The Delhi High Court clarified that if the charitable educational society (petitioner) had failed to upload the audit report in Form 10B while claiming exemption under Section 11 of the Income Tax Act, due to an inadvertent error of the auditor, and it was filed belatedly, then the delay in filing Form 10B has to be condoned if no mala fides were alleged.
Asserting that any mistake on the part of the Auditor should not result in hardship or prejudice to the taxpayer, the Court quashed the order passed by the respondent (Commissioner) under Section 119(2)(b) of the Income Tax Act, and directed him to pass a fresh order on the application filed by the petitioner/applicant under Section 119(2)(b) within a period of eight weeks.
The Division Bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar found that the return was filed within the time stipulated, and a reference to the audit report was made in the ITR. However, after it came to the knowledge of the petitioner that the audit report had not been uploaded, the audit report was filed with a delay of 16 days, which can surely be considered a bona fide mistake.
Since the facts clearly enumerate the averments made in the application that the audit report could not be uploaded because of a mistake on the part of the Tax Professional/Auditor, the Bench answered the petition in favour of the taxpayer society.
Briefly, the petitioner society, engaged in the welfare activities, filed its ITR within the extended time under the relevant CBDT circulars, declaring nil income after claiming exemption under sections 11 and 12 of the Income Tax Act, and disclosing the details of the audit report. However, due to an inadvertent error on the part of the auditor/tax professional, the audit report in Form 10B could not be uploaded along with the return. Upon noticing the omission, the petitioner uploaded the audit report with a delay of 16 days.
Later, the AO processed the return and denied the exemption under sections 11 and 12 on the ground that the audit report had been filed belatedly. The petitioner therefore filed an application under section 119(2)(b) seeking the condonation of delay, which was rejected by the Commissioner (Exemptions), holding that such lapse could not constitute reasonable cause.
Cases Relied On:
Sarvodaya Charitable Trust v. ITO. (Exemption) [2021] 125 taxmann.com 75
VRG Electronics (P.) Ltd. v. Pr. CIT Delhi W.P.(C) 753/2025
Al Jamia Mohammediyah Education Society v. CIT (Exemptions) [2025] 482 ITR 41 (Bombay)
Square Vision India (P.) Ltd. v. Pr. CIT [2025] 174 taxmann.com 735 (Delhi)
Parul Mahila Pragati Mandal v. ITO (Exemption) [2025] 175 taxmann.com 922 (Gujarat)
Appearances:
Advocates Vivek Sarin, Abhishek Jain, Dhurv Devgupta, Divyanshi Singh, Satish C. Kaushik and Devansh Aeron, for the Petitioner/ Taxpayer
Advocates Abhishek Maratha, Apoorv Aggarwal, Parth Samwal, Gaurav Singh, Bhanukaran Singh Jodha, Himanshu Goel, Nischay Purohit, Nupur Sharma, and Muskan Goel, for the Respondent/ Revenue
