Bombay High Court accepts reasonable cause for 29‑day delay in Form 10B, reinstates Section 11 exemption

Background of the dispute

The decision in Church of Our Lady of Immaculate Conception Vs CIT (Exemption) (Writ Petition (L) No. 14461 of 2025, Bombay High Court, order dated 02/09/2025) addresses whether a brief delay in filing Form No. 10B can justify denial of exemption under Section 11 to a registered charitable trust.

The assessee, Church of Our Lady of Immaculate Conception, is a charitable and religious trust under the supervision and administration of the Archdiocese of Bombay. It:

  • Is registered as a Public Charitable Trust under the Maharashtra Public Trust Act, 1950 with PTR No. D-218 (Mumbai) dated 20/11/1969.
  • Has been regularly assessed to income-tax since 1975, holding PAN: AAATC2637D.
  • Holds registration under Section 12A(1)(ac)(i) vide registration No. AAATC2637DE19759 dated 23/09/2021.
  • Also has registration under Section 12A(a) vide order dated 07/11/1975.

The trust carries out charitable and religious activities including providing basic necessities (food, education, medical assistance) to poor and marginalised parishioners, undertaking environmental initiatives, and conducting community development and spiritual programmes.

For Assessment Year 2022-23, the assessee filed:

  • Its Return of Income on 05/11/2022, within the extended due date under Section 139(1) as notified by CBDT.
  • Its audit report in Form No. 10B on 05/11/2022, though the prescribed due date under Section 12A(1)(b) was 07/10/2022.

This created a 29‑day delay in e‑filing Form No. 10B.

When the Centralised Processing Centre processed the return under Section 143(1) on 08/03/2023, the exemption claimed under Section 11 was disallowed solely because Form No. 10B had not been filed within the statutory timeframe.

Application for condonation under Section 119(2)(b)

Reason for delay

The assessee applied to the CIT (Exemption) on 16/03/2023 under Section 119(2)(b) seeking condonation of the delay. The explanation put forward was:

  • The trust’s accounts were managed by a lady accountant.
  • In August 2022, she suffered a miscarriage.
  • She was advised complete bed rest for two months and was, therefore, unable to attend office.
  • Because of her absence, the accounts could not be finalised in time, and hence the audit report and financial statements for the year ended 31/03/2022 could not be completed and signed before the due date.

To support these claims, the assessee produced a medical certificate.

The assessee also pointed out:

  • Form No. 10B was e‑filed on 05/11/2022, the very day on which the Return of Income was filed.
  • When the return was processed under Section 143(1) on **08/03/2023, the audit report in Form No. 10B` was already on record.
  • The delay was marginal (29 days), technical in nature, and did not result in any revenue loss or any attempt at tax evasion.

On this basis, the assessee requested condonation of the delay under the discretionary powers provided by Section 119(2)(b) to avoid genuine hardship.

Rejection by the Commissioner (Exemption)

By order dated 30/01/2025, passed under Section 119(2)(b), the CIT (Exemption):

  • Refused to condone the 29‑day delay in filing Form No. 10B for A.Y. 2022‑23.
  • Held that the assessee had not established a “reasonable cause” preventing timely filing of the audit report.
  • Consequently, upheld denial of exemption under Section 11 for A.Y. 2022‑23.

This order became the subject matter of challenge before the Bombay High Court in the present writ petition.

Submissions before the Bombay High Court

Contentions of the assessee

Counsel for the assessee highlighted several key aspects:

  1. Undisputed factual matrix

    • The CIT (Exemption) had not denied or doubted any of the factual circumstances narrated in the condonation application.
    • There was no finding that the delay was deliberate, wilful, or attributable to any mala fide conduct by the assessee.
    • The medical evidence relating to the accountant’s miscarriage and subsequent two‑month prescribed bed rest was not disputed.

  2. Nature of delay and hardship

    • The delay was only 29 days.
    • The cause of delay was clearly beyond the control of the trust’s management because the key personnel responsible for accounts and audit coordination was incapacitated.
    • Non‑condonation would deny the trust substantial exemption under Section 11, amounting to genuine hardship.