Condonation of delay in Form No.10 filing granted on equity and substantial compliance grounds; return to be processed accordingly.

Application for condonation of delay in filing Form No.10 for A.Y. 2015-16 was considered under the exercise of administrative discretion, with the court applying principles of substantial compliance and an equity oriented, liberal approach to Section 119(2)(b). The prospective effect of Rule 17 and 2015 Finance Act amendments was recognised, but did not preclude relief where the trust had filed its return and audit on time and delay was factually explained. Relief was granted: the delay (423 days) was condoned and the administrative rejection set aside, directing processing of the return and giving effect to the Form No.10 filing within eight weeks.

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Issues: Whether the delay in filing Form No. 10 for Assessment Year 2015-16 should be condoned under Section 119(2)(b) of the Income-tax Act, 1961 and, consequently, whether the Petitioner is entitled to have its return processed and exemption under Section 11(2) of the Income-tax Act, 1961 given effect to on the basis that Form No. 10 was filed within time.

Analysis: The Petitioner, a registered charitable trust, filed its return and tax audit report within the statutory period but the statement of accumulation in Form No. 10 was disputed as not being filed within time; Rule 17 of the Income Tax Rules, 1962 and the Finance Act, 2015 amendments prescribing time and electronic filing applied prospectively from A.Y. 2016-17. The Court considered the factual explanation for delay, the consequences of denial of exemption including potential double taxation under Section 11(3) of the Act, and precedent endorsing liberal and equity oriented exercise of discretion under Section 119(2)(b). The Court noted authorities applying substantial compliance and condoning similar delays and found that a justice oriented approach was warranted in the circumstances. Having regard to these legal and factual aspects, the Court concluded that relief by condonation was appropriate and that the impugned administrative order rejecting condonation should be set aside to allow statutory benefits to be given effect to.

Conclusion: The delay in filing Form No. 10 is condoned (423 days) and the impugned order dated 24.02.2025 passed under Section 119(2)(b) of the Income tax Act, 1961 is quashed and set aside; the Respondents are directed to process the Petitioner's return within eight weeks giving effect to Form No. 10 as filed within time.

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