DCIT, Exemption vs Noida Golf Course Society

This appeal arises from order dated 15.10.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”) by Ld. Addl./JCIT(Appeals)-10, Mumbai. The main point in this appeal is that the assessee moved an application u/s 154 of the Act for allowing the benefit of exemption from taxation on the income shown in the returned of income. It is seen that the assessee obtained audit report in Form 10B within the permitted period, being 15.01.2022. However, this audit report was filed on 19.02.2022 instead of on the due date, being 15.01.2022. The rectification application was rejected by AO-CPC and the said rejection was confirmed by the Ld. Addl./JCIT(Appeals) on the ground that for claiming exemption the assessee was required to file the audit report within the statutory time period. It was held that since this was not done, therefore, the benefit of exemption could not be available to the assessee.

Before us, on the last date of hearing, none appeared on behalf of the assessee but it was decided to proceed ahead with the adjudication with the help of Ld. DR. The Ld. DR pointed out the relevant dates and submitted that the time limits mentioned in the Act need to be followed in case the assessee wanted any exemption from taxation.

We have considered the submissions of Ld. DR and have gone through the record before us. The judiciary has consistently adopted an equitable and judicious approach towards condoning delays in such procedural matters, emphasizing that substantive benefits for charitable purposes should not be defeated by technicalities. In the landmark judgment of CIT (Exemptions) v. Al Jamia Mohammediyah Education Society [2025] 176 taxmann.com 761/481 ITR 215 (SC), the Hon’ble Supreme Court approved and affirmed the judgment of the Hon'ble Bombay High Court in Al Jamia Mohammediyah Education Society v. CIT (Exemptions) [2024] 162 taxmann.com 114/298 Taxman 650/ [2025] 482 ITR 41 (Bom.), in which the court condoned the delay of 1257 days stating that a long-standing charitable trust with a consistent history of compliance should not be ineligible due to a bona fide professional error, in the absence of any mala fides. The Court also held that the approach should be equitable and balancing. Similarly, the Hon'ble Delhi High Court in Delhi Maharashtriya Educational and Cultural Society v. CIT (Exemptions) [2025] 179 taxmann.com 689/307 Taxman 448 (Delhi) condoned a delay of 16 days in filing Form 10B, attributing it to an inadvertent error by the tax professional. The Court reiterated the settled legal position that a bona fide procedural delay, without mala fides, should not prejudice an eligible trust, thereby upholding the exemption claim over a technical defect. This principle is firmly supported by various High Court judgments, including:

In the result, appeal of the assessee is allowed.