ST.JOSEPH EDUCATIONAL AND CHARITABLE TRUST vs. THE COMMISSIONER OF INCOME TAX (EXEMPTION)

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WP(C)/8942/2025HC KeralaKLHC01020240202504 April 2025Bench: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
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What did the High Court hold?

The High Court of Kerala held that the Commissioner's order dismissing the application for condonation of delay was highly hyper-technical and contrary to well-established principles on condonation of delay. The court noted that the requirement for filing the audit report one month before the return was a recent amendment, and previously, it could be filed along with the return. The delay occurred during the Covid-19 pandemic, a period when the Supreme Court had extended limitations in judicial and quasi-judicial proceedings. Although the revenue objected to the applicability of the Supreme Court's judgment in Re Cognizance for Extension of Limitation to audit reports, the court found that the principles embodied in that judgment could be adopted, especially given the minimal delay of 25 days. The court also considered that the CBDT had extended the due date for filing returns, which might have caused confusion. Therefore, the court found that a rigid stance was not warranted. The impugned order was set aside, and the delay in filing the audit report for assessment year 2021-2022 was condoned. The writ petition was allowed.

What were the facts?

The petitioner, St. Joseph Educational and Charitable Trust, is a charitable trust registered under Section 12A of the Income Tax Act, 1961. For the assessment year 2021-2022, the trust filed its audit report in Form 10B with a delay of 25 days, although the return of income was filed within the stipulated time. The trust applied to the Commissioner of Income Tax (Exemption) under Section 119(2)(b) of the Act for condonation of this delay. The Commissioner, by an order dated 08.04.2024, dismissed the application. The trust challenged this order before the High Court of Kerala, arguing that the delay was inadvertent and occurred during the Covid-19 pandemic, a period when the Supreme Court had condoned delays in many matters. The trust contended that the Commissioner adopted a rigid stance instead of a liberal approach.

What were the issues?

1. Whether the Commissioner of Income Tax (Exemption) erred in dismissing the application for condonation of delay in filing the audit report in Form 10B for the assessment year 2021-2022, under Section 119(2)(b) of the Income Tax Act, 1961, by adopting a hyper-technical approach, despite the delay being minimal (25 days) and occurring during the Covid-19 pandemic. Assessee's Contentions: The delay was inadvertent and occurred during the Covid-19 pandemic, a period when the Supreme Court had condoned delays in numerous matters. The Commissioner took a rigid stance instead of a liberal approach. The Supreme Court's decision in Re Cognizance for Extension of Limitation (2021 (5) KLT 689) should be applied. The CBDT had extended the due date for filing returns, which caused confusion. The delay was minimal (25 days). Revenue's Contentions: (Not recorded in the judgment. The judgment states that the respondents objected to the applicability of the Supreme Court judgment to the filing of an audit report.)

Which sections of the Income-tax Act were involved?

Section 119(2),Section 119(2)(b),Section 12A

AI-generated summary — verify with the full judgment below

WP(C) NO. 8942 OF 2025 1 2025:KER:29037 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS FRIDAY, THE 4TH DAY OF APRIL 2025 / 14TH CHAITHRA, 1947 WP(C) NO. 8942 OF 2025 PETITIONER(S): ST.JOSEPH EDUCATIONAL AND CHARITABLE TRUST AGED 43 YEARS CHRIST NAGAR CENTRAL SCHOOL (FORMERLY K E CARMEL SCHOOL), AMACHAL P.O, KUCHAPURAM, KATTAKADA THIRUVANANTHAPURAM, KERALA REPRESENTED BY ITS PRINCIPAL FR.JOJO VADEKKPARAMPIL CMI, PIN – 695 572. BY ADVS. ALEXANDER JOSEPH MARKOS SRI.JOSEPH MARKOS (SR.) V.ABRAHAM MARKOS ABRAHAM JOSEPH MARKOS ISAAC THOMAS P.G.CHANDAPILLAI ABRAHAM JOHN VITHAYATHIL NABEEL AHAMED S. RESPONDENT(S): 1 THE COMMISSIONER OF INCOME TAX (EXEMPTION) AYAKAR BHAVAN, OLD RAILWAY STATION ROAD, KOCHI, PIN – 682 018. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX (EXEMPTION) INCOME TAX OFFICE, TRIVANDRUM, PIN – 695 001. 3 THE CENTRAL BOARD OF DIRECT TAXES GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NORTH BLOCK, SECRETARIAT BUILDING, NEW DELHI, PIN – 110 001. REPRESENTED BY ITS SECRETARY SRI.JOSE JOSEPH, SR.SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04.04.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 8942 OF 2025 2 2025:KER:29037 BECHU KURIAN THOMAS, J. ......…............................................. W.P.(C) No.8942 of 2025 …................................................ Dated this the 4th day of April, 2025 JUDGMENT Petitioner challenges an order issued under Section 119(2) of the Income Tax Act, 1961 [for short, ‘the Act’], dismissing an application for condonation of delay in filing audit report in Form 10B for the assessment year 2021-2022. 2. Petitioner is a charitable trust registered under Section 12A of Act and is liable to file their returns as well as audit reports for each assessment year. In the assessment year 2021-2022, the audit reports were filed with a delay of 25 days. However, the return, as required by law, was filed within time. Since there was a delay in filing the audit report, an application was filed before the Commissioner under Section 119(2)(b) of the Act for condonation. However, by order dated 08.04.2024, the application was dismissed. 3. According to the petitioner, the delay in filing the audit report was inadvertent and it was during the Covid-19 Pandemic time, when the Supreme Court had even condoned delay in most of the matters. It is also pointed out the Commissioner has taken a very rigid stance, instead of adopting a liberal approach. 4. I have heard Sri.Joseph Markos, the learned Senior counsel instruction by

WP(C) NO. 8942 OF 2025 3 2025:KER:29037 Sri.Alexander Joseph Markos, the learned counsel for the petitioner as well as Sri.Jose Joseph, the learned Standing Counsel for respondents. 5. A perusal of the impugned order reveals that no specific reasons have been given by the Commissioner and instead, he merely came to the conclusion that the petitioner had failed to provide any reasons or documentary evidence to prove that the delay was caused due to circumstances beyond petitioner’s control. The approach of the Commissioner has been highly hyper-technical and contrary to the well established principles on condonation of delay. 6. The requirement of audit report to be filed one month before filing the returns have been brought in by an amendment only recently. Till then, the audit reports could be filed along with the returns. In the instant case, the delay in filing the audit report occurred at a time when Covid-19 Pandemic had struck the country. 7. The supreme Court had, in Re Cognizance for Extension of Limitation (2021 (5) KLT 689) suo motu, extended the time for filing various applications in judicial and quasi judicial proceedings. Though the respondents have objects to the applicability of the said judgment, to the filing of an audit report, I am of the view that principles embodied in the said judgment of the Supreme Court could be adopted, especially since the delay in filing audit report is only 25 days. In this context, it is also pertinent to mention that the CBDT had extended the time to file returns till 15.03.2022, and therefore, petitioner should have filed the audit report 30 days before the returns. Since the change in dates has

WP(C) NO. 8942 OF 2025 4 2025:KER:29037 caused confusion to many persons and the delay is very minimal, I am of the view that a rigid stance ought not to have been adopted. The order declining to condone the delay is liable to be interfered with. 8. Accordingly, Ext.P8 order is set aside and the delay in filing the audit report for the assessment year 2021-2022 is hereby condoned. The writ petition is allowed as above. sd/- BECHU KURIAN THOMAS JUDGE AMV/04/04/2025

WP(C) NO. 8942 OF 2025 5 2025:KER:29037 APPENDIX OF WP(C) 8942/2025 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF JUDGMENT DATED 06.08.2024 IN W.P.(C) NO. 10438/2024. AND CONNECTED CASES EXHIBIT P2 TRUE COPY OF CIRCULAR NO.1/2022 DATED 11.01.2022 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT) EXHIBIT P3 TRUE COPY OF ACKNOWLEDGEMENT DATED 12.03.2022 AND AUDIT REPORT IN FORM 10B EXHIBIT P3(A) TRUE

COPY

INCOME

TAX

RETURN ACKNOWLEDGEMENT DATED 15.03.2022 EXHIBIT P4 TRUE COPY OF ORDER DATED 10.01.2022 OF THE HON’BLE SUPREME COURT IN SUO MOTO W.P. (C)3/2020 EXHIBIT P5 TRUE COPY OF CIRCULAR NO. 2/2020 DATED 03.01.2020 ISSUED BY CENTRAL BOARD OF DIRECT TAXES EXHIBIT P6 TRUE COPY OF CIRCULAR NO. 16/2022 DATED 19.07.2022 OF THE CENTRAL BOARD OF DIRECT TAXES EXHIBIT P7 TRUE COPY OF APPLICATION FOR CONDONATION OF DELAY DATED 01.08.2022 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT EXHIBIT P8 TRUE COPY OF ORDER 08.04.2024 OF THE 1ST RESPONDENT

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