137-Day Delay Uploading Audit Report Excused Due to Software Glitch; UDIN Within Due Period; Section 11 Exemption Allowed

ITAT allowed condonation of a 137-day delay in uploading audit report (Form 10B), accepting that software glitches prevented timely upload and noting the audit report bore UDIN and signing date within the due period. Relying on CBDT delegation of condonation powers, the tribunal held the delay was due to sufficient cause beyond the assessee's control and directed that income be assessed allowing exemption under section 11 if otherwise entitled.

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ISSUES PRESENTED AND CONSIDERED

1. Whether the delay of 10 days in filing the appeal before the Tribunal should be condoned having regard to the assessee's explanation and supporting medical evidence regarding the chartered accountant's hospitalization.

2. Whether the failure to upload audited Form 10B within the prescribed time due to alleged software/portal glitches constitutes "sufficient cause" for condonation of the delay in uploading, thereby permitting claim of exemption under section 11.

3. Whether the Deputy Director, CPC/processing officer's rejection of the assessee's response during processing under section 143(1)(a) and refusal to rectify under section 154 (as complained) was without providing opportunity of hearing and/or beyond the jurisdiction of the officer.

4. Whether the Tribunal should apply delegated administrative guidance (CBDT circular regarding condonation powers) and the cited precedents addressing portal glitches in deciding entitlement to condonation and consequent allowance of exemption.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Condonation of delay in filing the appeal

Legal framework: Principles governing condonation of delay in filing appeals require demonstration of "sufficient cause" for the delay; the Tribunal evaluates affidavit and supporting documentary evidence submitted by the appellant.

Precedent Treatment: The Court relied on the absence of any counter-affidavit from Revenue and accepted the procedural approach of considering documentary evidence in support of the plea for delay.

Interpretation and reasoning: The Tribunal found a credible and supported reason for the 10-day delay - hospitalization of the assessee's CA for cardiac arrest with supporting medical records and affidavit. The absence of contrary material from Revenue further weighed in favour of condonation.

Ratio vs. Obiter: Ratio - a short, supported period of delay grounded in verified medical emergency constitutes sufficient cause to condone delay in filing appeal. Obiter - none additional.

Conclusion: Delay of 10 days in filing the appeal is condoned and the appeal admitted for hearing on merits.

Issue 2 - Condonation of delay in uploading Form 10B owing to software/portal glitches and entitlement to section 11 exemption

Legal framework: The entitlement to exemption under section 11 (application of income by charitable trusts) is conditional on compliance with statutory/administrative requirements including audited report (Form 10B) being filed; administrative provisions and CBDT guidance permit consideration of condonation where filing is prevented for reasons beyond assessee's control.

Precedent Treatment: The Tribunal treated decisions addressing portal/software failures as instructive and followed them, recognizing software glitches as a recurrent systemic issue that has already been addressed administratively by the Board's delegation of condonation powers.

Interpretation and reasoning: The assessee filed the return and obtained the audit report with UDIN dated within time (3/09/2022) and filed the return on 1/10/2022; the failure was in uploading Form 10B due to technical errors. The Tribunal placed weight on documentary evidence of signing/UDIN, timing of return filing, correspondence indicating availability of condonation mechanism (email dated 28/01/2025), and CBDT circular delegating condonation power (cited as Circular No.16/2024). Given these factors, the inability to upload was held to be beyond the assessee's control and to constitute sufficient cause for condonation of the 137-day delay in uploading Form 10B.

Ratio vs. Obiter: Ratio - where a signed audit report and return are filed within statutory time but the Form 10B could not be uploaded due to systemic portal/software glitches, the delay in uploading can be condoned as "sufficient cause," allowing consideration of exemption under section 11 if otherwise entitled. Obiter - reference to administrative delegation (CBDT circular) reinforces but does not supplant statutory entitlement.

Conclusion: Delay of 137 days in uploading Form 10B is condoned; the claim for exemption under section 11 is allowed to be considered and, on this basis, the Tribunal directed allowance of exemption for application of income of Rs.11,65,496, if otherwise found entitled.

Issue 3 - Validity of CPC/processing officer's rejection under section 143(1)(a) and non-rectification under section 154 without hearing

Legal framework: Processing under section 143(1)(a) and rectification under section 154 involve exercise of limited powers by CPC/processing authorities; principles of natural justice require fair procedure where necessary. The power to rectify and to consider responses during processing is circumscribed by statutory scheme and delegated authorities' guidelines.

Precedent Treatment: The Tribunal examined the procedural record and the assessee's contention that no opportunity of hearing was afforded before rejecting rectification; the Tribunal considered administrative guidance and the factual matrix of portal glitches.

Interpretation and reasoning: The Tribunal found that the rejection of the application for rectification and the non-allowance of exemption flowed from the failure to upload Form 10B; given the established systemic technical difficulties and the later availability of a condonation mechanism, the action of the processing authority in not rectifying without adequate consideration of the documented impediment was unsustainable. The Tribunal also noted that Revenue did not tender counter-affidavit challenging the condonation evidence, weakening the position of non-rectification.

Ratio vs. Obiter: Ratio - where denial of rectification or rejection in processing is based on non-filing attributable to systemic portal error, denial without adequate consideration or hearing can be set aside and rectification effected; failure to consider documentary evidence of timely audit and return undermines such rejection. Obiter - the scope of hearing required depends on facts and statutory limits of the processing officer's function.

Conclusion: The Tribunal found the processing officer's rejection/ non-rectification unsustainable in the circumstances and directed condonation and allowance of the exemption claim subject to entitlement.

Issue 4 - Application of CBDT administrative guidance and reliance on precedent

Legal framework: Administrative circulars and delegations issued by the Board are relevant in guiding departmental officers and tribunals in addressing systemic portal issues and condonation of delays in electronic filings.

Precedent Treatment: The Tribunal expressly relied upon and followed earlier decisions confronting portal glitches and condonation, and used the Board's circular delegating condonation power as corroborative evidence that such difficulties were widespread and recognized administratively.

Interpretation and reasoning: The existence of a specific Board circular delegating condonation powers was treated as persuasive administrative recognition of portal issues; combined with case law accepting portal glitches as sufficient cause, the Tribunal concluded that condonation was appropriate in the facts.

Ratio vs. Obiter: Ratio - administrative circulars recognizing systemic filing difficulties and delegating condonation power bolster the finding that portal glitches can amount to "sufficient cause" for condonation of delayed electronic filing. Obiter - administrative guidance does not create substantive entitlement but informs exercise of discretion.

Conclusion: The Tribunal applied the Board's circular and relevant precedents to validate condonation of delay in uploading Form 10B and to direct allowance of the exemption claim if otherwise made out.

Overall Disposition

The Tribunal condoned procedural delays (both in filing the appeal and in uploading Form 10B), accepted that software/portal glitches amounted to sufficient cause, followed relevant precedents and administrative guidance, found the processing/rectification rejection unsustainable on the facts, and allowed the appeal directing that the exemption under section 11 be allowed if otherwise entitled.

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