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Facts
The assessee, a charitable trust, filed its return of income and Form 10B belatedly. The CPC disallowed the claim of exemption under section 11 of the Income-tax Act, 1961, solely on the ground of the late filing of Form 10B.
Held
The Tribunal held that the filing of Form 10B is directory and not mandatory, and that a delay in filing it should not lead to the denial of exemption if filed before the assessment is finalized. The delay in filing Form 10B was condoned.
Key Issues
Whether the delay in filing Form 10B can be a ground for disallowing exemption under Section 11 of the Income-tax Act, 1961.
Sections Cited
11, 143(1), 139(1)
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Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: MS. MADHUMITA ROY, & SHRI NAVEEN CHANDRA
This appeal by the assessee is preferred against the order of the ld. CIT(A) , Mumbai dated 11.07.2024 for A.Y 2020-21.
The ld. counsel for the assessee has filed an application for condonation of delay.
Page 1 of 6 assessee has sufficient cause for not filing the appeal in time.
Accordingly, we condone the delay and admit the appeal.
The sum and substance of the grievance of the assessee is the confirmation of action of the CPC in disallowing assessee the exemption u/s 11 of the Income-tax Act, 1961 [the Act, for short] amounting to Rs. 81,30,497/-.
Short facts of the case are that the assessee is running a charitable trust and is carrying charitable activities for so many years. The CPC, while processing the return of income, denied the claim of exemption u/s 11 of the Act, merely on the basis that Form 10B was belatedly filed.
Aggrieved, the assessee is in appeal before us.
At the very outset, the ld AR argued that the return of Income was filed on 15.01.2021, due date of which is 15.02.2021. He further stated that the Form 10B was filed on 30.03.2021, the due date of which was 15.01.2021. CPC processed the return u/s 143(1) vide the intimation order dated 30.11.2021. The ld AR argued that mere delay in filing Form 10B which is directory and procedural in nature cannot
• M/s. Shilparamam Arts, Crafts and Cultural Society, Hyderabad v. Asst. CIT, WP No. 31360 of 2023 dated 24.11.2023, Telangana High Court • SLP dismissed by Supreme Court vide SLP No. 34100/2025 dated 04.08.2025 • CIT v. Xavier Kelavani Mandal Pvt. Ltd., 2012:GUJHC:26224-DB • Delhi Brotherhood Society v. ITO, dt. 16.05.2025, ITAT Delhi • Puran Chand Arora Charitable Trust v. ITO, ITA 625/DEL/2024 dt.22.01.2025, ITAT Delhi • Earthing Trust v ITO, ITA 882/Del/2024 dt. 10.01.2025, ITAT Delhi • Shakuntalam Bal Vikas Society v. ITO, ITA 3506/Del/2023 dt. 27.08.2024, ITAT Delhi • Bhagwant Kishore Memorial Educational Society, v. ITO, ITA 3657/Del/2023 dt. 14.08.2024, ITAT Delhi
Per contra, the ld. DR relied on the orders of the authorities below.
We have heard the rival submissions and have perused the relevant material on record. We find that the CIT(E) has denied the benefit of deduction u/s 11 on the ground that the Form 10B is mandatory and has been filed with a delay and that the delay has not been condoned. We find that there are catena of cases where the hon’ble High Courts have held that the filing of Form 10/audit report is directory and not mandatory and that if the audit report was filed at any time before the Page 3 of 6 should be held to have been met. The hon’ble Delhi High Court in the case in Commissioner Of Income Tax V. Contimeters Electricals (P) Ltd - (2009) 317 ITR 249(Delhi), following the judgements of the Madras High Court in Commissioner Of Income Tax V. Arunachalam (A.N.)- (1994) 208 ITR 481 and in Cit V. Jayant Patel (2001) 248 ITR 199 (Mad) held that the filing of audit report along with the return was not mandatory but directory and that it and may be filed before finalization of assessment.
Similar view was adopted by the Hon'ble Madras High Court in the case of CIT Vs. A K S Alloys Pvt. Ltd. 18 Taxman.com 25 and the Karnataka High Court in the case in Commissioner Of Income Tax And Another Vs. Ace Multitaxes Systems (P) Ltd. (2009) 317 ITR 207(Karnataka). That was also the view of the Bombay in Commissioner of Income Tax v. Sivanand Electronics-(1994)209 ITR 63(Bom), and Gujarat High Court in Zenith Processing Mills v. CIT-(1996) 219 ITR 721 and Panjab and Haryana High Court in CIT V. Mahalaxmi Rice Factory (2007) 294 ITR 631.
In the instant case, the Form 10B was filed on 30.03.2021 and the return of income was processed on 30.11.2021. We find that the assessee had obtained audit report in Form 10B before filing return of income, however filed the same belatedly but before completion of Page 4 of 6 decisions therefore squarely applies to the facts of the case. We therefore, hold that filing of audit report in Form 10B before the due date for filing of return of income u/s 139(1) being only directory, the same may be accepted and benefit of exemption under section 11 may not be denied to assessee-trust. The delay in filing the Form 10B be condoned and we direct the A.O./CPC to allow exemption u/s 11 of the Act. Accordingly, the Grounds of Appeal of the Assessee are allowed. is allowed.
The order is pronounced in the open court on 22.08.2025.