Form 10B Filing delay due to Auditor Oversight is reasonable Cause: Bombay HC

Al Jamia Mohammediyah Education Society Vs CIT (Bombay High Court)

The case of Al Jamia Mohammediyah Education Society vs. CIT before the Bombay High Court revolves around the condonation of delay in filing Form 10B by a charitable trust. Despite the trust’s explanation of an auditor’s error, the application for delay condonation was rejected under Section 119(2)(b) of the Income Tax Act, 1961.

The petitioner, a charitable trust, filed its return of income for AY 2016-17 but failed to submit Form 10B, which was eventually filed after a significant delay. The trust attributed the delay to an error on the part of its auditor. However, the court rejected this explanation, emphasizing that the trust should have immediately rectified the situation instead of waiting for an extended period.

The court scrutinized the petitioner’s track record of timely filings for other assessment years, suggesting that the failure for AY 2016-17 was likely due to human error. Despite the absence of malafide intentions, the court upheld the rejection of the delay condonation application, citing the necessity for adherence to rules and regulations.

Drawing from previous judgments, the court underscored the importance of a balanced and equitable approach in such cases. It highlighted the discretionary powers vested in authorities to condone delays, particularly for longstanding charitable trusts meeting exemption criteria.

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