Gujarat HC quashes rejection of condonation application for 361-day delay in filing Form 10B under Income Tax Act

The Gujarat HC allowed a petition challenging rejection of condonation application for 361-day delay in filing Form 10B under Income Tax Act. The court found the authority's interpretation of CBDT Circular No.10 to be faulty. The authority incorrectly interpreted that Form 10B should be "filed" before return filing, whereas the circular required it to be "obtained" before return filing. Since the petitioner had obtained the audit report before filing the return, they were entitled to delay condonation under clause 4(i) of the circular. The HC quashed the impugned order for being contrary to law and the CBDT circular.

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Issues:
Challenge to rejection of application for condonation of delay in filing Form 10B under the Income Tax Act, 1961.

Analysis:
The petitioner, a Trust engaged in charitable activities, challenged the rejection of their application for condonation of delay in filing Form 10B under Section 119(2)(b) of the Income Tax Act, 1961. The petitioner had a genuine reason for the delay, citing the illness and subsequent death of their Accountant as the cause. The delay in filing Form 10B electronically was 361 days, and the petitioner had filed a rectification application under Section 154 of the Act, which was rejected. An appeal was also dismissed on the grounds that the order under Section 119(2)(b) is not appealable. The petitioner approached the High Court seeking relief.

The petitioner argued that the rejection of the condonation of delay was unjust, emphasizing the genuine hardship faced due to the Accountant's death. They relied on Circular No.10 dated 22nd May, 2019, which directed authorities to condone delays in filing Form 10B for specific years under certain conditions. The petitioner contended that the authority should have considered this circular and not rejected the application for delay condonation.

On the other hand, the respondent supported the impugned order, stating that the petitioner did not fall within the category specified in the Circular No.10, as the audit report was filed after the specified date. The respondent argued that the rejection was justified under the Circular's provisions.

The High Court analyzed the Circular No.10 dated 22nd May, 2019, and found fault with the authority's interpretation. The Court noted that the Circular required Form 10B to be obtained before filing the return of income, not filed as interpreted by the authority. The Court held that the authority's interpretation was flawed, and the impugned order was not in accordance with the law and the Circular. Consequently, the Court allowed the petition, quashing the impugned order and providing all consequential reliefs to the petitioner.

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