Khandelwal Vaishya Samaj Charitable Trust Vs CIT (Exemptions) (Rajasthan High Court)
The Rajasthan High Court quashed an order rejecting a charitable trust’s application to condone a delay in filing an audit report (Form 10B), emphasizing that a taxpayer should not suffer due to a professional’s mistake.
The Rajasthan High Court has ruled in favor of the Khandelwal Vaishya Samaj Charitable Trust, setting aside an order from the Commissioner of Income Tax (Exemptions) that had denied the trust’s request to condone a delay in filing its audit report (Form 10B). The trust had filed its income tax return for the Assessment Year 2017-18, claiming an exemption under Sections 11 and 12 of the Income Tax Act. While the audit was completed and the report was ready, it was not e-filed within the statutory time limit due to a consultant’s employee who suffered a leg fracture and was unable to complete the task. This failure resulted in the Central Processing Centre (CPC) disallowing the trust’s exemption claim and raising a tax demand of over ₹12 lakh.
Upon discovering the issue, the trust promptly filed a condonation of delay application, explaining the circumstances behind the late filing. However, the Commissioner of Income Tax (Exemptions) rejected the application without providing a detailed justification, a decision the High Court deemed “perfunctory.” The court underscored that a taxpayer should not be penalized for a bona fide mistake or an unavoidable lapse on the part of the professional they hired. The court referenced a Supreme Court judgment that advocates for a liberal and justice-oriented approach when dealing with delay condonation requests, stating that technical considerations should not override the pursuit of substantial justice.
