FOOD SAFETY AND STANDARDS AUTHORITY OF INDIA,NEW DELHI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE EXEMPT 1(1), DELHI, DELHI

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ITA 7688/DEL/2025Status: DisposedITAT Delhi15 June 2026AY 2016-178 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the Hon'ble High Court had condoned the delay in filing Form 10. Therefore, the matter was restored to the Assessing Officer to consider the assessee's claim for accumulation under Section 11(2) as per law.

What were the facts?

The assessee, a charitable society, filed its return declaring Nil income. The Assessing Officer disallowed accumulation under Section 11(2) because Form 10 was filed late, and this disallowance was confirmed by the CIT(A).

What were the issues?

Whether the disallowance of accumulation under Section 11(2) due to late filing of Form 10 is justified when the delay has been condoned by the High Court.

Which sections of the Income-tax Act were involved?

Section 11(2),Section 12AA,Section 250,Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHIBENCH ‘E’, NEW DELHI

Before: Sh. Raj Kumar Chauhan & Smt. Renu Jauhri

Hearing: 02.06.2026Pronounced: 15.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘E’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Smt. Renu Jauhri, Accountant Member ITA No. 7688/Del/2025 : Asstt. Year: 2016-17 Food Safety and Standards Authority Vs ACIT, of India, 3rd and 4th Floor, Ministry of Circle Exemption-1(1), Health and Family Welfare, FDA New Delhi-110002 Bhawan, Kotla Road, New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AAAGF0023K Assessee by: Sh. Amit Sharma, Adv. Revenue by: Sh. Abhijeet Kumar, CIT-DR Date of Hearing: 02.06.2026 Date of Pronouncement: 15.06.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal of the assessee is directed against the order dated 25.09.2025 of ld. CIT(A)/NFAC passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), wherein the addition made vide assessment order dated 28.12.2018 of Rs.22,97,26,067/- disallowing accumulation u/s 11(2) of the Act as Form 10 was filed late, was confirmed and the request of the assessee/appellant for condonation of delay in filing the Form 10B was declined.

2.

Facts in brief are that the assessee is a charitable society, registered u/s 12AA of the Act, filed its return declaring Nil income on 09.10.2016 for A.Y. 2016-17. The case was selected

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for scrutiny by issuing notice u/s 143(2) dated 19.07.2017 followed by a notice u/s 142(1) alongwith questionnaire. Ld. AO while completing the assessment observed that since Form 10 was filed late on 15.12.2018, whereas the due date for filing the same was 17.10.2016, hence, the accumulation claim u/s 11(2) of the Act was disallowed and the amount of Rs.22,97,26,067/- was added to the total income of the assessee. Penalty proceedings were also initiated.

3.

The said Assessment Order was challenged before the ld. CIT(A) who has dismissed the same by observing in para 6 & 7 extracted below as under: “06. Findings and Decision: The appellant contested the impugned additions made by the AO on the following grounds: 1. The assessing officer has absolutely erred in making addition of Rs 229726067.00 being surplus to be used in subsequent years despite the facts that application of the assessee for condonation of delay is pending with CIT(E), New Delhi for disposal. 2. That the appellant reserves the right to add, amend or delete any ground of appeal before the hearing. 6.1 I have gone through the facts of the case, findings of the AO, and have considered the arguments put forth by the appellant in the grounds of appeal and statement of facts. The appeal is being adjudicated as under: 6.2 Addition of Rs.22,97,26,067/- on account of disallowance as application of income: The grounds of appeal primarily pertain to the addition of Rs.22,97,26,067/- on account of disallowance as application of income. During the assessment proceedings, sufficient opportunity to submit the reply was given to the assessee. The assessee submitted reply to the notice issued by the AO wherein it submitted that

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the application for condonation of delay was pending before CIT(Exemptions). However, AO held that the fact remains that assessee had failed to file statement in form 10 by due date and also assessee had failed to get any condonation for delay by due date as mentioned in show-cause notice. Hence, benefit of accumulation was not available to the assessee as per the provisions of the Act and accordingly computation of income was done without giving benefit of accumulation u/s 11 (2) of the Act. In view of the above, the amount of Rs.22,97,26,067/- was disallowed as application of income and added to the income of the assessee. 6.2.1 During appellate proceedings, many opportunities have been given to the appellant to pursue its case. In its submission, the appellant has submitted that, the Ld.AO has denied the statutory benefit of amount of accumulation under section 11(2) only on the contention that the form 10 which has been prescribed for claiming the subject benefit could not be filed within the timeline prescribed. The appellant submits that application for condonation filed by the Appellant was dismissed vide order dated January 30, 2019 by incorrectly holding that the Appellant was not prevented by any reasonable cause from filing the Form 10 within the stipulated time period. Aggrieved by the same, the Appellant filed a writ petition before the Hon’ble Delhi High Court (‘HC’) in WP(C) No. 4091/2019 wherein the Hon’ble High Court has reserved the judgment and listed the matter on August 18, 2025. 6.2.2 The appellant has taken recourse of appeal before higher appellate authorities against the rejection of condonation application but has failed to provide any document in respect of any relief regarding the condonation of delay despite the fact that sufficient time has elapsed. Thus, the appellant has failed to adduce any documentary evidence to controvert the findings of the AO. Accordingly, the Ground no. 01 of the appeal filed by the appellant is dismissed. 6.2.3 Furthermore, in the Ground of Appeal no. 01, the appellant has pleaded that the assessing officer has absolutely erred in making addition of Rs. 229726067.00 being surplus to be used in subsequent years despite the fact that application of the assessee for condonation of delay is pending with CIT(E), New Delhi for disposal. But it is a matter of fact that the appellant’s application for condonation of delay has already been dismissed by CIT(E), New Delhi. This is as good as confirmation of addition made by the AO. On this very basis also, this Ground of appeal at this stage is non-maintainable.

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6.2.4 In view of the facts and circumstances, I find no reason to interfere with the findings of the AO. Accordingly, the addition of Rs.22,97,26,067/- is confirmed and the grounds raised in this regard are dismissed. 07. In the result, the appeal of the appellant is dismissed.” 4. Aggrieved by the impugned order, the assessee is in appeal before us and has raised the following grounds of appeal: Grounds relating to validity of proceedings “1. That on facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) at National Faceless Appeal Centre, Delhi [CIT(A)] has erred in passing the order dated September 25, 2025, under section 250 of the Income Tax Act, 1961 (‘the Act’) [‘impugned order’] in violation of the principles of natural justice by acting in undue haste and denying adequate opportunity of being heard. 2. That on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has grossly erred in passing the impugned order upholding the disallowances made by the Ld. AO without considering the fact that the subject issue, in the Appellant’s own case, is pending before Hon’ble Delhi High Court in W.P.(C) No. 4091 of 2019, wherein the Hon’ble Delhi High Court has reserved its judgment for pronouncement. Without prejudice to above. Grounds relating to application of income as per section 11 of the Act 3. That on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred in upholding the disallowance of INR 22,97,067 under Section 11(2) of the Act in respect of the amount accumulated/set apart, solely on the ground that Form 10 was not filed within the timelines stipulated under the Act. Further, the Ld. CIT(A) has grossly failed to take cognizance of the fact that there is not even a whisper on the merits of the benefit claimed in the assessment order, let alone any allegation by the Ld. AO. Thus, the impugned order passed by the Ld. CIT(A), upholding the disallowance solely on the ground of delay in filing Form 10, is bad in law and liable to be quashed/set aside.

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4.

That on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred in upholding the disallowance in complete disregard of CBDT Circular No. 07/2018 dated December 20, 2018, which directed Commissioners to admit belated applications in Form 10 for AY 2016-17, considering that the requirement of e- filing Form 10 was introduced for the first time from April 01, 2016. This proposition has been affirmed by the jurisdictional Delhi High Court in Bar Council of India v. CIT (Exemption) [TS-07-HC-2024(DEL)]. 5. That on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating that the Appellant has complied with the substantive provisions of Section 11 of the Act. Therefore, the benefit of non-inclusion of the amount accumulated/set apart cannot be denied merely on account of a delay in filing Form 10. The Ld. C1T(A) further failed to consider that technical lapses should not defeat the cause of substantial justice, particularly when the provision in question is an incentive-granting provision, which must be interpreted liberally in favor of the Assessee. 6. That on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in passing the impugned order without appreciating that the requirement under Section 13(9) of the Act for filing Form 10 is directory and not mandatory. The denial of exemption solely on technical non-compliance defeats the purpose of the incentive-granting provision under Section 11, which must be interpreted liberally to advance the cause of substantial justice. 7. That on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) has erred in passing the impugned order without adjudicating or considering the reasonable cause that prevented the Appellant from filing Form 10 within the stipulated timeline. 8. That on the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in not appreciating the directive contained in CBDT Circular No. 14 (XL-35) dated April 11, 1955, which mandates that Income Tax authorities should not take advantage of an assessee’s ignorance of his rights and should allow all legitimate claims. The impugned order, by upholding the disallowance solely on technical grounds, is contrary to the spirit and intent of the said circular and defeats the principle of substantial justice.

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Ground relating to levy of interest as per section 234B of the Act 9. That on the facts and circumstances of the case and in law, the Learned AO erred in levying interest amounting to INR 2,39,68,131 under section 234B of the Act. The grounds of appeal herein above are independent and without prejudice to each other. The Appellant craves leave to alter, amend and/ or withdraw the Ground(s) of Appeal herein or add any further grounds as may be considered necessary and to submit such statements, documents and papers as may be considered necessary either before or during the appeal hearing.” 5. We have heard the ld. AR and the ld. DR. The ld. AR at the very outset submitted that the ld. CIT(A) ought to have condoned the delay as it was the first year being A.Y. 2016-17 when the Form 10 was introduced to be filed for the purpose of claiming benefit of accumulation u/s 11(2) of the Act. It is further argued that the ld. CIT(A) has dismissed the appeal contrary to the Circular dated 20.12.2018 issued by the CBDT wherein ld. CIT(E) was authorized to consider the grounds for condonation of delay for filing the Form 10 since it being first year of introduction of the Form 10 for the said purpose. It is further submitted that the denial of the condonation of delay in filing Form 10 was challenged by the assessee by filing W.P.(C) No. 4091/2019 in the Hon’ble High Court of Delhi and the said fact was brought to the notice of ld. CIT(E) who has not considered the said fact and dismissed the appeal and denied

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the condonation of delay in filing the Form 10 resulting into addition being confirmed which was made by the Assessing Officer for delayed filing of the Form 10. It is submitted that the Hon’ble High Court has condoned the delay vide order dated 27.04.2026. Hence, it is prayed that the matter be restored to the AO for considering the benefit of accumulation u/s 11(2) of the Act.

6.

The ld. DR in view of the order of the Hon’ble High Court of Delhi dated 27.04.2026, copy of the same is placed on record, has left it to the discretion of the court to restore the matter to the AO who shall examine the claim of the assessee for accumulation u/s 11(2) of the Act.

7.

We have considered the rival submissions. Since, the delay in filing the Form 10 electronically has been condoned by the Hon’ble High Court, we deem it expedient to restore the matter to the file of the AO for considering the claim of the assessee as per law and to extend the benefit of accumulation, if the claim is found lawful and correct. The impugned order is accordingly set aside and appeal of the assessee is allowed for statistical purpose.

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8.

In the result, the appeal of the assessee is allowed for statistical purposes. Order Pronounced in the Open Court on 15/06/2026. Sd/- Sd/- (Renu Jauhri) (Raj Kumar Chauhan) Accountant Member Judicial Member Dated: 15/06/2026 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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