Bombay High Court
Cosmopolitan Education Society vs Commissioner Of Income Tax Exemption ... on 13 October, 2025
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2025:BHC-OS:19242-DB
6.wp(l).31326.2025.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.31326 OF 2025
Cosmopolitan Education Society .. Petitioner
Versus
CIT (Exemption), Mumbai & Ors. .. Respondents
Mr.Kumar Kale, Advocate for the Petitioner.
UTKARSH
KAKASAHEB Mr.Prathamesh P. Bhosle, Advocate for the Respondents.
BHALERAO
Digitally signed by
UTKARSH KAKASAHEB
BHALERAO
Date: 2025.10.16
11:33:35 +0530
CORAM : B. P. COLABAWALLA &
AMIT S. JAMSANDEKAR, JJ.
DATE : OCTOBER 13, 2025
P. C.
1. Rule. Respondents waive service. With the consent of parties, Rule is made returnable forthwith and heard finally.
2. The present Writ Petition challenges the impugned order dated 26th March 2025 passed by Respondent No.1 rejecting the Petitioner's application under Section 119(2)(b) of the Income-tax Act, 1961 (for short "IT Act"), for condonation of delay of 133 days in filing Form No.10B for the Assessment Year 2019-20. Page 1 of 7
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3. The Petitioner is a Charitable Trust running various schools and colleges and is registered under Section 12A of the Act. The Petitioner filed its Return of Income for A.Y.2019-20 on 26 th October 2019 declaring their total income as "NIL". The Petitioner's auditor was a senior citizen, aged above 80 years, who, though completed the audit and signed the audit report in Form No.10B on 31 st July 2019, inadvertently missed to upload the same on the Income Tax Portal. In the Return of Income, the Petitioner's auditor inadvertently mentioned the date of signing and furnishing of audit report as 31 st July 2019 which was actually the date of signing of the manual audit report, assuming that the same was uploaded on the IT Portal.
4. On 11th February 2020, the CPC, Bengaluru issued a communication under the first proviso to Section 143(1) of the IT Act for proposed adjustment to disallow the claim of the Petitioner for exemption under Section 11 on account of non-filing of the audit report in Form No.10B electronically, along with the Return of Income. Realizing this inadvertent error, the Petitioner uploaded the audit report in Form No.10B on the Income Tax Portal on 7 th March 2020 i.e. within the stipulated time of thirty days as provided in the second proviso to Page 2 of 7 OCTOBER 13, 2025 Utkarsh ::: Uploaded on - 16/10/2025 ::: Downloaded on - 18/10/2025 00:04:39 :::
6.wp(l).31326.2025.doc Section 143(1) and thus, complied with the communication dated 11.02.2020.
5. The CPC, Bengaluru without taking any cognisance of the Petitioner's response, issued an intimation under Section 143(1) of the IT Act dated 24th July 2020 making an adjustment to the Petitioner's total income of Rs.19,19,54,063/- and thereby, disallowing the Petitioner's claim for exemption under Section 11 of the Act and raising a demand of Rs.7,90,24,747/- against the Petitioner.
6. On receipt of the intimation under Section 143(1) the IT Act, the Petitioner, on being legally advised, had earlier filed a Writ Petition before this Court being Writ Petition No.609 of 2022, challenging the adjustment made in the intimation issued under Section 143(1) of the IT Act, disallowing the Petitioner's claim for exemption under Section 11 of the IT Act. When that Writ Petition came up for hearing before this Court on 3rd March 2022 the Petitioner sought leave of this Court to withdraw the same, submitting that the Petitioner will apply for condonation of delay in submission of the audit report in Form No.10B, as per the Circulars issued by the CBDT from time to time. Page 3 of 7
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6.wp(l).31326.2025.doc Accordingly, the said Writ Petition was dismissed by this Court as withdrawn. However, all the rights and contentions were kept open.
7. The Petitioner, thereafter, filed an application under Section 119(2)(b) of the IT Act before Respondent No.1 on 18 th May 2022 seeking condonation of delay of 133 days in filing Form No.10B. On 4th March 2025 in response to the letter issued by Respondent No.1, the Petitioner also filed a copy of the Affidavit of its auditor in support of its application of condonation of delay wherein the Petitioner's auditor admitted that it was an omission on his part to electronically file Form No.10B.
8. Respondent No.1, by the impugned order dated 26 th March 2025, rejected the condonation application on the ground that no "reasonable cause" was shown for the delay, holding that the audit report was not furnished within the due date i.e. 26th October 2019.
9. We have heard the learned counsel for the parties. Form the record before us, we find that the delay in filing Form No.10B was neither deliberate nor mala fide but was on account of inadvertence on the part of the Petitioner's auditor who has admitted the same in his Page 4 of 7 OCTOBER 13, 2025 Utkarsh ::: Uploaded on - 16/10/2025 ::: Downloaded on - 18/10/2025 00:04:39 :::
6.wp(l).31326.2025.doc Affidavit dated 3rd March 2025. The Petitioner, a Charitable Trust running educational institutions, had otherwise complied with the statutory requirements, obtained the audit report in time, and filed it immediately upon noticing the lapse. We, therefore, agree with the counsel for the Petitioner that refusal to condone this delay will result in grave injustice and financial hardship to the Petitioner, which runs various educational institutions, especially when the demand has arisen solely on account of a technical lapse.
10. We also find that this Court in the case of St.Thomas High School V/S Commissioner of Income Tax (Exemption) [Writ Petition (L) No.14483 of 2025 decided on 2 nd September 2025] held thus:-
"10. We are further of the view that Respondent No.1 ought to have taken a justice oriented approach rather than a pedantic one, and condoned the delay. We also find that in similar facts, this Court in the case of Mirae Asset Foundation vs. Pr. Commissioner of Income Tax (Writ Petition No.713 of 2025), Sau. Dwarkabai tai Karwa Charitable Trust vs. Commissioner of Income Tax (Exemption) [2025] 174 taxmann.com 245 (Bombay) and Kotak Family Foundation Vs. Commissioner of Income-tax (Exemption) [2025] 176 taxmann.com 56 (Bombay) has taken a similar view and condoned the delay. Even the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust vs. Income Tax Officer (exemption) [2021] 125 taxmann.com 75 (Gujarat) took the view that in cases like the present one (delay in filing Form No.10B), the approach of the authorities ought to be equitious, balancing and judicious, and availing of exemption should not be denied merely on the bar of limitation. This is more so, when the legislature has conferred wide discretionary powers to condone the Page 5 of 7 OCTOBER 13, 2025 Utkarsh ::: Uploaded on - 16/10/2025 ::: Downloaded on - 18/10/2025 00:04:39 :::
6.wp(l).31326.2025.doc delay on the authorities concerned. The relevant portion of this decision reads thus:-
31. Having given our due consideration to all the relevant aspect of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no.2 might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condonation for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
32. We may also refer to the decision of this Court in CIT v.
Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income-Tax Officer or before the appellate authority by assigning sufficient cause."
11. We accordingly quash and set aside the impugned order dated 26th March 2025 passed by Respondent No.1 under Section 119(2)
(b) of the Act.
12. Now that the impugned order is quashed, we also hereby condone the delay of 133 days in filing Form No.10B. Page 6 of 7
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13. Rule is made absolute in the above terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
14. This order will be digitally signed by the Private Secretary/ Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order. [AMIT S. JAMSANDEKAR, J.] [B. P. COLABAWALLA, J.] Page 7 of 7 OCTOBER 13, 2025 Utkarsh ::: Uploaded on - 16/10/2025 ::: Downloaded on - 18/10/2025 00:04:39 :::