CA's Inadvertent Error is a Reasonable Cause for Condoning Form 10 Delay.

CA’s Inadvertent Error is a Reasonable Cause for Condoning Form 10 Delay.

Issue

Whether a 523-day delay in e-filing Form No. 10, caused by a Chartered Accountant’s inadvertent error (due to confusion over newly introduced e-filing requirements), constitutes a “reasonable cause” under Section 119(2)(b) that warrants condonation to prevent genuine hardship to the trust.

Facts

The assessee-trust filed its return for Assessment Year 2016-17, claiming exemption under Section 11 and accumulation under Section 11(2).
An intimation under Section 143(1) denied the claim for accumulation because the required Form No. 10 was not filed by the due date.
The assessee subsequently uploaded Form No. 10 and filed an application under Section 119(2)(b) to condone the 523-day delay.
Reason for delay: The assessee explained that its CA had inadvertently failed to e-file the form. They submitted that the trustees had resolved to accumulate the funds and had signed a physical copy of Form No. 10 on time, but the CA was confused by the “recently introduced requirement” of e-filing.
The authority (Respondent No. 1) rejected the application, holding that “no reasonable cause” was shown and there was no proof to support the assessee’s claims.

Decision

The High Court (implied) quashed and set aside the authority’s rejection order.
It held that the delay ought to be condoned.
The court accepted the assessee’s explanation—an inadvertent error by their CA compounded by confusion over new e-filing rules—as a valid and sufficient reason for the delay.
It found that denying the condonation would cause “genuine hardship” to the trust.

Key Takeaways

Substance Over Form: The court prioritized the substantive compliance (the trustees had resolved to accumulate and signed a physical form on time) over the procedural lapse (the failure to e-file).
CA’s Error is “Reasonable Cause”: A bona fide, inadvertent error by a professional (like a CA) can be considered a “reasonable cause” or “sufficient cause” for a delay, and the assessee should not be penalized for it.
Genuine Hardship: Denying a substantial tax exemption to a charitable trust due to a procedural lapse (which would cause a large tax demand) is a clear case of “genuine hardship,” justifying condonation.
New E-filing Procedures: Confusion arising from newly introduced e-filing procedures (AY 2016-17 was an early year for this) is a valid mitigating factor in condonation applications.

HIGH COURT OF BOMBAY

St. Anne’s School

Commissioner of Income-tax (Exemptions)^*

B. P. COLABAWALLA and AMIT S. JAMSANDEKAR, JJ.

WRIT PETITION NO. 3539 OF 2025

OCTOBER 14, 2025

Sukhsagar Syal and Sameer Dalal, Advs. for the Petitioner. Prathmesh P. Bhosle, Adv. for the Respondent.

ORDER

1. Rule. Respondents waive service. With the consent of the parties, Rule made returnable forthwith and heard finally.

2. The above Writ Petition is filed seeking to quash and set aside an order dated 18^th June, 2025 passed by Respondent No. 1 rejecting the Petitioner’s application for condonation of delay in filing Form No. 10 for Assessment Assessment Year 2016-17. The other relief sought is a direction to Respondent No. 1 to condone the delay and allow the Petitioner’s claim for accumulation of Rs. 10,08,118/- in terms of section 11(2) of the Income-tax Act, 1961.

3. The present matter pertains to Assessment Year 2016-17. The Petitioner filed its return of income on 17^th October, 2016 and filed its revised return of income on 16^th March, 2018. An intimation under section 143(1) was issued on 17^th March 2018 denying the claim for exemption made by the Petitioner-Trust under section 11 of the IT Act on the ground that Form No. 10 should have been filed before the due date of filing of the original return. The Petitioner uploaded Form No. 10 on the Income Tax portal on 24^th March, 2018. The Petitioner preferred an application for condonation of delay before Respondent No. 1 under section 119(2)(b) of the Income-tax Act on 13^th March, 2020. In this application, the Petitioner sought for a condonation of delay of 523 days in filing Form No. 10.

4. Respondent No. 1, by the impugned order, refused to condone the delay on the ground that no “reasonable cause” was shown for the aforesaid delay. Respondent No. 1 came to the conclusion that there was no proof of the bald assertions made by the Petitioner regarding the delay in filing Form No. 10.

5. From the record, we find that the delay has been explained by the Petitioner by stating that the delay has occurred because the Chartered Accountant of the Trust inadvertently did not file Form No. 10 along with the return of income. Though this assertion was made before Respondent No. 1, no Affidavit of the Chartered Accountant was filed before him. However, in this Writ Petition, the Petitioner has annexed the Affidavit of the Chartered Accountant dated 1^st August, 2025 (page 172 of the paper book) where the Chartered Accountant has categorically stated that the Trustees of the Petitioner-Trust passed a resolution to accumulate a sum of Rs. 10,08,118/-in a meeting held on 29^th September, 2016. They also signed Form No. 10 in the paper format which was tabled at the said meeting.

6. In fact, in the affidavit, it is stated that while presenting the accounts for the A.Y. 2016-17, the Chartered Accountant brought to the attention of the the Trustees the fact that the Trust has to spend the required amount of 85% of the receipts and there was a shortfall in the expenditure on the objects, amounting to Rs. 10,08,118/-. In this affidavit, the Chartered Accountant further stated that though he filed the return of income on 17^th October, 2016 (before the due date), he inadvertently missed out on the submission of Form No. 10 in the electronic format, as this was a recently introduced requirement.

7. Having carefully perused the Affidavit filed by the Chartered Accountant of the Petitioner-Trust, we are of the view that the PetitionerTrust would suffer grave hardship if the delay is not condoned and the exemption is denied to them only on this count. The Petitioner-Trust, which is a charitable Trust, ought not to be foisted with such a liability because of the inadvertent error of its Chartered Accountant.

8. Considering the facts and circumstances of the case, we are of the view that the delay ought to be condoned. We accordingly quash and set aside the impugned order dated 18^th June, 2025 passed by Respondent No. 1 under section 119(2)(b) of the IT Act.

9. Now that the impugned order is quashed, we also hereby condone the delay on the part of the Petitioner in filing Form No. 10.

10. 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.

11. 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.