John And Marie Almeida Educational Trust Vs CIT (Madras High Court)
The Madras High Court considered writ petitions challenging orders rejecting the petitioner’s applications for condonation of delay in filing Form 10B for Assessment Years 2019-20 and 2020-21 under Section 119(2)(b) of the Income-tax Act, 1961.
The petitioner had sought condonation of delay in filing Form 10B. According to the petitioner, the audit report could not be filed along with the returns of income for the relevant assessment years due to ill-health. The petitioner relied on medical records showing that he suffered from a slipped disc and vision-related issues. It was also contended that the applications had been rejected solely because they were filed more than three years after the end of the relevant assessment years. The petitioner further submitted that Section 119(2)(b) of the Income-tax Act does not prescribe any time limit for filing an application seeking condonation of delay.
The Revenue opposed the petitions. It was submitted that the medical records did not justify the petitioner’s failure to file the audit report during the relevant period. The Revenue also pointed out that the audit reports had been received sufficiently early to enable their filing along with the returns of income. Reliance was placed on CBDT Circular No.16 of 2024 dated 18.11.2024, and it was submitted that the circular was binding on the income-tax authorities.
The High Court examined Section 119 of the Income-tax Act. It observed that the provision empowers the CBDT to issue orders, instructions and directions to income-tax authorities. The Court noted that clause (b) of Section 119(2) does not prescribe any time limit within which an application for condonation of delay must be filed. The provision enables condonation in order to avoid genuine hardship. At the same time, the Court observed that the income-tax authorities are bound by the CBDT circular fixing a time limit, as contended by the Revenue.
The Court also considered the facts of the case. It noted that the petitioner was the Managing Trustee of an educational trust and had claimed exemptions in the returns of income for the relevant assessment years. The Court observed that the entitlement to such exemptions was contingent upon filing the return of income together with the audit report in Form 10B. It further noted that, in each relevant assessment year, the audit report had been filed only a few days after filing the return of income. The Court also recorded that the petitioner was about 70 years old during the relevant period, while observing that the petitioner could not be entirely absolved of responsibility.
After considering all the circumstances, the Court held that sufficient cause had been shown, including by producing documents relating to the petitioner’s medical condition. Accordingly, it condoned the delay in filing the audit report in Form 10B, subject to the petitioner paying costs of ₹30,000 to the Medical Research Foundation, Sankara Nethralaya, Chennai, within two weeks from the date of receipt of the order.
The Court further directed that the assessment proceedings relating to the relevant assessment years should proceed on the basis that the delay in filing Form 10B stood condoned. The writ petitions were disposed of on these terms. No order as to costs was made, and the connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The petitioner had applied for condonation of delay in filing Form 10B for assessment years 2019-20 and 2020-21 under Section 119(2)(b) of the Income-Tax Act, 1961 (the I-T Act).
2. Learned counsel for the petitioner submits that the petitioner was unable to file Form 10B along with the return of income for the two relevant assessment orders on account of ill-health. Referring to medical reports in this regard, he submits that the petitioner had both a slipped disc and vision related issues. Adverting to orders impugned herein, learned counsel submits that the sole ground for the rejection of the applications is the filing of the application WEB ‘ after three years from the end of the relevant assessment order. Learned counsel submits, in this regard, that Section 119(2)(b) of the I-T Act does not prescribe any time limit for entertaining an application under the said provision.
3. In response, Mr.Arulraj, learned senior standing counsel, points out that the medical reports do not justify the failure to file the audit report during the relevant period. He also points out that the audit reports were received by the petitioner sufficiently in time to enable filing along with the return of income. Referring to Circular No.16 of 2024 dated 18.11.2024 of the CBDT, learned standing counsel, submits that said circular is binding on the income-tax authorities.
4. Section 119, in relevant part, reads as under:
“119.(1) The Board may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board:
Provided that no such orders, instructions or directions shall be issued-
(a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or
(b) so as to interfere with the discretion of the [the Joint Commissioner (Appeals) or] the [Commissioner (Appeals)] in the exercise of his appellate functions.
(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise [any income-tax authority, not being [a Joint Commissioner (Appeals) or] a Commissioner (Appeals)] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law.”
As can be seen from Section 119, said provision empowers the CBDT to issue orders, instructions or directions to the income-tax authorities. Clause (b) of subsection (2) does not prescribe a time limit within which an application for condonation should be made. The provision enables such condonation in order to avoid genuine hardship to the assessee concerned. Undoubtedly, as submitted by learned standing counsel, the income-tax authorities are bound by the circular fixing a time limit.
5. The petitioner is the managing trustee of an educational trust. Exemptions have been claimed in the returns of income for the relevant assessment years. The right to avail of such exemptions is contingent on filing a return of income accompanied by the audit report in Form 10B. The audit report, in each relevant assessment year, was filed a few days after filing the WEB ‘ return of income. The petitioner was about 70 years old at the relevant time. The petitioner, however, cannot entirely be absolved of responsibility.
6. Considering all these aspects, I am satisfied that sufficient cause is shown, including by way of documents relating to the medical condition of the petitioner. Therefore, the delay in filing the audit report in Form 10B is condoned subject to the payment of a sum of Rs.30,000/- as costs to the Medical Research Foundation, Sankara Nethralaya, Old No.18, New No.41, College Road, Chennai 600 006, (Ph:91-44-28271616), within two weeks from the date of receipt of a copy of this order. Assessment proceedings relating to the relevant assessment years shall proceed on the basis that the delay in filing Form 10B stands condoned.
7. These writ petitions are disposed of on the above terms. No costs. Consequently, connected miscellaneous petitions are closed.
