Delay in filing Form 10B condoned as failure was in 1st year of operation of Trust

High Court condoned delay in filing Form 10B as the failure was in the 1st Year of operation of the Trust.

In a recent judgment, Hon’ble madras High Court condoned delay in filing Form 10B as the failure was in the 1st Year of operation of the Trust. Delay in filing statutorily forms should not come in the way in case an Assessee is otherwise entitled to such exemptions / deductions.

ABCAUS Case Law Citation:
4900 (2025) (12) abcaus.in HC

In the instant case, the assessee had challenged the order passed by the Commissioner of Income Tax (Exemption) under Section 119(2)(b) of the Income Tax Act, 1961 (the Act) whereby the application for condoning the delay in filing Audit Report in Form 10B had been rejected.

The assessee trust had delayed in filing audit report in Form 10B and moved an application before CITE) for condonation of delay. The assessee submitted that due to the Cyclone, the Trust could not file the statutory from viz., Form 10B and furnished some information about the “Gaja Cyclone” from Wikipedia.

The CIT(E) observed the date of formation and dissipation of the said Cyclone which was much later than the due date for filing the Audit Report. Also, from the Attendance Register, it was seen that the School of the Trust run by the Trust was closed only after the due date for filing audit report was expired.

The CIT(E) was of the view that the assessee had not submitted any clinching evidence to prove that its School was affected by Cyclone during the relevant time except a general write up on the said Cyclone and extracts from Wikipedia.

The CIT(E) further observed that the preparation and E-filing of Audit Reports is a statutory responsibility of the Chartered Accountant who is registered as a Tax Professional on the E-filing portal of the Department. The vague reasons stated by the assessee were only an afterthought and the assessee had not established any reasonable cause for the delay in filing Form 10B for the Assessment Year 2018-2019.

As a result, the CIT(E) rejected the assessee’s petition seeking condonation of delay under Section 119(2)(b) in filing Form 10B.

The Hon’ble High Court noted that originally, the last date for filing Form 10B was prescribed as 30.09.2018 which was later extended to 31.10.2018.  However, the Petitioner filed the same along with the Return of Income on 31.03.2019 with a delay of 151 days from 31.10.2018.

The Hon’ble High Court further noted that an intimation under Section 143(1) of the Act was issued by CPC disallowing the exemption claimed under section 11 of the Act.

Both the assessee and the Revenue placed reliance on number of judgments of the Hon’ble High Court to augment their stand.

The Hon’ble High Court opined that the Petitioner did not gain anything by not filing Form 10B in time.  Ultimately, the Income Tax Department is expected to collect just tax that are due from an Assessee, if an Assessee is entitled for any deductions.

The Hon’ble High Court further opined that the delay in filing the declarations or the documents that are required statutorily should not come in the way in case an Assessee is otherwise entitled to such exemptions / deductions. Even if such declarations / documents are not filed, the Hon’ble Supreme Court has ultimately held that while confirming the demand, all the attendant benefits that are available to an Assessee has to be extended.  Apart from that the Hon’ble Supreme Court has repeatedly held that procedures are rules makers, handmaids of justice and not mistress of law.

The Hon’ble High Court observed that in this case, the Petitioner was registered as a “Trust” in the year 2017.  Effectively, the Petitioner would have carried on operation as a “Trust” from 01.04.2017 onwards, which would fall under the relevant Assessment Year i.e. AY 2018-2019.

The Hon’ble High Court observed that the failure was in the year 1st Year of its operation.  Therefore, the delay in filing Form 10B for the purpose of Section 12A(1)(b) of the Act should not come in the legitimate way of any exemptions or deductions that may be available to the Petitioner.

Considering the same, the Hon’ble High Court allowed the Writ Petition on terms subject to the Petitioner donating sum of Rs. 25,000/- to Blue Cross of India. It was directed that on payment of donation by the assessee, the impugned Order shall stand quashed and the Assessing Officer/Assessing Unit shall complete the assessment in accordance with law.

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