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Facts
The Assessee, a public trust running a school, claimed exemption under Section 11 of the Income Tax Act. The exemption was denied for Assessment Year 2022-2023 due to non-filing of Form 10B within the due date, and for Assessment Year 2023-2024, the denial was also based on delayed filing of Form 10B. The Assessee filed appeals against these denials.
Held
For Assessment Year 2022-2023, the appeal was dismissed as withdrawn. For Assessment Year 2023-2024, the Tribunal set aside the impugned order and directed the CIT(A) to adjudicate the appeal afresh after considering the order on condonation of delay application, referencing a Bombay High Court judgment.
Key Issues
Whether the delay in filing Form 10B is a procedural lapse that cannot be a fatal impediment to claiming exemption under Section 11 of the Income Tax Act.
Sections Cited
11, 12, 12A(1)(b), 119(2)(b), 143(1), 44AB, 11(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Appearance For the Appellant/Assessee : Ms. Vasanti B. Patel For the Respondent/Department : Shri Leyaqat Ali Aafaqui Date Conclusion of hearing : 02.12.2025 Pronouncement of order : 12.12.2025
O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. These are two appeals preferred by the same Assessee involving identical issues. The appeals were heard together and are being disposed off by way of common order.
ASSESSMENT YEAR 2022-2023 2. We would first take up appeal preferred by the Assessee for the &3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 Assessment Year 2022-2023 which is directed against the Order, dated 16/10/2023, passed by the Additional/Joint Commissioner of Income Tax (Appeals) – 1, Lucknow [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had dismiss the appeal against the Intimation Order, dated 08/03/2023, passed under Section 143(1) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’].
When the appeal was taken up for hearing the Learned Authorized Representative for the Assessee placed on record the judgment, dated 02/09/2025, passed by the Hon’ble Bombay High Court in Writ Petition No.1901 of 2025 tilted ‘The Bombay St. Xavier’s Society Vs. Commissioner of Income Tax (Exemption) and Ors’. It was submitted that in view of the aforesaid judgment the appeal preferred by the Assessee for the Assessment Year 2022-2023 be disposed off as withdrawn.
The Learned Departmental Representative did not raise any objections to be above submission made on behalf of the Assessee.
On perusal of record, we find that the Assessee is a public trust registered under the Maharashtra Public Trusts Act, 1950 and also under Section 12AB of the Act. At the relevant time the Assessee was running St. Xavier’s High School in furtherance of its objects of promoting all round holistic education and was awarding scholarships to deserving students. The Assessee was being assessed in the status of Association of Persons (A.O.P. – Trust) and had claimed exemption under Section 11 and 12 of the Act in the return of income for Assessment Year 2022-2023 filed on 07/11/2022. The aforesaid return of income was processed under Section 143(1) of the Act and intimation dated 08/03/2023 was issued to the Assessee whereby the total income of the the Assessee was computed at INR.7,95,52,422/-. While processing the return of income, entire amount of expenditure incurred/amount set aside aggregating to INR.7,49,97,625/- that was claimed as deduction &3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 under Section 11 of the Act was disallowed. Further, addition of INR.45,00,000/-, being amount deemed to have been applied during the previous year as per Clause (2) of Explanation to Section 11(1) of the Act), was made in the hands of the Assessee. It is the contention of the Assessee that the aforesaid disallowance/addition was made for the reason that the Assessee had not e-filed the Form No.10B (being Audit Report under Section 12A(1)(b) of the Act) within the due date as specified.
Being aggrieved, the Assessee preferred appeal before the Ld. CIT(A). The Ld. CIT(A) declined to grant any relief and dismissed the appeal preferred by the Assessee vide Order, dated 16/12/2023.
Being aggrieved, the Assessee has preferred the present appeal before the Tribunal inter-alia raising the following grounds of appeal.
“I. CONDONATION OF DELAY: 1.1 On the facts and in the circumstances of the case, the Bonafide delay in filing the present appeal may kindly be condoned and the appeal may kindly be heard and decided on merits as the delay in filing the appeal is for valid and sufficient reasons. 1.2 It is submitted that the Appellant sought redressal of the issue by filing a petition for Condonation of Delay under Section 119(2)(b) of the Act with the Commissioner of Income Tax (Exemptions) in line with the CBDT Circular No. 16/2022. However, the CIT(A) dismissed the appeal of the Appellant. The appeal was technically required to be filed on or before 15.12.2023, However, since the Petition for Condonation of Delay in Filing Form No. 108 was pending before the CIT(E), the Appellant did not initially file the appeal against the Appellate Order. Thus, there is a delay of 434 days in filing the above appeal. It is submitted that the Appellant has a very strong case on merits. Accordingly, the Appellant prays that the delay be condoned, and the appeal be decided on merits after affording sufficient opportunity of being heard to the Appellant. II. DENIAL OF DEDUCTION/APPLICATION OF INCOME UNDER SECTION 11 OF THE ACT:
&3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 2.1 On the facts and in circumstances of the case and in law the learned CIT(A) erred in confirming the entire amount of Rs.7,49,97,625/- being amount applied/set aside under Section 11 of the Act on the ground that the Appellant has not e-filed the Form No. 10B being Audit Report under Section 12A(1)(b) of the Act for the Assessment Year 2022-23 within the extended due date as specified under Section 44AB of the Act viz. 07.10.2022. This addition has resulted to levy of a huge demand of Rs.3,85,07,340/- 2.2 The learned CIT (A) and the learned Assessing Officer failed to appreciate the submissions made. It is submitted that non- filling/delayed filing of Audit Report in Form No 10-B is a procedural omission, and it cannot be an impediment in law in claiming the exemption. GROUNDS OF APPEAL
The Appellant prays that the learned Assessing Officer (CPC) be directed to grant the deduction for application of income under section 11 of the Act for the sum of Rs. 7,49,97,625/- and reduce the total income of the Appellant accordingly.”
8. In the affidavit filed by the Assessee supporting the application seeking condonation of delay it was stated that the Assessee had filed a petition for condonation of delay under Section 119(2)(b) of the Act with the Commissioner of Income Tax (Exemption) in line with Circular No.16/2022 issued by Central Board of Direct Taxes (CBDT). The aforesaid application was rejected vide Order, dated 06/02/2025, and thereafter, the present appeal before the Tribunal was instituted on 25/02/2025 after delay of 434 days.
9. On perusal of judgment of Hon’ble Bombay High Court in Writ Petition No.1902 of 2025, we find that the Assessee had preferred a writ petition against the order rejecting application, dated 16/03/2023, filed by the Assessee for seeking condonation of delay of 31 days in filing Form No.10B for the Assessment Year 2022- 2023. Further, the Assessee had also challenged the consequent denial of exemption claimed by the Assessee under Section 11 of the Act. Vide judgment, dated 02/09/2025, the Hon’ble Bombay High Court had quashed the Order, dated 06/02/2025, passed by Commissioner of Income Tax (Exemption) and had condoned the delay in filing Form No.10B. Thus, taking away the very basis on &3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 which addition/disallowance was made in the hands of the Assessee.
10. In the above background, the Assessee has sought to withdraw the present appeal. Since no objections have been raised by the Learned Departmental Representative, the present appeal is dismissed as withdrawn.
In result the appeal is dismissed as withdrawn.
We would now take up appeal preferred by the Assessee for the Assessment Year 2023-2024 which is directed against the Order, dated 27/03/2025, passed by the Additional/Joint Commissioner of Income Tax (Appeals) – 2, Vadodara [hereinafter referred to as ‘the CIT(Appeals)’] whereby the Ld. CIT(Appeals) had dismissed the appeal against the Intimation Order, dated 19/11/2024, passed under Section 143(1) of the Act.
We have heard both the sides and have perused the material on record.
It is admitted position that for the Assessment Year 2023-2024, the Assessee has e-filed Return of Income on 27/11/2023 (before the expiry of extended due date of 30/11/2023) declaring ‘Nil’ income and claiming refund of INR.10,72,356/-. The Form No.10B was e- filed on 27/11/2023 before filing the return of income for the Assessment Year 2023-2024 that was e-filed on 27/11/2023. The Assessee had e-filed Form No.10B issued by the Chartered Accountant on 27/11/2023 (vide acknowledgement No.528915220271123) after a delay of 27 days. The Centralized Processing Centre, Bangalore processed the Return of Income e- filed by the Assessee for the Assessment Year 2023-2024 by issuing an Intimation under Section 143(1) of the Act on 19/11/2024, assessing the total income of the Assessee at INR.80,51,967/- by &3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 making adjustment of INR.80,51,967/- disallowing the amount accumulated or set apart for application to charitable or religious purpose or for the stated objects of the trust under Section 11(1)(a) of the Act on the ground that the Assessee not filed the Form No.10B within the specified due date.
Being aggrieved, the Assessee preferred appeal before the Ld. CIT(Appeals), which was dismissed vide Order, dated 16/12/2023.
Being aggrieved, the Assessee has preferred the present appeal before the Tribunal the raising the following grounds of appeal. “I. DENIAL OF DEDUCTION/EXEMPTION UNDER SECTION 11. OF THE ACT: 1.1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) [CIT(A)] erred in confirming the denial of exemption/deductions under Section 11 of the Act resorted to by the Centralized Processing Centre, Income Tax Department, Bengaluru (herein after referred to as "CPC-ITD") while processing the Return of Income under Section 143(1) of the Act on the grounds that the Audit Report in Form 10B was filed belatedly, though with the Return of Income which was filed in prescribed time. 1.2. The learned CIT(Appeals) and the learned CPC-ITD failed to appreciate that the time limit prescribed for filing the Audit Report is only declaratory and not mandatory. The lower authorities failed to appreciate that delay in filing the Audit Report is only a procedural lapse and the same cannot be fatal leading to denial of exemption/benefits under Section 11 of the Act particularly when the said Audit Report was available on record when the Return of Income was processed under Section 143(1) of the Act. 1.3. The learned CIT (Appeals) failed to appreciate the explanations/submissions furnished by the Appellant and the legal position emerging from the decisions of various High Courts/Income-tax Appellate Tribunals dealing with amended provisions of Section 12A(b) of the Act In view of the above, the Appellant prays that the learned CPC- ITD may kindly be directed to grant the exemption under Section 11 of the Act to the Appellant and reduce the Total Income to Rs.NIL as declared in the Return of Income filed. II. CONSEQUENTIAL DISALLOWANCES:
&3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 2.1. Without prejudice to the above, it is submitted that the denial of exemption under Section 11 of the Act, as discussed above, has led to denial of deductions of the following amounts resulting into huge demand of Rs.18,57,170/- after adjusting the TDS refund of Rs. 10,72,356/-against the Appellant: 2.1.1 A sum of Rs.80,51,967/- under section 11(1)(a) of the Act being amount accumulated or set apart for application to charitable or religious purposes or for the stated objects of the trust to the extent it does not exceed 15 per cent of income derived from property held in trust. It is submitted that the disallowances referred to above are unjustified and bad in law as the denial of exemption under Section 11 of the Act itself is ill-founded and unwarranted. In view of the above, the Appellant prays that the learned CPC- ITD be directed to grant deductions for the above items as claimed in the Return of Income and reduce the total income accordingly. III. ADJUSTMENT MADE UNDER SECTION 143(1) OF THE ACT IS INVALID: 3.1. Without prejudice to the above, it is submitted that on the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in confirming the adjustments resorted to by the learned Assessing Officer while processing the Return of Income under Section 143(1) of the Act. 3.2. It is submitted that the basic issue leading to denial of exemption under Section 11 of the Act viz. delay in filing the Audit Report in Form 10B, itself is a highly debatable question of law and the same cannot be the ground for adjustment/additions/disallowances under Section 143(1)(a)/143(1) of the Act. It is submitted that the learned CPC-ITD has resorted to the adjustments without complying with the provisions of Section 143(1) of the Act. The Appellant prays that the adjustments made while processing the Return of Income under Section 143(1) of the Act are illegal, unwarranted and contrary to the law and may therefore be kindly struck down/deleted. The Appellant hereby craves the leave to add to, alter or amplify the aforesaid grounds of appeal
, which are independent of each other, as and when the need arises at the time of hearing.”
17. We find that in facts and circumstances identical to those prevailing &3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 to the Assessment Year 2022-2023, the Assessee was denied the benefit of Section 11 of the Act claimed in the return of income for the Assessment Year 2023-2024 on the ground delayed filing of Form 10B.
18. It was submitted by Learned Authorized Representative for the Assessee that the only difference in the facts was that the application seeking condonation of delay in filing Form No.10B for the Assessment Year 2023-2024 filed before the Learned Commissioner of Income Tax (Exemption) [for short ‘the CIT(E)’] was pending adjudication whereas for the Assessment Year 2022- 2023 the same was rejected. It was submitted on behalf of the Assessee that the Learned CIT(A) had incorrectly proceeded to dismiss the appeal without awaiting the disposal of the aforesaid application by the Learned CIT(E).
19. On the other hand, the Learned Departmental Representative relied upon the order passed by the CIT(Appeals). It was submitted that the Assessee had failed to demonstrate that an application seeking condonation of delay was filed before the Learned CIT(E). The Learned Departmental Representative also placed on record written submissions, dated 04/08/2025, supplementing the aforesaid submissions.
20. Keeping in view the parity in facts and the judgment, dated 02/09/2025, passed by the Hon’ble Bombay High Court in Writ Petition No.1901 of 2025 tilted ‘The Bombay St. Xavier’s Society Vs. Commissioner of Income Tax (Exemption) and Ors’, we are of the view that the Learned CIT(A) should have taken into consideration the result of application seeking condonation of delay in filing Form 10B filed by the Assessee before the Learned CIT(E). Therefore, we deem it appropriate and in the interest of justice to set aside the impugned Order, dated 27/03/2025, passed by the Learned &3643/Mum/2025 Assessment Year 2022-2023 & 2023-2024 CIT(Appeals) with the directions to adjudicate the appeal afresh after taking into consideration the order to be passed by the CIT(E) on the application seeking condonation of delay filed by the Assessee on 16/01/2024 which is pending adjudication before the Learned CIT(E). The Assessee is directed to place copy of the present order alongwith the judgment of Hon’ble High Court in Writ Petition No.1901 of 2025 tilted The Bombay St. Xavier’s Society Vs. Commissioner of Income Tax (Exemption) and Ors before the Learned CIT(E) for expediting the disposal of the aforesaid application seeking condonation of delay in Form 10B. Accordingly, the impugned Order, dated 27/03/2025, passed by the Learned CIT(A) is set aside with the directions to decide the appeal preferred by the Assessee afresh after giving the Assessee a reasonable opportunity of being heard. In terms of the aforesaid the Ground No.1 is allowed for statistical purpose while other grounds dismissed as having been rendered infructuous at this stage.
21. In result, in terms of Paragraph 20 above, the present appeal preferred by the Assessee is treated as allowed for statistical purpose.
Order pronounced on 12.12.2025.