2026 (3) TMI 1032 - HC - Income Tax

Condonation of delay in filing audit report: 31 day delay condoned where preponement and pandemic caused bona fide lapse.

Condonation of delay in filing Form No.10B for AY 2020-21 under discretionary power was granted where a 31 day delay resulted from a statutory preponement ... Condonation of delay under Section 119(2)(b) - genuine hardship as basis for condonation - delay of 31 days in filing Form No.10B for AY 2020-2021 - eligible reasons of delay - HELD THAT: - The Court accepted the petitioner's explanation of a bona-fide 31-day delay, noting that AY 2020-21 was the first year the audit-report due date was preponed by one month and that the filing was affected by disruptions during the COVID-19 lockdown. The bench observed that substantial justice and genuine hardship are relevant considerations u/s 119(2)(b) and relied on precedents recognising a liberal, justice-oriented approach to condonation of delay in similar tax-audit filing contexts. Having found the delay short, explained and bona-fide, and that denial would cause genuine hardship by leading to loss of exemption, the Court exercised its discretion to condone the delay and directed that the returns be reprocessed on the basis that Form 10B was filed within time. [Paras 13, 14, 15, 16, 17] Delay of 31 days in filing Form No.10B for AY 2020-2021 condoned; impugned order under Section 119(2)(b) quashed and returns to be reprocessed treating Form 10B as filed within time. Final Conclusion: The writ petition is allowed insofar as the delay in filing Form No.10B for AY 2020-2021 is condoned; the impugned order is quashed and the respondent is directed to reprocess the petitioner's returns treating Form 10B as filed within time. Issues: Whether the delay of 31 days in filing Form No.10B for Assessment Year 2020-21 should be condoned under Section 119(2)(b) of the Income-tax Act, 1961, thereby setting aside the CIT (Exemptions) order dated 27th February 2025 refusing condonation.Analysis: The petitioner filed the return and Form No.10B on 15th February 2021 but the due date for filing the audit report had been preponed for AY 2020-21 resulting in a 31 days delay. The petitioner attributed the delay to inadvertent non-notice of the changed due date and to disruptions caused by the COVID-19 lockdowns. The respondent relied on CBDT Circular No.16/2024 (18.11.2024) and contended that applications beyond three years must be filed before the CBDT, but clarified that the petitioner would have a remedy before the CBDT. Precedents and principles relevant to Section 119(2)(b) support a liberal, justice-oriented exercise of discretion where delays are short, explanations are bona fide, and denial would cause genuine hardship. The facts show a short delay, an honest explanation tied to a change in the statutory timetable and pandemic-related disruptions, and a substantial financial prejudice to the petitioner if relief is denied.Conclusion: The delay of 31 days in filing Form No.10B for AY 2020-21 is condoned; the impugned order dated 27th February 2025 is quashed and set aside and the return shall be re-processed treating Form No.10B as filed within time, in favour of the assessee.