2025 (2) TMI 1191 - HC - Income Tax

Rejection of application for condonation of delay u/s 119(2)(b) of the Act in filing of Form 10BB for the AY 2022-2023 - As contented inadvertently Form No.10B was filed instead of 10BB which was required to be filed and on learning the inadvertence Form 10BB was filed on 21.02.2023 - HELD THAT - Board for avoiding any genuine hardship authorizes any income-tax authority to admit an application or claim for any exemption deduction refund or any other relief under the Income Tax Act after the expiry of period specified by or under the Act and deal with the same on merits in accordance with law. Therefore the delay can be condoned only in cases where there is genuine hardship - due to which the applicant could not file the claim within the statutory time line. The reasoning given by the petitioner for delay in submission of Form 10BB that Form 10B instead of 10BB was advertently filed does not show any hardship as has been rightly observed by the learned CIT (Exemptions). Fur her when the application was moved before the CIT (Exemptions) for condonation of delay in filing Form 10BB a report was called from the Assessing Officer through Additional Commissioner of Income Tax (Exemptions) Range I Chandigarh and as per his report even for the Assessment Year 2023-2024 there is a delay of 140 days in filing the audit report in Form 10BB which clearly shows the negligent conduct of the petitioner. CIT(Exemption) has rightly rejected the application for condonation of delay under Section 119(2)(b) of the Act in filing of Form 10BB for the Assessment Year 2022-2023.

Summary

The core legal questions considered in this judgment are:

1. Whether the delay in filing the audit report in Form 10BB for the Assessment Year 2022-2023 can be condoned under Section 119(2)(b) of the Income Tax Act, 1961.

2. Whether the inadvertent filing of Form 10B instead of Form 10BB constitutes sufficient cause or genuine hardship warranting condonation of delay.

3. The scope and applicability of the discretionary power vested in the income-tax authorities under Section 119(2)(b) to condone delay in filing statutory documents.

Issue-wise Detailed Analysis

1. Condonation of Delay under Section 119(2)(b) of the Income Tax Act

The relevant legal provision is Section 119(2)(b) of the Income Tax Act, which empowers the Board to authorize any income-tax authority (other than certain appellate authorities) to admit applications or claims for exemption, deduction, refund, or other relief after the expiry of the prescribed period, if it considers it desirable or expedient to avoid genuine hardship. The power is discretionary and intended to prevent injustice caused by procedural delays.

The Court examined the scope of this provision, emphasizing that condonation of delay is permissible only where there is genuine hardship preventing timely compliance. The Court noted that the discretion must be exercised judiciously and not as a matter of routine or convenience.

In the present case, the petitioner sought condonation of delay of 143 days in filing Form 10BB, which is mandatory for claiming exemption under Section 10(23C)(vi). The delay was attributed to inadvertent filing of Form 10B instead of Form 10BB, and upon realizing the error, Form 10BB was filed belatedly.

The Court upheld the principle that mere inadvertence or negligence does not amount to sufficient cause or genuine hardship for condonation of delay. The petitioner's explanation was scrutinized and found lacking in demonstrating any compelling reason that prevented timely filing.

2. Inadvertent Filing of Form 10B Instead of Form 10BB

The petitioner contended that the initial filing of Form 10B was inadvertent and that the correct form, 10BB, was filed subsequently. The Court analyzed whether this inadvertence could be considered a reasonable cause for condoning the delay.

The Court observed that the petitioner failed to show any extraordinary circumstance or hardship arising from the delay. The filing of an incorrect form was a procedural lapse attributable to the petitioner's negligence rather than an unavoidable impediment.

Further, the Court referred to the report from the Assessing Officer indicating a similar delay in filing Form 10BB for the subsequent Assessment Year 2023-2024, suggesting a pattern of negligent conduct rather than isolated inadvertence.

This evidence reinforced the conclusion that the petitioner did not exercise due diligence, and the delay was not caused by circumstances beyond their control.

3. Exercise of Discretion by Income Tax Authorities

The Court examined the exercise of discretion by the Commissioner of Income Tax (Exemptions) in rejecting the condonation application. The Court noted that the authority had considered the petitioner's explanation and the report from the Assessing Officer before arriving at the decision.

The Court found no error or illegality in the impugned order and held that the discretion was exercised within the bounds of law and reason. The authority rightly concluded that no genuine hardship was demonstrated and therefore declined to condone the delay.

The Court emphasized that the power under Section 119(2)(b) is not to be used to excuse routine or negligent delays but is reserved for cases where strict adherence to timelines would cause genuine hardship.

Conclusions on Issues

The Court concluded that the petitioner's application for condonation of delay in filing Form 10BB was rightly rejected. The inadvertent filing of Form 10B did not constitute a sufficient cause or genuine hardship. The discretionary power under Section 119(2)(b) was correctly exercised by the Commissioner of Income Tax (Exemptions) in declining condonation.

Significant Holdings

"The Board for avoiding any genuine hardship, authorizes any income-tax authority to admit an application or claim for any exemption, deduction, refund or any other relief under the Income Tax Act after the expiry of period specified by or under the Act and deal with the same on merits in accordance with law. Therefore, the delay can be condoned only in cases where there is genuine hardship - due to which the applicant could not file the claim within the statutory time line."

"The reasoning given by the petitioner for delay in submission of Form 10BB that Form 10B instead of 10BB was inadvertently filed, does not show any hardship as has been rightly observed by the learned CIT (Exemptions)."

"Even for the Assessment Year 2023-2024, there is a delay of 140 days in filing the audit report in Form 10BB, which clearly shows the negligent conduct of the petitioner."

"We do not find any infirmity in the impugned order dated 31.07.2024, thus, the same is affirmed and the present writ petition is dismissed being devoid of any merit."

The judgment establishes the principle that condonation of delay under Section 119(2)(b) requires demonstration of genuine hardship beyond mere inadvertence or negligence. The discretionary power to condone delay is to be exercised sparingly and not to excuse routine procedural lapses. The Court's affirmation of the Commissioner's order reinforces strict compliance with statutory timelines for filing audit reports under the Income Tax Act.