In a significant ruling, the Delhi High Court has quashed the order issued by the Commissioner of Income Tax (Exemption) and directed the authorities to accept Form No. 10 submitted by the Bar Council of India (BCI) after condoning the delay.
The bench, comprising Justice Rajiv Shakdher and Justice Girish Kathpalia, emphasised that the purpose of Section 119(2)(b) of the Income Tax Act is to alleviate genuine hardships faced by assesses, allowing Commissioners to admit belated Form 10 submissions.
The Petitioner, Bar Council of India is a non-commercial organisation regulating legal education and the legal profession under the Advocates Act, sought the annulment of an order by the Commissioner of Income Tax (Exemption). Additionally, the petitioner requested directives for accepting Form No. 10 after condoning the delay in submission.
The BCI, enjoying tax exemption under Section 10(23A) since April 1, 1962, filed its return of income for the Assessment Year 2016-17, seeking exemption under Section 10(23A). However, amendments to Sections 11 and 13, effective April 1, 2016, were not initially noticed by the petitioner. Upon discovering the oversight during assessment proceedings, the BCI promptly filed a revised computation on December 12, 2018, seeking exemption under Section 11.
On December 17, 2018, Form 10 was submitted with an application for condonation of the delay. The BCI urged the department to address the condonation application before December 31, 2018, to coincide with the completion of assessment proceedings for AY 2016–17.
However, the assessing officer overlooked the exemption claim, leading to the department dismissing the condonation application, citing a lack of intention and reasonable cause for the delay. The impugned order stated that the petitioner had an intention not to submit the Form 10.
Conversely, the BCI submitted that the delay in filing Form 10 occurred because their officials failed to notice the amendments in the Act and the Rules.
The department contended that the delay condonation application lacked sufficient reasons. The court noted that CBDT Circular No. 17/2022 authorised Commissioners to condone delays beyond 365 days up to 3 years in filing Forms 9A and 10 for AY 2018–19.
The bench stated that ‘We are unable to decipher from the impugned order as to what those “reasons to believe” were which led the respondent to arrive at a conclusion that the petitioner had no intention to file Form 10 within the due date. Mere failure to claim accumulation cannot be read as “reasons to believe” that the petitioner did not intend to file Form 10.’
The High Court observed that “we find no reason to disbelieve the explanation furnished by the petitioner to explain the delay in filing Form 10. Further, we are unable to fathom as to what benefit would accrue to the petitioner by delaying the filing of Form 10. In our opinion the discretion conferred for condoning the delay was not correctly exercised by the Commissioner Income Tax.”
Considering the submissions, the bench quashed the impugned order dated January 30, 2019. The delay incurred by the BCI in submitting Form 10 has been condoned. Consequently, Form-10 is now deemed acceptable, and the ensuing actions and consequences will proceed accordingly.
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