The Madras High Court has held that while considering an application for condonation of delay under Section 119(2)(b) of the Income Tax Act, 1961, the primary consideration is whether the applicant would suffer genuine hardship if the delay is not condoned. 

The bench of Justice Senthilkumar Ramamoorthy set aside an order rejecting a charitable trust’s request to condone a 31-day delay in filing Form 10 and directed that the delay be treated as condoned.

The petitioner/assessee had approached the Madras High Court after its application seeking condonation of delay in filing Form 10 was rejected by the Income Tax authorities.

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For AY 2023-24, Form 10 was required to be filed by November 30, 2023. According to the record before the Court, the Trust ultimately filed Form 10 on December 31, 2023, resulting in a delay of approximately 31 days. The Trust attributed the delay to the ill health of its managing trustee.

The Trust had also filed its audit report belatedly. While the audit report was filed with a delay of approximately two months, Form 10 was filed with a delay of about 31 days. Significantly, the same reason—ill health of the managing trustee—was relied upon for seeking condonation of both delays.

The tax authorities accepted the explanation in relation to the audit report but declined to accept it in relation to Form 10.

The department defended the rejection of the condonation application on two principal grounds.

First, it was contended that the managing trustee’s medical condition affected her only for a period of two days and therefore did not constitute sufficient justification for the delay.

Second, the authorities pointed out that the Trust had failed to respond to communications seeking details and documents. It was also alleged that the Trust had not furnished evidence demonstrating compliance with the investment requirements under Section 11(5) of the Income Tax Act, 1961.

The dispute therefore raised an important question concerning the scope of the authority’s discretion under Section 119(2)(b), particularly where a delay is relatively short but failure to condone it may have significant tax consequences for a charitable institution.

The court examined the chronology of the filings and noted that the Trust had filed its return of income, Form 10 and audit report on December 31, 2023.

The Court recorded that the audit report had been filed with a delay of approximately two months, whereas Form 10 had been filed with a delay of only around 31 days. The Court also noted that the Trust had provided the same explanation—ill health of the managing trustee—for seeking condonation of both delays.

The crucial factor was that the explanation had already been accepted by the authorities as sufficient cause for condoning the delay in filing the audit report, while the same explanation was rejected in respect of Form 10.

The Court laid down the central principle governing the dispute while examining the scope of Section 119(2)(b).

According to the Court, the primary consideration while dealing with an application under Section 119(2)(b) is whether the applicant would suffer genuine hardship if the delay is not condoned.

Applying that principle to the present case, the Court observed that refusal to condone the delay in filing Form 10 would result in tax liabilities being incurred by the petitioner Trust.

The Court therefore found that rejection of the application, particularly when the delay in filing Form 10 was only about 31 days, could not be sustained.

Another significant aspect of the judgment concerns the Revenue’s reliance on the alleged absence of evidence relating to investment in accordance with Section 11(5).

The High Court held that this issue related to the merits of the matter and was required to be examined during the course of assessment.

In other words, the Court distinguished between the question of whether the delay in filing Form 10 should be condoned and the substantive question of whether the Trust ultimately satisfied the statutory requirements for claiming exemption.

The Court therefore did not consider the alleged absence of evidence regarding Section 11(5) investment to be a sustainable additional ground for rejecting the condonation application under Section 119(2)(b).

The Madras High Court set aside the impugned order passed under Section 119(2)(b).

The Court expressly condoned the delay in filing Form 10 after taking into account the reasons furnished by the petitioner.

It further directed that any subsequent proceedings by the Income Tax authorities should proceed on the basis that the delay in filing Form 10 stands condoned.

Both writ petitions were consequently disposed of. The connected miscellaneous petition was also closed, and the Court ordered that there would be no order as to costs.

One of the two writ petitions had challenged the intimation issued under Section 143(1) for AY 2023-24 and sought a direction to allow the exemption under Section 11 in respect of the Trust’s entire receipts.

The other petition challenged the order dated January 7, 2026, passed under Section 119(2)(b), seeking condonation of the delay in filing Form 10.

With the Section 119(2)(b) rejection order having been set aside and the delay in Form 10 having been condoned, the Court directed that further proceedings should be undertaken on that basis.

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