TaxTMI 
TaxTMI 
2026 (2) TMI 644
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther various relief activities. The said activities are carried out from donations received by it during any financial year. The Petitioner filed its Return of Income under Section 139 for A.Y. 2018-19 on 20/12/2018. The Petitioner also filed its Audit Report in Form 10B on 20/12/2018. The due date for filing returns for A.Y. 2018-19 was 31/10/2018. The Petitioner has claimed that the Audit Report in Form No. 10B could not be filed by the due date for various reasons, including the shortage of duly qualified accountants to collate information into Financial Statements, resulting in a delay in submitting the financial records for audit to its Chartered Accountants. Consequently, due to the delay in filing of the Audit Report in Form 10B, the Petitioner was denied the benefit of exemption under Section 11 vide a intimation under Section 143(1)(a) of the IT Act. Subsequently, a demand of Rs. 10,30,95,810/- was raised on the Petitioner Trust. 4. It is not in dispute that the Audit Report in Form 10B was required to be uploaded online along with the Return of Income or before filing the Return of Income, i.e. by 31/10/2018 and that the Audit Report was filed online on 20/12/2018. As ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CBDT], to exercise the delegated authority in terms of the said Section. Mr. Haindaday relies upon a decision of the Hon'ble High Court of Delhi in Sun Pharmaceutical Industries Ltd. Vs. Income Tax Officer [2025] 171 taxmann.com 469 (Delhi) para 41 which analyses Section 119 as being demonstrative of the statute conferring power upon the Board to relax a prescription or enlarge a period of limitation as opposed to imposing or introducing a restriction or for that matter constricting a period within which a right may be exercised under the IT Act. 11. We note that though the Petitioner was not strictly mandated to file an Application for condonation of delay within a particular period of time, which was subsequently introduced vide Circular No. 16/2024 dated 18/11/2024 prescribing a time period of 3 years within which such an Application for condonation of delay had to be made, but as pointed out by Mr. Haindaday, the Circular No. 16/2022 dated 19/07/2022, upon which the Petitioner places reliance, strictly mandates disposal of an application for condonation made to it within three months of receipt. The impugned order was passed more than 2 years from the date of the Application....
X X X X Extracts X X X X
X X X X Extracts X X X X
....articulars as may be prescribed." [Emphasis is ours] 16. The requirement with respect to the Audit Report was with respect to its filing along with the Return of Income for the relevant assessment year. The Petitioner submits that as long as the Audit Report was filed along with the Income Tax Returns, it was sufficient compliance with the law and cannot be held otherwise. The Petitioner has annexed a tabular statement detailing the due date of filing of ITR, date of filing of ITR and date of filing of Audit Report in Form 10B and submits that there has been no delay as alleged by the Respondents. 17. The Petitioner submits that the due date with respect to filing of Audit Report was first introduced by the Finance Act, 2017 with effect from 1st April 2018. Finance Act, 2017 inserted clause (ba) in sub-section (1) Section 12A which reads as under:- Following clause (ba) shall be inserted after clause (b) of sub-section (1) of section 12A by the Finance Act, 2017, w.e.f. 1-4-2018 : "(ba) the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under Section 119 of the Income Tax Act which are binding on the authorities in the administration of the Act. Under Section 119(2)(a), however, the circulars as contemplated therein cannot be adverse to the assessee. Thus, the authority which wields the power for its own advantage under the Act is given the right to forego the advantage when required to wield it in a manner it considers just by relaxing the rigour of the law or in other permissible manner as laid down in Section 119. The power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Hard cases which can be properly categorised as belonging to a class, can thus be given the benefit of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng that the main ingredient on which Respondent No. 1 based its rejection of the application was a perceived delay in earlier years, we find that there has been a gross violation of the directions under Section 119(2)(b) read with the Circular for the relevant period issued thereunder. Respondent No. 1 was necessarily bound to follow the law both in letter and spirit and not cause its exercise of discretion to be coloured by non-existent conditions. 22. The Hon'ble Gujarat High Court in Sarvodaya Charitable Trust vs. Income Tax Officer (Exemption) [2021] 125 taxmann.com 75 (Gujarat) has observed that the provision regarding furnishing of Audit Report with the Return of Income has to be treated as a procedural provision. It is a directory in nature and its substantial compliance would suffice. 23. We also find that not granting the benefit of Section 11 to the Petitioner would certainly cause genuine hardship to the Petitioner and may adversely affect the functioning of its activities which provide relief to thousands of students who are utilising its educational aid and schools run by it. The purpose of Section 119(2)(b) is to mitigate such genuine hardship faced by the Asses....