HC Sets Aside Rejection of Form 10B Delay Condonation Application

The petitioner, a long-standing charitable trust engaged in religious and community activities, sought condonation of delay under Section 119(2)(b) for AY 2021–22 in relation to verification of Form 10B. While the audit report had been uploaded by the auditor within the prescribed due date, there was a delay of 42 days in its acceptance on the portal by the trust.

The return was initially processed under Section 143(1), accepting the exemption claim. However, a rectification order under Section 154 later disallowed the exemption, citing issues relating to Form 10B and registration. The trust applied for condonation, explaining that the delay was merely technical and unintentional. The CIT (Exemption), however, rejected the application on the ground that the trust failed to furnish registration under Section 12AA.

Main Issue: Whether the CIT (Exemption) was justified in rejecting the condonation of the delay application by examining issues beyond the scope of Section 119(2)(b).

HC’s Ruling: The High Court held that the CIT (Exemption) had clearly overstepped its jurisdiction. While deciding an application for condonation of delay, the authority was only required to examine whether the delay deserved to be condoned based on the explanation furnished. Instead of evaluating the reasons for the delay, the authority rejected the application on an entirely different ground relating to registration under Section 12AA, which was not relevant at that stage.

The Court observed that such issues could be examined during assessment proceedings, but not while deciding condonation. Accordingly, the impugned order was quashed, and the matter was remanded back to the CIT (Exemption) to reconsider the application strictly on the issue of delay within six weeks.

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