2026 (3) TMI 391 - HC - Income Tax

Condonation of Delay under Section 119(2)(b): bona fide pandemic-related short delays warrant liberal discretion to prevent hardship.

Condonation of a 113 day delay in acceptance/verification of Form No.10B is considered under the discretionary power in Section 119(2)(b); the article ... Denial of exemption u/s 11 - belated filing of the audit report in Form No. 10B - considerations for condoning delay u/s 119(2)(b) - genuine hardships which an Assessee will face if the delay is not condoned HELD THAT:- Audit report was required to be filed one month before the due date to file the return of income. This apart, during this time, there was a lockdown announced by the Government. It should not be forgotten that we are dealing with a period when the COVID-19 pandemic was still prevalent. It is a known fact that during such time, time limits for various compliances were extended by the CBDT from time to time. So much so that even the Hon'ble Supreme Court had suo moto extended the time limits to file appeals/applications under various laws from time to time in Suo Motu Writ Petition (C) [2021 (3) TMI 497 - SC ORDER]. Thus, we are satisfied that the reasons given by the Petitioner for the delay in filing of Form No.10B are bona-fide. Moreover, not condoning such delay would cause a genuine hardship to the Petitioner inasmuch as the Petitioner had been denied exemption u/s 11 and a demand has been raised for belated filing of the audit report in Form No. 10B. One of the relevant considerations for condoning delay under Section 119(2)(b) is to consider the genuine hardships which an Assessee will face if the delay is not condoned. We derive support from the decision in case of Sitaldas K. Motwani [2009 (12) TMI 36 - BOMBAY HIGH COURT Final Conclusion: The writ petition is allowed: the delay in acceptance/verification of Form No.10B for A.Y.2020-2021 is condoned on grounds of bona fides, COVID-related disruption, and genuine hardship; the impugned order rejecting the condonation application is quashed and the respondents are directed to reprocess the return accordingly. Issues: Whether the delay of 113 days in acceptance/verification of Form No.10B for A.Y.2020-21 should be condoned under Section 119(2)(b) of the Income-tax Act, 1961, and whether the impugned order dated 11.02.2025 rejecting the condonation application should be quashed and set aside.Analysis: The delay is a short period of 113 days and occurred in the context of COVID-19 disruptions including lockdowns and extensions of compliance dates. The audit report was filed by the auditor within time and the acceptance/verification lapse arose from inadvertence by an elderly managing trustee working from home. Preponement of the due date for filing Form No.10B for A.Y.2020-21 contributed to confusion, and time extensions granted during the pandemic are relevant background. Consideration of hardship is a relevant factor under Section 119(2)(b); refusal to condone would result in denial of exemption under Section 11 and a substantial demand. Previously decided judgments at the same court and comparable authorities support a justice-oriented, liberal exercise of discretion where delay is bona fide and genuine hardship would follow.Conclusion: The impugned order dated 11.02.2025 is quashed and set aside; the delay of 113 days in filing/acceptance of Form No.10B for A.Y.2020-21 is condoned and the return shall be processed as filed within time. The decision is in favour of the assessee.Ratio Decidendi: The discretionary power under Section 119(2)(b) of the Income-tax Act, 1961 to condone delay must be exercised to advance substantial justice where a bona fide short delay is shown and genuine hardship would result from refusal.