Court Condones One-Day Delay in Tax Exemption Application, Remits Case for Reconsideration

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Case Name:

Chief Commissioner of Income Tax & Ors. Vs Anand Rishi Jain Society (High Court of Madras)

W.A.No.31 of 2015

Key Takeaways:

1. The Court exercised its extraordinary jurisdiction to condone a one-day delay in filing a tax exemption application.

2. The question of whether the Chief Commissioner of Income Tax has the power to condone delays was left open.

3. The case was remitted back to the Chief Commissioner for consideration on its merits.

4. The Court emphasized that this decision should not set a precedent for future cases.

Issue:

Does the Chief Commissioner of Income Tax have the power to condone delays in filing applications for tax exemption under Section 10(23C)(vi) (of Income Tax Act, 1961), 1961?

Facts:

1. The respondent (Anand Rishi Jain Society) filed an application for tax exemption under Section 10(23C)(vi) (of Income Tax Act, 1961), 1961.

2. The application was rejected by an order dated 29.10.2010 on the grounds that it was filed one day late and that the Commissioner had no power to condone the delay.

3. The respondent filed a writ petition (W.P.No. 33485 of 2012) challenging this rejection.

4. The Writ Court, in its order dated 7.11.2014, held that the Chief Commissioner had inherent power to condone the delay under Section 10(23C)(iv) (of Income Tax Act, 1961).

5. The appellants (Chief Commissioner of Income Tax & Ors.) challenged this order through an intra-court appeal.

Arguments:

1. The respondent argued that the Chief Commissioner, being a quasi-judicial authority, was competent to condone the delay.

2. The appellants, represented by Shri. Promodkumar Chopda, cited a subsequent Orissa High Court decision (ROLAND EDUCATIONAL AND CHARITABLE TRUST Vs. CHIEF COMMISSIONER, INCOME TAX) which held that there is no provision in the Income Tax Act for condonation of delay in presenting applications under Section 10(23C)(vi) (of Income Tax Act, 1961).

Key Legal Precedents:

1. PADMASHREE KRUTHARTH ACHARYA INSTITUTE OF ENGINEERING AND TECHNOLOGY Vs. CHIEF COMMISSIONER OF INCOME TAX:

This Orissa High Court judgment, relied upon by the Writ Court, held that the Chief Commissioner has inherent power to condone delays.

2. ROLAND EDUCATIONAL AND CHARITABLE TRUST Vs. CHIEF COMMISSIONER, INCOME TAX:

This subsequent Orissa High Court decision held that there is no provision in the Income Tax Act for condonation of delay in presenting applications under Section 10(23C)(vi) (of Income Tax Act, 1961).

Judgement:

1. The Court left open the question of whether the Chief Commissioner has the power to condone delays.

2. Exercising its extraordinary jurisdiction under Article 226 of the Constitution of India, the Court condoned the one-day delay in filing the application.

3. The Court remitted the case back to the Chief Commissioner of Income Tax for consideration on its merits and in accordance with law.

4. The Court emphasized that this order should not create any precedent, as the delay was condoned by the Court exercising extraordinary jurisdiction.

5. The impugned order dated 7.11.2014 passed by the Writ Court was modified accordingly.

FAQs:

Q1: Does this judgment mean that the Chief Commissioner of Income Tax can now condone delays in all cases?

A1: No, the Court specifically left this question open and emphasized that this decision should not set a precedent for future cases.

Q2: Why did the Court condone the delay if it didn't decide on the Chief Commissioner's power to do so?

A2: The Court used its extraordinary jurisdiction under Article 226 of the Constitution of India to condone the delay, given that it was only one day.

Q3: What happens to the respondent's application now?

A3: The case has been remitted back to the Chief Commissioner of Income Tax for consideration on its merits and in accordance with law.

Q4: Can this judgment be used as a precedent in similar cases?

A4: No, the Court explicitly stated that this order should not create any precedent as the delay was condoned by the Court exercising extraordinary jurisdiction.

Q5: What was the main issue in this case?

A5: The main issue was whether the Chief Commissioner of Income Tax has the power to condone delays in filing applications for tax exemption under Section 10(23C)(vi) (of Income Tax Act, 1961), 1961.

1. The instant intra-court appeal arises from the order dated 7.11.2014 passed in W.P.No. 33485 of 2012.

2. The respondent, who was the petitioner, questioned the legality and validity of the order dated 29.10.2010 passed under Section 10(23C)(vi) (of Income Tax Act, 1961), 1961 (for short “the Income Tax Act”), rejecting his application for the purpose of grant of exemption and continuance thereof, on the ground that the application was barred by one day's delay and also, stating therein that the Commissioner has no power to condone the delay in filing an application for grant of exemption under Section 10(23C) (of Income Tax Act, 1961).

3. The contention of the writ petitioner/respondent herein before the Writ Court was that the Chief Commissioner of Income Tax, being quasi judicial authority, exercising power under Section 10(23C)(iv) (of Income Tax Act, 1961), was competent to condone the delay.

4. The Writ Court, accepting the contention of the learned counsel for the respondent/writ petitioner and also relying on a Division Bench judgment of the High Court of Orrisa in PADMASHREE KRUTHARTH ACHARYA INSTITUTE OF ENGINEERING AND TECHNOLOGY Vs. CHIEF COMMISSIONER OF INCOME TAX

1, held that the Chief Commissioner of Income Tax has inherent power under Section 10(23C)(iv) (of Income Tax Act, 1961) to condone the delay. The said Section is a special provision for filing under Chapter III of the Income Tax Act.

5. Shri. Promodkumar Chopda, learned Standing Counsel for the appellants, submits that the decision of the Orissa High Court in

PADMASHREE KRUTHARTH ACHARYA INSTITUTE OF ENGINEERING AND TECHNOLOGY 1 (supra) was considered

subsequently in ROLAND EDUCATIONAL AND CHARITABLE TRUST Vs. CHIEF COMMISSIONER, INCOME TAX

2. by a Division Bench of the High Court of Orissa, wherein, it was held that the provisions of the Income Tax Act, nowhere provide any provision for condonation of delay in presenting application under Section 10(23C)(vi) (of Income Tax Act, 1961) for grant of exemption. In the absence of such a provision, any application made under Section 10(23C)(vi) (of Income Tax Act, 1961) beyond the statutory period of limitation,cannot be entertained by the appropriate authority by condoning the delay in presenting such application.

6. Be that as it may, the finding recorded by the learned Writ Court about the competency of the Chief Commissioner of Income Tax for condonation of delay requires re-consideration.

7. On a perusal of the relevant provisions, it is evident that there is no power for the Chief Commissioner of Income Tax to condone the delay. Thus, the question is left open. However, having regard to the fact situation, as there is a delay of only one day in presenting the application under Section 10(23C)(vi) (of Income Tax Act, 1961), this Court, exercising extra-ordinary jurisdiction under Article 226 of the Constitution of India, condones the delay of one day in filing the application and remits back the matter to the Chief Commissioner of Income Tax/the first appellant herein, for consideration of the respondent/writ petitioner's application, on its own merits and in accordance with law. We make it clear that this order shall not create any precedent as delay is being condoned by this Court, exercising extra-ordinary jurisdiction in respect of delay of one day.

8. Thus, the impugned order dated 7.11.2014 passed by the Writ Court is modified as above and the matter is remitted back to the Chief Commissioner of Income Tax-the first appellant, for consideration on its own merits and in accordance with law.

9. This writ appeal stands disposed of accordingly.

Connected Miscellaneous Petition is closed. No costs.

(S.K.A.J.,) (M.V.J.)

03.02.2015

Index: Yes/No

To

1. The Chief Commissioner of Income Tax – IV, 121, M.G. Road, Nungambakkam, Chennai 600 034.

2. The Income Tax Officer Ward -I (4), West Tambaram, Chennai.45.

3. Central Board of Direct Taxes, North Block, New Delhi.

SATISH K. AGNIHOTRI,J.

and

M. VENUOGPAL, J.