Charitable exemption for late return upheld where filing was within the belated return period and Covid-era delay was condoned.

A charitable institution's return filed seven days after the extended due date, but before the last date for a belated return, was treated as satisfying the filing requirement for exemption under section 11 and accumulation under section 11(2). The CBDT's clarification on the amended section 12A(1)(ba) was applied to read the requirement as filing within the time allowed under section 139, and the exemption was therefore allowed. The delay was also condoned in view of the Covid-19 limitation extensions, the short period of delay, and the relaxation reflected in the CBDT circulars, so the return was directed to be considered accordingly.

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Issues: (i) Whether the assessee was entitled to exemption under section 11 and accumulation under section 11(2) when the return was filed after the extended due date but before the last date for filing a belated return; and (ii) whether the delay in filing the return was liable to be condoned in the light of the CBDT circulars and the Covid-19 limitation extensions.

Issue (i): Whether the assessee was entitled to exemption under section 11 and accumulation under section 11(2) when the return was filed after the extended due date but before the last date for filing a belated return.

Analysis: The return was filed on 23.02.2021, with the due date having been extended to 15.02.2021, resulting in a delay of seven days. The return was nevertheless filed before 31.03.2021. The circular issued by the CBDT on 23.04.2019 clarified that, for the purposes of the amended section 12A(1)(ba), the return furnished within the time allowed under section 139 would satisfy the condition for exemption under section 11. On that basis, the filing was treated as meeting the statutory requirement for the charitable exemption claimed.

Conclusion: The assessee was held entitled to the benefit of exemption under section 11 and the related accumulation claim.

Issue (ii): Whether the delay in filing the return was liable to be condoned in the light of the CBDT circulars and the Covid-19 limitation extensions.

Analysis: The delay was only seven days, and it occurred during the pandemic period. The order also relied upon the Supreme Court's extensions of limitation during Covid-19 and CBDT Circular No. 06/2020 dated 19.02.2020, which authorised liberal consideration of delay-related hardship in specified charitable institution cases. The delay was therefore treated as deserving condonation and the return was directed to be considered on that basis.

Conclusion: The delay was condoned and the return was directed to be considered accordingly.

Final Conclusion: The impugned denial of exemption did not survive, and the assessee obtained the substantive relief claimed, with the appeal succeeding in part for statistical purposes.

Ratio Decidendi: For charitable institutions, a return filed within the statutory filing framework read with the applicable CBDT clarification and relaxation circulars cannot be denied exemption merely because it was filed a few days beyond the extended due date, where the delay is condoned and the filing remains within the permitted return period.

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