Delay in Filing Income Tax Audit Report by Trust: AP HC Condones Delay noting Covid-19 issues and Treasurer’s Advanced Age [Read Order]

The Andhra Pradesh High Court has condoned the delay in filing the income tax audit report (Form 10B) by a religious charitable trust, considering the Covid-19 disruptions and the advanced age of its treasurer, who was responsible for statutory compliance.

Amnos Evangelical, petitioner, which is a trust registered under Section 12A of the IncomeTax Act, 1961 had filed its audit report for AY 2021-22 with a delay of 44 days. As a result, the Centralised Processing Centre (CPC), Bengaluru, denied exemption under Section 11 and raised a tax demand of ₹5,68,900 solely on the ground of late filing.

The trust approached the Commissioner of Income Tax (Exemptions) seeking condonation of delay under Section 119(2)(b), but the request was rejected on 27 May 2023 after the trust failed to furnish certain documents sought through a departmental letter dated 19 April 2023.

Before the High Court, the trust submitted that its trustees were not computer literate and that compliance obligations were primarily handled by its 78-year-old treasurer. It was argued that due to Covid-19 circumstances and his advanced age, he could not attend to the notice issued by the department calling for additional documents, resulting in the rejection of the condonation application.

The trust added that its income consisted only of small offerings collected during weekly prayer meetings and that it has been engaged in charitable and religious activities for more than 15 years, with no other business or income-generating activity.

The Revenue contended that the rejection was accounted for since the trust did not comply with the request for supporting documents, which were necessary to examine its application for condonation of delay.

The income tax department submitted that had the trust furnished the required information, the outcome might have been different.

Justices Battu Devanand and Hari Haranadha Sharma, after examining the record, the High Court noted that the delay was due to exceptional circumstances. The Court found merit in the trust’s explanation regarding the inability of the elderly treasurer to attend to departmental proceedings during the pandemic period.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

The court, observing that the petitioner was engaged in bona fide religious and charitable activities and that the delay was neither intentional nor mala fide, held that a reasonable opportunity must be given to the trust to submit the documents sought by the Commissioner of Income Tax (Exemptions).

The Court accordingly set aside the rejection order and permitted the trust to submit all required documents within three weeks. It directed the Commissioner to reconsider the condonation request and pass fresh orders in accordance with law. Accordingly, the writ petition was disposed of.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates