Income Tax Act | Madras High Court Quashes Rejection Of Delay Condonation; Holds Trust’s Tax Exemption “Cannot Be Denied For Delay In Filing Form 10B”
Safiya Malik
The High Court of Judicature at Madras, Single Bench of Justice C. Saravanan held that delay in filing Form 10B, as required under Section 44AB for the purpose of Section 12A(1)(b) of the Income Tax Act, 1961, cannot by itself be a reason to deny a trust its legitimate tax exemptions. The case concerned a charitable trust that had sought condonation of delay in filing the audit report for the Assessment Year 2018–2019, which the Commissioner of Income Tax (Exemption) had earlier rejected. Observing that the assessee, registered as a trust in 2017 and operating from 1 April 2017, had not gained any advantage from the delay, the Court directed that the denial be set aside subject to a nominal donation and that the assessment proceed in accordance with law.
The petitioner, Sivestar Educational Trust, registered under Section 12A of the Income Tax Act on 30.03.2017, sought condonation of delay in filing Form 10B for Assessment Year 2018–2019. The statutory due date for filing the audit report was initially 30.09.2018, later extended to 31.10.2018. The petitioner filed its return and Form 10B on 31.03.2019, resulting in a delay of 151 days. Following an intimation under Section 143(1) issued on 17.10.2019, the petitioner applied before the Commissioner of Income Tax (Exemption) under Section 119(2)(b) on 06.11.2023 seeking condonation of delay.
The petitioner contended that extenuating circumstances—including the impact of Gaja Cyclone—prevented timely filing. The application included general information from Wikipedia and an attendance register showing closure of the school from 15.11.2018 to 22.11.2018. The respondent rejected the application on 28.11.2024, stating that the cyclone occurred after the due date, and that the petitioner failed to establish reasonable cause or submit clinching evidence.
The petitioner relied on earlier High Court decisions allowing similar relief. The respondent cited various precedents relating to delay and strict compliance with statutory provisions. The dispute centered on whether procedural delay in filing Form 10B should deprive the trust of statutory benefits for its first year of operations. The court examined statutory provisions under Sections 119(2)(b), 12A(1)(b), 44AB, and 143(1) of the Income Tax Act.
The court recorded that “the Petitioner did not gain anything by not filing Form 10B in time” and that the Income Tax Department is “expected to collect just tax that are due from an Assessee, if an Assessee is entitled for any deductions.” It further stated that “the delay in filing the declarations or the documents that are required statutorily should not come in the way in case an Assessee is otherwise entitled to such exemptions / deductions.”
The court referred to Supreme Court precedent noting that “procedures are rules makers, handmaids of justice and not mistress of law.” It cited earlier judgements which held that authorities must act reasonably and fairly, and “it is not on the part of the duty of the Department to collect or to retain the tax amount, which is not due to it, and is legitimately due to an assessee.”
It noted that the petitioner had been registered as a trust only in 2017 and observed: “The failure is in the year 1st Year of its operation. Therefore, the delay in filing Form 10B… should not come in the legitimate way of any exemptions or deductions that may be available.” Considering the surrounding circumstances, the court recorded that procedural lapses should not nullify substantive relief where deductions are otherwise lawfully due.
The court ordered that the writ petition would be allowed “subject to the Petitioner donating sum of Rs.25,000/- (Rupees Twenty Five Thousand only) by way of Demand Draft, directly to the Chairman / Honorary Secretary, Blue Cross of India (BCI)… within a period of 30 days from today.”
“In case the Petitioner complies with the above stipulation, it will be construed that the impugned Order has been quashed and the Writ Petition is allowed in which case, the Assessing Officer/Assessing Unit is directed to complete the assessment in accordance with law.”
The court directed that the matter be listed for reporting compliance on 27.11.2025.
Advocates Representing the Parties
For the Petitioner: Mr. Suhrith Parthasarathy
For the Respondent: Mr. V. J. Arul Raj, Senior Standing Counsel
Case Title: Sivestar Educational Trust v. Commissioner of Income Tax (Exemption)
Case Number: W.P.No.6814 of 2025
Bench: Justice C. Saravanan
