Delay in E-Verification of Form 10B During COVID-19 to Be

Delay in E-Verification of Form 10B During COVID-19 to Be Condoned as Reason Was Bona Fide

Issue

Whether the delay of 113 days in the e-verification of Form No. 10B during the COVID-19 pandemic period was bona fide and deserved to be condoned under Section 119(2)(b), despite CBDT Circular No. 16/2024 restricting applications beyond three years from the end of the assessment year.

Facts

Filing and Claim: For the Assessment Year (AY) 2020-21, the assessee-trust filed its income tax return on October 31, 2020, claiming a tax exemption under Section 11.
The Delay: While the audit report in Form No. 10B was uploaded alongside the return, its e-verification was delayed by 113 days due to inadvertence during the COVID-19 pandemic, eventually being completed on May 8, 2021.
Exemption Denial: An intimation issued under Section 143(1)(a) denied the Section 11 exemption and raised a tax demand due to the unverified audit report.
Condonation Rejected: The assessee applied to the Commissioner (Exemptions) under Section 119(2)(b) to condone the 113-day delay. The Commissioner rejected the plea, citing CBDT Circular No. 16/2024, which bars applications filed beyond three years from the end of the relevant assessment year.
Mitigating Factors: AY 2020-21 was the very first year where the due date for filing the audit report was preponed by a month. Additionally, the delay transpired during the COVID-19 lockdown when statutory timelines were globally extended by both the CBDT and the Supreme Court.

Decision

Held, in favor of the assessee: The reasons provided by the assessee-trust for the delay in e-verifying Form No. 10B were genuinely bona fide and deserved condonation.
Bona Fide Context: The delay occurred during peak COVID-19 disruptions, matching the period where the Supreme Court and CBDT had already extended various statutory compliance windows.
Strict Application Rejected: A hyper-technical or strict application of the three-year limitation under CBDT Circular No. 16/2024 should not override substantive justice when a minor delay (113 days) is caused by verified, unprecedented hardships.

Key Takeaways

Substance Over Formality: Minor procedural delays in uploading or verifying statutory audit reports (like Form 10B) should be condoned if the underlying intent is honest and the delay is caused by factors beyond the assessee’s control.

COVID-19 Relief Context: Courts and authorities must evaluate delays occurring during the pandemic era through a lens of leniency, factoring in the widespread disruptions and the judicial extensions granted at the time.

Limits of CBDT Circulars: While CBDT circulars set administrative timelines (such as the 3-year cap in Circular No. 16/2024), they cannot be used mechanically to defeat genuine cases of hardship where the delay is minimal and well-justified.

HIGH COURT OF BOMBAY

Shree Chandraprabha Medical Trust

Commissioner of Income-tax (Exemptions)^*

B. P. COLABAWALLA and FIRDOSH P. POONIWALLA, JJ.

WRIT PETITION (L) NO. 14286 OF 2025

MARCH 4, 2026

Shreyash Shah, Udayan Mukherjee and Anjali Sahu, Advs. for the Petitioner. Prathamesh P. Bhosle, Adv. for the Respondent.

ORDER

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

2. The above Writ Petition has been filed challenging the legality and propriety of the order dated 11^th February 2025 passed under Section 119(2)(b) of the Income Tax Act, 1961 (“I. T. Act”) for A.Y.2020-2021. By the impugned order, the CIT (Exemptions), Mumbai (Respondent No.1) rejected the Application filed by the Petitioner seeking a condonation of delay of 113 days in filing Form 10B by relying upon a Circular issued by the CBDT, being Circular No.16/2024 dated 18^th November 2024. This Circular stipulates that no Application for delay in filing of Form No.9A/10/10B/10BB shall be entertained beyond the period of three years from the end of the Assessment Year for which such Application is made. The Circular also makes it clear that this time limit would apply for any Applications that are filed on or after the date of the Circular, namely, 18^th November, 2024. Respondent No.1 dismissed the Application filed by the Petitioner under Section 119(2)(b) relying upon this Circular because admittedly, the application seeking condonation of delay was filed on 18^th November, 2024 and was beyond the period of three years from the end of the Assessment Year in question. The second challenge laid in the above Petition is to paragraph 3 of the Circular itself, which mandates that no Application for condonation of delay shall be entertained if it is beyond the period of three years from the end of the Assessment Year in question.

3. The Petitioner is a public charitable trust registered under the Maharashtra Public Trusts Act, 1950. The Petitioner has been rendering medical services to the public since 1997. The Trust operates the Chandraprabha Jain Medical Centre at Charni Road, Mumbai and treats over 25,000 patients annually ranging from General Medicine, dental care, pathology dermatology, gastroenterology, ophthalmology, etc and is accessible to the public, irrespective of caste, creed and religion. It is registered under Section 12A of the I. T. Act.

4. The year under consideration is A.Y. 2020-2021. The due dates to file the return of income were extended from time to time, due to difficulties arising out of the COVID-19 pandemic and the lockdowns imposed.

5. The Petitioner Trust filed its return of income on 31^st October 2020 offering Rs. 71,970/- as income to tax after claiming benefits under Section 11 of the Act. For this purpose, the Petitioner was required to conduct an audit of its books of account and submit a statutory audit report under Section 12A(1)(b) of the I. T. Act in Form No.10B. The Petitioner had filed its audit report along with the return of income on 31^st October 2020.

6. The problem has arisen because apart from uploading of the audit report, the Assessee is also required to e-verify/ accept the said audit report. Since all this was done during the Covid-19 pandemic and the Managing trustee [who was more than 80 years] of the Petitioner-Trust was working from home, due to inadvertence, the e-verification/ acceptance of the audit report in Form 10B, and which was already filed by the auditor in time, was not done by the Petitioner-Trust within the stipulated time. As soon as the Petitioner became aware of this inadvertent error of not everifying the audit report, the Petitioner verified/ accepted the audit report in Form 10B on 8^th May 2021.

7. It appears that the Petitioner received an intimation under Section 143(1)(a) of the I. T. Act dated 30^th November 2021 issued by the Centralized Processing Centre, denying the exemption which was claimed by the Petitioner by computing the total income as Rs. 1,35,76,137/- and thereby, raising a demand of Rs. 54,12,410/-. Further, it was mentioned that “No forms filed”. There was, undisputedly, no mention of late filing of the audit report in Form 10B.

8. It is in these circumstances that on 18^th November 2024, the Petitioner filed an application before Respondent No.1, seeking a condonation of delay of 113 days in acceptance/ verification of the audit report in Form 10B and which was rejected by the impugned order. This has given rise to the present Petition.

9. We have heard Mr. Shah, the learned Counsel appearing on behalf of the Petitioner as well as the learned Counsel Mr. Bhosle appearing on behalf of the Respondents.

10. We find that due to the clarification issued by the Respondents in their affidavit-in-reply dated 29^th July, 2025 that an application for condonation of delay in filing of Form 9A/10/10B/10BB beyond three years from the end of the relevant Assessment Year can be made before the CBDT, there is no further requirement for us to deal with the challenge to paragraph 3 of the Circular No.16/2024 dated 18^th November 2024.

11. Having said that, in the facts of the present case, we do not deem it appropriate to send the Petitioner to the CBDT. This is because we are satisfied that there is a reasonable cause for the delay of 113 days in filing of Form No. 10B by the Petitioner. Firstly, the delay is merely of 113 days. Further, we note that A.Y. 2020-21 was the first year when the due date to file audit report was preponed by one month. Earlier, the time limits to upload the audit report in Form 10B coincided with the due date to file the return of income. However, with effect from A.Y. 2020-21, the due date to file the audit report in Form 10B was preponed by one month. In other words, the audit report was required to be filed one month before the due date to file the return of income. This apart, during this time, there was a lockdown announced by the Government. It should not be forgotten that we are dealing with a period when the COVID-19 pandemic was still prevalent. It is a known fact that during such time, time limits for various compliances were extended by the CBDT from time to time. So much so that even the Hon’ble Supreme Court had suo moto extended the time limits to file appeals/applications under various laws from time to time in Suo Motu Writ Petition (C) No. 3 of 2020. Thus, in the facts of the present case, we are satisfied that the reasons given by the Petitioner for the delay in filing of Form No. 10B are bonafide.

12. Moreover, not condoning such delay would cause a genuine hardship to the Petitioner inasmuch as the Petitioner had been denied exemption under Section 11 of the I. T. Act and a demand of Rs. 54,12,410/-has been raised for belated filing of the audit report in Form No. 10B. One of the relevant considerations for condoning delay under Section 119(2)(b) of the I. T. Act is to consider the genuine hardships which an Assessee will face if the delay is not condoned. We derive support from the decision of this Court in case of Sitaldas K. Motwani v. DIT (International Taxation) 323 ITR 223 (Bombay). Paragraph 15 of the said decision is reproduced hereunder:

“15. The phrase “genuine hardship” used in Section 119(2)(b) should have been construed liberally even when the petitioner has complied with all the conditions mentioned in Circular dated 12^th October,1993. The Legislature has conferred the power to condone delay to enable the authorities to do substantive justice to the parties by disposing of the matters on merit.

The expression “genuine” has received a liberal meaning in view of the law laid down by the Apex Court referred to hereinabove and while considering this aspect, the authorities are expected to bare in mind that ordinarily the applicant, applying for condonation of delay does not stand to benefit by lodging its claim late. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the authorities should be justice-oriented so as to advance cause of justice. If refund is legitimately due to the applicant, mere delay should not defeat the claim for refund.”

13. In somewhat similar circumstances, this Court had condoned the delay in filing of Form No. 10B in the case of Mirae Asset Foundation v. Pr. CIT (Bombay)/[Writ Petition No. 713 of 2025 decided on 7-7-2025]. Paragraph 5 of the said order is reproduced hereunder:

“5. As far as the condonation of delay is concerned, we find that admittedly there was only 24 days delay in filing Form 10B. It is true that the application seeking condonation of delay was filed after about 9 months. However, we find that this delay is not such that should deny the Petitioner from filing Form 10B with a delay of 24 days. We find that if this delay is not condoned, there will be genuine hardship to the Petitioner, inasmuch as, the Petitioner would be denied the exemption otherwise claimed under the provisions of Section 11 of the IT Act and which is a substantial amount. In the view that we take, we are supported by a decision of the Hon’ble Gujarat High Court in the case of Sarvodaya Charitable Trust v. ITO (exemption) (Gujarat). A Division Bench of the Gujarat High Court in Sarvodaya Charitable Trust (supra) took a view that in cases like the present one (delay in filing Form 10B), the approach of the Authorities ought to be equitious, balancing and judicious and availing of exemption should not be denied merely on the bar of limitation. This is more so, when the legislature has conferred wide discretionary powers to condone the delay on the authorities concerned. The relevant portion of this decision reads thus :-

“31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no.2 might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condonation for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.

32. We may also refer to the decision of this Court in CIT v. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the IncomeTax Officer or before the appellate authority by assigning sufficient cause.”

14. Incidentally for the same A.Y. 2020-21, this Court in (i) Little Flower Education Society v. CIT (Exemptions) [Writ Petition No. 2057 of 2025, dated 25-8-2025], (ii) Dinesh Surendra Kotecha v. UOI (Bombay)/[Writ Petition No. 2657 of 2025 dated 13-10-2025] and (iii) Dakuben Saremalji Sancheti (Nadol Charitable Trust) v. CIT, Exemptions (Bombay)/[Writ Petition (L) No. 37554 of 2025 dated 22-12-2025], condoned the delay in filing the concerned Forms, instead of relegating the Petitioners therein to approach the CBDT.

15. In view of the aforesaid discussion and the reasons stated above, we quash and set aside the impugned order passed under section 119(2)(b) of the I. T. Act dated 11.02.2025 and condone the delay of 113 days in filing of Form No. 10B for A.Y. 2020-21.

16. Since the delay has been condoned, the Respondents shall once again process the Petitioner’s returns in accordance with law by giving effect to this order on the basis that Form 10B has been filed within time.

17. 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.

18. 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.