SOCIETY FOR MAINTENANCE & DEVELOPMENT OF ROCK GARDEN,CHANDIGARH vs. DCIT, EXEMPTIONS CIRCLE 1, CHANDIGARH, CHANDIGARH

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ITA 164/CHANDI/2026Status: DisposedITAT Chandigarh03 August 2026AY 2019-207 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that procedural requirements should not defeat substantive rights, especially when the assessee is otherwise eligible for exemption. The Tribunal noted that the due date for filing the return was extended by a CBDT circular, which was not examined by the lower authorities.

What were the facts?

The assessee, a society registered under Section 12A, claimed exemption under Section 11. The CPC denied exemption due to non-furnishing of Section 12A registration details and late filing of return and Form 10B. The CIT(A) upheld this denial.

What were the issues?

Whether denial of exemption under Section 11 solely on procedural grounds, like late filing of return and audit report, is justified when the assessee is otherwise eligible and a CBDT circular extended the due date.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 139(1),Section 143(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH

Before: SHRI LALIET KUMAR & SHRI MANOJ KUMAR AGGARWAL

For Appellant: Shri Parikshit Aggarwal,CA
For Respondent: Smt. Kusum Bansal, Pr.CIT, DR
Hearing: 30.07.2026Pronounced: 03.08.2026

आयकर अपीलीय अिधकरण,च�ीगढ़ �ायपीठ, च�ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH

BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 164/CHD/2025 िनधा�रण वष� / Assessment Year : 2019-20 Society for Maintenance & The DCIT (Exemptions), Development of Rock Garden, Vs Circle-1, Chandigarh. Rock Garden, Sector-1, High Court, Chandigarh. �ायी लेखा सं./PAN NO: AABTS9650B अपीलाथ�/Appellant ��थ�/Respondent Assessee by : Shri Parikshit Aggarwal,CA Revenue by : Smt. Kusum Bansal, Pr.CIT, DR Date of Hearing : 30.07.2026 Date of Pronouncement : 03.08.2026 HYBRID HEARING O R D E R PER LALIET KUMAR, JM

This is an appeal filed by the assessee feeling aggrieved by

the order passed by the ld. Commissioner of Income Tax (Appeals)

Kolkata [in short ‘the CIT (A)’] dated 25.11.2025 passed for

assessment year 2019-20.

ITA-164/CHD/2026 A.Y. 2019-20 2 2. The brief facts of the case are that the assessee is a society registered under Section 12A of the Act and is engaged in the maintenance and development of the Rock Garden, Chandigarh. For the assessment year under consideration, it filed its return of income claiming exemption under section 11 of the Act. The return was processed under section 143(1) by CPC, Bengaluru, wherein the exemption claimed under section 11 was denied on the ground that the particulars relating to registration under section 12A/12AA were not furnished in the return, resulting in an adjustment under section 143(1)(a). The learned CIT(A), by the impugned order, upheld the action of the CPC and dismissed the appeal. While doing so, in paragraph 5.2 of the impugned order, the learned CIT(A) observed that although the assessee was registered under section 12A, it had not e-filed the return of income and Form No.10B within the prescribed due date under section 139(1). The learned CIT(A) held that filing of the return and audit report within the prescribed time was a statutory requirement and not merely procedural and, therefore, concluded that the CPC was justified in denying exemption under section 11.

3.

The learned Authorised Representative submitted that the denial of exemption is founded primarily on procedural lapses and not on the ineligibility of the assessee. It was contended that the

ITA-164/CHD/2026 A.Y. 2019-20 3 assessee has been enjoying registration under section 12A for several years and the charitable character of the institution has never been disputed by the Revenue. It was submitted that the ends of substantial justice require that the matter be restored to the file of the learned CIT(Exemption) for fresh adjudication after considering all the relevant documents, including the registration, audit report and such other evidence as may be produced. It was further argued that procedural requirements should not be permitted to defeat substantive rights where the assessee is otherwise eligible for exemption under the Act.

4.

Per contra, the learned Departmental Representative relied upon the findings recorded by the learned CIT(A), particularly those contained in paragraph 5.2 of the impugned order, and submitted that the filing of the return of income and Form No.10B within the prescribed time is a statutory requirement. It was, therefore, contended that the learned CIT(A) had rightly upheld the adjustment made by the CPC. However, the learned DR submitted that in the event the Bench is inclined to restore the matter, appropriate directions may be issued requiring the assessee to fully cooperate in the fresh proceedings.

5.

Per contra in rebuttal Ld. AR submitted that that the assessee is a charitable society duly registered under section 12A of the Act

ITA-164/CHD/2026 A.Y. 2019-20 4 and has been claiming exemption under section 11 for the past several years. It was contended that the denial of exemption is founded solely on procedural considerations and not on the eligibility of the assessee. Drawing our attention to the CBDT Circular dated 27.09.2019, the learned AR submitted that the due date for filing the return of income for the assessment year under consideration stood extended up to 31.10.2019. It was submitted that the assessee had filed its return of income within the extended due date prescribed by the CBDT and, therefore, the observation of the learned CIT(A) in paragraph 5.2 of the impugned order that the return was filed beyond the prescribed due date is factually incorrect. It was further submitted that, once the return was filed within the time validly extended by the CBDT, the matter deserves reconsideration by the competent authority after examination of all relevant facts and statutory compliance. The learned AR further argued that procedural requirements should not be permitted to defeat substantive rights where the assessee is otherwise eligible for exemption under section 11 of the Act.]

6.

We have considered the rival submissions and perused the material available on record. We find no dispute that the assessee is a registered charitable institution under section 12A of the Act. The controversy essentially revolves around compliance with

ITA-164/CHD/2026 A.Y. 2019-20 5 certain statutory requirements, which, according to the Revenue, disentitle the assessee from claiming exemption under section 11.

7.

The learned CIT(A), in paragraph 5.2 of the impugned order, has proceeded on the premise that since the return of income and Form No.10B were not filed within the prescribed due date, the assessee was not entitled to exemption under section 11. While the statutory requirements cannot ordinarily be ignored, procedural prescriptions are intended to advance the cause of justice and cannot be permitted to become a roadblock in the grant of substantial justice, particularly where the assessee claims to be otherwise eligible for the exemption and the relevant material can still be examined by the competent authority.

8.

However, before us, the learned AR has specifically relied upon the CBDT Circular dated 27.09.2019, whereby the due date for furnishing the return of income for the relevant assessment year was extended up to 31.10.2019, and submitted that the return of income had in fact been filed within the extended due date. This contention goes to the root of the controversy and has not been examined by the learned CIT(A).

9.

Prima facie, if the due date stood extended by the CBDT and the return was filed within such extended period, the very

ITA-164/CHD/2026 A.Y. 2019-20 6 foundation of the finding recorded by the learned CIT(A) regarding delay in filing the return would require reconsideration. Likewise, the consequential effect, if any, on the filing of the audit report and the assessee's entitlement to exemption under section 11 would also require fresh examination by the competent authority.

10.

We are of the considered opinion that procedural requirements are intended to facilitate the administration of justice and cannot be allowed to become a roadblock in the grant of substantial justice, particularly where the assessee is otherwise claiming a statutory exemption and the issue can effectively be examined on merits after considering the relevant material. The settled principle is that technical or procedural lapses should not override substantial justice when no prejudice is caused to the Revenue.

11.

In these circumstances, and in the interest of substantial justice, we deem it appropriate to set aside the impugned order and restore the matter to the file of the learned Assessing Officer ) for fresh adjudication. The learned Assessing Officer shall specifically examine the effect of the CBDT Circular dated 27.09.2019 extending the due date for filing the return, the compliance relating to filing of Form No.10B and other statutory requirements, and thereafter pass a fresh speaking order in accordance with law after

ITA-164/CHD/2026 A.Y. 2019-20 7 affording adequate opportunity of hearing to the assessee . The assessee shall extend full cooperation and furnish all the relevant documents and explanations before the learned CIT(Exemption).

12.

However, while restoring the matter, we also consider it appropriate to impose a token condition to ensure the litigation results in tangible public benefit. Accordingly, the assessee is directed to plant 100 trees on its premises on 11.08.2026 or any other date as is convenient to the assessee with intimation to the Ld. DR . This direction shall have no bearing on the merits of the controversy, which shall be decided independently in accordance with law. 13. The appeal is accordingly allowed for statistical purposes. Order pronounced on 03.08.2026.

Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER “Poonam” आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकर आयु�/ CIT 3. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�ीगढ़/ DR, ITAT, CHANDIGARH 4. गाड� फाईल/ Guard File 5.

Assistant Registrar

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