Andhra Pradesh High Court Sets Aside Rejection of Form-10B Delay Condonation Applications — Sri Vani Educational Society Case
Overview of the Case
The Andhra Pradesh High Court, in Sri Vani Educational Society Vs Assistant Commissioner and Others, delivered a significant ruling on the scope and application of Section 119(2)(b) of the Income Tax Act, 1961, particularly concerning the condonation of delay in filing Form-10B by a registered charitable institution. The Court's decision reinforces the principle that tax authorities must adopt a liberal and compassionate approach when dealing with genuine hardship cases, and that imposing rigid time-bound restrictions for condonation applications runs contrary to the legislative intent embedded in Section 119(2)(b).
The matter arose out of two writ petitions — WP No. 3499 of 2025 and WP No. 17909 of 2025 — both of which were clubbed and disposed of by a common order, given the overlapping legal issues involved.
Background: Who Is the Petitioner?
Sri Vani Educational Society is a registered educational society that obtained registration under Section 12AA of the Income Tax Act, 1961, through proceedings dated 03.11.2009, issued by the Commissioner of Income Tax, Vijayawada. The Society had originally submitted an application in Form-10A for registration under Section 12A(a) of the Act on 10.08.2009, pursuant to its trust deed/memorandum or articles of association dated 03.11.2008. Upon registration, the Society became eligible for exemptions from the Assessment Year (AY) 2010-11 onwards.
As a registered charitable institution, the Society was entitled to claim exemptions on its income under Sections 11 and 12 of the Income Tax Act, 1961. For AY 2019-20, the Society filed its return on 13.11.2019, claiming exemption on income amounting to Rs. 3,53,27,987/-, declaring gross income as nil.
The Demand and the Events That Led to the Writ Petition
The trouble began when the respondent authorities issued a notice of intimation dated 09.06.2020 under Section 143(1) of the Act, rejecting the Society's exemption claim. The stated grounds were that registration details under Section 12AA or approval under Section 10(23C)(iv) had not been furnished, and that the filing of Form-10B — an audit report mandatory for such institutions — was compulsory.
Thereafter, assessment orders were passed on 26.12.2003 (as referenced in the order) for AYs 2019-20, 2020-21, and 2021-22, aggregating to a substantial tax demand of Rs. 4,79,92,300/-.
The Society approached the authorities, clarifying that it held a valid registration under Section 12AA and was exempt from tax. The authorities acknowledged this but noted that since Form-10B had not been filed within the prescribed time, the assessment orders stood. The Society was directed to apply for condonation of delay.
Applications Under Section 119(2)(b) and Their Rejection
Acting on these directions, the Society filed three separate applications under Section 119(2)(b) of the Income Tax Act, 1961, seeking condonation of delay in filing Form-10B for all three assessment years — 2019-20, 2020-21, and 2021-22.
The grounds cited in each application were as follows: