Case Law Details
Srivatsa Encivil Pvt. Ltd. Vs PCIT (Bombay High Court)
The Bombay High Court allowed a writ petition challenging an order passed under Section 119(2)(b) of the Income-tax Act, 1961, which had rejected a company’s request for condonation of a 13-day delay in filing Form 10-IC for Assessment Year 2025-26. The rejection had resulted in denial of the concessional tax regime available under Section 115BAA.
The petitioner, a construction company eligible to opt for the concessional tax regime under Section 115BAA, was required to file its return of income and Form 10-IC by 10 December 2025. Although the company had completed its audit in time and had already factored the Section 115BAA benefit into its accounts, both the return and Form 10-IC were filed on 23 December 2025, resulting in a delay of 13 days. The company attributed the delay to the sudden demise of its Group Founder and Chairman on 25 November 2025, which disrupted its functioning. An application seeking condonation of delay was filed on 24 December 2025 under Section 119(2)(b).
The tax authorities rejected the application on the ground that filing Form 10-IC within the prescribed timeline was mandatory. Before the High Court, the petitioner argued that the delay was minimal, bona fide, and caused by exceptional circumstances supported by documentary evidence. It also contended that the power under Section 119(2)(b) should have been exercised to condone the delay.
The Court observed that the delay was only 13 days and was adequately explained by undisputed facts relating to the death of a key family member who was also the promoter and father of one of the directors. It held that the delay was neither deliberate nor mala fide. The Court further noted that the benefit under Section 115BAA is a substantive statutory benefit, whereas filing Form 10-IC is merely the procedural mechanism for exercising that option. Procedural requirements, the Court held, should not defeat substantive entitlements when eligibility is undisputed.
The Court also took note of the petitioner’s consistent history of timely compliance and observed that this was its first instance of delay. Since the return of income and Form 10-IC were filed simultaneously, the claim could not be treated as an afterthought. The Court found that the authorities had adopted an unduly technical and rigid approach, ignored the short duration of delay and exceptional circumstances, and failed to consider the absence of any prejudice to the Revenue.
Observing that denial of condonation would impose an additional tax liability exceeding ₹5 crore and cause grave hardship, the Court held that the impugned order reflected non-application of mind and defeated the objective of Section 119(2)(b). Accordingly, the order rejecting condonation was quashed, the delay of 13 days was condoned, and the authorities were directed to process the matter by treating Form 10-IC as having been filed within time.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. This Petition is filed under Article 226 of the Constitution of India whereby the Petitioner challenges the order dated 28th January 2026 passed by Respondent No.1 under Section 119(2)(b) of the Income Tax Act, 1961, whereby the Petitioner’s application for condonation of delay of 13 days in filing Form 10-IC for Assessment Year 2025–26 has been rejected. Consequentially, the Petitioner has been denied the benefit of the concessional tax regime under Section 115BAA of the Act.
2. The Petitioner is a company engaged in the business of construction and is eligible to opt for the concessional tax regime under Section 115BAA. For A.Y. 2025–26, the due date for filing the return of income and Form 10-IC was 10th December 2025.
3. The Petitioner had completed its audit well in time and the benefit under Section 115BAA was already factored into the accounts. However, due to the sudden demise of the Group Founder/Chairman on 25.11.2025, both the return of income and Form 10-IC were filed on 23rd December 2025, i.e. with a delay of 13 days. The sudden demise of the Group Founder/Chairman disrupted the functioning of the Company.
4. As there was a delay in filing both the return of income as well as Form 10-IC, the Petitioner filed an application for condonation of delay on 24th December 2025 under Section 119(2)(b).
5. By the impugned order dated 28th January 2026, Respondent No.1 rejected the application primarily on the ground that filing Form 10-IC within time is mandatory.
6. In this factual backdrop, the learned Counsel for the Petitioner submitted that the delay is merely of 13 days which is minimal and occurred due to a genuine and unavoidable circumstance i.e. the demise of a Group Founder/Chairman, which is duly supported by documentary evidence. It was further submitted that the Petitioner is fully eligible to claim the benefit of Section 119(2)(b) of the Income-Tax Act, 1961 and therefore, the delay deserves to be condoned in exercise of such powers.
7. On the other hand, the learned Counsel for the Respondents supported the impugned order and submitted that compliance with timelines is mandatory.
8. Having heard the learned counsel, we find that in the present case, the delay is only 13 days and is duly explained by undisputed facts, namely the demise of a key family member who was both the promoter and the father of one of the Directors. Therefore, the delay is neither deliberate nor malafide.
9. The benefit under Section 115BAA is a substantive statutory benefit, whereas the filing of Form 10-IC is merely the mode of exercising such option and is thus a procedural requirement. It is well settled that procedural requirements cannot defeat substantive entitlements, particularly where there is no dispute as to the eligibility of the assessee. The denial of the benefit under Section 115BAA of the Act is going to result in the Tax Liability (including interest thereon) of over Rs. 5,00,00,000/-, which will cause immense hardship to the Petitioner Company.
10. The material on record clearly demonstrates that the Petitioner has a consistent track record of timely compliance and that the present instance is the first and only delay from the Petitioner’s side. That the return of income and Form 10-IC were filed simultaneously, thereby establishing that the claim was neither an afterthought nor lacking in bona fides.
11. In the fact of the present case, we find that Respondent No.1 has adopted an unduly technical and rigid approach by ignoring the short duration of delay, especially due to the exceptional circumstances leading thereto. There is a complete absence of any prejudice to the Revenue and such an approach defeats the very object and purpose of Section 119(2)(b) of the Income Tax Act, 1961. The denial of condonation results in the Petitioner being deprived of the concessional tax regime and consequently saddled with a substantial additional tax liability. For a mere delay of 13 days, such a consequence, in our view, is unduly harsh, excessive and grossly disproportionate.
12. In our considered view, if the relief is not granted under Section 119(2)(b) of the Income Tax Act, 1961, a liability of Rs. 5 crores will be imposed upon the Petitioner causing it grave hardship. The impugned order suffers from non-application of mind and reflects an unduly rigid approach of Respondent No.1. The refusal to condone the delay results in defeating the cause of substantial justice.
13. In view of the foregoing discussion, the impugned order dated 28th January, 2026, passed by Respondent No.1 under Section 119(2)(b) of the Income Tax Act, 1961, is hereby quashed and set aside and the Petitioner’s application for condonation of delay of 13 days in filing Form 10-IC for Assessment Year 2025-26 is hereby condoned.
14. Now that the delay has been condoned, the Respondents are directed to process the matter in accordance with law by giving effect to this order on the basis that Form-10 IC 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.
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