Condonation of delay in tax audit filing upheld; remand for reassessment and consideration of charitable exemption.

Delay in filing the Tax Audit Report (Form 10B) was treated as excusable under Section 119(2) by applying the reasonable-cause standard set out in the impugned circular, where the petitioner filed the return on time, produced evidence of unavoidable unavailability of the managing trustee due to donor-related commitments, and later filed a revised Form 10B; the HC found the activities charitable and the reasons reasonable, quashed the order rejecting condonation, and remitted the matter to the Assessing Officer to re-exercise jurisdiction under Section 143 and to consider extension of exemption under Section 11 if otherwise eligible.

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Issues: Whether the delay in filing Tax Audit Report in Form 10B for Assessment Year 2023-24 should be condoned and the impugned order rejecting the application for condonation under Section 119(2) of the Income-tax Act, 1961 quashed.

Analysis: The Court considered the statutory framework including Section 12A, Section 139(4A) and Section 119(2) of the Income-tax Act, 1961 and Circular No.2/2020 dated 03-01-2020 which authorises Commissioners to admit belated applications of condonation of delay up to 365 days subject to satisfaction that the assessee was prevented by reasonable cause. The petitioner filed the return within the due date but filed Form 10B belatedly and later filed a revised Form 10B; the petitioner explained that trustees and the managing trustee were preoccupied with a visit by foreign donors and that the managing trustee was unavailable to coordinate the audit before the due date, and supporting material was placed on record. The Court found the petitioner's activities charitable in nature and the reasons for delay to be reasonable. The Court noted its consistent approach in similar cases and observed that, in the circumstances, the impugned order did not properly appreciate the reasonable cause justification and the discretionary power under the cited circular and statute.

Conclusion: The impugned order rejecting the application for condonation of delay is quashed and the matter is remitted to the Assessing Officer to re-exercise jurisdiction under Section 143 of the Income-tax Act, 1961 and to extend the benefit of exemption under Section 11 of the Income-tax Act, 1961 to the petitioner if otherwise eligible.

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