Rajasthan HC Condones 700-Day Delay in Filing Audit Report by Charitable Trust considering Lack of Malafide Intention [Read Order]

The Rajasthan High Court condoned the 700-day delay in filing the audit report by the charitable trust considering lack of malafide intention and set aside the impugned order dated 17.08.2023 passed under Section 119(2) (b) of the Income Tax Act, 1961.

The petitioner, Manav Seva Samiti challenged an order dated 17th August 2023 passed under Section 119(2)(b) of the Income Tax Act, 1961. The matter pertains to Assessment Year 2018-2019. The petitioner is a public charitable trust registered under Rajasthan Public Charitable Trusts Act, 1959. Petitioner-trust was being maintained by one Anandi Lal Mehta, who was the then President of Trust. Anandi Lal Mehta suffered a severe brain stroke and was consequently hospitalized for an extended period of time.

Due to his medical condition, accounts of petitioner for Assessment Year 2018-2019 got audited on 23rd February 2019 after a delay of 115 days and the auditor of petitioner uploaded Form 10B on income tax e-portal only on 20th September 2020 with a delay of 700 days after the due date. The said Anandi Lal Mehta unfortunately also died later on 27th November 2022.

In his absence, the day to day affairs of petitioner had also come to a grinding halt resulting in inordinate delay. Petitioner, therefore, filed application under Section 119 of the Act, which came to be rejected by impugned order dated 17th August 2023.

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Counsel for petitioner Mr. Siddharth Ranka submitted that petitioner is a bona fide charitable trust running charitable activities, distributing food to poor and also free ambulance facilities. He submitted that all these activities are easily verifiable from various income and expenditure accounts of the petitioner.

It was submitted by Mr. Ranka that respondent, in a very casual manner, has rejected application for condonation of delay by stating that, in absence of trust’s President, a Vice-President shall be responsible for all duties of President and therefore, the fact that President not being well is a bona fide reason for seeking condonation.

The division bench of Justice K.R. Shriram and Justice Sandeep Taneja while condoning the delay viewed that there was any mala fide intention in filing Form 10B belatedly is not alleged in impugned order. The fact that the petitioner is a charitable trust is also not denied.

Even though technically and strictly and liberally speaking, respondent might be justified in rejecting application but the assessee, a public charitable trust, with so many years of charitable activities, which otherwise satisfies the condition for availing such exemption should not be denied the same merely due on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.

The assessee petitioner was lethargic or lacked bona fide in making claims beyond the period of limitation. The court did not understand why any party, who is entitled to claim, would intentionally delay in uploading the required documents.

The court quashed and set aside the impugned order dated 17.08.2023 passed under Section 119(2) (b) of the Act and consequently allowed the petitioners application seeking condonation of delay in filing of Form 10B for the assessment year 2018-2019.

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