Condonation of Minor Delay in Form 10B Filing Granted to Charitable Trust
Issue: Whether a 15-day delay in filing Form 10B by a charitable trust under Section 12A of the Income-tax Act, 1961, should be condoned, considering the reasons provided by the trust and the principles of a liberal approach in such cases.
Facts:
- The assessee trust sought condonation of a 15-day delay in filing Form 10B for the assessment year 2022-23.
- The trust attributed the delay to reconstruction and redevelopment activities at its office over the past 3-4 years, coupled with disruptions caused by the COVID-19 pandemic, making the office not fully functional.
- The Revenue argued that the trust should have been aware of the statutory timelines and that the reasons provided were insufficient.
- The trust claimed that the delay was marginal and unintentional.
Decision:
- The court held that since the delay was only 15 days, the reasons cited by the trust were sufficient.
- The court observed that there was no evidence of malafide intent or an attempt to gain undue benefit by the trust.
- The court emphasized that a liberal approach was warranted in the given circumstances, considering the minor nature of the delay and the genuine difficulties faced by the trust.
- The court set aside the impugned order refusing to condone the delay.
- The court condoned the 15-day delay in filing Form 10B.
- The decision was in favor of the assessee trust.
HIGH COURT OF BOMBAY
Karnataka Sangha
v.
Commissioner of Income-tax (Exemptions)
M.S. Sonak and Jitendra Jain, JJ.
WRIT PETITION (L) NO. 9375 OF 2024
JANUARY 21, 2025
Nishit Gandhi, Ms. Aadnya C. Bhandari for the Petitioner. Dinesh R. Gulabani, Vibhor D. Gulabani for the Respondent.
JUDGMENT
M.S. Sonak, J. – Heard Ms. Aadnya Bhandari and Mr. Nishit Gandhi for the Petitioner and Mr. Gulabani for the Respondents.
2. Rule. The rule is made returnable immediately at the request of and with the consent of learned counsel for the parties.
3. This Petition concerns the Assessment Year 2022-23 and challenges the CIT (Exemptions) order dated 21 November 2023, which refused to condone a 15-day delay in filing Form-10B of the Income Tax Act, 1961 (“IT Act”) on the ground that no sufficient cause was shown.
4. The Petitioner had submitted that reconstruction and redevelopment of the trust premises had been going on for the last 3 to 4 years. As a result, the trust office was not fully functional. Due to this, there is a marginal delay of 15 days in filing the prescribed Form-10B. The learned counsel for the Petitioner submitted that this was more than sufficient cause.
5. Mr. Gulabani, the learned counsel for the Respondents, defended the impugned order based on the reasoning reflected therein. He pointed out that the cited reasons could not constitute sufficient cause since the Petitioner trust was old and presumed to know the rules and regulations. He pointed out that this reconstruction and redevelopment did not prevent the Petitioner trust from undertaking its routine activities. Therefore, this reason could not now be cited as a cause for not filing Form-10B within the prescribed limitation period. He referred to the decisions discussed in the impugned order regarding the importance of adherence to the timelines under the provisions of the Income Tax Act. He also relied on Ranka & others v. Rewa Coalfields Ltd. AIR 1962 SC 361 to submit that every day’s delay needs to be explained with cogent evidence.
6. We have considered the rival contentions, and in our judgment, the 15-day delay in filing Form-10B deserves to be condoned in the facts and circumstances of the present case.
7. There is no serious denying that the reconstruction and redevelopment of the trust premises have been going on since 2018. Necessary approvals are on record. There is a reference to the intervening Covid pandemic. If, for all these reasons, there was some disruption in the normal functioning of the trust office, entailing a marginal delay of 15 days in filing Form-10B, a case of sufficient cause was made out.
8. The impugned order notes that if the condonation had pertained to F.Y.2018-19, then the reason now cited by the trust could have been accepted. However, since the delay pertains to A.Y. 2022-23, this cause cannot be accepted. Since there is no dispute that the reconstruction and redevelopment work commenced in 2018 and were ongoing, such a distinction was improper. The trust has also submitted sufficient evidence regarding ongoing construction activities in forms, approvals, commencement certificates, etc. The reason is neither frivolous nor can it be said to be some excuse to derive some undue benefits. Even assuming that each day’s delay must be explained, considering the delay is only 15 days and the cause shown is eminently acceptable, the impugned order warrants interference.
9. In most matters involving condonation of delay, some lapse on the part of the party seeking indulgence is quite normal. However, that by itself, cannot be a ground for refusing to exercise discretion. Suppose the cause shown is not malafide and the party has not gained any undue and undeserved advantage due to its own delay. In that case, the authorities are expected to consider the cause shown. In a matter where the delay is not inordinate, the liberal approach could be adopted.
10. Even assuming that in tax matters, the liberal approach should not be readily adopted given the importance of the timelines, still, even on a conservative basis, this is a matter where sufficient cause has been shown to explain the marginal delay.
11. For all the above reasons, we set aside the impugned order and condone the delay of 15 days in filing Form-10B of the IT Act.
12. Now that we have condoned the delay, it will be open to the Petitioner to take steps regarding the impugned intimation. This liberty is granted explicitly to the Petitioner.
13. The rule is made absolute in the above terms. No costs.
14. All concerned to act upon an authenticated copy of this order.