The court emphasized that substantial justice prevails over mere technicalities in tax-related matters, especially during hardships like the Covid-19 Pandemic.

ORDER

Order No. 07.08.2025

02. The matter is taken up through Hybrid mode. 2. Mr. Manoj Kumar Agrawalla, learned counsel enters appearance on behalf of the petitioner and files his appearance memo in Court today, which is taken on record.

3. Challenging the order dated 13.03.2025 (Annexure-4) rejecting the petition for condonation of delay filed under Section 119 (2)(b) of the Income Tax Act, 1961 for filing the audit report in Form 10B prescribed under Rule 17B of the Income Tax Rules, 1962 (for short, “IT Rules”) for claiming exemption from payment of income tax under Section 12A of the Income Tax Act, 1961 (for brevity, “IT Act”) for the Assessment Year 2021-22 by the Commissioner of Income Tax (Exemption), Hyderabad (“CIT”, abbreviated), the Petitioner has approached this Court by way of filing this writ petition under Articles 226 & 227 of the Constitution of India.

4. Mr. Agrawalla, learned Advocate appearing for the Petitioner submitted that despite sufficient cause being shown, the Opposite Party No.1 has rejected the application for condonation of delay of 28 days in filing the audit report. It is submitted that the delay was caused due to negligence of Auditor, which was not appreciated by the said authority.

4.1. Learned Advocate advanced valiantly argued that irrelevant decisions have been referred to and relied on by the CIT to disallow the exemption claimed in the returns. Though the audit report in Form 10B could be filed even before the assessment, the same was filed on 15.03.2022. The audit report was due for submission was 15.02.2022. Thus, there was only 28 days’ delay. The approach of the CIT indicates pedantic; rather utilizing his judicial discretion he should have been pragmatic in his approach. He, therefore, submitted that under Section 119 (2)(b) of the Income Tax Act by virtue of Circular No.10 of 2019, dated 22.05.2019 and circular No.16 of 2024 dated 18.11.2024, the CIT has been delegated with power to exercise discretion while dealing with the application for condonation of delay in filing the Form 10B for the Assessment Year 2021-22. Despite such discretion is conferred on the CIT, the reason for the delay being not appreciated appropriately, the order is susceptible to be interfered with in the present proceeding, as such the same is liable to be set aside.

4.2. He strenuously urged that serious prejudice would ensue to the Petitioner if 28 days’ delay is not condoned as the audit report under Section 12A read with Rule 17B is required to be considered by the competent authority for the purpose of claiming benefits under the IT Act.

4.3. To buttress his argument, he placed reliance on the decision of the Gujarat High Court in Sarvodaya Charitable Trust vs. Income Tax Officer (Exemption), (2021)18 ITR-OL 253 (Guj) and contended that the provision relating furnishing of audit report with the return is to be treated as procedural and the same could be filed even before the assessment.

5. Mr. Avinash Kedia, learned Junior Standing Counsel for the Income Tax Department submitted that the CIT exercising his discretion under Section 119 (2)(b) of the IT Act rejected the application for condonation of delay having found no sufficient cause shown by the Petitioner. He submitted that genuine hardship being not demonstrated by the Petitioner, the rejection of petition for condonation of delay is not unjustified.

6. Mr. M.K. Agrawalla, learned Advocate appearing for the Petitioner and Mr. Avinash Kedia, learned Junior Standing Counsel for Income Tax Department.

7. Considering the rival submissions made by the learned counsel for the respective parties, this Court is satisfied that there is no dispute with regard to delay of 28 days in submitting the audit report in Form-10B prescribed under Rule 17B of the IT Rules in order to claim benefit under Section 12A of the IT Act for the Assessment Year 2021-22. It is also not fact on record that the petitioner has been availing the benefit of exemption since Asses