High Court condones delay in filing audit report in Form-10B considering the extent of the delay
In a recent judgment, the Hon’ble Kerala High Court, considering the extent of the delay, quashed the order passed by the CIT(Exemptions) denying to condone delay in filing audit report in Form-10B
ABCAUS Case Law Citation:
4216 (2024) (08) abcaus.in HC
In the instant case, the Petitioner(s) / assessees had filed Writ Petition(s) before the Hon’ble High Court challenged the order passed by the CIT(Exemption) rejecting the condonation of the delay in filing Audit Report in Form-10B.
The petitioners were entities registered under Section 12A of the Act. For the assessment year 2022-2023, the petitioners were required to file their return of income by 31-10-2022 and the audit report in Form-10B had to be filed on or before 30-09-2022. The due date for filing return of income for the assessment year 2022-2023 was extended by the CBDT for a period of seven days, as a result of which, the last date for filing return for that year became 07-11-2022 and consequently, the last date for filing audit report in Form-10B was 07-10-2022.
The petitioners did not file any audit report in Form-10B within the specified time. However. they filed it on or before the extended date of filing of the return for the assessment year 2022-2023.
The petitioners, thereafter filed applications before the Commissioner of Income Tax (Exemption) under Section 119(2)(b) of the Act praying that the delay in filing the audit report in Form-10B be extended. The Commissioner vide the impugned order rejected the applications for condonation of delay.
The Petitioner argued that Commissioner considered the applications for condonation of delay in a highly mechanical manner. Considering the facts and circumstances of these cases and also considering the fact that the delay was 30 days or less in each of these cases, the Commissioner ought not to have taken such a strict view and ought to have condoned the delay in filing the audit report, especially taking In the instant appeal, the assessee had challenged the order of CIT(A) in confirming consideration the fact that the income tax returns were filed within the due date.
The Department contended that reasons mentioned by the petitioners for the delay in filing the audit report were not at all acceptable in the facts and circumstances of these cases. It was submitted that the petitioners contended that they were unable to uphold the audit report on account of certain technical glitches, which cannot be correct, as the audit report itself was prepared much later than the date on which such glitches are reported.
It was submitted that the filing of the audit report was mandatory and the Commissioner had considered the contentions taken before him as grounds to condone the delay and had come to the conclusion that there was no reason to exercise the jurisdiction under Section 119(2)(b) of the 1961 Act to condone the delay in filing the audit report.
The Petitioners relied upon the judgment of the Division Bench of the Bombay High Court to contend that the applications for condonation of delay should have been considered without being too hyper technical and in a judicious manner.
The Hon’ble High Court opined that the delay in filing the audit report in Form-10B can at best be 30 days, as the law only requires that the audit report be uploaded atleast a month before the due date for filing returns. Considering the extent of the delay, it should have been appropriate that the Commissioner exercised his jurisdiction under Section 119(2)(b) of the Act to condone the delay instead of taking a strict view of the matter.
The Hon’ble High Court noted that the Hon’ble Bombay High Court had observed that when Petitioner was a charitable trust and had been regularly filing its returns and Form 10B within the due dates. On this ground alone, condonation application should have been allowed because the failure to file returns could be only due to human error and there was no allegation of malafide. The Division Bench opined that such routine exercise of powers would neither be expedient nor desirable, since the entire machinery of tax calculation, processing of assessment and further recoveries or refunds, would get thrown out of gear, if such powers are routinely exercised without considering its desirability and expedience to do so to avoid genuine hardship.
Accordingly, the Hon’ble High Court allowed the writ petitions by quashing the orders issued by the Commissioner of Income Tax (Exemptions) dismissing the applications filed by the petitioners under Section 119(2)(b) of the Act.
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