Mere Failure In Claiming Accumulation Doesn't Mean Assessee Had No Intention To File Form 10 Within Due Date: Delhi HC Allows BCI's Plea

The Delhi High Court held that the mere failure to claim accumulation does not necessarily mean that the assessee had not intention to file Form 10 within due date.

The Court allowed the Bar Council of India's petition related to the 2016-17 assessment under the Income Tax Act, 1961 (Act).

The Bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed, “mere failure to claim accumulation cannot be read as “reasons to believe” that the petitioner did not intend to file Form 10”.

Advocate Preetpal Singh appeared for the Petitioner and Senior Standing Counsel Zoheb Hossain appeared for the Respondent.

The Bar Council of India, a non-commercial organization that sought tax exemption under Section 10(23A) of the Act, filed a writ petition challenging the Commissioner of Income Tax (Exemption)'s order. The Petition sought to quash the order and sought instructions against the Respondent to accept Form No.10 despite a delay, following due condonation.

The issue arose during the 2016-17 assessment, prompting the Petitioner to submit a revised computation on December 12, 2018, after realizing a filing mistake. Despite filing Form 10 with a delay on December 17, 2018, and requesting a timely review, the Assessing Officer proceeded with the assessment on December 30, 2018. The Respondent, in the order on January 30, 2019, dismissed the condonation of delay application. The writ petition aimed to annul the order and urged the Court to condone the delay in filing Form 10.

The Court noted that the petitioner attributed the delay to officials not noticing amendments in the Act and Rules. The Bench also noted the unclear reasoning behind the Respondent's conclusion about the petitioner's intentions. The Court emphasized that the mere failure to claim accumulation does not provide sufficient grounds to believe that the petitioner had no intention to file Form 10 on time.

Referring to CBDT Circulars, the Court observed authorities' discretion to admit belated applications under certain circumstances, considering reasonable causes preventing timely filing. The petitioner successfully sought condonation for AY 2017-18 and AY 2018-19. The Court found no reason to doubt the explanation provided by the petitioner for the delay, emphasizing the incorrect exercise of discretion by the Commissioner of Income Tax.

Accordingly, the Court allowed the Petition, set aside the impugned order and condoned the delay in submitting Form 10.

Cause Title: Bar Council Of India v Commissioner Of Income Tax (Exemption) (2024:DHC:57-DB)

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