My start-up's Inter-Ministerial Board certificate for s.80-IAC was refused, so I switched to s.115BAA and filed Form 10-IC 53 days late for AY 2022-23. There is no blanket circular for that year. Can the delay be condoned?
Yes. The Gujarat High Court quashed the rejection under s.119(2)(b) and directed the competent authority to accept Form 10-IC for AY 2022-23. Where the assessee was otherwise eligible for s.115BAA, refusing to condone a 53-day delay produced a tax liability of Rs. 50,72,890 at the normal rate, and that financial consequence is itself the genuine hardship s.119(2)(b) is designed to relieve.
Decided by the High Court (A. S. Supehia J and Pranav Trivedi J) on 2026-03-16, reported as R/Special Civil Application No. 11722 of 2024 (Gujarat High Court). It bears on section 115BAA, section 115BAA(5), section 80-IAC, section 119(2)(b), section 139(1), section 140A, section 143(1) of the Income Tax Act 1961, in Assessment & Scrutiny and Deductions & Disallowances matters.
Two things make this useful. First, it is a condonation granted for an assessment year outside any blanket circular, on the bare s.119(2)(b) test, and it holds that the size of the tax consequence of refusing condonation is what makes the hardship genuine — an argument that can be made in any year. Second, it is a working illustration of the s.80-IAC certificate condition. The company had DPIIT start-up recognition and the Court accepted that its activities fell within s.80-IAC and that every condition was met except the certificate of eligible business from the Inter-Ministerial Board, which was refused because a director held majority shareholding in the group. Without that certificate there is no s.80-IAC deduction at all, however eligible the business. The Revenue's answer — that the start-up could simply have taken its three years later, since s.80-IAC allows any three consecutive years out of ten — was rejected: hardship is judged when the cause arises, and the remedy cannot be left to a future year.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The petitioner was incorporated on 10 December 2019 in the healthcare and life sciences industry and was recognised as a start-up by the Department for Promotion of Industry and Internal Trade by certificate No. DIPP80620 dated 28 May 2021. In August 2021 it applied to the Inter-Ministerial Board of Certification for a certificate of eligible business under s.80-IAC. Its accounts for AY 2022-23 were audited and the tax audit report uploaded on 28 September 2022. At its 66th meeting on 7 October 2022 the Board rejected the application solely on the ground that a director of the petitioner held majority shareholding in the Herald group of companies; that was communicated by email on 21 October 2022. The due date for the return under s.139(1) was 7 November 2022. After taking professional advice, the petitioner was told that challenging the Board's decision was not a workable solution and that it should instead claim s.115BAA. It mobilised funds and paid self-assessment tax under s.140A of Rs. 1,39,77,790 in four instalments between 20 and 30 December 2022, and on 30 December 2022 filed both Form 10-IC and its return of income declaring total income of Rs. 5,01,96,080 with tax computed under s.115BAA. The delay in Form 10-IC was 53 days. The return was processed under s.143(1) on 26 June 2023 at the normal rate, raising a demand of Rs. 50,72,890. The application under s.119(2)(b) was rejected on 3 January 2024 on the ground that this was not a case of genuine hardship.
The writ petition was allowed and Rule made absolute with no order as to costs. The order dated 3 January 2024 under s.119(2)(b) rejecting condonation of the delay in filing Form 10-IC for AY 2022-23 was quashed and set aside, the matter was remanded to the competent authority, and the competent authority was directed to accept the Form 10-IC filed by the petitioner for AY 2022-23.
The Court set out s.119(2)(b) and recalled the Supreme Court's construction of 'genuine hardship' in B. M. Malani v. CIT [2008] 306 ITR 196, where 'genuine' was taken as not fake or counterfeit, real, not pretending, to be determined on a purposive construction and with the principle that a person cannot take advantage of his own wrong in mind (para 14). It then reasoned that the respondent was required to consider the impact of refusing to condone: refusal denied the s.115BAA benefit to an assessee found eligible for it, and quantified tax at Rs. 50,72,890, which would result in financial hardship amounting to genuine hardship, avoidable by condoning the delay (para 15). The petitioner had had two options — a full deduction under s.80-IAC or the lower rate under s.115BAA — and having learned at the end of October 2022 that its certificate was refused, took advice and chose the second, mobilising funds for self-assessment tax before uploading the return; the delay was therefore neither deliberate nor tainted with mala fides, and the Revenue had not suggested otherwise (para 12). The Revenue's submission that the start-up could have claimed s.80-IAC in any three consecutive years out of ten was held to be without merit, because the petitioner had undertaken the necessary exercise once it realised the certificate was refused, and hardship and the need for remedial action are to be examined when the cause arises rather than left to a subsequent event (para 16). The Commissioner has extensive powers to condone and ought to have exercised them judiciously to render substantial justice (para 17).
Hence, we are of the opinion that the expression 'genuine hardship' used under Section 119(2)(b) of the Act is required to be construed liberally in case of the petitioner.
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Handle my notice → Ask a CA on WhatsAppYes. The Gujarat High Court quashed the rejection under s.119(2)(b) and directed the competent authority to accept Form 10-IC for AY 2022-23. Where the assessee was otherwise eligible for s.115BAA, refusing to condone a 53-day delay produced a tax liability of Rs. 50,72,890 at the normal rate, and that financial consequence is itself the genuine hardship s.119(2)(b) is designed to relieve. This was decided by the High Court (A. S. Supehia J and Pranav Trivedi J) and bears on section 115BAA, section 115BAA(5), section 80-IAC, section 119(2)(b), section 139(1), section 140A, section 143(1) of the Income Tax Act 1961. It is reported as R/Special Civil Application No. 11722 of 2024 (Gujarat High Court). Two things make this useful. First, it is a condonation granted for an assessment year outside any blanket circular, on the bare s.119(2)(b) test, and it holds that the size of the tax consequence of refusing condonation is what makes the hardship genuine — an argument that can be made in any year. Second, it is a working illustration of the s.80-IAC certificate condition. The company had DPIIT start-up recognition and the Court accepted that its activities fell within s.80-IAC and that every condition was met except the certificate of eligible business from the Inter-Ministerial Board, which was refused because a director held majority shareholding in the group. Without that certificate there is no s.80-IAC deduction at all, however eligible the business. The Revenue's answer — that the start-up could simply have taken its three years later, since s.80-IAC allows any three consecutive years out of ten — was rejected: hardship is judged when the cause arises, and the remedy cannot be left to a future year. If it applies to you, the first step is this: Where the IMB certificate is refused or delayed, decide at once whether to fall back on s.115BAA, and file Form 10-IC before the s.139(1) due date rather than waiting for the certificate; the whole difficulty here was that the assessee waited.
The petitioner was incorporated on 10 December 2019 in the healthcare and life sciences industry and was recognised as a start-up by the Department for Promotion of Industry and Internal Trade by certificate No. DIPP80620 dated 28 May 2021. In August 2021 it applied to the Inter-Ministerial Board of Certification for a certificate of eligible business under s.80-IAC. Its accounts for AY 2022-23 were audited and the tax audit report uploaded on 28 September 2022. At its 66th meeting on 7 October 2022 the Board rejected the application solely on the ground that a director of the petitioner held majority shareholding in the Herald group of companies; that was communicated by email on 21 October 2022. The due date for the return under s.139(1) was 7 November 2022. After taking professional advice, the petitioner was told that challenging the Board's decision was not a workable solution and that it should instead claim s.115BAA. It mobilised funds and paid self-assessment tax under s.140A of Rs. 1,39,77,790 in four instalments between 20 and 30 December 2022, and on 30 December 2022 filed both Form 10-IC and its return of income declaring total income of Rs. 5,01,96,080 with tax computed under s.115BAA. The delay in Form 10-IC was 53 days. The return was processed under s.143(1) on 26 June 2023 at the normal rate, raising a demand of Rs. 50,72,890. The application under s.119(2)(b) was rejected on 3 January 2024 on the ground that this was not a case of genuine hardship. The matter was decided on 2026-03-16 by the High Court (A. S. Supehia J and Pranav Trivedi J). On those facts the High Court held as follows. The writ petition was allowed and Rule made absolute with no order as to costs. The order dated 3 January 2024 under s.119(2)(b) rejecting condonation of the delay in filing Form 10-IC for AY 2022-23 was quashed and set aside, the matter was remanded to the competent authority, and the competent authority was directed to accept the Form 10-IC filed by the petitioner for AY 2022-23.
The Court set out s.119(2)(b) and recalled the Supreme Court's construction of 'genuine hardship' in B. M. Malani v. CIT [2008] 306 ITR 196, where 'genuine' was taken as not fake or counterfeit, real, not pretending, to be determined on a purposive construction and with the principle that a person cannot take advantage of his own wrong in mind (para 14). It then reasoned that the respondent was required to consider the impact of refusing to condone: refusal denied the s.115BAA benefit to an assessee found eligible for it, and quantified tax at Rs. 50,72,890, which would result in financial hardship amounting to genuine hardship, avoidable by condoning the delay (para 15). The petitioner had had two options — a full deduction under s.80-IAC or the lower rate under s.115BAA — and having learned at the end of October 2022 that its certificate was refused, took advice and chose the second, mobilising funds for self-assessment tax before uploading the return; the delay was therefore neither deliberate nor tainted with mala fides, and the Revenue had not suggested otherwise (para 12). The Revenue's submission that the start-up could have claimed s.80-IAC in any three consecutive years out of ten was held to be without merit, because the petitioner had undertaken the necessary exercise once it realised the certificate was refused, and hardship and the need for remedial action are to be examined when the cause arises rather than left to a subsequent event (para 16). The Commissioner has extensive powers to condone and ought to have exercised them judiciously to render substantial justice (para 17). In the words reproduced by the source cited on this page: "Hence, we are of the opinion that the expression 'genuine hardship' used under Section 119(2)(b) of the Act is required to be construed liberally in case of the petitioner." The decision followed or applied B. M. Malani v. Commissioner of Income-tax & Anr., [2008] 306 ITR 196 (SC) — relied on for the meaning of 'genuine hardship'.
It was decided by the High Court on 2026-03-16 and is reported as R/Special Civil Application No. 11722 of 2024 (Gujarat High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 115BAA, section 115BAA(5), section 80-IAC, section 119(2)(b), section 139(1), section 140A, section 143(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed and Rule made absolute with no order as to costs. The order dated 3 January 2024 under s.119(2)(b) rejecting condonation of the delay in filing Form 10-IC for AY 2022-23 was quashed and set aside, the matter was remanded to the competent authority, and the competent authority was directed to accept the Form 10-IC filed by the petitioner for AY 2022-23. It arises in Assessment & Scrutiny and Deductions & Disallowances matters, on section 115BAA, section 115BAA(5), section 80-IAC, section 119(2)(b), section 139(1), section 140A, section 143(1) of the Income Tax Act 1961, and was decided by A. S. Supehia J and Pranav Trivedi J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. In a s.119(2)(b) application, quantify the exact tax consequence of refusal and put it at the front — that figure is what carried the day here. Where the application is for a year not covered by Circular 6/2022 or 19/2023, do not concede that the absence of a circular is decisive; this application was for AY 2022-23 and was rejected in January 2024, before Circular No. 17/2024 issued. Anticipate the argument that the start-up can claim s.80-IAC in some later year within the ten-year window; the answer accepted here is that the choice must be judged at the time the cause arose. Check the shareholding structure against the IMB's criteria before building a s.80-IAC claim into cash-flow planning, and do not stop paying advance tax in expectation of the certificate — this assessee did, and had to fund self-assessment tax of Rs. 1,39,77,790 in four instalments in December.
Validity check could not be completed. Validity check could not be completed. No search for later treatment was run. The decision does not consider the three-year outer bar in para 5 of CBDT Circular No. 17/2024, which had not issued when the impugned order was passed on 3 January 2024; for AY 2022-23 that bar would run to 31 March 2026. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Two internal conflicts in the report. The Revenue's submission recorded at para 7 says 'the petitioner as a start-up was incorporated in 28.05.2021', whereas para 5.1 records incorporation on 10 December 2019 and gives 28 May 2021 as the date of the DPIIT recognition certificate; 28 May 2021 is the certificate date, not the date of incorporation. Para 12 says the refusal of the IMB application 'was communicated on 27.10.2022' while paras 5.3 and 10 both give 21 October 2022. Para 10 refers to an application by the company 'dated 15.09.2023' while para 5.6 lists letters dated 25 October, 21 December and 25 December 2023. The reasoning does not turn on any of these. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed and Rule made absolute with no order as to costs. The order dated 3 January 2024 under s.119(2)(b) rejecting condonation of the delay in filing Form 10-IC for AY 2022-23 was quashed and set aside, the matter was remanded to the competent authority, and the competent authority was directed to accept the Form 10-IC filed by the petitioner for AY 2022-23.
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