Case Law Details
Bombay Prathana Samaj Vs Union of India and Ors. (Bombay High Court)
Delay in Filing Form No. 10 for Section 11 Accumulation Condoned; CBDT Directed to Accept Belated Application in Interest of Substantive Justice
The Petitioner is a public charitable trust. It claimed exemption under section 11 of the Income Tax Act. For AY 2015-2016; it claimed accumulation under section 11(2). Same was denied on the ground that Form No.10 was not filed. It filed Form No.10 belatedly. It applied seeking condonation of delay under section 119(2)(b) of the Act; before the CBDT. The same came to be rejected. Hence; petition came to be filed.
The Hon’ble Bombay High Court set aside the order and allowed the petition. It held: (i) there was a CA working on honorary basis with the petitioner; which led to delay; and hence; sufficient cause was made out; (ii) condones delay of 430 days in filing Form No.10; (iii) substantive cause of justice needs to be seen than pedantic approach; (iv) relies on earlier decisions in the case of People’s Mobile Hospital and KSB care; (v) directs acceptance of Form No.10 in time.
Argued by Adv. Bharat Raichandani i/b UBR Legal
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule is made returnable forthwith. Respondents waive service. By consent of the parties, the Petition is taken up for final disposal at the stage of admission.
2. The above Writ Petition challenges the legality and validity of the impugned order dated 07.03.2025 passed by Respondent No.3, Commissioner of Income – tax (Exemptions), Mumbai, under Section 119(2) (b) of the Income-tax Act, 1961 (for short “the IT Act”), rejecting the Petitioner’s application for condonation of delay of 430 days in filing Form No. 10 for Assessment Year 2015–16.
3. The Petitioner is a public charitable trust registered under Section 12A of the IT Act since 1976. The Petitioner has been regularly complying with various obligations for seeking exemption under Section 11 of the IT Act including regularly filing its Return of Income, Audit Reports, Form No. 10, wherever applicable.
4. For Assessment Year 2015 – 16, the Petitioner filed its Return of Income on 16.10.2016. In its Return of Income, the Petitioner declared Nil income after claiming accumulation under Section 11(2) to the extent of Rs. 29,07,202/-.
5. Thereafter, the Centralized Processing Centre, Bengaluru, issued an intimation under Section 143(1) of the IT Act on 18.11.2016 wherein the benefit of accumulation under Section 11(2) of the IT Act was denied and a demand of Rs. 6,58,740/- was raised. Thereafter, the Petitioner filed its Form No.10 on 03.01.2017. After all this, an assessment order under Section 143(3) was passed by Respondent No.2 on 11.11.2017 wherein the benefit of accumulation under Section 11(2) of IT the Act was denied on the ground that the Petitioner did not file Form No. 10 at the time of filing of Return of Income and therefore the said amount of accumulation of Rs.29,07,202/-was added back to the Petitioner’s income. However, the assessment order records that the Petitioner had filed Form No. 10 on 03.01.2017. The Petitioner challenged the said assessment order before the CIT(A).
6. In the meantime, the Petitioner also filed an application under Section 119(2)(b) of the IT Act with Respondent No.3 on 27.01.2023 for seeking condonation of delay in filing Form No. 10. The reasons stated for the delay were that the accounts of the Petitioner Trust are finalized by an accountant who is employed with other organizations and works with the Petitioner Trust on a honorary basis, and therefore, Form No. 10 inadvertently remained to be submitted at the time of filing of the Return of Income. By the impugned order dated 07.03.2025, Respondent No.3 rejected the Petitioner’s application under Section 119(2)(b) of the IT Act, and hence, the present Petition.
7. We have heard the learned counsel for the parties. We have also perused the material placed on record.
8. For claiming the benefit of accumulation as per Section 11(2) of the IT Act, the Petitioner was required to file Form No. 10 (Statement of Accumulation). From the record, we are satisfied that there is a reasonable cause for the delay in filing Form No. 10 by the Petitioner. One of the relevant considerations for condoning delay under Section 119(2)(b) is to consider the genuine hardship which an Assessee will face if the delay is not condoned.
9. We derive support from the judgment of the Hon’ble Supreme Court in CIT v. Nagpur Hotel Owners’ Association, (2001) 247 ITR 201 (SC), wherein it was held that furnishing of Form No. 10 before completion of assessment constitutes sufficient compliance.
10. In any case, this Court, in several of its orders involving a similar issue of delay in filing Form No. 10, has adopted a liberal approach. They are :-
(a) Shree Jain Swetamber Murtipujak Tapagachha Sangh v. CIT (E) [W.P. (L) No. 1321 of 2024, 0rder dated 27.03.2025]
(b) KSB Care Charitable Trust v. CIT (E) [(2025) 178 com771 (Bom)]
(c) People’s Mobile Hospitals v. CIT (E) [W.P. No. 2697 of 2025, order dated 15.09.2025]
(d) St. Anne’s School v. CIT (E) [(2025) 180 taxmann.com183 (Bom)]
(e) Francis Xavier Church vs. CIT (E) [W.P. 635 of 2026, order dated 18.02.2026]
11. We are also of the view that Respondent No.3 ought to have taken a justice-oriented approach rather than a pedantic one and condoned the delay. This Court, in People’s Mobile Hospitals v. CIT (E) (order dated 15th September 2025 in Writ Petition No. 2632 of 2025) has followed its earlier judgments in Mirae Asset Foundation v. Pr. Commissioner of Income-tax (order dated 7th July 2025 in WP No. 713 of 2025), Sau Dwarkabai tai Karwa Charitable Trust v. Commissioner of Income-tax(E) (2025) 174 taxmann.com245 (Bombay) and Kotak Family Foundation v. Commissioner of Income-tax (E) (2025) 176 taxmann.com56 (Bombay) and condoned the delay. In these cases also, this Court was concerned with condonation of delay in filing of similar forms within the stipulated time while claiming exemption under Section 11 of the IT Act. Therein, reliance was also placed on a judgment of the Gujarat High Court in the case of Sarvodaya Charitable Trust v. ITO (E) (2021) 125 taxmann.com 75 laying down the principle that in cases like the present one, the approach of the authority ought to be equitious, balancing and judicious and availing of exemption should not be denied merely on the bar of limitation. This is more so when the Legislature has, under Section 119(2)(b) of the IT Act, conferred discretionary powers to condone the delay on the authorities concerned with a view to avoid genuine hardship.
12. Moreover, not condoning such delay would cause genuine hardship to the Petitioner inasmuch as the Petitioner has been denied exemption under Section 11 of the IT Act and a demand of Rs.7,16,990/- has been raised for belated filing of Form No. 10.
13. Considering the facts and circumstances of the case, we are of the view that the delay ought to be condoned. We, accordingly, quash and set aside the impugned order passed under Section 119(2)(b) of the IT Act dated 07.03.2025 and condone the delay of 430 days in filing of Form No. 10 for A.Y. 2015-16.
14. Since the delay has been condoned, the Respondents shall once again process the Petitioner’s Returns in accordance with law by giving effect to this order on the basis that Form No. 10 has been filed within time.
15. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
16. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.
Author Bio
