25 Days Delay in Filing Audit report due to Covid 19 Pandemic: Kerala HC sets aside Income Tax Order Declining to Condone Delay [Read Order]

Relying In Re cognizance for the extension of limitation Case, the Kerala High Court sets aside the income tax order, which declined to condone the 25 days delay in filing Audit report. It was found that the delay in filing the audit report occurred at a time when Covid-19 Pandemic had struck the country.

St. Joseph Educational and Charitable Trust, the petitioner challenged an order issued under Section 119(2) of the Income Tax Act, 1961 ['the Act'], dismissing an application for condonation of delay in filing audit report in Form 10B for the assessment year 2021-2022.

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The Petitioner is a charitable trust registered under Section 12A of Act and is liable to file their returns as well as audit reports for each assessment year. In the assessment year 2021-2022, the audit reports were filed with a delay of 25 days. However, the return, as required by law, was filed within time. Since there was a delay in filing the audit report, an application was filed before the Commissioner under Section 119(2)(b) of the Act for condonation. However, by order dated 08.04.2024, the application was dismissed.

According to the petitioner, the delay in filing the audit report was inadvertent and it was during the Covid-19 Pandemic time, when the Supreme Court had even condoned delay in most of the matters. It is also pointed out the Commissioner has taken a very rigid stance, instead of adopting a liberal approach.

Sri.Joseph Markos, the Senior counsel  appeared for the petition and Sri.Jose Joseph, the Standing Counse appeared for respondents.

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A perusal of the impugned order reveals that no specific reasons have been given by the Commissioner and instead, he merely concluded that the petitioner had failed to provide any reasons or documentary evidence to prove that the delay was caused due to circumstances beyond petitioner's control. The approach of the Commissioner has been highly hyper-technical and contrary to the well established principles on condonation of delay.

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The requirement of audit report to be filed one month before filing the returns have been brought in by an amendment only recently. Till then, the audit reports could be filed along with the returns. In the instant case, the delay in filing the audit report occurred at a time when Covid-19 Pandemic had struck the country.

The supreme Court had, in Re Cognizance for Extension of Limitation (2021) suo motu, extended the time for filing various applications in judicial and quasi judicial proceedings. Though the respondents have objects to the applicability of the said judgment, to the filing of an audit report,the court viewed that principles embodied in the said judgment of the Supreme Court could be adopted, especially since the delay in filing audit report is only 25 days. In this context, it is also pertinent to mention that the CBDT had extended the time to file returns till 15.03.2022, and therefore, petitioner should have filed the audit report 30 days before the returns.

 Since the change in dates has caused confusion to many persons and the delay is very minimal, the single bench of Justice Bechu Kurian Thomas was of view that a rigid stance ought not to have been adopted. The court set aside the order declining to condone the delay in filing the audit report.

To Read the full text of the Order CLICK HERE

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