Condonation of delay preserves trust tax benefits by permitting return processing despite a marginal procedural lapse.

Application to condone a 61 day delay in filing Form 10B was assessed under the discretionary power to condone procedural lapses, with emphasis on preserving substantive entitlements to charitable trust tax benefits under provisions governing income from trust activities. The reasoning relied on the marginal nature of the delay, prior filing of the statutory audit, and that administrative circulars do not bind judicial discretion; accordingly the procedural delay was held amenable to condonation and administrative processing of the return was directed to give effect to the trust's entitlement to tax benefits.

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Issues: Whether the delay of 61 days in filing Form 10B for Assessment Year 2018-2019 should be condoned under Section 119(2)(b) of the Income-tax Act, 1961 so that the petitioner can claim benefits under Sections 11 and 12 of the Income-tax Act, 1961.

Analysis: Relevant provisions include Section 119(2)(b) and Section 44AB of the Income-tax Act, 1961, and the substantive entitlement under Sections 11 and 12. The impugned order rejected the condonation application noting absence of supporting evidence; however a marginal delay of 61 days is recorded and the petitioner had filed the audit report under Section 44AB. The respondent authority acted under Circular No. 2/2020 dated 03.01.2020; that circular does not bind the High Court. Consistent judicial practice supports granting discretionary relief to trusts/institutions entitled to substantive tax benefits where delay is procedural and marginal. In view of these factors, the delay is amenable to condonation under the statutory discretion conferred by Section 119(2)(b), and further processing of the return is necessary to give effect to entitled benefits.

Conclusion: The delay in filing Form 10B for AY 2018-2019 is condoned; the respondent is directed to process the Return of Income afresh in accordance with the intimation and rectification order, and the writ petition is allowed.

Final Conclusion: The petitioner's substantive entitlement to tax benefits under Sections 11 and 12 is preserved by condoning a marginal procedural delay, and administrative action is directed to give effect to that entitlement.

Ratio Decidendi: A marginal procedural delay in filing Form 10B does not defeat a trust's substantive entitlement under Sections 11 and 12 where discretionary condonation under Section 119(2)(b) is appropriate to prevent denial of substantial benefits.

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