Income Tax Act | Trust's Legitimate Tax Exemption Cannot Be Denied For Delay In Filing Form 10B: Madras High Court

Justice C. Saravanan observed that the assessee was registered as a “Trust” in the year 2017. Effectively, the assessee would have carried on operation as a “Trust” from 01.04.2017 onwards, which would fall under the Assessment Year 2018-2019.

The failure is in the year 1^st Year of its operation. Therefore, the delay in filing Form 10B as is required under Section 44AB for the purpose of Section 12A(1)(b) of the Income Tax Act, 1961, should not come in the legitimate way of any exemptions or deductions that may be available to the assessee, stated the bench.

Paragraphs Nos. 5 and 6 of CBDT vide Circular No.2/2020, dated 03.01.2020, directed that:

“It has also been decided by the where there is delay of upto 365 days in filing Form No.10B for the Assessment Year 2018-2019 or for any subsequent Assessment Years, the Commissioners of Income Tax are hereby authorized to admit such belated applications of condonation of delay under Section 119(2) of the Income Tax Act and decide on merits.

The Commissioner of Income Tax shall, while entertaining such belated applications in filing Form No.10B, satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time.”

In this case, the assessee/Petitioner was registered as a “Trust” under Section 12A of the Income Tax Act, 1961 on 30.03.2017. As a “Trust”, the assessee was required to not only file the Return of Income by the due date under Section 139 of the Income Tax Act, 1961, but was also required to file Form 10B in terms of Section 44AB of the Income Tax Act, 1961.

Originally, the last date for filing Form 10B was prescribed as 30.09.2018, which was later extended to 31.10.2018. However, the assessee filed the same along with the Return of Income on 31.03.2019 with a delay of 151 days from 31.10.2018.

It appears that an intimation under Section 143(1) of the Income Tax Act, 1961, was issued on 17.10.2019 to finalise the Return of Income filed on 31.03.2019.

The assessee filed an application before the department under Section 119(2)(b) of the Income Tax Act, 1961, for condoning the delay of 151 days in filing Form 10B as is required under Section 44AB of the Income Tax Act, 1961 for the purpose of Section 12A(1)(b) of the Income Tax Act, 1961.

The Respondent/Commissioner of Income Tax (Exemption) by the impugned Order, rejected the application filed by the assessee for condoning the delay in filing Form 10B as required under Section 44AB of the Income Tax Act, 1961, on the ground that the assessee has not put forward any reasonable cause beyond its control which prevented the assessee from filing Form 10B on the due date specified in the Act.

The bench opined that the assessee did not gain anything by not filing Form 10B in time. Ultimately, the Income Tax Department is expected to collect just the taxes that are due from an Assessee, if an Assessee is entitled to any deductions.

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, added the bench.

In view of the above, the bench allowed the petition on the condition that the assessee donate Rs. 25,000/- by Demand Draft, directly to the Chairman / Honorary Secretary, Blue Cross of India (BCI).

Case Title: Sivestar Educational Trust v. Commissioner of Income Tax (Exemption)

Citation: 2025 LiveLaw (Mad) 403

Case Number: W.P.No.6814 of 2025

Counsel for Petitioner/Assessee: Suhrith Parthasarathy

Counsel for Respondent/Department: V.J. Arul Raj

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