High Court Sets Aside Rejection of Delay Condonation under Section 119(2)(b):

High Court sets aside rejection of condonation under Section 119(2)(b) for 16-day delay in uploading Form 10B, directs reconsideration citing bona fide professional error and CBDT Circular 2/2020.

High Court Quashes Rejection of Delay Condonation

Meetu Kumari

Nov 3, 2025

Last update on Nov 3, 2025

High Court Sets Aside Rejection of Delay Condonation under Section 119(2)(b) The petitioner filed their return of income for Assessment Year 2018-19 on 31.10.2018, declaring NIL income and claiming exemption under Sections 11 and 12 of the Income-tax Act, 1961. The year-end audit report was signed and completed on 30.09.2018, and Form 10B was apparently not uploaded electronically in parallel with the return, which is apparently due to a real mistake carried out by the statutory auditors. The audit report was uploaded on 16.11.2018, and this led to a delay of 16 days after the trust had discovered the mistake. When the Assessing Officer was processing the return under Section 143 (1) on 23.03.2020, accepted the exemption claimed under Sections 11 and 12 on the sole ground of the delay in uploading Form 10B, and made a demand of tax of 22353535468/-. A rectification application filed subsequently under Section 154 has been rejected on 24.12.2021. After that, the trust had applied to section 119(2)(b) before the Commissioner (Exemptions) seeking condonation of the delay in uploading the Form 10B. The trust did reason, which was based on the CBDT circular No.2/2020, which gives a discretion to the authorities to condone delays up to 365 days, but in that case, occurred purely due to inadvertent mistakes and not deliberate action. However, the Commissioner rejected the application on 14.06.2024, stating that professional negligence on the part of the auditor could not be a reasonable cause, regardless of the authority, which was of case law in consideration. ITAT Held: The assessee appealed before ITAT, which subsequently allowed the condonation vide order dated 23.12.2024, which the Revenue challenged thereafter before the Hon'ble High Court in ITA No.373/2025. The order of the Tribunal was set aside on maintainability grounds, giving liberty to the petitioner to take such remedies as it thought appropriate. Pursuant thereto, the present writ petition was filed challenging the Commissioner’s order and consequential assessment. Main Issue: Whether rejection of the condonation application under Section 119(2)(b) for a 16-day delay in uploading Form 10B, despite timely completion of audit and return filing, was valid in law when the lapse arose from an inadvertent bona fide error by the auditor. HC's Decision: The Hon’ble Delhi High Court permitted the writ petition and quashed the order of the Commissioner of 14.06.2024. According to the Court, the 16-day time lag in the removal of Form 10B was because of an honest error by the auditor and that trivial procedural missteps should not deny a charitable organisation its valid exemption in Sections 11 and 12. The Bench decided that discretion by Section 119(2)(b) should be applied in cases where the intent is good and no loss of revenue is incurred. The Court also pointed out that the audit as well as the return was made on time and the explanation given was reasonable and substantiated by books. Based on CBDT Circular No.2/2020 and the judicial precedents on the necessity of fair interpretation of such cases, the Bench instructed the authorities to re- consider the application of the petitioner afresh within eight weeks and issue the relevant orders within the law. It was also recorded that an appeal-effect order had resulted in a refund of Rs. 17,12,511/-, reflecting that part of the claim had already been accepted. The writ petition and pending applications were accordingly disposed of. To Read Full Judgment, Download PDF Given Below

About Author

Meetu Kumari

Content Manager

Meetu Kumari is an Experienced Advocate and Content Writer with 4+ years of demonstrated history of working in the law practice industry. Skilled in Developing Content, Researching, and Drafting. Strong professional with a Bachelor of Science (B.Sc.) focused on Law from Gujarat National Law University.