Orissa High Court
Saraswati Shishu Vidya Mandira vs Commissioner Of Income Tax …. … on 17 June, 2025
Author: Murahari Sri Raman
Bench: Murahari Sri Raman
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.13921 of 2025
Saraswati Shishu Vidya Mandira, .... Petitioner
Parichalana Samiti, Khordha
Mr. Prakash Kumar Jena, Advocate
along with Mr. S.P. Dalai, Advocate
-versus-
Commissioner of Income Tax .... Opposite Parties
(Exemption), Aayakar Bhawan,
Hyderabad & Another
Mr. Subash Chandra Mohanty, Senior
Standing Counsel along with
Mr. Avinash Kedia, Junior Standing
Counsel for CGST
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MURAHARI SRI RAMAN
Order ORDER
No. 17.06.2025
01. This matter is taken up through Hybrid mode.
2. Challenging the order dated 23.10.2023 (Annexure-1)
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 2022-23 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.
3. Mr. Prakash Chandra Jena, learned Advocate appearing
along with Mr. S.P. Dalai, learned counsel for the Petitioner
submitted that despite sufficient cause being shown, the Opposite
Party No.1 has rejected the application for condonation of delay of
305 days in filing the audit report. It is submitted that the delay was
caused due to technical glitch, which was not appreciated by the
said authority.
3.1. 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 09.09.2023. The audit report was due for submission was
07.10.2022
. Thus, there was only 305 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.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 2018-19 and subsequent years, where the
delay is up to 365 days under Section 119(2)(b) of the IT Act.
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.
3.2. He strenuously urged that serious prejudice would ensue to
the Petitioner if 305 days’ delay is not condoned as the audit report
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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.
3.3. To buttress his argument, he placed reliance on the decision
of the Gujarat High Court in Sarvodaya Charitable Trust vs.
IncomeTax 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.
4. Mr. Subash Chandra Mohanty, learned Senior Standing
Counsel appearing along with 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.
5. Mr. Prakash Chandra Jena, learned Advocate appearing
along with Mr. S.P. Dalai, learned counsel for the Petitioner and
Mr. Subash Chandra Mohanty, learned Senior Standing Counsel
along with Mr. Avinash Kedia, learned Junior Standing Counsel for
Income Tax Department.
6. 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 eight 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
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Assessment Year 2022-23. It is also not fact on record that the
petitioner has been availing the benefit of exemption since
Assessment Year 2021-22.
6.1. This Court is of the considered view that the benefit of
exemption should not have been denied merely on account of delay
in furnishing audit report, which could be produced at a later stage
either before the Assessing Officer or the Appellate Authority by
assigning sufficient cause. This Court also takes cognizance of the
fact that at an around 13.03.2022, Covid-19 Pandemic was
continuing and it is believed that the contention of the Senior
Advocate for the Petitioner that on account of technical glitch the
audit report could not be furnished. Such a stance of the petitioner
sounds genuine since no objection is raised by the learned Senior
Standing Counsel for the CGST against such statement.
6.2. This Court, taking note of such identical plea and taking
cognizance of Covid-19 Pandemic situation at and around the date
of filing of audit report in 2022, has elaborately discussed the
factors of consideration of petition for condonation of delay in the
case of Action Research for Health and Socio-economic
Development vs. Central Board of Direct Taxes (CBDT) and
others, W.P.(C) No.8035 of 2025 which stood disposed of vide
judgment dated 25.04.2025.
6.3. Considering the facts and situation of the said case and
applying the legal position discussed in similar fact-situation as
obtained in Action Research for Health and Socio-economic
Development (supra), this Court is of the opinion that the
Commissioner of Income Tax (Exemption), Hyderabad has not
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applied his conscientious mind in proper perspective. Taking
cognizance of well-established principle that when technical
consideration and cause of substantial justice are pitted against each
other, it is the substantial justice which is to prevail, this Court
holds that mere technicality should not have been ground for claim
of exemption under Section 12A of the IT Act. Thus, the CIT has
failed to consider the application for condonation of delay in its
right earnest under the provisions of Section 119(2)(b) of the
Income Tax Act, 1961 read with power conferred by virtue of
Circular No.16/2024, dated 18.11.2024.
6.4. Ergo, finding that there was “genuine hardship” faced by the
petitioner during the relevant period and refusal to condone the
delay invoking power under Section 119(2) of the IT Act being
arbitrary exercise of discretion having regard to the fact-situation,
Order dated 23.10.2023 passed by the Commissioner of Income
Tax (Exemption), Hyderabad-opposite party No.1 (Annexure-1 &
1A) are hereby set aside. The matter is remitted to the said
authority concerned to consider audit report in Form 10B furnished
under Rule 17B of the Income Tax Rules to claim exemption under
Section 12A of the Income Tax Act and in consequence thereof, the
Commissioner of Income Tax (Exemptions)-opposite party No.1 is
directed to grant all consequential relief to the petitioner by taking
into account the Audit Report in Form 10B pertaining to the
Assessment Year 2022-23 submitted on 09.09.2023, as if the same
is filed within period specified invoking Section 119(2)(b) of the
Income Tax Act, 1961.
6.5. With the observation made supra and directions issued, the
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writ petition stands disposed of. As a result of the disposal of the
writ petition, all pending interlocutory applications, if any, shall
stand disposed of.
(Harish Tandon)
Chief Justice
(M.S. Raman)
MRS/ Judge
Laxmikant
Signature Not
Verified
Digitally Signed
Signed by: MANORANJAN
SAMAL
Designation: PERSONAL
ASSISTANT
Reason: Authentication
Location: Orissa High Court,
Cuttack
Date: 18-Jun-2025 11:55:55
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