Delay in filing Form 10 and 10B due to professional's illness constitutes genuine hardship for condonation under Section 119(2)(b).

The petitioner, a religious and charitable trust, filed its return of income for A.Y. 2016-17 on 26.09.2016, claiming exemption under Section 11 of the Income Tax Act.

Although the statutory Audit Report (Form 10B) and the statement for accumulation of funds (Form 10) were obtained from the Chartered Accountant (CA) on 16.09.2016 and 22.09.2016 respectively—prior to filing the return—they were inadvertently not uploaded electronically due to clerical errors and the terminal illness of the CA.

The Revenue processed the return under Section 143(1), denying the exemption and raising a demand of Rs. 37,67,334/-.

The petitioner subsequently filed the forms electronically in 2018 and moved an application for condonation of delay under Section 119(2)(b), which the respondent rejected on 09.09.2019, citing a lack of "genuine hardship".

A subsequent application based on CBDT Circular No. 6 of 2020 was treated as non-actionable.

1. Whether the delay in filing Form 10 and Form 10B should be condoned under Section 119(2)(b) when the reports were obtained before the return was filed but uploaded late due to the CA’s terminal illness.

Section 11 of the Income Tax Act regarding exemptions for trust income and Section 119(2)(b), which empowers the CBDT/Income Tax authorities to condone delays in filing returns or forms to avoid genuine hardship.

CBDT Circular No. 2 of 2020 (effectively Circular No. 6 of 2020/Circular No. 10/2019), which authorizes Commissioners to condone delays in filing Form 10B for A.Y. 2016-17 if the report was obtained before the return was filed.

Precedent set in the petitioner’s own case for A.Y. 2015-16, [2024] 167 taxmann.com 170 (Gujarat), which established that technical delays caused by the death/illness of a CA constitute "genuine hardship".

The Court observed that the issue was squarely covered by its previous decision in the petitioner's own case for a different assessment year.

It noted that the petitioner actually possessed the Audit Report (Form 10B) and Form 10 prior to the filing of the return, but the failure to upload was a "technical compliance" issue caused by the CA's brain tumor and subsequent death.

The Court criticized the respondent’s "pedantic approach" in rejecting the condonation application, stating that the illness of the professional in charge constitutes a reasonable cause and satisfies the requirement of "genuine hardship".

Since the CBDT Circular No. 6 of 2020 specifically provided for condonation in A.Y. 2016-17 under these circumstances, the Court found the respondent’s refusal to act on the petitioner’s second application unjustified.

The Court quashed and set aside the impugned order dated 09.09.2019 and directed the respondent to pass an order condoning the delay in filing Form 10B to enable the petitioner to claim the Section 11 exemption, reaffirming that technical lapses should not override substantive justice when the statutory reports were ready before the return due date.