Auditor affected with Covid Causes Delay in Form 10B Report Filing: Madras HC Condones 44-Day Delay with ₹5,000 Cost [Read Order]

The Madras High Court condoned a 44-day delay in filing Form 10B required for income tax exemption claims observing that the delay was due to the petitioner's auditor being affected by COVID-19 conditionally.

The Court set aside the rejection order passed by the Income Tax Department and directed reconsideration of the case, subject to a payment of ₹5,000 to the Government Naturopathy Medical College and Hospital.

Centre for Educare and Research Charitable Trust, the petitioner, filed its income tax return and audit report for AY 2021-22 with a delay attributed to the health condition of its auditor during the pandemic. The petitioner moved a condonation request under Section119(2)(b) of the Income Tax Act, but the same was rejected by the department without considering the circumstances.

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On the other hand, the Senior Standing Counsel appearing for the respondents opposed the contention of counsel for the petitioner and submitted that the petitioner has assigned the same reason in the previous assessment year for condoning the delay in filing the Form No.10B. Hence, he requests this Court to dismiss this writ petition.

According to the petitioner, since the Covid-19 was to exist till the end of 2022, they have not filed the audit report in Form 10B within time.

Justice Krishnan Ramasamy, recognizing that COVID-19 disruptions continued well into 2022, noted that the reason for delay appeared genuine and deserved leniency. The Court held that procedural delays caused by pandemic-related issues should not defeat substantive rights, especially in the case of public charitable institutions.

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The court added that “this Court expects the respondents to take a lenient view, by condoning the delay in filing the audit report in Form 10B, since the reason assigned by the petitioner appears to be genuine.”

Accordingly, the Court directed the Income Tax Department to condone the delay upon payment of ₹5,000 and to reprocess the petitioner’s claim after providing a fair opportunity for hearing.

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