Juba Jyoti Jubak Sangha Vs Central Board of Direct Taxes (CBDT) and others (Orissa High Court)
Core Issue: The principal issue before the Orissa High Court was whether the Commissioner of Income Tax (Exemption) was justified in rejecting the assessee’s application under section 119(2)(b) for condonation of delay in filing the audit reports in Form 10B for Assessment Years 2020-21 and 2021-22, thereby denying exemption under section 12A, despite the delay having been caused by the Covid-19 pandemic and genuine hardship.
Facts: The petitioner, a charitable organization registered under section 12A, sought exemption from income tax for AYs 2020-21 and 2021-22. However, the audit reports in Form 10B, prescribed under Rule 17B, were filed belatedly on 20.04.2022 and 29.03.2022, resulting in delays of 460 days and 73 days, respectively. The petitioner filed an application under section 119(2)(b) seeking condonation of delay, explaining that the delay occurred due to the Covid-19 pandemic and the resulting hardship. The Commissioner of Income Tax (Exemption), Hyderabad rejected the application on the ground that sufficient cause and genuine hardship had not been established, leading to denial of exemption under section 12A. Aggrieved, the petitioner invoked the writ jurisdiction of the High Court.
Findings of the High Court: The Court observed that there was no dispute regarding the period of delay. The only question was whether the delay deserved to be condoned in exercise of the discretionary power under section 119(2)(b). The Court reiterated that the requirement of furnishing the audit report is essentially procedural and that exemption should not be denied merely because the audit report was filed after the prescribed due date, particularly when it is available before completion of the assessment proceedings and sufficient cause is shown.
