MOTHER SUPERIOR MEDICAL SISTERS OF ST.JOSEPH CHRIST THE KING CONVENT vs. THE COMMISSIONER OF INCOME TAX (EXEMPTION)

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WP(C)/9009/2025HC KeralaKLHC01020356202504 April 2025Bench: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
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What did the High Court hold?

The High Court held that the Commissioner's order dismissing the application for condonation of delay was hyper-technical and contrary to established principles. The court noted that the requirement for filing the audit report one month before the return was a recent amendment. The delay occurred during the Covid-19 pandemic, a period when the Supreme Court, in Re Cognizance for Extension of Limitation (2021 (5) KLT 689), had suo motu extended time for various filings. Although the revenue objected to its applicability to audit reports, the court found the principles embodied in the Supreme Court's judgment could be adopted, especially given the minimal delay of 28 days. The court also considered that the CBDT had extended the time to file returns, which may have caused confusion. Therefore, the court found that a rigid stance was unwarranted. The impugned order was set aside, and the delay in filing the audit report for assessment year 2021-2022 was condoned. The ratio is that in cases of minimal delay during a pandemic, especially when statutory deadlines have been extended or are subject to recent changes, a liberal approach should be adopted for condonation under Section 119(2)(b), considering the principles laid down by the Supreme Court regarding extension of limitations.

What were the facts?

The petitioner, Mother Superior Medical Sisters of St. Joseph Christ the King Convent, a charitable trust registered under Section 12A of the Income Tax Act, 1961, filed their audit report for assessment year 2021-2022 with a delay of 28 days. Their 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, stating that the petitioner failed to provide reasons or documentary evidence for the delay being beyond their control. The petitioner challenged this order before the High Court of Kerala, arguing the delay was inadvertent, occurred during the Covid-19 pandemic, and that the Commissioner adopted a rigid stance.

What were the issues?

1. Whether the Commissioner of Income Tax (Exemption) was justified in dismissing the application for condonation of delay in filing the audit report for assessment year 2021-2022, under Section 119(2)(b) of the Income Tax Act, 1961, on the ground that no sufficient reasons or documentary evidence were provided by the petitioner. Assessee's contentions: The delay was inadvertent and occurred during the Covid-19 pandemic. The Commissioner took a rigid stance instead of a liberal approach. The Supreme Court had condoned delays in many matters during the pandemic. Revenue's contentions: Not recorded in the judgment.

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. 9009 OF 2025 1 2025:KER:29038 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. 9009 OF 2025 PETITIONER(S) : MOTHER SUPERIOR MEDICAL SISTERS OF ST.JOSEPH CHRIST THE KING CONVENT 36/1002 OPP LISIE HOSPITAL, ST.AUGUSTIN ROAD KANAYANNUR TALUK ERNAKULAM, KERALA, PIN – 682 018. REPRESENTED BY ITS MOTHER SUPERIOR SR. SALY JOSEPH, AGED 65 YEARS. BY ADVS. JOSEPH MARKOS (SR) ALEXANDER JOSEPH MARKOS 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, KOCHI, KERALA, PIN – 682 018. 3 THE CENTRAL BOARD OF DIRECT TAXES GOVERNMENT OF INDIA, MINISTRY OF FINANCE, NORTH BLOCK, SECRETARIAT BUILDING NEW DELHI, PIN – 110 001. 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. 9009 OF 2025 2 2025:KER:29038 BECHU KURIAN THOMAS, J. ......…............................................. W.P.(C) No.9009 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 28 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

WP(C) NO. 9009 OF 2025 3 2025:KER:29038 by 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 28 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

WP(C) NO. 9009 OF 2025 4 2025:KER:29038 audit report 30 days before the returns. Since the change in dates has 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. 9009 OF 2025 5 2025:KER:29038 APPENDIX OF WP(C) 9009/2025 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 15.03.2022 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 EXHIBIT P5 TRUE COPY OF CIRCULAR NO. 2/2020 DATED 03.01.2020 ISSUED BY CBDT EXHIBIT P6 TRUE COPY OF CIRCULAR NO. 16/2022 DATED 19.07.2022 ISSUED BY CBDT EXHIBIT P7 TRUE COPY OF APPLICATION FOR CONDONATION OF DELAY DATED 30.01.2023 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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