Brahmchari Wadi Trust Vs CIT (Exemption) (Gujarat High Court)
The Gujarat High Court allowed the writ petition filed by a charitable trust and set aside the order rejecting condonation of delay in filing Form No.10 for Assessment Year 2017–18 under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner trust, registered under Section 12AA and engaged in running educational institutions, had claimed exemption under Sections 11 and 12 and exercised the option to accumulate income under Section 11(2). Although the trust filed Form No.10B (audit report) and Form No.10 for accumulation, these were filed after the due date prescribed under Section 139(1).
The Centralised Processing Centre disallowed the accumulation claim under Section 11(2) on the ground of delayed filing of Form No.10 and raised a tax demand. The petitioner sought condonation of delay, explaining the circumstances and subsequently furnishing supporting documents to demonstrate compliance with statutory conditions, including investment of accumulated funds. However, the authority rejected the condonation application, holding that internal administrative issues did not constitute a reasonable cause. Consequential assessment and demand orders were passed, leading the petitioner to pursue appellate remedies and repeated requests for reconsideration.
The High Court noted that the delay in filing Form No.10B had already been condoned by the department and that the petitioner had explained the reasons for delay in filing Form No.10. Relying on its earlier decisions, including those holding that procedural requirements such as filing of Forms 10 and 10B should not defeat substantive exemptions, the Court reiterated that authorities must adopt an equitable, balanced, and judicious approach. The Court distinguished reliance placed on the Supreme Court decision in the Wipro case, observing that strict compliance principles applicable to other statutory provisions could not be mechanically applied where the requirement is procedural and the trust otherwise satisfies substantive conditions.
