SANATHANA DHARMA TRUST vs. COMMISSIONER OF INCOME TAX (EXEMPTION)

The petitioner has been filing regular returns of income since the assessment year 2009-10 and has been availing the benefit of exemption. For the assessment year 2018-19, petitioner has been denied exemption on the ground that the petitioner failed to upload the audit report in Form No.10B of the Income Tax Act. Petitioner, thereupon, filed an application under Section 119(2)(b) of the Income Tax Act, 1961, for condonation of delay and for permission to upload the audit report in Form No.10B of the Act for the assessment year 2018-19. The said application of the petitioner has been rejected by Ext.P18 order and the said order is now under challenge before this Court.

Learned Standing Counsel appearing for the respondent department submits that there is absolutely no WP(C) NO. 1663 OF 2023 3 illegality in Ext.P18 order and the 1st respondent has properly considered the application filed for condonation of delay and has rejected the same on the ground that no proper explanation for condonation of delay has been made by the petitioner. It is submitted that the return of the petitioner, for the assessment year 2018-19, was processed under Section 143(1) of the Income Tax Act and it was then noticed that the petitioner had not uploaded the audit report in Form No.10B of the Income Taxt Act, which is mandatory for claiming exemption. It is submitted that the petitioner is, therefore, not entitled to claim any exemption in respect of his income for the assessment year 2018-19. However, it is very fairly pointed out by the learned Standing Counsel that in terms of Circular No.16 of 2022 dated 19.07.2022, the Central Board of Direct Taxes has issued instructions in respect of failure to file audit report in Form No. 10B of the Income Tax Act , in respect of the assessment year 2018-19 and has directed that, for genuine reasons, the delay may be condoned provided the delay is upto a maximum period of three years. It is submitted that the audit report for the assessment year 2018-19 was uploaded by the petitioner on 31.03.2021 and therefore, the petitioner falls within the terms of Circular No.16 of 2022. WP(C) NO. 1663 OF 2023 4

Learned counsel appearing for the petitioner, in reply, submits that there was genuine cause for failure to upload audit report in Form No.10B of the Income Tax Act as is evident from a reading of Ext.P18 order itself. It is submitted that the reason is genuine and therefore, the delay ought to have been condoned in terms of the instructions contained in Circular No.16 of 2022 dated 19.07.2022. 5. Having heard the learned counsel appearing for the petitioner and the learned Standing counsel appearing for the respondent-Department, I am of the view that since the petitioner has uploaded its audit report in Form No.10B of the Income Tax Act, on 31.03.2021, the same was within the period specified in the aforesaid Circular No.16 of 2022, which to the extent it is relevant, reads as follows:-

Further to the powers delegated to Commissioners of Income-tax as discussed above, the CBDT hereby directs that where there is delay of beyond 365 days upto three years in filing Form No. 10B for Assessment Year 2018- 19 or for any subsequent Assessment Years, the Pr. Chief Commissioners of Income-tax/Chief Commissioners of Income-tax are authorized to admit such applications of condonation of delay under section 119(2) of the Act and decide on merits.

The Pr. Chief Commissioner/Chief Commissioner or Commissioners of Income-tax, as the case may be, while