Vallabh Welfare Foundation Vs CIT (Exemptions) (Bombay High Court)
Form 10B Filed 30 Days Late, ₹27 Lakh Demand Raised: Bombay High Court Condoned the Delay
SEO Title: 30-Day Form 10B Delay Condoned on Genuine Hardship: Bombay High Court
Cases Discussed
- Sitaldas K. Motwani v. DIT (International Taxation) [2010] 187 Taxman 44 — relied upon for liberal construction of “genuine hardship” under Section 119(2)(b) and a justice-oriented approach to condonation.
- Mirae Asset Foundation v. Pr. CIT [2025] 176 taxmann.com 345 — relied upon regarding condonation of a short delay in filing Form 10B where refusal would cause genuine hardship.
- Shree Chandraprabha Medical Trust v. Commissioner of Income-tax (Exemptions) [Writ Petition (L) No. 14286 of 2025, dated 4-3-2026] — referred to as a Bombay High Court decision condoning delay in filing the concerned Forms for A.Y. 2020-21.
- Little Flower Education Society v. CIT (Exemptions) [Writ Petition No. 2057 of 2025, dated 25-8-2025] — referred to as a Bombay High Court decision condoning delay in filing the concerned Forms for A.Y. 2020-21.
- Dinesh Surendra Kotecha v. UOI [Writ Petition No. 2657 of 2025 dated 13-10-2025] — referred to as a Bombay High Court decision condoning delay in filing the concerned Forms for A.Y. 2020-21.
- Dakuben Saremalji Sancheti (Nadol Charitable Trust) v. CIT, Exemptions [Writ Petition (L) No. 37554 of 2025 dated 22-12-2025] — referred to as a Bombay High Court decision condoning delay in filing the concerned Forms for A.Y. 2020-21.
Vallabh Welfare Foundation v. Commissioner of Income Tax (Exemptions), Mumbai & Ors., Writ Petition (L) No. 24472 of 2026, Bombay High Court, order dated 21 September 2026.
Can a charitable institution lose its Section 11 exemption because its audit report was filed 30 days after the prescribed date, even though the report was furnished before the due date for its income tax return? The Bombay High Court answered that question in favour of Vallabh Welfare Foundation. Considering the change in the filing deadline, the COVID-19 period and the substantial demand that followed, the Court condoned the delay in filing Form 10B for assessment year 2020–21.
The Foundation was a Section 8 company registered under Section 12AA. It claimed an exemption of ₹70 lakh under Section 11 in its return filed on 9 February 2021. To support that claim, it was required to furnish its audit report in Form 10B. For the relevant year, the extended due date for Form 10B was 15 January 2021, while the extended due date for the return was 15 February 2021.
The distinction between those dates lay at the heart of the dispute. Under the earlier requirement, the audit report could be furnished along with the return. Following the amendment to Section 12A(1)(b), it had to be furnished one month before the return’s due date. The Foundation and its auditor believed that the changed requirement would apply from assessment year 2021–22. Acting on their understanding of the earlier rule, they uploaded Form 10B on 14 February 2021, a day before the extended return filing deadline. Under the amended requirement applicable to assessment year 2020–21, however, the report was 30 days late.
The Centralized Processing Centre issued an intimation dated 30 November 2021 denying the Section 11 exemption and raising a demand of ₹27,35,970. The intimation recorded “No forms filed”. As the High Court noted, Form 10B had in fact been filed; the intimation did not discuss its delayed filing. The Foundation said it became aware of the demand only when it received a recovery communication on 1 October 2024. After examining the position, it applied to the Commissioner of Income Tax (Exemptions) on 4 February 2025 for condonation under Section 119(2)(b).
The Commissioner rejected the application on 18 February 2025 by relying on CBDT Circular No. 16/2024 dated 18 November 2024. The Circular provided that applications concerning delayed Forms 9A, 10, 10B and 10BB filed on or after its date would not be entertained by the specified authorities beyond three years from the end of the relevant assessment year. The Foundation’s application to the Commissioner had been filed beyond that period. It subsequently made a separate condonation application to the CBDT, which remained pending when the High Court heard its writ petition.
The Department objected to the writ petition, pointing both to the Circular and to the pending CBDT application. The High Court noted the Department’s own clarification that an application beyond the three-year period could be made to the CBDT. Even so, it decided that the Foundation need not be sent back to pursue that pending application. On the particular facts before it, the Court was satisfied that there was reasonable cause for the 30-day delay in filing Form 10B.
The Court attached weight to the timing of the rule change. Assessment year 2020–21 was the first year in which the audit report deadline was brought forward by one month. It was also a period affected by the COVID-19 pandemic, during which compliance deadlines were extended from time to time. The Foundation was in only its second year of operations. Taken together, these circumstances supported its explanation that the late filing arose from a bona fide misunderstanding of the new requirement.
The resulting hardship mattered as well. Failure to condone a short delay would leave the Foundation facing a demand of more than ₹27 lakh after denial of its Section 11 claim. Referring to Sitaldas K. Motwani v. DIT (International Taxation), the High Court emphasised that genuine hardship under Section 119(2)(b) calls for a liberal, justice-oriented consideration. It also referred to Mirae Asset Foundation v. Pr. CITand other cases in which it had condoned delays in filing the relevant forms for assessment year 2020–21.
The High Court quashed the Commissioner’s rejection order, condoned the 30-day delay and set aside the CPC intimation. It directed the Department to process the return afresh in accordance with law, treating Form 10B as filed within time. The Foundation’s counsel undertook to communicate the order to the CBDT and withdraw the pending application.
Author’s comment: The important distinction in this case is between the delay in filing Form 10B and the later date on which condonation was requested. The Commissioner relied on the three-year limit in the CBDT Circular to reject the application before him. The High Court nevertheless examined the Foundation’s particular circumstances and granted relief itself. The decision does not mean that every delayed audit report will be condoned. It shows why the length and cause of the filing delay, the actual availability of the report, and the hardship caused by refusal should all be placed clearly before the authority or Court.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule. Respondents waive service. With the consent of the parties, Rule is made returnable forthwith and heard finally.
2. The above Writ Petition has been filed challenging the legality and propriety of the order dated 18th February 2025 passed underSection 119(2)(b) of the Income Tax Act, 1961 (“the I.T. Act”) for Assessment Year 2020-21. By the impugned order, the Commissioner of Income Tax (Exemptions), September 2026 (Respondent No. 1) rejected the application filed by the Petitioner seeking condonation of delay of 30 days in filing Form No. 10B by relying upon a Circular issued by the CBDT, beingCircular No. 16/2024 dated 18th November 2024.This Circular stipulates that no application for delay in filing of Form No. 9A/10/10B/10BB shall be entertained beyond the period of three years from the end of the Assessment Year for which such application is made. The Circular also makes it clear that this time limit would apply for any applications that are filed on or after the date of the Circular, namely, 18th November 2024. Respondent No. 1 dismissed the application filed by the Petitioner under Section 119(2)(b) relying upon this Circular because admittedly, the application seeking condonation of delay was filed on 4th February 2025 and was beyond the period of three years from the end of the Assessment Year in question.
3. The Petitioner is a charitable institution registered underSection 12AA of the I.T. Act and also a company incorporated under Section 8 of the Companies Act, 2013 on 11th April 2018 and has been constituted with the objective of promoting education, healthcare, social welfare, and community development. The Petitioner undertakes activities for the benefit of the economically weaker and vulnerable sections of society, including children, women, senior citizens, Scheduled Castes, Scheduled Tribes, backward classes, minorities, and physically challenged persons, through various welfare, skill development, and rehabilitation initiatives. The Petitioner was granted registration under Section 12AA of the I.T. Actvide certificate dated 10th December 2018.
4. The year under consideration is A.Y. 2020-21. The Petitioner filed its Return of Income on 9th February 2021 under Section 139(1) of the I.T. Actclaiming exemption under Section 11 of the Act amounting to Rs. 70,00,000/-. For claiming the exemption, the Petitioner has to get its books of account audited and submit an Audit Report under Section 12A(1)(b) of the I.T. Act in Form No. 10B. By virtue of the amendment to Section 12A(1)(b) introduced by the Finance Act, 2020, the requirement of furnishing the Audit Report in Form No. 10B was changed from filing the same along with the Return of Income to filing it one month prior to the due date for filing the Return of Income. Consequently, for A.Y. 2020-21, the due date for filing Form No. 10B stood extended up to 15th January 2021, whereas the due date for filing the Return of Income stood extended up to 15th February 2021.
5. The Petitioner is a comparatively new trust and A.Y. 2020-21 was only its second year of operations. The Petitioner filed its Return of Income for threlevant Assessment Year on 9th February 2021 under Section 139(1) of the I.T. Act. In view of the newly introduced amendment during the COVID-19 period, the Petitioner and its Auditor under bona fide belief, proceeded on the understanding that the amended requirement would apply from A.Y. 2021-22 and that Form No. 10B was required to be furnished along with the Return of Income as per the old provision. Accordingly, the Audit Report in Form No. 10B for the relevant Assessment Year came to be filed on 14th February 2021, i.e., prior to the extended due date for filing the Return of Income. According to the Petitioner the delay was neither deliberate nor mala fide, but arose solely on account of a bona fide misunderstanding regarding the amended compliance requirement. Though the Petitioner and its auditor believed the delay to be only 5 days, however, under the amended provisions the effective delay in filing Form No. 10B is 30 days.
6. The Petitioner was issued an intimation under Section 143(1)(a) of the I.T. Actdated 30th November 2021 by the Centralized Processing Centre, denying the exemption which was claimed by the Petitioner and raising a demand of Rs. 27,35,970/-. Further, the said intimation records that “No forms filed”. Thus, the intimation proceeded on the basis that Form No. 10B had not been filed at all. There was, undisputedly, no reference in the said intimation of delay in filing of the Audit Report in Form No. 10B.
7. The Petitioner claims that it was not aware of the issuance of the intimation under Section 143(1) of the I.T. Act. The Petitioner first became aware of the same upon receipt of a recovery communication dated 1st October 2024 issued by Respondent No. 3, stating that demand for A.Y. 2020-21 was outstanding and calling upon the Petitioner to either pay the demand or furnish details of rectification, appeal effect, or stay application, if any. Upon verification of the records and after obtaining professional advice, the Petitioner came to understand that Form No. 10B had not been considered while processing the Return of Income under Section 143(1) of the I.T. Act, resulting in denial of exemption claimed under Section 11 of the Act.
8. It is in these circumstances that on 4th February 2025, the Petitioner filed an Application before Respondent No. 1 under Section 119(2)(b) of the I.T. Act, seeking condonation of delay in filing of Form No. 10B for the relevant Assessment Year, which came to be rejected by the impugned order dated 18th February 2025. Thereafter, the Petitioner also preferred an Application for condonation of delay under Section 119(2)(b) of the I.T. Act before the CBDT, which is presently pending adjudication and has not yet been disposed of by the CBDT. Hence, the present Writ Petition.
9. The Respondents have raised a preliminary objection regarding the maintainability of the present Writ Petition. It is the contention of the Respondents, as set out in the Affidavit-in-Reply dated 4th August 2026 filed by Respondent No. 1, that the Petitioner has already availed of the alternate remedy available under law by filing an Application for condonation of delay under Section 119(2)(b) of the I.T. Act before the CBDT on 24th June 2025, and therefore, the present Writ Petition ought to be dismissed on the ground of maintainability as the Petitioner has already approached the CBDT. The Respondents further contend that the Application for condonation of delay was filed beyond three years from the end of the relevant Assessment Year and as perCBDT Circular No. 16/2024 dated 18th November 2024, the said Application was not admissible before the CIT (Exemptions) and was therefore rightly rejected.
10. We have heard Mr. Jain, the learned Counsel appearing on behalf of the Petitioner, as well as Mr. Bhosle, the learned Counsel appearing on behalf of the Respondents and have perused the material on record. We find that the Respondents, in their Affidavit-in-Reply dated 4th August 2026, have Page 6 of 11 ————————————— st themselves clarified that an Application for condonation of delay in filing of Form 9A/10/10B/10BB beyond three years from the end of the relevant Assessment Year can be made before the CBDT. We further note from the record that the Petitioner, being conscious of the aforesaid legal position, has already filed an Application for condonation of delay under Section 119(2)(b) of the Act before the CBDT on 24th June 2025, which is stated to be pending consideration.
11. Though we are mindful of the fact that the Petitioner has already filed an Application before the CBDT seeking a condonation of delay, in the peculiar facts and circumstances of the present case, we do not deem it necessary to relegate the Petitioner to prosecute its pending Application before the CBDT. This is because we are satisfied that there is a reasonable cause for the delay of 30 days in filing of Form No. 10B by the Petitioner. Firstly, the delay is merely of 30 days. Further, we note that A.Y. 2020-21 was the first year when the due date to file Audit Report was preponed by one month. Earlier, the time limits to upload the Audit Report in Form 10B coincided with the due date to file the Return of Income. However, with effect from A.Y. 2020- 21, the due date to file the Audit Report in Form 10B was preponed by one month. In other words, the Audit Report was required to be filed one month before the due date to file the Return of Income. This apart, during this time, there was a lockdown announced by the Government. It should not be forgotten that we are dealing with a period when the COVID-19 pandemic was still prevalent. It is a known fact that during such time, time limits for various compliances were extended by the CBDT from time to time. So much so that even the Hon’ble Supreme Court had suo moto extended the time limits to file Appeals/Applications under various laws from time to time in Suo Moto Writ Petition (C) No. 3 of 2020. Thus, in the facts of the present case, we are satisfied that the reasons given by the Petitioner for the delay in filing of Form No. 10B are bona fide.
12. This apart, not condoning such delay would cause a genuine hardship to the Petitioner inasmuch as the Petitioner had been denied exemption under Section 11 of the I.T. Act and a demand of Rs. 27,35,970/- has been raised for belated filing of the Audit Report in Form No. 10B. One of the relevant considerations for condoning delay under Section 119(2)(b) of the I.T. Act is to consider the genuine hardships which an Assessee will face if the delay is not condoned. We derive support from the decision of this Court in the case of Sitaldas K. Motwani v. DIT (International Taxation) [2010] 187 Taxman 44, the relevant portion of which is reproduced hereunder:
“15. The phrase “genuine hardship” used in Section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated 12th October,1993.The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on merit.
The expression “genuine” has received a liberal meaning in view of the law laid down by the Apex Court referred to hereinabove and while considering this aspect, the authorities are expected to bare in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging its claim late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non deliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice-oriented so as to advance cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund.”
13. A similar issue was considered by this Court in the case ofMirae Asset Foundation v. Pr. CIT [2025] 176 taxmann.com 345. Paragraph 5 of the said order is reproduced hereunder:
“5. As far as the condonation of delay is concerned, we find that admittedly there was only 24 days delayin filing Form 10B. It is true that the application seeking condonation of delay was filed after about 9 months. However, we find that this delay is not such that should deny the Petitioner from filing Form10B with a delay of 24 days. We find that if this delay is not condoned, there will be genuine hardship to the Petitioner, inasmuch as, the Petitioner would be denied the exemption otherwise claimed under the provisions of Section 11 of the IT Act and which is a substantial amount.”
14. Incidentally, for the same A.Y. 2020-21, this Court in:
(i) Shree Chandraprabha Medical Trust v. Commissioner of Income-tax (Exemptions) [Writ Petition (L) No. 14286 of 2025, dated 4-3-2026],
(ii)Little Flower Education Society v. CIT (Exemptions)[Writ Petition No. 2057 of 2025, dated 25-8-2025],
(iii)Dinesh Surendra Kotecha v. UOI [Writ Petition No. 2657 of 2025 dated 13-10-2025] and
(iv)Dakuben Saremalji Sancheti (Nadol Charitable Trust) v. CIT, Exemptions[Writ Petition (L) No. 37554 of 2025 dated 22-12-2025],
condoned the delay in filing the concerned Forms, instead of relegating the Petitioners therein to approach the CBDT.
15. In view of the aforesaid discussion and the reasons stated above, we quash and set aside the impugned order passed under Section 119(2)(b) of the I.T. Act dated 18th February 2025 and condone the delay of 30 days in filing of Form No.10B for A.Y. 2020-21. Consequently, we also set aside the intimation dated 30th November 2021 issued under Section 143(1) of the I.T. Act.
16. Since the delay has been condoned, the Respondents shall once again process the Petitioner’s Return of Income in accordance with law by giving effect to this order on the basis that Form 10B has been filed within time.
17. In the light of this order, Mr. Jain undertakes to communicate the present order to Respondent No.2 – CBDT and also to withdraw the Application under Section 119(2)(b) of the Act filed before Respondent No.2 – CBDT within a period of one week from the date of uploading of this order. The said undertaking is accepted.
18. Rule is made absolute in the above terms and the present Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
19.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.
