Minor delay should not come in legitimate claim for any deduction – High Court

Minor delay should not come in the way of legitimate claim for any deduction if the assessee is otherwise entitled to exemption/deduction – High Court

In a recent judgment, Hon’ble Madras High Court has condoned delay of 25 days in filing Audit Report in Form 10B holding that minor delay should not come in the way of ‘legitimate claim for any deduction’ if the assessee is otherwise entitled to exemption/deduction.

ABCAUS Case Law Citation:
4996 (2026) (01) abcaus.in HC

In the instant case, the Petitioner/assessee had filed a Writ Petition praying quashing of order passed under Section 119(2)(b) of the Income Tax Act, 1961 (the Act) by the CIT(Exemption) rejecting the application to condone the delay in filing Form 10B for the Assessment Year (AY) 2021-22.

The Petitioner was a charitable trust. It did not file the Return of Income for the Assessment year 2021-22 with the time prescribed under Section 139(1) of the Act.

However, on account of the outbreak of Covid-19 pandemic, the time period for filing of Return of Income was extended till 15.03.2022. The petitioner had filed the Return of Income before the extended time period on 12.03.2022.   Thus, there is no dispute on account of filing of Return of Income before 15.03.2022 by the petitioner for the said Assessment year.

In terms of Rule 44 (as per Section 12A(b) r/w Section 44 AB) of the Act, the Return of Income should have preceded by filing of Audit Report in Form 10B. Since Return of Income and Form 10B had been filed by the Petitioner on the same day, the petitioner approached the CIT(Exemption) vide application for condoning the delay of 25 days in filing the aforesaid Form 10B.  It was stated that the delay was on account of delay caused by the accountant. However, vide the impugned order the application was rejected.

The Hon’ble High Court noted that the reasons given in the impugned Order stated as under, “upon careful examination of the petition and the submission made by the assessee, it is evident that the petitioner has not provided any concrete evidence to substantiate its claim regarding delay attributable to its accountant’s actions.  Further as reported by the AO, the petitioner never availed even the extended timelines for filing of returns/audit report to its benefit. The lack of documentary evidence to corroborate the petitioner’s statements creates a situation where the grounds for delay are unclear and insufficient to warrant condonation under Section 119(2)(b) of the IT Act.”

However, the Hon’ble High Court observed that it had taken a categorical view that minor delay should not come in the ‘legitimate claim for any deduction’ if the assessee is otherwise entitled to exemption/deduction. In the case in hand admittedly there was a marginal delay of 25 days in filing Form 10B as required under Section 12A(b) r/w Section 44AB of the Act.

Accordingly, the Hon’ble High Court quashed the impugned Order and the impugned intimation Order issued by the CPC under Section 143(1) of the Act and the case was remitted back to the CPC to redo the said exercise and issue a fresh intimation notice to the petitioner under Section 143(1) of the Act.

Download Full Judgment Click Here >>

• Object of assessment proceedings is not to find empirically correct solution on every fact issue – HC
• Penalty u/s 270A deleted as assessee filed revised computation during scrutiny
• Penalty u/s 271B for unfilled column 40 in Tax Audit Report Form 3CD deleted by ITAT
• Merely ex-parte rectifying computation without amending assessment order not make it nullity- ITAT
• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT