The Delhi High Court has said the Vishwa Hindu Parishad (VHP) cannot be faulted for the delay in submitting its audit report for the assessment year 1993-94, as it was banned as an unlawful organisation after the Babri Masjid demolition in 1992. Due to the delay in submitting its audit report, the assessing officer (AO) of the income tax department had not exempted the income generated from its property and contributions.
The AO’s order was set aside by the Commissioner of Income Tax on VHP’s appeal and the commissioner’s decision was upheld by the Income Tax Appellate Tribunal (ITAT). The high court has upheld the ITAT’s decision granting the exemption to the VHP while dismissing the appeal filed by the income tax department. A bench of Justices S Muralidhar and Anil Kumar Chawla held that in the present case, there was no finding that the audit report submitted by the assessee (VHP) does not satisfy the requirement of the law.
“The delay in submitting the audit report could not be said to be inordinate. The assessee was able to show that the delay was due to bona fide reasons beyond its control,” the court said. The bench also noted that while the AO passed his assessment order on February 29, 1996, VHP’s audit report was ready by March 12, 1996. “Had the AO granted the assessee two weeks time, the assessee would have filed its audit report and the assessment order passed thereafter would still have been within the deadline of March 31, 1996. It would have caused no prejudice to the revenue,” the court said.
The AO had passed the order as per the returns filed by VHP in November 1995 but without the audit report. VHP had sought more time from the AO, saying since it was banned in 1993 under the Unlawful Activities (Prevention) Act its documents had been seized by the authorities and it did not have access to them. The ban was lifted only on June 28, 1995, the VHP had told the AO while seeking more time to get its accounts audited as required under the law.
The AO had waited till February 29, 1996 and then passed its assessment order in which only 10 per cent of the expenditure of the organisation was allowed.