W.P.No.4241 of 2009 IN HIGH COURT OF JUDICATURE AT MADRAS Dated 15.10.2019 CORAM HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU W.P.No.4241 of 2009 and M.P.No.1 of 2009 M/s.Coimbatore Muslim Relief Fund, # Vadamaraicar Street, Chennai 600 001, Rep. by its Trustee, Thiru Nalla Mohammed Kalanjiam. Petitioner Vs. 1.The Director of Income Tax (Exemptions), III Floor, Annexe Building, # 121, Mahatma Gandhi Salai, Chennai 600034. 2.The Assistant Director of Income Tax (Exemptions)-II, III Floor, Annexe Building, # 121, Mahatma Gandhi Salai, Chennai 600 034. 3.The Tax Recovery Officer XVI, (IT Dept), Range III, Annexe IV Floor, # 121, Mahatma Gandhi Salai, Chennai 600 034. ...Respondents PRAYER:Writ Petition filed under Article 226 of Constitution of India for issuance of Writ of certiorarifed mandamus to call for 1/10 http://www.judis.nic.in W.P.No.4241 of 2009 records of petitioner in DIT(E) No.26(2)/05-06 on file of first respondent and quash order under Section 119(2) (b) read with Section 11(2) dated 17.07.2007 for Assessment Year 1998-99 and direct first respondent to permit petitioner to accumulate income after condoning delay in filing Form No.10. For Petitioner : Mr.M.P.Senthilkumar For Respondent : Mrs.Hema Muralikrishnan Senior Standing Counsel ORDER petitioner is aggrieved against proceedings of first respondent dated 17.07.2007 relevant to Assessment Year 1998- 1999, passed under Section 119(2b) read with Section 11(2) of Income Tax Act, 1961. Through impugned order, first respondent rejected petition filed by petitioner for condonation of delay in filing Form-10 on reason that delay was not satisfactorily explained. 2. Following are brief facts and circumstances, as projected by petitioner, which warranted petitioner to file present writ petition:- petitioner Trust was formed on 10.12.1997 with aim to 2/10 http://www.judis.nic.in W.P.No.4241 of 2009 provide rehabilitation to people, who are victims of communal violence in City of Coimbatore during November/December 1997. petitioner claims to have received contribution from public for providing relief to riot victims. petitioner filed return of income on 18.09.2001 for assessment year 1998-99 declaring 'Nil' income and return of income was lodged. notice under Section 148 was issued on 27.03.2002 and assessment was completed under Section 143(3) read with Section 147 on 27.03.2003, determining total income at Rs.1,50,12,470/- in absence of registration under Section 12AA. Subsequently, petitioner was granted registration under Section 12AA by order of first respondent dated 02.02.2005 with effect from 10.12.1997, pursuant to order of Income Tax Appellate Tribunal in ITA No.4/MDS/2003 dated 27.09.2004. There was short fall to extent of Rs.36,38,830/- in application of income of petitioner for assessment year 1998-99. said shortfall was brought to tax on granting registration under Section 12AA, while giving effect to order of Income Tax Appellate Tribunal, thereby raising demand of Rs.27,34,507/- with interest at Rs.6,34,271/-. due date for filing Form No.10 as per Section 11(2) for accumulation of income is 3/10 http://www.judis.nic.in W.P.No.4241 of 2009 due date for for filing return of income for assessment year 1998-99 i.e.,31.10.1998. However, petitioner had filed Form No.10 on 27.04.2005 for accumulation of funds in order to enable petitioner to identify other victims of riot in systematic manner. entire collection of petitioner for period from 10.12.1997 to 31.12.1999 was properly disbursed to deserving victims of riot. petitioner filed Form No.10 along with petition to condone delay in filing same. However, first respondent through impugned order rejected petition for condonation of delay by stating that reasons for delay have not been properly explained. 3. counter affidavit is filed by respondents, wherein it is stated as follows: assessee filed its return of income for assessment year 1998-99 on 18.09.2001, declaring 'Nil' income and return of income was lodged. assessee filed application in Form 10A only on 23.05.2002 though Trust was created on 10.12.1997. registration under Section 12AA of Income Tax Act, 1961 was granted with effect from 01.04.2002. However, in pursuant to 4/10 http://www.judis.nic.in W.P.No.4241 of 2009 order passed by Income Tax Appellate Tribunal, Registration under Section 12AA was granted with effect from 10.12.1997 by order dated 02.02.2005. Form No.10 has to be filed along with return of income before due date as per Section 11(2) of Act. assessee had filed Form 10 for assessment year 1998-99 belatedly on 27.04.2005. assessee filed Form 10 for accumulation of Rs.36,38,825/- along with petition for condonation of delay in filing same. first respondent considered petition and rejected same, as petitioner has not satisfactorily explained delay. 4. Mr.M.P.Senthilkumar, learned counsel for petitioner reiterated contentions raised in affidavit filed in support of writ petition and also invited this Court's attention to list of dates and events as well as written submissions filed separately. After doing so, learned counsel submitted that delay in filing Form 10 was neither willful nor intentional and on other hand, petitioner has filed such Form No.10 immediately after order of Tribunal, which was subsequently given effect to by order dated 02.02.2005, thereby granting Registration under Section 12AA with retrospective effect from 10.12.1997. Therefore, he submitted that for 5/10 http://www.judis.nic.in W.P.No.4241 of 2009 assessment year 1998-99, though last date for filing Form 10 fell on 31.10.1998, in view of fact that as on said date, there was no registration granted to petitioner at that point of time, question of filing Form No.10 within that date does not arise and therefore, petitioner was justified in filing such Form 10 immediately after order of first respondent granting registration with retrospective effect from 10.12.1997. Therefore, learned counsel contended that first respondent is not justified in rejection application for condonation of delay simply by saying that petitioner has not explained delay. 5. On other hand, Mrs.Hema Muralikrishnan, learned Senior Standing Counsel for Revenue submitted that condonation of delay is not automatic and on other hand, petitioner has to satisfy Authorities for filing such belated Form 10. She also submitted that petitioner seeks to accumulate amount for utilisation to next financial year and therefore, whether such utilisation was for purpose of Trust and to achieve its object or not, is purely question of fact, which petitioner has to prove independently. Therefore, she contended that assuming that delay 6/10 http://www.judis.nic.in W.P.No.4241 of 2009 can be condoned, that itself cannot entitle petitioner to get sanction of benefit derived from Form 10, unless petitioner proves utilisation of funds in next years for object of Trust. 6. Heard both sides. Perused materials placed before this Court. 7. petitioner is Trust, seems to have been formed for rehabilitating victims of communal violence in city of Coimbatore during November-December 1997. It seems that petitioner received contribution from public for providing funds to people. Though petitioner did not get such registration under Section 12AA of Income Tax Act during relevant assessment year 1998-99, such registration was subsequently granted to petitioner by order dated 02.02.2005 with retrospective effect from 10.12.1997 onwards. There is no dispute to above said fact. Therefore, for all practical purposes, it is to be construed that for Assessment Year 1998-99 also, petitioner was enjoying benefit under Section 12AA on getting such registration with effect from 7/10 http://www.judis.nic.in W.P.No.4241 of 2009 10.12.1997. No doubt, for filing Form No.10, due date is last date for filing return of income for relevant assessment year. In this case, relevant assessment year 1998-99 and last date for filing such return was 31.10.1998. Consequently, Form 10 ought to have been filed on or before 31.10.1998. But in any event, filing of Form No.10 would arise only when petitioner enjoys benefit of registration under Section 12AA. Admittedly, on last date viz., 31.10.1998, petitioner was not enjoying such benefit, however such benefit was granted with retrospective effect by order dated 02.02.2005. Once such order is passed, petitioner made application for condonation of delay in filing such Form 10 before first respondent. 8.Therefore, I find that above stated facts and circumstances would show that petitioner has explained delay in filing Form 10 satisfactorily. Therefore, first respondent is not justified in rejecting application for condonation of delay, simply by saying that petitioner has not satisfactorily explained delay. However, as rightly pointed out by learned counsel for Revenue, though delay is condonable, it is for petitioner to establish before 8/10 http://www.judis.nic.in W.P.No.4241 of 2009 first respondent that accumulated income was utilised for subsequent years only for purpose for which petitioner Trust was established. Therefore, such liability exists on petitioner, which they have to discharge before first respondent. 9. Accordingly, considering above stated facts and circumstances, this writ petition is allowed and impugned order of first respondent is set aside. Consequently, matter is remitted back to first respondent with direction to take Form 10 on file and thereafter, to conduct enquiry as to whether accumulated interest was utilised for succeeding years by petitioner for purpose for which petitioner Trust was established. Such exercise shall be made by first respondent within period of eight weeks from date of receipt of copy of this order. petitioner shall cooperate with first respondent by placing material facts in support of their contention that accumulated interest was utilised, as stated supra. No costs. connected miscellaneous petition is closed. 15.10.2019 Speaking/Non Speaking 9/10 http://www.judis.nic.in W.P.No.4241 of 2009 Index :Yes/No vri K.RAVICHANDRABAABU,J. vri To 1.The Director of Income Tax (Exemptions), III Floor, Annexe Building, # 121, Mahatma Gandhi Salai, Chennai 600 034. 2.The Assistant Director of Income Tax (Exemptions)-II, III Floor, Annexe Building, # 121, Mahatma Gandhi Salai, Chennai 600 034. 3.The Tax Recovery Officer XVI, (IT Dept), Range III, Annexe IV Floor, # 121, Mahatma Gandhi Salai, Chennai 600 034. W.P.No.4241 of 2009 15.10.2019 10/10 http://www.judis.nic.in Coimbatore Muslim Relief Fund v. Director of Income-tax (Exemptions), Chennai / Assistant Director of Income-tax (Exemptions)-II, Chennai / Tax Recovery Officer XVI, (IT Dept), Range III, Chennai