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Facts
The Assessee, a charitable trust registered u/s 12A, filed its income tax return on time but submitted Form 10B belatedly by 6 days for A.Y. 2020-21. Due to this delay, the CPC disallowed the exemption claimed u/s 11 and determined the total income at Rs. 52,29,359/-, a decision upheld by the Ld. Commissioner (Appeals) who stated that appellate authorities lacked discretionary power to condone such delays as per CBDT Circulars.
Held
The Tribunal, relying on various High Court judgments, held that CBDT circulars do not curtail the appellate authorities' powers to condone delays. It affirmed that the filing of Form 10B is a procedural requirement, and its belated submission should not automatically lead to the denial of the Section 11 exemption. The AO was directed to consider the belatedly filed Form 10B as valid and re-determine the tax liability qua deduction/exemption claimed.
Key Issues
1. Whether the Assessee is entitled to deduction under Section 11 despite belated filing of Form 10B. 2. Whether CBDT Circulars curtail the appellate authorities' power to condone delay in filing Form 10B.
Sections Cited
250, 143(1), 11, 12A, 119(2)(b), 119
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “B” BENCHES :: MUMBAI
Before: SHRI OM PRAKASH KANTSHRI NARENDER KUMAR CHOUDHRYShri Bhagwandas
This appeal has been preferred by the Assessee against the order dated 30/06/2025 impugned herein passed by the ADDL/JCIT (Appeals)-1, Coimbatore (in short, ‘Ld. Commissioner’) u/sec. 250 of the Income Tax Act, 1961 (in short, ‘Act’) for the A.Y. 2020-21.
(Shri Bhagwandas Ramdasji Charitable and Religious Trust) 2. The Assessee being engaged in the charitable activities of education and medical relief to the poor and needy, as claimed by the Assessee, is a trust registered u/sec. 12A of the Act and by filing its return of income on dated 01/02/2021 as against due date of filing of return dated 15/02/2021, had declared ‘nil’ income. The Assessee trust filed its audited report online in Form 10B on dated 22/01/2021, against due date, which was fixed as 15/01/2021 and thus, with delay of 6 days.
The Assessing Officer (AO) vide intimation dated 31/11/2021 u/sec. 143(1) of the Act, disallowed the exemption claimed by the Assessee u/sec. 11 of the Act and determined total income of the Assessee at Rs. 52,29,359/- because of delay in filing of Form 10B.
The Assessee, being aggrieved, challenged the said decision/ intimation of the CPC before the Ld. Commissioner, however of no avail, as the Ld. Commissioner by mentioning that CBDT had issued Circular No. 06/2020 dated 19/02/2020 to overcome the difficulties faced by the Assessees during Covid-19 period and to condone the delay u/sec. 119(2)(b) of the Act, has given power/authorized the Commissioner of Income Tax (Exemptions) to admit the applications for condonation of delay, where there is a delay of 365 days. Further, the CBDT extended the powers to Principal Chief Commissioner of Income Tax to admit the delay applications, where there is delay beyond 365 days and upto 03 years.
The Ld. Commissioner, therefore, by further observing “that the appellate authority has no discretionary power to relax the provisions of the Statute and alternate remedy is available to the Assessee as per statute. The Assessee can file a condonation petition before the Commissioners of Income Tax (Exemptions) to condone the (Shri Bhagwandas Ramdasji Charitable and Religious Trust) delay in filing of audit report along with the return filed, and therefore the appeal does not survive on merits and after filing of the appeal, the Assessee is provided with an alternate remedy by the CBDT”, ultimately, dismissed the appeal of the Assessee, without condoning the delay.
The Assessee, being aggrieved, has preferred this appeal. As observed above, admittedly, the Assessee though had filed its return of income within the due date as prescribed, however, filed the Form 10B with delay of 06 days, which resulted into not allowing the exemption claimed by the Assessee by CPC and confirmation thereof by the Ld. Commissioner by taking refuge of the aforesaid CBDT circular without condoning the delay. Therefore, the following question emerge:
“ As to whether the Assessee is entitled to get the deduction claimed on the basis of Form-10-B filed belatedly and/or on rejection of delay application u/s 119(2)(b) of the Act”.
First, we will address the question “As to whether CBDT Circular no. 06/2020 dated 19/02/2020 as relied on by the Ld. Commissioner, has created any bar or curtailed the powers of the appellate authorities, to condone the delay in filling of appropriate Forms”.
7.1 We observe that the Hon'ble Gujarat High Court in the case of Association of Indian Panelboard Manufacturer vs. DCIT in R/Tax Appeal No. 655/2022 decided on 21/03/2022 has also dealt with identical Circular and issue, wherein Tribunal refused to entertain condonation of delay in filing of Form 10B on the ground that as per CBDT Circular No. 07/2018 dated 20/12/2018, the powers have been vested with certain authorities for condonation of delay u/sec. 119 of the Act.
7.2 The Hon'ble High Court has held as under:
“ That the Tribunal further committed an error in appreciating the merit of section 119(2)(b) of the Act, inasmuch as the application contemplated thereunder is only additional remedy for the Assessee which could not be said to be compulsorily resorted to by the Assessee. The Circular No. 07/2018 dated 20/12/2018 issued u/sec. 119 of the Act could not be, therefore said to have taken away the appellate authority.” 7.2 Thus, from the decision of the Hon'ble High Court it has become clear that CBDT by issuing Circular {as relied on by the Ld. Commissioner in this case} entrusting the powers to the Commissioner of Income Tax (Exemptions) or Chief Commissioner of Income Tax for condonation of delay in filing appropriate Forms for claiming deductions as applicable, has not created any bar or not curtailed the powers of the appellate authorities, which are otherwise, entrusted under the Statute.
In fact, Circular CBDT Circular no. 06/2020 dated 19/02/2020 is ancillary to the respective provision and/or the powers of the appellate authorities for condonation of delay in appropriate and deserving cases for filing of proper Forms as prescribed and required. Thus, the question posed is answered in “affirmative “.
7.3 Coming to the main question/issue posed “as to whether the Assessee is entitled to get the deduction claimed on the basis of Form- 10-B filed belatedly”, we observe that various High Courts including the Hon'ble Gujarat High Court in the aforesaid case, also dealt with identical issue, wherein there was a delay in filing of Form 10B and, therefore, the claim of the Assessee u/sec. 11 of the Act was denied. The Hon'ble High Court by analyzing various judgments of (Shri Bhagwandas Ramdasji Charitable and Religious Trust) the Hon’ble High Courts ultimately held “that filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 10B is filed to be available with the Assessing Officer, before assessment proceedings take-place, the requirement of law is satisfied”.
We further observe that in the case of Sarvodaya Charitable Trust vs. ITO (Exemption) (2021) 125 taxmann.com 75 (Guj.) the Hon'ble Gujarat High Court has also dealt with the identical issue qua filing of Form 10B belatedly, however, in that case the Assessee approached the Appropriate Authority u/s 119(2b) of the Act for condonation of delay in filing of Form 10B. The Hon'ble Gujarat High Court by considering the issue, held as under:
"That in the cases of delay in filing form 10B the approach of the authorities ought to be equitious, balancing and judicious. Further, availing of exemption should not be denied merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. This Court in CIT Vs. Gujarat Oil and Allied Industries Ltd. (1993) 201 ITR 325 (Guj.) has also held that 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. 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".
We further observe that the Hon'ble Gujarat High Court in the case of CIT (Exemption) Vs. Laxminarayandev Shikshan Seva Kendra (2024) 167 taxmann.com 548 (Guj.) (10.09.2024) has also dealt with the issue "wherein the Form 10B was filed during the course of appellate proceedings before the Commissioner (Appeals) who allowed the benefit of section 11 of the Act to the Assessee" and the Tribunal upheld the said decision of the Ld. Commissioner.
(Shri Bhagwandas Ramdasji Charitable and Religious Trust) The Hon'ble Gujarat High Court by taking cognizance of the fact and the decision in the case of Sarvodaya Charitable Trust case (supra) approved the decision of the Tribunal in following the judgment in the case of Social Securities Scheme of GICEA Vs. Commissioner of Income Tax (Exemption), Ahmedabad dated 21.12.2022 in Special Civil Application No.17612 of 2022}, wherein it has been held as under:
"That though filing of audit report is mandatory in nature and substantial compliance is required to be made, however, furnishing of audit report along with return filed, is to be treated as a procedural requirement".
The Hon'ble Gujarat High Court also distinguished the judgment of the Hon'ble Apex Court in the case of Pr. CIT Vs. Wipro Ltd. (2022) 446 ITR (1)(SC), which has been relied on by the then Ld. Commissioner, in approving the decision of the CPC, while rejecting the deduction claimed by the Assessee u/s 11 of the Act.
We further observe that the Hon'ble Jurisdictional High Court in the case of Mirae Audit Foundation Vs. Pr. Commissioner of Income Tax-6, Mumbai & Ors. has also taken into consideration the judgment of the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust case (supra) and ultimately condoned the delay of 246 days in filing of Form 10B by holding as under: "That if delay is not condoned, there will be genuine hardship to the petitioner, in as much as the petitioner would be denied the exemption otherwise claimed under the provisions of section 11 of the Act and which is substantial amount".
Thus, on the aforesaid analyzations, the question posed is answered in "affirmative" and consequently, we direct the AO to consider Form no.10B filed by the Assessee, as valid and verify the facts and determine the tax liability qua deduction/exemption claimed by the Assessee u/sec. 11 of the Act as per law.
In the result, the Assessee's appeal is allowed for statistical purposes in the aforesaid terms.
Order pronounced in the open court on 30.09.2025.