Denial of tax exemption for charitable trust due to delayed Form 10BB upheld as improper; payment directed.

Denial of exemption to a charitable trust based solely on delayed filing of Form 10BB was criticised: the court held that a procedural lapse should not defeat a taxpayer's substantive entitlement to statutory exemption, applying the principle that tax cannot be retained when not due, and relied on precedent refusing to allow collection of amounts not legitimately due; operative effect was that the trust's entitlement to exemption could not be denied for the filing delay, but the petitioner was directed to pay Rs. 50,000 in view of the late application.

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Issues: (i) Whether the delay in filing the Audit Report in Form No.10BB for Assessment Year 2023-24 should be condoned under Section 119(2)(b) of the Income-tax Act, 1961 and the impugned order rejecting the condonation petition quashed.

Analysis: The Court examined the statutory requirement to file Form No.10BB one month prior to the due date for filing the return under Section 139(1) and Rule 17B, the respondent's reliance on CBDT Circular No.2/2020 empowering commissioners to admit belated applications up to 365 days, and the facts presented in the condonation application including medical records concerning the Managing Trustee. The Court balanced the binding force of the CBDT circular with principles of substantial justice, observed that procedural lapse should not automatically defeat entitlement to statutory exemptions where reasonable cause exists, and noted the petitioner's senior-citizen status and medical evidence while also recording the assessing authority's concerns about habitual non-compliance. The Court directed payment of a specified goodwill amount to a charitable institution as a condition for quashing the impugned order and ordered fresh assessment in accordance with law upon compliance.

Conclusion: The condonation of delay in filing Form No.10BB for AY 2023-24 is granted in favour of the assessee by quashing the impugned order, subject to the petitioner complying with the court's stipulated direction for payment, and the Assessing Officer is directed to pass fresh assessment in accordance with law.

Ratio Decidendi: Where an assessee is otherwise entitled to statutory exemption, discretionary power under Section 119 must be exercised in accordance with substantial justice and reasonable cause shown to admit belated applications for condonation of delay rather than depriving the assessee of the benefit on purely procedural grounds.

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