succeeds and accordingly allowed. The impugned Orders dated
31.03.2021, 30.4.2021 and the Demand Notice dated 06.05.2021 are
hereby quashed and set aside. The Respondent No.1 is directed to
pass a fresh order upon the Petitioner's application under Section
119(2)(b) of the Act dated 23.02.2021 within a period of Twelve
(12) weeks from the date of receipt of a copy of this judgment and
order in light of the findings in Paragraph Nos. 7.1 to 7.2
hereinabove. Rule is made absolute to the aforesaid extent. No order
as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
BINA SHAH
