SRI SAHAKARA EDUCATION SOCIETY,BENGALURU vs. DEPUTY COMMISIONER OF INCOME-TAX (EXEMPTION), CIRCLE-1, BENGALURU, BENGALURU

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ITA 1817/BANG/2026Status: DisposedITAT Bangalore16 July 2026AY 2022-234 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the filing of the audit report in Form 10B is directory and not mandatory. Following the principle of consistency and a coordinate bench decision, the Tribunal directed the AO to allow the exemption claim.

What were the facts?

The assessee society was granted registration under section 12AA and filed its return declaring Nil income. The CPC added Rs.12,03,42,540/- as income because the audit report in Form 10B was filed belatedly. The CIT(A) dismissed the appeal, upholding the CPC's action.

What were the issues?

Whether exemption under Section 11 can be denied solely due to belated filing of the audit report in Form 10B. Whether the filing of Form 10B is a mandatory condition for claiming exemption.

Which sections of the Income-tax Act were involved?

Section 11,Section 12AA,Section 139(1),Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH : BANGALORE

Before: SHRI BALAKRISHNAN S & SHRI KESHAV DUBEY

For Appellant: Shri. Adoksh Urs, Advocate
For Respondent: Shri. N. S. Shashidhara, CIT(DR)(ITAT), Bengaluru
Hearing: 06.07.2026Pronounced: 16.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI BALAKRISHNAN S, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1817/Bang/2026 Assessment Year : 2022-23 Sri Sahakara Education Society, Vs. DCIT (Exemptions), School Vivekananda, Circle – 1, No.33/2 and 33/3 NTI Layout, Rajeev Gandhi Bengaluru. Nagar Off Sahakaranagar, Bengaluru – 560 092. PAN : AAETS 6935 N APPELLANT RESPONDENT Assessee by : Shri. Adoksh Urs, Advocate Revenue by : Shri. N. S. Shashidhara, CIT(DR)(ITAT), Bengaluru. Date of hearing : 06.07.2026 Date of Pronouncement : 16.07.2026 O R D E R Per Balakrishnan S, Accountant Member :

This appeal is filed by the assessee against the order of learned ADDL/JCIT (A), Udaipur [in short “CIT(A)”] vide DIN & Notice No. ITBA/APL/S/250/2025-26/1086130558(1) dated 17.02.2026 arising out of the intimation passed under section 143(1) of the Act, dated 13.11.2025.

2.

Briefly stated facts of the case are assessee registered under the Karnataka Societies Registration Act, 1960, was granted registration under section 12AA of the Act on 31.10.2022 declaring Nil income for the Assessment Year 2022-23. Assessee filed audit report in Form 10B on 31.10.2022. The CPC while processing the intimation under section 143(1) of the Act added an

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amount of Rs.12,03,42,540/- as income of the assessee since the assessee has not filed the audit report on or before one month from the date of filing return of income under section 139(1) of the Act.

3.

Aggrieved by the intimation, the assessee carried the matter before the learned CIT(A). The learned CIT(A) after considering the submissions made by the assessee noted that the learned CIT(E) has not condoned the delay in filing Form 10B by the assessee and therefore dismissed appeal of the assessee.

4.

Aggrieved by the Order of the learned CIT(E), assessee is in appeal before us. The only grievance by the assessee is with respect to denial of exemption under section 11 of the Act since the audit report in Form 10B was filed belatedly on 31.10.2022 which ought to have been filed on or before 30.09.2022. The learned AR submitted that various judicial pronouncements have held that filing of audit report in Form 10B is only a directory and not mandatory. He placed heavy reliance on the decision of the Co-ordinate Bench of Bangalore in the case of Anasuya Foundation Vs. ITO (Exemptions) reported in (2026) 186 taxmann.com 1074 (Bangalore – Trib.). He therefore pleaded that the exemption under section 11 be granted.

5.

Per contra, the learned Departmental Representative [in short ‘DR’] relied on the Orders of the Revenue authorities.

6.

It is an admitted and undisputed fact that when the assessee filed Form 10B on 31.10.2022 which ought to have been filed on or before 30.09.2022 for the Assessment Year 2022-23. The CPC due to non-availability of the Form 10B in the ITBA portal denied exemption claimed by the assessee. However, the case relied on by the learned AR in the decision of Co-ordinate Bench of

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Bangalore in the case of Anasuya Foundation Vs. ITO (Exemptions) (supra), held as follows:

“9. We have carefully considered the rival contention and perused the order of the Ld. Lower Authorities. In this case for assessment year 2018- 19 the due date for filing of the return of income was 31st August 2018. According to the provisions of Section 44AB of the Act read with Section 12A(1)(b) of the Act read with Rule 12(2) of the Income Tax Rules Form No. 10B was required to be filed one month before the due date of filing of the return of income. Admittedly the assessee did not file Form No. 10B. The intimation u/s 143(1) of the Act was passed on 4th March 2020. By that time also the assessee did not file any such audit report. The assessee file appeal before the Ld. CIT-A on 23rd June 2025 on that date it electronically uploaded Form No. 10B as stated by the assessee. Such form is placed before us in a paper book at Page No. 112-116 of the paper book. Thus, when the appeal was pending before the Ld. CIT-A, the form No. 10B was available. The Hon'ble Gujarat High Court was also dealing with an identical situation where the form No. 10B for assessment year 2017-18 was filed during the pendency of appellate proceedings, the Ld. CIT-Appeal accepted such form and granted relief to the assessee. On appeal by the revenue before the ITAT this was upheld. On appeal by the revenue u/s 260A of the Act before the Hon'ble High Court no infirmity was found in the order of the Ld. CIT-Appeal. Thus, the Hon'ble High Court accepted that even if form No. 10B is filed electronically during the pendency of the appellate proceedings before the Ld. CIT- Appeal the assessee cannot be denied benefit of Section 11 and accumulation of income. The facts are identical before us. The Hon'ble Gujarat High Court in paragraph No. 4 of that order is also confronted with the decision of the Honorable ITA No.: 2617/Bang/2025 Supreme Court in Wipro Ltd. wherein the Honorable High Court made a distinction held that reference to the aforesaid decision of the Honorable Supreme Court has no connection whatsoever remotely to the facts of the present case before the Hon'ble High Court. Further the Coordinate Bench in assessment year 2018-19 in ITA No. 1110/Bang/2023 has also held so. However, in the case before the Tribunal before passing of the intimation u/s 143(1)A of the Act the audit report was available. In our case same was not available. Thus, the decision of the ITAT does not apply. However, the decision of the Hon'ble Gujarat High Court squarely applies.”

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7.

The facts and circumstances of the instant case are identical to the case relied on by the learned AR. Following the principle of consistency, we direct the AO to allow the claim of exemption u/s 11 for Rs.12,03,42,540/-. The grounds raised by the assessee are thus allowed.

8.

In the result, appeal of the assessee is allowed.

Pronounced in the open court on the date mentioned on the caption page.

Sd/- Sd/- (KESHAV DUBEY) (BALAKRISHNAN S) Accountant Member Judicial Member Bangalore. Dated: 16.07.2026. /NS/*

Copy to: 1. Appellants 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard file By order Assistant Registrar, ITAT, Bangalore.

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