Availability of Form 10B before the extended return deadline satisfies Section 12A(1)(b) compliance.

The petitioner, a charitable trust registered under Section 12AA of the Income-tax Act, 1961, filed its return of income for Assessment Year 2019–20 on 30 September 2019, claiming exemption under Section 11.

The petitioner’s Chartered Accountant uploaded the audit report in Form No. 10B on 30 September 2019 at 16:21 hours, before the return was filed at 20:56 hours; however, the trustees accepted the electronically uploaded report only on 1 October 2019 at 11:45 hours.

The return-processing intimation under Section 143(1), dated 11 May 2020, denied the Section 11 exemption on the ground that Form No. 10B had not been filed along with the return and raised a demand of approximately Rs.1,68,600.

The petitioner subsequently filed an application under Section 119(2)(b) seeking condonation of the alleged one-day delay in furnishing Form No. 10B. The application was rejected on 16 May 2025 on the ground that Circular No.16/2024 dated 18 November 2024 permitted condonation applications only within three years from the end of the relevant assessment year.

The petitioner challenged the rejection order and consequential denial of exemption, contending that Form No. 10B had been uploaded before the return was filed and, in any event, was accepted before the extended due date for filing the return, namely 31 October 2019.

1. Whether the petitioner substantially complied with Section 12A(1)(b) by having Form No. 10B uploaded before filing the return and accepted before the extended due date for filing the return?

2. Whether the Revenue could deny the petitioner’s exemption under Section 11 merely because Form No. 10B was accepted one day after the return was filed?

3. Whether the rejection of the petitioner’s application under Section 119(2)(b), solely by relying on the limitation prescribed in Circular No.16/2024, was sustainable?

The Court applied Section 12A(1)(b) of the Income-tax Act, 1961, which requires a charitable or religious trust to obtain an audit of its accounts and furnish the prescribed audit report along with the return in order to claim the benefits of Sections 11 and 12.

The Court held that the requirement of obtaining and furnishing the audit report is substantive, whereas the precise time and mode of furnishing it are procedural; consequently, the exemption cannot be denied where Form No. 10B is available to the Assessing Officer before completion of assessment proceedings.

The Court relied on Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income Tax, [2025] 482 ITR 54, which held that delayed filing of Form No. 10B is a procedural omission and that Section 119(2)(b) provides an additional remedy rather than a mandatory or exclusive remedy.

The Court also considered the extended due date for filing the return and held that the Revenue was required to adopt a rational approach and validate Form No. 10B accepted before that extended date.

The Court found that the petitioner’s audit report had been uploaded on 30 September 2019, before the return was filed later that day, and was accepted on 1 October 2019—only one day later.

Since the due date for filing the return had been extended to 31 October 2019, Form No. 10B was accepted well before the extended due date.

Applying the distinction between substantive compliance and procedural requirements, the Court held that the expression “along with the return of income” in Section 12A(1)(b) could not be applied rigidly in these circumstances.

The denial of the entire Section 11 exemption for a one-day procedural delay, despite the audit report being available before assessment and within the extended filing period, was therefore unjustified.

The availability of an appellate remedy did not prevent writ intervention because the Revenue had failed to validate the audit report despite the extended due date and had wrongly rejected the condonation application by mechanically relying on Circular No.16/2024.

It directed the respondents to accept the petitioner’s Form No. 10B for Assessment Year 2019–20 and grant the corresponding exemption under Section 11 of the Income-tax Act.

The necessary action was directed to be completed within four weeks from receipt of the judgment.