Return/Balance sheet to be considered as being within time if filed within timeline condoned by Hon’ble Supreme Court due to Covid-19
In a recent judgment, Hon’ble Allahabad High Court has set aside the order of CIT(Exemption) passed u/s 119(2(b) and order u/s 154 passed by the Assessing Officer denying the benefit of exemption u/s 11 holding that return filed within timeline condoned by Hon’ble Supreme Court in view of Covid-19 pandemic shall be considered in accordance with law as being within time.
ABCAUS Case Law Citation:
5100 (2026) (04) abacus.in HC
Counsel of the Petitioner:
Adv. Vibhanshu Srivastava
In the instant case, the Petitioner had challenged the order passed u/s 119(2)(b) of the Income Tax Act, 1961 (the Act) passed by the CIT(Exemption) denying condonation of the delay of three days in filing Income Tax Return and rectification order passed u/s 154 of the Act confirming CPC intimation u/s 143(1) denying benefit of exemption u/s 11 of the Act.
The Petitioner was a Charitable Institution (Society) duly registered u/s 12A of the Act and running schools. For the AY 2020-21, due to Covid-19 pandemic, there was a delay in filing audit report (Form 10B) and ITR by 34 days and 3 days respectively.
The CPC Bangaluru while processing the ITR denied the benefit of section 11 to the Petitioner due to delay in filing of Audit Report/ITR and levied tax at the gross income of the Petitioner.
The Petitioner filed two separate applications under Section 119(2)(b) of the Act seeking condonation of delay with regard to the filing of the Audit Report as well as the ITR. The CIT (Exemption) Lucknow, condoned the delay of 34 days in filing the Audit Report/Balance sheet by the petitioner.
However, with respect to the application for condonation of delay in filing ITR, the CIT(E) rejected it by observing that as per the CBDT Circular No. 11/2024 dated 01.10.2024, the return having claim of refund and return having claim of carry forward of loss & set off thereof, may only be condoned and since, in the case of the Petitioner there was no refund due, the application for condonation of delay in filing ITR does not qualify the prerequisite mandatory condition.
Thereafter, the Petitioner filed a rectification application u/s 154 of the Act before the AO. The Petitioner submitted that due to the covid conditions which made the situation beyond the control of the assessee, there was a slight delay of only three days in filing of ITR. The Petitioner also submitted that Hon’ble Supreme Court in Suo moto Writ Petition (Civil No. 3 of 2020) reported in 3467 (2021) (03) SC abacus.in had taken cognizance of the difficulties faced by the litigants in filing petitions, suits, appeals, other proceedings within the period of limitation prescribed under the general law of limitation or under any special laws. Accordingly, the Hon’ble Apex Court had extended the period of  limitation prescribed under the general law or special laws with effect from 15.03.2020.
The Petitioner also submitted that the Section 12A(1)(ba) of the Act does not bar return filed under section 139(4) and the return filed by it was within extended time prescribed for filing belated return. The Petitioner relied on the CBDT Circular F No. 173/193/2019 –ITA-1, dated 23.04.2019 and Circular No. 02/2018 dated 15.02.2018 along with judgments of ITAT Rajkot and ITAT Ahmedabad in its support.
However, the AO rejected the rectification application observing that the delay in filing of ITR was not condoned by the CIT(Exemptions), Lucknow. Moreover, the circulars and case laws quoted by the assessee were not applicable in his case as the provisions of section 12A(1)(ba) of the Act was amended w.e.f. 01.04.2023 and not applicable on the assessee.
Before the Hon’ble High Court, the counsel for the Petitioner contended that once the CIT(Exemption) while condoning the delay in filing audit report had already considered the grounds raised by the petitioner, especially the aspect that the COVID-19 pandemic, the rejection of condonation for return was not justified. It was also submitted that the Hon’ble Supreme Court had condoned the delay across the country in all proceedings from 15.03.2020 till 28.02.2022.
The Hon’ble High Court observed that while condoning the delay of 34 days in filing Audit Report/Balance Sheet, the CIT(E) duly took into account the hardships indicated by the petitioner in the application and found that there was justification for the delay caused in filing the audited balance sheet and accordingly, the delay was condoned. Surprisingly, however, the delay of three days in filing the return of three days was rejected by means of the impugned order.
The Hon’ble High Court further observed that it was needless to say that the case of the petitioner falls within the period which has been condoned by the Hon’ble Supreme Court. In any view of the matter, the case of the petitioner ought to have been considered in light of the aforesaid judgment. Testing the impugned orders on the touchstone of the said judgment of the Hon’ble Supreme Court as well as on the reasons given therein, there was no justification for sustaining both the orders.
The Hon’ble High Court observed that when the same authority had condoned the delay of 34 days, there was no reason as to why, for the same reasons, it could have refused to condone the delay of merely three days in filing the return.
Accordingly, the writ petition was allowed. The impugned orders were set aside.
It was directed the returns of the petitioner shall be considered in accordance with law as being within time. For this purpose, the matter was remitted to the competent authority for fresh determination in light of the observations made by the Court.
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