Charitable trust’s 430-day delay in filing Form No. 10 condoned due to reasonable cause of honorary accountant’s omission.

By | May 22, 2026
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Charitable trust’s 430-day delay in filing Form No. 10 condoned due to reasonable cause of honorary accountant’s omission.

Issue

Whether a 430-day delay in filing Form No. 10 for accumulation of income under Section 11(2) should be condoned under Section 119(2)(b) when the omission was caused by an honorary accountant and its rejection causes genuine hardship.

Facts

  • The assessee-trust claimed accumulation of income under Section 11(2) for the assessment year 2015-16.

  • The Central Processing Centre (CPC) denied the benefit during summary processing under Section 143(1), and the Assessing Officer (AO) subsequently upheld the denial in the regular assessment under Section 143(3).

  • The sole ground for denial was that the trust failed to file Form No. 10 along with its initial return of income.

  • The trust faced a delay of 430 days in submitting the form and applied for condonation of delay under Section 119(2)(b).

  • The trust explained that the delay occurred because the paperwork was handled by an honorary accountant who inadvertently omitted the filing.

  • The Commissioner of Income-tax (Exemptions) [CIT(E)] rejected the condonation application.

Decision

  • Held, yes: The delay of 430 days is liable to be condoned because the oversight by an honorary worker constitutes a reasonable cause.

  • Held, yes: Merely rejecting the application on technical timelines would cause genuine, disproportionate financial hardship to a charitable entity.

Key Takeaways

  • Substance Over Technicalities: Procedural delays in filing mandatory forms (like Form No. 10) should be condoned by tax authorities if the taxpayer demonstrates a bone fide mistake and reasonable cause.

  • Leniency for Charitable Management: The judiciary recognizes that charitable trusts often rely on honorary or non-professional staff, making inadvertent clerical omissions an acceptable ground for seeking relief under Section 119(2)(b).

HIGH COURT OF BOMBAY
Bombay Prathana Samaj
v.
Union of India*
B. P. COLABAWALLA and FIRDOSH P. POONIWALLA, JJ.
WRIT PETITION NO. 2039 OF 2025
APRIL  20, 2026
Bharat Raichandani and Suraj Ghadigaonkar, Advs. for the Petitioner. Prathamesh Bhosle for the Respondent.
ORDER
1. Rule. Rule is made returnable forthwith. Respondents waive service. By consent of the parties, the Petition is taken up for final disposal at the stage of admission.
2. The above Writ Petition challenges the legality and validity of the impugned order dated 07.03.2025 passed by Respondent No.3, Commissioner of Income – tax (Exemptions), Mumbai, under Section 119(2) (b) of the Income-tax Act, 1961 (for short “the IT Act”), rejecting the Petitioner’s application for condonation of delay of 430 days in filing Form No. 10 for Assessment Year 2015-16.
3. The Petitioner is a public charitable trust registered under Section 12A of the IT Act since 1976. The Petitioner has been regularly complying with various obligations for seeking exemption under Section 11 of the IT Act including regularly filing its Return of Income, Audit Reports, Form No. 10, wherever applicable.
4. For Assessment Year 2015 – 16, the Petitioner filed its Return of Income on 16.10.2016. In its Return of Income, the Petitioner declared Nil income after claiming accumulation under Section 11(2) to the extent of Rs. 29,07,202/-.
5. Thereafter, the Centralized Processing Centre, Bengaluru, issued an intimation under Section 143(1) of the IT Act on 18.11.2016 wherein the benefit of accumulation under Section 11(2) of the IT Act was denied and a demand of Rs. 6,58,740/- was raised. Thereafter, the Petitioner filed its Form No.10 on 03.01.2017. After all this, an assessment order under Section 143(3) was passed by Respondent No.2 on 11.11.2017 wherein the benefit of accumulation under Section 11(2) of IT the Act was denied on the ground that the Petitioner did not file Form No. 10 at the time of filing of Return of Income and therefore the said amount of accumulation of Rs.29,07,202/-was added back to the Petitioner’s income. However, the assessment order records that the Petitioner had filed Form No. 10 on 03.01.2017. The Petitioner challenged the said assessment order before the CIT(A).
6. In the meantime, the Petitioner also filed an application under Section 119(2)(b) of the IT Act with Respondent No.3 on 27.01.2023 for seeking condonation of delay in filing Form No. 10. The reasons stated for the delay were that the accounts of the Petitioner Trust are finalized by an accountant who is employed with other organizations and works with the Petitioner Trust on a honorary basis, and therefore, Form No. 10 inadvertently remained to be submitted at the time of filing of the Return of Income. By the impugned order dated 07.03.2025, Respondent No.3 rejected the Petitioner’s application under Section 119(2)(b) of the IT Act, and hence, the present Petition.
7. We have heard the learned counsel for the parties. We have also perused the material placed on record.
8. For claiming the benefit of accumulation as per Section 11(2) of the IT Act, the Petitioner was required to file Form No. 10 (Statement of Accumulation). From the record, we are satisfied that there is a reasonable cause for the delay in filing Form No. 10 by the Petitioner. One of the relevant considerations for condoning delay under Section 119(2)(b) is to consider the genuine hardship which an Assessee will face if the delay is not condoned.
9. We derive support from the judgment of the Hon’ble Supreme Court in CIT v. Nagpur Hotel Owners’ Association (SC)/[2001] 247 ITR 201 (SC), wherein it was held that furnishing of Form No. 10 before completion of assessment constitutes sufficient compliance.
10. In any case, this Court, in several of its orders involving a similar issue of delay in filing Form No. 10, has adopted a liberal approach. They are :-
(a)Shree Jain Swetamber Murtipujak Tapagachha Sangh v. CIT (Exemptions) [2024] [2025] 482 ITR 38 (Bombay)/[W.P. (L) No. 1321 of 2024, 0rder dated 27.03.2025]
(b) KSB Care Charitable Trust v. CIT (E) (Bombay)]
(c) People’s Mobile Hospitals v. CIT (E) [W.P. No. 2697 of 2025, order dated 15.09.2025]
(d) St. Anne’s School v. CIT (E)  (Bombay)]
(e) Francis Xavier Church v. CIT (E) (Bombay)/[W.P. 635 of 2026, order dated 18.02.2026]
11. We are also of the view that Respondent No.3 ought to have taken a justice-oriented approach rather than a pedantic one and condoned the delay. This Court, in People’s Mobile Hospitals v. CIT (E) [W.P. No. 2632 of 2025, dated 15-09-2025] has followed its earlier judgments in Mirae Asset Foundation v. Pr. CIT [2025]  (Bombay) / (order dated 7th July 2025 in WP No. 713 of 2025), Sau Dwarkabai tai Karwa Charitable Trust v. Commissioner of Income-tax(E) (Bombay)and Kotak Family Foundation v. CIT (E) (Bombay) and condoned the delay. In these cases also, this Court was concerned with condonation of delay in filing of similar forms within the stipulated time while claiming exemption under Section 11 of the IT Act. Therein, reliance was also placed on a judgment of the Gujarat High Court in the case of Sarvodaya Charitable Trust v. ITO (E)  (Gujarat) laying down the principle that in cases like the present one, the approach of the authority 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, under Section 119(2)(b) of the IT Act, conferred discretionary powers to condone the delay on the authorities concerned with a view to avoid genuine hardship.
12. Moreover, not condoning such delay would cause genuine hardship to the Petitioner inasmuch as the Petitioner has been denied exemption under Section 11 of the IT Act and a demand of Rs.7,16,990/- has been raised for belated filing of Form No. 10.
13. 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 passed under Section 119(2)(b) of the IT Act dated 07.03.2025 and condone the delay of 430 days in filing of Form No. 10 for A.Y. 2015-16.
14. 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 No. 10 has been filed within time.
15. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
16. 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.