2024 (8) TMI 758 - HC - Income Tax

Registration u/s 12A - Rejection of the petitioner's application u/s 119(2)(b) - delay in filing the audit report in Form-10B - HELD THAT - The petitioners are entitled to succeed. As rightly pointed out by petitioners, the delay in filing the audit report in Form-10B can at best be 30 days, as the law only requires that the audit report be uploaded atleast a month before the due date for filing returns. Considering the extent of the delay, it should have been appropriate that the Commissioner exercised his jurisdiction under Section 119(2)(b) of the 1961 Act to condone the delay instead of taking a strict view of the matter. As relying on Al Jamia Mohammediyah Education Society 2024 (4) TMI 939 - BOMBAY HIGH COURT writ petitions are allowed by quashing the orders issued by the CITx(E), Kochi, dismissing the applications filed by the petitioners u/s 119(2)(b). As a result of this order, the delay on the part of the petitioners in filing the audit report in Form-10B stand condoned.

Summary

Issues:
Consideration of delay in filing audit report under Section 119(2)(b) of the Income Tax Act, 1961.

Analysis:
The judgment by the High Court of Kerala involved several writ petitions concerning the condonation of delay in filing audit reports by entities registered under Section 12A of the Income Tax Act, 1961. The petitioners were required to file their return of income by a specified date, with the audit report in Form-10B due earlier. However, due to an extension granted by the Central Board of Direct Taxes, the deadline for filing the audit report was also extended. The petitioners failed to meet the extended deadline but filed the audit report before the return filing date. They sought condonation of the delay under Section 119(2)(b) of the Act, which was rejected by the Commissioner of Income Tax (Exemption).

The petitioners argued that the Commissioner took a mechanical approach in rejecting the condonation applications and should have considered the circumstances, especially since the returns were filed on time. On the other hand, the Income Tax Department contended that the reasons provided for the delay were not acceptable and that filing the audit report was mandatory. The court considered a judgment from the Bombay High Court emphasizing a balanced and judicious approach to condonation applications.

After hearing both parties, the court held that the petitioners were entitled to succeed. It was noted that the delay in filing the audit report was minimal and that the Commissioner should have exercised discretion to condone the delay under Section 119(2)(b) instead of taking a strict view. The court referenced the Bombay High Court's judgment to support its decision, highlighting that the delay was not intentional or deliberate. As a result, the court allowed the writ petitions, quashing the Commissioner's orders and condoning the delay in filing the audit reports for the specified assessment year.

In conclusion, the High Court of Kerala granted the writ petitions, overturning the Commissioner's orders and condoning the delay in filing the audit reports. The judgment emphasized the need for a balanced and judicious approach in considering condonation applications under the Income Tax Act, 1961.