Case Law Details
Chandraprabha Medical Trust Vs CIT (Exemptions) & Ors (Bombay High Court)
The Bombay High Court allowed the writ petition filed by a charitable trust challenging the rejection of its application for condonation of delay in filing Form 10B for Assessment Year (AY) 2020-21. The Court quashed the order passed under Section 119(2)(b) of the Income-tax Act and condoned the delay of 113 days in the acceptance and e-verification of Form 10B.
The petitioner, a public charitable trust registered under the Maharashtra Public Trusts Act, 1950 and under Section 12A of the Income-tax Act, had been engaged in providing medical services since 1997. For AY 2020-21, it filed its return of income on 31 October 2020 after claiming exemption under Section 11. The statutory audit report in Form 10B was also uploaded by the auditor on the same date.
However, while the audit report had been filed, the trust failed to complete the separate process of e-verifying or accepting Form 10B within the prescribed time. The Court noted that this lapse occurred during the COVID-19 pandemic when the trust’s managing trustee, who was over 80 years of age, was working from home. According to the trust, the omission was inadvertent. Upon discovering the error, the trust completed the verification process on 8 May 2021.
Subsequently, the Centralized Processing Centre issued an intimation under Section 143(1)(a) denying the exemption claimed under Section 11 and raised a tax demand of Rs. 54,12,410. The intimation recorded that no forms had been filed. Thereafter, on 18 November 2024, the trust applied for condonation of the 113-day delay under Section 119(2)(b).
The Commissioner of Income Tax (Exemptions) rejected the application by relying on CBDT Circular No. 16/2024 dated 18 November 2024. The Circular provided that applications seeking condonation of delay in filing Forms 9A, 10, 10B and 10BB would not be entertained if filed beyond three years from the end of the relevant assessment year. Since the trust’s application had been filed on 18 November 2024, beyond the three-year period, the application was rejected.
During the hearing before the High Court, the respondents clarified through an affidavit that applications for condonation beyond the three-year period could be made before the CBDT. In view of this clarification, the Court held that it was unnecessary to examine the validity of paragraph 3 of the Circular imposing the three-year limitation.
The Court, however, declined to direct the petitioner to approach the CBDT. It observed that the delay in the present case was only 113 days and that AY 2020-21 was the first year in which the due date for filing Form 10B had been advanced by one month, requiring the audit report to be filed before the due date for filing the return of income. The Court also took judicial notice of the extraordinary circumstances prevailing during the COVID-19 pandemic, including lockdowns and repeated extensions of statutory timelines granted by the CBDT. It further referred to the Supreme Court’s suo motu extension of limitation periods during the pandemic.
Considering these circumstances, the Court concluded that the reasons furnished by the trust for the delay were bona fide. It also held that refusing condonation would cause genuine hardship because denial of exemption under Section 11 had resulted in a substantial tax demand.
The Court emphasized that the expression “genuine hardship” under Section 119(2)(b) should receive a liberal interpretation. It relied upon earlier judicial precedents which held that the power to condone delay exists to advance substantive justice and ensure that meritorious matters are decided on their merits rather than being defeated on technical grounds. The Court reiterated that there should be no presumption that delay is deliberate or mala fide and that substantial justice should prevail over procedural technicalities.
The Court also referred to its earlier decisions where delays in filing Form 10B or similar forms had been condoned, particularly in circumstances involving charitable trusts seeking exemptions under the Act.
Having found that the petitioner had established sufficient cause and genuine hardship, the High Court quashed the impugned order dated 11 February 2025. The delay of 113 days in filing Form 10B for AY 2020-21 was condoned. The respondents were directed to reprocess the petitioner’s return of income in accordance with law by treating Form 10B as having been filed within time. The writ petition was accordingly allowed, without any order as to costs.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule. Respondents waive service. With the consent of parties, Rule made returnable forthwith and heard finally.
2. The above Writ Petition has been filed challenging the legality and propriety of the order dated 11th February 2025 passed under Section 119(2)(b) of the Income Tax Act, 1961 (“ T. Act”) for A.Y.2020-2021. By the impugned order, the CIT (Exemptions), Mumbai (Respondent No.1) rejected the Application filed by the Petitioner seeking a condonation of delay of 113 days in filing Form 10B by relying upon a Circular issued by the CBDT, being Circular 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 18th November, 2024 and was beyond the period of three years from the end of the Assessment Year in question. The second challenge laid in the above Petition is to paragraph 3 of the Circular itself, which mandates that no Application for condonation of delay shall be entertained if it is beyond the period of three years from the end of the Assessment Year in question.
3. The Petitioner is a public charitable trust registered under the Maharashtra Public Trusts Act, 1950. The Petitioner has been rendering medical services to the public since 1997. The Trust operates the Chandraprabha Jain Medical Centre at Charni Road, Mumbai and treats over 25,000 patients annually ranging from General Medicine, dental care, pathology dermatology, gastroenterology, ophthalmology, etc and is accessible to the public, irrespective of caste, creed and religion. It is registered under Section 12A of the I. T. Act.
4. The year under consideration is A.Y. 2020-2021. The due dates to file the return of income were extended from time to time, due to difficulties arising out of the COVID-19 pandemic and the lockdowns imposed.
5. The Petitioner Trust filed its return of income on 31st October 2020 offering Rs. 71,970/- as income to tax after claiming benefits under Section 11 of the Act. For this purpose, the Petitioner was required to conduct an audit of its books of account and submit a statutory audit report under Section 12A(1)(b) of the I. T. Act in Form No.10B. The Petitioner had filed its audit report along with the return of income on 31st October 2020.
6. The problem has arisen because apart from uploading of the audit report, the Assessee is also required to e-verify/ accept the said audit report. Since all this was done during the Covid-19 pandemic and the Managing trustee [who was more than 80 years] of the Petitioner-Trust was working from home, due to inadvertence, the e-verification/ acceptance of the audit report in Form 10B, and which was already filed by the auditor in time, was not done by the Petitioner-Trust within the stipulated time. As soon as the Petitioner became aware of this inadvertent error of not e-verifying the audit report, the Petitioner verified/ accepted the audit report in Form 10B on 8th May 2021.
7. It appears that the Petitioner received an intimation under Section 143(1)(a) of the I. T. Act dated 30th November 2021 issued by the Centralized Processing Centre, denying the exemption which was claimed by the Petitioner by computing the total income as Rs. 1,35,76,137/- and thereby, raising a demand of Rs. 54,12,410/-. Further, it was mentioned that “No forms filed”. There was, undisputedly, no mention of late filing of the audit report in Form 10B.
8. It is in these circumstances that on 18th November 2024, the Petitioner filed an application before Respondent No.1, seeking a condonation of delay of 113 days in acceptance/ verification of the audit report in Form 10B and which was rejected by the impugned order. This has given rise to the present Petition.
9. We have heard Mr. Shah, the learned Counsel appearing on behalf of the Petitioner as well as the learned Counsel Mr. Bhosle appearing on behalf of the Respondents.
10. We find that due to the clarification issued by the Respondents in their affidavit-in-reply dated 29th July, 2025 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, there is no further requirement for us to deal with the challenge to paragraph 3 of the Circular No.16/2024 dated 18th November 2024.
11. Having said that, in the facts of the present case, we do not deem it appropriate to send the Petitioner to the CBDT. This is because we are satisfied that there is a reasonable cause for the delay of 113 days in filing of Form No. 10B by the Petitioner. Firstly, the delay is merely of 113 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 Motu 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 bonafide.
12. Moreover, 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. 54,12,410/-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 case of Sitaldas K. Motwani vs. Director General of Income-tax (International Taxation), New Delhi reported in [2010] 323 ITR 223 (Bombay). Paragraph 15 of the said decision 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. In somewhat similar circumstances, this Court had condoned the delay in filing of Form No. 10B in the case of Mirae Asset Foundation vs. Principal Commissioner of Income-tax-6, Mumbai [Writ Petition No. 713 of 2025 decided on 7th July, 2025]. 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 delay in 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 Form 10B 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. In the view that we take, we are supported by a decision of the Hon’ble Gujarat High Court in the case of Sarvodaya Charitable Trust v. ITO (exemption) [2021] 125 taxmann.com 75/278 Taxman 148 (Gujarat). A Division Bench of the Gujarat High Court in Sarvodaya Charitable Trust (supra) took a view that in cases like the present one (delay in filing Form 10B), the approach of the Authorities 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 conferred wide discretionary powers to condone the delay on the authorities concerned. The relevant portion of this decision reads thus :-
“31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no.2 might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condonation for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
32. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the IncomeTax Officer or before the appellate authority by assigning sufficient cause.”
14. Incidentally for the same A.Y. 2020-21, this Court in (i) Tax (Exemptions) Mumbai & Ors. [Writ Petition No. 2057 of 2025 decided on 25th August, 2025], (ii) Dinesh Surendra Kotecha & Anr. v/s. Union of India & Ors. [Writ Petition No. 2657 of 2025 decided on 13th October, 2025 ] and (iii) Dakuben Saremalji Sancheti Nadol Charitable Trust v. CIT (E) & Ors. [Writ Petition (L) No. 37554 of 2025 dated 22nd December, 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 11.02.2025 and condone the delay of 113 days in filing of Form No. 10B for A.Y. 2020-21.
16. 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 10B has been filed within time.
17. Rule is made absolute in the above terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
18. 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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