NIRAMAYSEVA FOUNDATION,MUMBAI vs. ITO EXEMPTION 2(1), MUMBAI

This appeal by the assessee is directed against the order dated 22.12.2025 passed by the learned Additional/Joint Commissioner of Income-tax (Appeals)-1, Lucknow [“the learned CIT(A)”] under section 250 of the Income-tax Act, 1961 (“the Act”), arising from the rectification order dated 24.01.2023 passed by the Central Processing Centre, Bengaluru under section 154 of the Act, for the assessment year 2021- 22.

The assessee has raised the following grounds of appeal:-

Brief facts of the case are that the assessee is a company incorporated under section 8 of the Companies Act, 2013 and is stated to be registered under section 12A/12AA/12AB of the Act. It is engaged in charitable activities in the field of medical relief, including operating help desks in hospitals, organising medical camps and assisting patients in availing government schemes. During the Covid-19 pandemic, the assessee also established four Covid care centres in Mumbai with an aggregate capacity of 215 beds.

For the year under consideration, the assessee filed its return of income on 31.03.2022 declaring nil income. The assessee had total receipts of Rs.1,48,33,226 and claimed application of Rs.1,57,23,220 towards its charitable objects. The audit report in Form No.10B was uploaded on 14.07.2022. The return was thereafter processed under section 143(1) on 26.10.2022. The CPC denied exemption under sections 11 and 12 on the ground that Form No.10B had not been filed within the prescribed time and brought the entire receipts of Rs.1,48,33,226 to tax. The assessee's first rectification application dated 09.11.2022 was 2

On appeal, the assessee submitted that the delay in uploading Form No.10B was neither deliberate nor intentional and arose on account of illness of the accountant and lapse on the part of the professional engaged for statutory compliance. It was also submitted that the audit report was already available on the e-filing portal before the return was processed under section 143(1). The learned CIT(A), however, held that filing Form No.10B within the prescribed time was mandatory and that neither the AO nor the appellate authority was empowered under section 119(2)(b) to condone the delay. The appeal was accordingly dismissed, leaving it open to the assessee to approach the competent authority under section 119(2)(b). The assessee is in further appeal before us.

The learned Authorised Representative submitted that the delay in filing Form No.10B occurred for bona fide reasons and that the audit report was available on record before processing of the return. He further submitted that the assessee's second petition seeking condonation of delay, filed on 06.05.2025 pursuant to CBDT Circular No.16/2024 dated 18.11.2024, is still pending before the learned Commissioner of Income- tax (Exemption). Reliance was placed on the decisions of the Coordinate Bench in St. Francis Xavier Church Trust v. ITO (Exemption), ITA No.5883/Mum/2025, order dated 25.11.2025, reported in [2025] 181 taxmann.com 59 (Mumbai - Trib.), and Kumbharwada Welfare Centre v. ITO, ITA No.6388/Mum/2024, order dated 18.02.2025.

The learned Departmental Representative relied upon the orders of the lower authorities and submitted that the delay in filing Form No.10B can be condoned only by the competent authority under section 119(2)(b) of the Act. 3

We have heard the rival submissions and perused the material available on record. The assessee filed Form No.10B on 14.07.2022, whereas its return was processed under section 143(1) on 26.10.2022. Thus, the audit report was available on record at the time of processing. The learned CIT(A), however, dismissed the appeal principally on the ground that neither he nor the AO was competent to condone the delay under section 119(2)(b).

The record further shows that the assessee's first condonation petition was rejected by the learned CIT(Exemption) on 16.08.2024. Thereafter, the assessee filed a second condonation petition on 06.05.2025 in terms of CBDT Circular No.16/2024 dated 18.11.2024, which is stated to be still pending. In St. Francis Xavier Church Trust (supra), the Coordinate Bench held that where there is substantial compliance and the audit report is available at the time of processing, delay in uploading the report should not by itself result in denial of exemption. A similar view was taken in Kumbharwada Welfare Centre (supra), wherein the delay in uploading Form No.10B was condoned and the claim under section 11 was directed to be allowed, if otherwise admissible.

Considering that the second condonation petition is pending before the competent authority, we deem it appropriate to set aside the impugned order and restore the issue to the file of the Jurisdictional Assessing Officer. The learned CIT(Exemption) is directed to dispose of the pending condonation petition in accordance with law, after considering the aforesaid decisions relied upon by the assessee and after affording reasonable opportunity of hearing. Thereafter, the Jurisdictional Assessing Officer shall decide the assessee's claim of exemption under sections 11 and 12 in conformity with the decision of the learned

In the result, the appeal filed by the assessee is allowed for statistical purposes.