NATIONAL WELFARE FOUNDATION,MUMBAI vs. INCOME TAX OFFICER, EXEM.WARD-2(1), MUMBAI

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ITA 3756/MUM/2026Status: DisposedITAT Mumbai28 July 2026AY 2011-128 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that a mere delay in filing Form 10, if filed before the completion of assessment, should not disentitle the assessee from claiming exemption under Section 11(2). The matter was set aside to the Assessing Officer for a decision on merits.

What were the facts?

The assessee, a charitable trust, claimed exemption under Section 11(2) of the Income Tax Act. The exemption was disallowed by the lower authorities because Form 10 was filed after the prescribed due date, although before the assessment was completed.

What were the issues?

Whether delay in filing Form 10 beyond the due date under Section 139(1) disentitles the assessee from claiming exemption under Section 11(2) when filed before completion of assessment.

Which sections of the Income-tax Act were involved?

Section 11(2),Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “I” BENCH, MUMBAI

Before: SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM

Hearing: 28.07.2026

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM I.T.A. No.3756/Mum/2026 (Assessment Year: 2011-12) National Welfare Foundation Income Tax Officer, Exem. Ward- C/o Glassex (India) Pvt Ltd, 107, 2(1) Gokul Arcade, B-Wing, Opp. Vs. Piramal Chamber, Lalbaug, Parel, Garware Polyster, Vile Parle Mumbai-400012 East, Mumbai-400057 PAN: AAATN4022F Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assesseeby : Shri Prakash Jhunjhunwala, CA : Shri Sridhar G. Menon (Sr. DR) Revenueby : 16.07.2026 Date of Hearing : 28.07.2026 Date of Pronouncement

O R D E R Per Arun Khodpia, AM: This appeal is filed by the assessee, against the order of the Commissioner of Income Tax Appeals,ADDL/JCIT (A)-2 Delhi [in short, “the Ld. CIT(A)”], dated 28.01.2026 for the Assessment Year (AY) 2011-12,which in turn arises from the assessment order under section 143(1) of the Income Tax Act, 1961 [in short, “the Act”] dated 20.03.2014, passed by Central Processing Center, Bengaluru [in short, “the CPC”]. The grounds of appeal raised by the assessee are as under:

ITA No. 3756/Mum/2026 National Welfare Foundation “1.0 On facts and circumstances of the case and in Law, Ld. CIT(A) erred inconfirming the disallowance of exemption claimed u/s.11(2) of Rs. 72,00,000/-, since the Form 10 had been filed after expiry of the time limit prescribed u/s.139(1) of the Act; 2.0 The Ld. CIT-(A), before confirming the disallowance of exemption u/s.11(2) of Rs. 72,00,000/-, erred in not considering the understated vital facts, being :- a) The income had been accumulated and set apart for application of specific purpose forming a part of objects of the trust; b) Mere delay in filing the Form 10, due to bonafide reasons, would not disentitle the appellant's claim of exemption u/s.11(2) of the Act; c) The conditions prescribed u/s.11(2) mandatorily requires the mode of investments, furnishing of Form 10, passing of resolution, etc. are fulfilled; d) The appellant had applied the accumulated income within 5 years towards the specific object of the trust.” 2. The facts of the case are that the assessee is a trust, engaged in the charitable activities. It has filed Income Tax Return u/s 139 on 29.11.2012 for AY 2011-12 declaring total taxable income at Nil. The assessee also submitted Form.10 on the same date. The return of assessee was processed by the CPC on 23.03.2014 u/s 143(1)(a) raising a demand of Rs.65,58,490/- disallowing the exemption u/s 11(1) and 11(2) of the Act amounting to Rs. 68,24,622/- and Rs.72,00,000/- respectively.

3.

Being aggrieved with the aforesaid disallowance, the assessee preferred an appeal before the Ld. CIT(A). It is further clarified that before filing the appeal with Ld. CIT(A), the assessee also filed a petition to the Ld. CIT (Exemption) for rectification of mistake apparent from record. However, the rectification application is still pending.

ITA No. 3756/Mum/2026 National Welfare Foundation 4. Before us, it is submitted by the Ld. Counsel of the assessee that the present case is in second round of litigation before the Tribunal, wherein during the course of first round of proceedings, the appeal of assessee was dismissed by the Ld. CIT(A) on account of delay in filing of the appeal, which thereafter has been condoned by the Hon’ble ITAT “B” Bench, Mumbai in ITA No. 3271/Mum/2025 vide order dated 29.09.2025 and the matter was restored back to the file of Ld. CIT(A) for decision on merits.

5.

The Ld. CIT(A) vide the impugned order dated 28.01.2026 allowed the exemption u/s 11(1) claimed by the assessee however had rejected the claim of exemption u/s 11(2) for Rs.72,00,000/- stating the reason that Form 10A was not filed before expiry of the time limit u/s 139(1) of the Act, being delayed by 16 months and filed on 29.11.2012. Since, the Ld. CIT(A) had confirmed the disallowance of exemption u/s 11(2) of Rs.72,00,000/-, the assessee is in appeal before us.

6.

On this issue, Ld. Counsel submitted that the issue herein, which was the basis for disallowance u/s 11(2) of the Act is squarely covered by various decisions under which it was held that mere delay in furnishing of Form 10 would not disentitle the assessee’s claim of exemption u/s 11(2).It is held that filing of Form 10 before completion of assessment is sufficient compliance to claim the exemption.On this aspect, Ld. Counsel of the assessee placed his reliance on the following decisions:

ITA No. 3756/Mum/2026 National Welfare Foundation a) CIT vs. Nagpur Hotel Owners Association 114 Taxman 255 (SC) b) Bombay Prathana Samaj vs. UOI WP No. 2039 of 2025 (Bom-HC) c) CIT vs. Mayur Foundation 274 ITR 562 (Guj-HC) d) Sarvodaya Charitable Trust vs. ITO (Exemption) 125 taxmann.com 75 (Guj- HC) 7. Based on aforesaid suggestions and submissions, Ld. AR made the following prayer: “A humble prayer is made to direct the Ld. AO allow the appellant's claim of exemption u/s.11(2) of Rs.72,00,000/-, since it had filed the Form No.10 on 29/12/2012 which is before passing the Intimation/Order u/s.143(1) dated 20/03/2014, for which the appellant shall ever remain grateful.” 8. Per contra, Ld. DR representing the Revenue submitted that the Ld. CIT(A) has rightly adjudicated the issue and therefore placed reliance on the decision of Ld. CIT(A).

9.

We have considered the rival submissions, perused the material available on record and the jurisprudence relied upon by the Ld. AR. On the issue in hand, before us, whether the exemption u/s 11(2) is available to the assessee, if the Form 10 has been filed by the assessee beyond the prescribed due date under the Act.We find that, the issue is no more res integra which is decided by the Hon’ble Apex Court and various other Hon’ble Courts in their decisions referred to (supra).The relevant findings emerging inn the aforesaid orders are culled out here under:

In the case of CIT vs. Nagpur Hotel Owners Association(supra)– “6. It is abundantly clear from the wordings of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required under rule 17 in Form No. 10 of the Act. If during 4

ITA No. 3756/Mum/2026 National Welfare Foundation the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time it completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules, even then, in our opinion, it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completes the concerned assessment because such requirement is mandatory and without the particulars of this income, the assessing authority cannot entertain the claim of the assessee under section 11, therefore, compliance of the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of section 11 on the basis of information supplied subsequent to the completion of assessment would mean that the assessment order will have to be reopened. In our opinion, the Act does not contemplate such reopening of the assessment. In the case at hand it is evident from the records of the case that the respondent did not furnish the required information till after the assessments for the relevant years were completed. In the light of the above, we are of the opinion that the stand of the revenue that the High Court erred in answering the first question in favour of the assessee is correct, and we reverse that finding and answer the said question in the negative and against the assessee. In view of our answer to the first question, we agree with Mr. Verma that it is not necessary to answer the second question on the facts of the case” In the case of Bombay Prathana Samaj vs. UOI and Ors. (supra)– “9. We derive support from the judgment of the Hon'ble Supreme Court in CIT v. Nagpur Hotel Owners' Association, (2001) 247 TR 201 (SC), wherein it was held that furnishing of Form No. 10 before completion of assessment constitutes sufficient compliance. 10. In any case, this Court, in several of its orders involving a similar issue of delay in filing Form No. 10, has adopted a liberal approach. They are:- (a) Shree Jain SwetamberMurtipujakTapagachha Sangh v. CIT (E) [W.P. (L) No. 1321 of 2024, order dated 27.03.2025] (b) KSB Care Charitable Trust v. CIT (E) [(2025) 178 taxmann.com 771 (Bom)] (c) People's Mobile Hospitals v. CIT (E) [W.P. No. 2697 of 2025, order dated 15.09.2025] (d) St. Anne's School v. CIT (E) [(2025) 180 taxmann.com 183 (Bom)] (e) Francis Xavier Church us. CIT (E) [W.P. 635 of 2026, order dated 18.02.2026] 11. We are also of the view that Respondent No.3 ought to have taken a justice-oriented approach rather than a pedantic one and condoned the delay. This Court, in People's 5

ITA No. 3756/Mum/2026 National Welfare Foundation Mobile Hospitals v. CIT (E) (order dated 15th September 2025 in Writ Petition No. 2632 of 2025) has followed its earlier judgments in Mirae Asset Foundation v. Pr. Commissioner of Income-tax (order dated 7th July 2025 in WP No. 713 of 2025), Sau Dwarkabai tai Karwa Charitable Trust v. Commissioner of Income-tax(E) (2025) 174 taxmann.com 245 (Bombay) and Kotak Family Foundation v. Commissioner of Income-tax (E) (2025) 176 taxmann.com 56 (Bombay) and condoned the delay. In these cases also, this Court was concerned with condonation of delay in filing of similar forms within the stipulated time while claiming exemption under Section 11 of the IT Act. Therein, reliance was also placed on a judgment of the Gujarat High Court in the case of Sarvodaya Charitable Trust v. ITO (E) (2021) 125 taxmann.com 75 laying down the principle that in cases like the present one, the approachof the authority ought to be equitious, balancing and judicious and availing of exemption should not be denied merely on the bar of limitation. This is more so when the Legislature has, under Section 119(2)(b) of the IT Act, conferred discretionary powers to condone the delay on the authorities concerned with a view to avoid genuine hardship. 12. Moreover, not condoning such delay would cause genuine hardship to the Petitioner inasmuch as the Petitioner has been denied exemption under Section 11 of the IT Act and a demand of Rs.7,16,990/-has been raised for belated filing of Form No. 10. 13. Considering the facts and circumstances of the case, we are of the view that the delay ought to be condoned. We, accordingly, quash and set aside the impugned order passed under Section 119(2)(b) of the IT Act dated 07.03.2025 and condone the delay of 430 days in filing of Form No. 10 for A.Υ. 2015-16. 14. Since the delay has been condoned, the Respondents shall once again process the Petitioner's Returns in accordance with law by giving effect to this order on the basis that Form No. 10 has been filed within time.” Identical findings wereaccorded by Hon’ble Gujarat High Court in the case of Mayur Foundation vs. CIT [274 ITR 562 (Guj-HC)] and in the case ofSarvodaya Charitable Trust vs. Income Tax Officer (Exemption)[125 taxmann.com 75 (Guj-HC].

10.

Respectfully following the aforesaid jurisprudence, we find that in the present case undoubtedly the assessee has filed Form 10 belatedly after due date prescribed under the provisions of the Act. However, since such information was available before the Ld. AO, while processing the return of assessee which is necessary to complete the assessment. Accordingly, the delay in filing of Form 6

ITA No. 3756/Mum/2026 National Welfare Foundation 10 by the assessee cannot be the sole reason for denial of exemption u/s 11(2) of the Act. As per the principle laid down by the Hon’ble Bombay High Court in the case of Bombay Prathana Samaj vs. Union of India and Others (supra), we set aside the issue back to the file of Ld. AO, with the direction to adopt a justice- oriented approach and decide the allowability of exemption u/s 11(2) on merits after examining the facts on record. We, therefore, set aside the impugned order of Ld. CIT(A) and direct the Ld. AO to once again adjudicate the claim of assessee u/s 11(2) of the Act, considering the Form 10 filed and available before him, being a valid form.

11.

In result, the appeal of assessee is allowed for statistical purposes,in above terms.

Order pronounced in the open court on 28-07-2026.

Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 28-07-2026. Ankit K., Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

ITA No. 3756/Mum/2026 National Welfare Foundation

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai

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