The Delhi High Court has instructed the income tax commissioner to approve the Bar Council of India's (BCI) Form No. 10, even after considering and excusing the delay in its submission.

Justices Rajiv Shakdher and Girish Kathpalia's bench noted that Section 119(2)(b) of the Income Tax Act is intended to alleviate legitimate hardships faced by taxpayers in specific situations, empowering commissioners to accept delayed Form 10 submissions.

The Bar Council of India, acting as the petitioner, has requested the quashing of an order issued by the Commissioner of Income Tax (Exemption) and has urged the respondent to acknowledge Form No. 10, even after considering and excusing the delay in its submission.

The Bar Council of India (BCI) serves as the highest professional entity tasked with overseeing legal education and the legal profession as per the Advocates Act, 1961. As a non-commercial organization registered under Section 12A of the Income Tax Act, the petitioner's income generated from member fees, contributions to legal reforms, and educational activities has been exempt from taxation since April 1, 1962, under the provisions outlined in Section 10(23A). The petitioner has consistently filed its income tax returns as required.

For the Assessment Year 2016–17, the petitioner filed its return of income on September 30, 2016, claiming exemption under Section 10(23A). In the meantime, with effect from April 1, 2016, Sections 11 and 13 were amended by the Finance Act of 2015, but these amendments were not noticed by the petitioner at the time of filing its return of income. It was only during the assessment proceedings that the inadvertent mistake was noticed. The petitioner immediately took remedial steps and filed on 12.12.2018 a revised computation, seeking exemption under Section 11.

On December 17, 2018, the petitioner submitted Form 10, accompanied by an application asking for forgiveness regarding the delay in filing. Additionally, the petitioner urged the respondent to address and resolve the request for condoning the delay in submitting Form 10 before December 31, 2018, which marked the conclusion of assessment proceedings for the assessment year 2016–17.

The assessing officer made a decision without acknowledging the exemption claimed by the petitioner. Additionally, the respondent or department rejected the petitioner's application for condoning the delay, asserting that the petitioner had no intention of submitting Form 10 by the due date and was not hindered by any valid reason from doing so.

The petitioner argued that the delay in filing Form 10 was due to a lack of awareness among the petitioner's officials, emphasizing that no harm or disadvantage resulted from the delay. Consequently, they asserted that the delay should have been excused or condoned.

The department argued that the petitioner or assessee failed to provide an adequate reason justifying the delay, leading to the rightful rejection of the application for condonation. Furthermore, it was pointed out that in the income tax return for Assessment Year 2016-17, the petitioner neither asserted accumulation under Section 11(2) of the Act nor made a claim for accumulation in Form 10. Hence, the department asserted that the order was free from any defects or shortcomings.

The court highlighted that according to CBDT Circular No. 17/2022, dated July 17, 2022, Commissioners were empowered to excuse delays exceeding 365 days up to 3 years in submitting Forms 9A and 10 for Assessment Year 2018-19. The court concluded that the oversight in filing Form 10 resulted from the petitioner's officials not being aware of the amendments made, as outlined in the circular.

Preetpal Singh represents the petitioner, while Zoheb Hossain acts as counsel for the respondent.

Case Title: Bar Council Of India Versus Commissioner Of Income Tax (Exemption)

Case No.: W.P.(C) 4330/2019