Bombay High Court Allows Delay Condonation For Charitable Trust IT Filing, Attributes Delay To CA Lapse

The Bombay High Court has set aside an order rejecting a charitable trust's request to excuse a delay in filing Form 10, holding that a lapse on the part of its Chartered Accountant could not be used to deny the trust tax exemption under Section 11 of the Income Tax Act.

A Bench of Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla said, “the Petitioner Trust would suffer grave hardship if the delay is not condoned since the Petitioner Firm would be saddled with a huge tax liability for merely not filing Form 10 within time. The Petitioner-Trust, ought not to be foisted with such hardship because of the failure of the Petitioner's Chartered Accountant to fulfill the Petitioner Trust's compliance owing to reasons explained in the Chartered Accountant's Affidavit dated 24th March 2023. The Petitioner does not seem to gain any benefit from such a delay in filing its Form 10”

At the centre of the case was a missed compliance. The trust had filed its audit report in Form 10B for the financial year 2022–23, but its income tax return and Form 10 were not submitted within the deadline.

The reason, the court noted, lay in a disruption within the Chartered Accountant's office. A senior assistant handling the filings suffered a personal tragedy and could not complete the work. When the responsibility shifted to a new recruit, only the audit report was uploaded.

The delay stretched to about 11 months. The trust approached the authorities seeking condonation under Section 119(2)(b), a provision that allows delays to be excused in genuine cases. The tax department resisted this, pointing to Section 13(9)(ii), which bars exemption if filings are not made within time.

The trust had first moved an application on March 27, 2023, seeking relief for both the return and Form 10. In July that year, the Commissioner accepted the explanation and condoned the delay in filing the return but said nothing about Form 10.

That silence led to a second round. After filing both the return and Form 10 in August 2023, the trust again sought condonation. This time, the request was rejected in April 2024. The reason given was that the return itself had been filed beyond the statutory deadline, making the trust ineligible for exemption.

The High Court found this approach inconsistent. The same authority had already accepted the explanation and condoned the delay in filing the return. Having done so, it could not rely on that very delay to deny relief for Form 10. The court also took note of the trust's past record, which showed timely filings in earlier years.

With that, the court set aside the April 2024 order, condoned the delay in filing Form 10 for the relevant year, and directed the tax department to process the return by treating the form as having been filed within time.

For Petitioner: Advocate Sanket Bora (through VC), with Vidhi Punmiya and Amiya Das instructed by SPCM Legal,

For Respondents: Advocate A. K. Saxena,