Procedural lapses in filing Audit Reports cannot defeat substantive tax exemptions for charitable trusts.

The petitioner is a charitable trust registered under Section 12A of the Income Tax Act, 1961

For the assessment year 2024-25, the petitioner’s Chartered Accountant inadvertently filed the audit report in Form 10BB instead of the mandatory Form 10B

On 27.01.2026, the petitioner filed an application before respondent no. 2 seeking condonation of delay and rectification of the form

The respondent authorities contended that the writ petition was premature, as Circular No. 16/2024 allows the competent authority six months from the end of the month of receipt to dispose of such applications, and the timeline had not yet expired

1. Whether a procedural lapse in filing the incorrect audit report form (10BB instead of 10B) can defeat the substantive right of a charitable trust to claim exemption under Section 12A.

2. Whether the Court should interfere to expedite the disposal of a pending statutory application for condonation of delay despite the timeline prescribed by administrative circulars.

Section 119(2)(b) of the Income Tax Act, 1961, regarding the power of the CBDT/authorities to condone delays in filing statutory forms

CBDT Circular No. 16/2024 dated 18.11.2024, which supersedes previous guidelines and prescribes a three-year limit for filing condonation applications and a six-month window for disposal by the authority

CIT v. Rajasthan and Gujarat Charitable Foundation (2018) 14 SCC 348, which holds that substantive entitlements like tax exemptions under Section 12A cannot be defeated by mere procedural lapses in filing audit reports

The court reasoned that the petitioner’s status as a registered charitable trust grants it a substantive right to exemptions, which should not be jeopardized by a technical error of the Chartered Accountant in selecting the wrong form

While the respondents argued the petition was premature under the six-month disposal guideline of Circular No. 16/2024, the court observed that administrative inaction regarding a statutory application warrants judicial interference to ensure timely resolution

The court determined that rather than adjudicating on the merits of the condonation, it was appropriate to mandate a time-bound disposal of the pending rectification and condonation applications in light of the circular's own directives

The competent authority was ordered to pass a reasoned speaking order after affording the petitioner an opportunity of hearing, preferably within one month (on or before 30th June, 2026), and communicate the decision within one week thereafter