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Form 10B Delay due to auditor negligence Not Fatal to 12A Exemption: Orissa HC

Case Law Details

TaxGuru Citation
2025 taxguru.in 5711
Case Name
Society for Training Action Research and Rehabilitation Vs Central Board of Direct Taxes (CBDT) and others (Orissa High Court)
Date of Judgement/Order
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Society for Training Action Research and Rehabilitation Vs Central Board of Direct Taxes (CBDT) and others (Orissa High Court)

The Orissa High Court has set aside an order by the Commissioner of Income Tax (Exemption), Hyderabad, which had rejected an application for condonation of delay in filing an audit report in Form 10B. This report is crucial for claiming income tax exemption under Section 12A of the Income Tax Act, 1961, for the Assessment Year 2017-18. The petitioner, Society for Training Action Research and Rehabilitation, had challenged the rejection, arguing that a 353-day delay was due to auditor negligence and should have been condoned.

The petitioner contended that despite showing sufficient cause, the CIT (Exemption) had arbitrarily rejected their application for condonation of delay under Section 119(2)(b) of the Income Tax Act. The audit report, due by March 31, 2020, was eventually filed on March 19, 2021. The petitioner’s counsel argued that the CIT (Exemption) had failed to exercise judicial discretion pragmatically, instead adopting a “pedantic” approach and relying on irrelevant decisions. They emphasized that a delay of 353 days should not result in serious prejudice to the petitioner, especially since the audit report could be filed even before the assessment.

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Author Info

CA Sandeep Kanoi
Qualification: CA in Job / Business
Company: Taxguru Consultancy
Location: Mumbai, Maharashtra
Articles Published: 20,910

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