BHARATHAMATHA FAMILY WELFARE FOUNDATION,TIRUVARUR vs. CIT EXEMPTIONS WARD, TRICHY

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ITA 654/CHNY/2026Status: DisposedITAT Chennai29 June 2026AY 2018-198 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the requirement of filing the audit report along with the return of income is directory, not mandatory. Exemption u/s.11 cannot be denied for procedural lapses if substantive conditions are met, and the audit report was filed within the extended due date.

What were the facts?

The assessee, a charitable trust registered u/s.12A, filed its return of income claiming exemption u/s.11. The CPC denied the exemption, stating that the audit report in Form 10B was not filed along with the return. Although the audit report was filed within the extended due date, there was a two-day gap between filing the return and uploading the audit report.

What were the issues?

Whether denial of exemption u/s.11 for a delay in filing the audit report (Form 10B) along with the return of income is justified, when the report was filed within the extended due date.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 07.05.2026Pronounced: 29.06.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeal)/ADDL/JCIT, (hereinafter referred to as ‘Ld.CIT(A)’), Mumbai, dated 14.08.2025 for the Assessment Year (hereinafter referred to as ‘AY’) 2018-19.

2.

The assessee is a charitable trust duly registered u/s.12A of the Act. For the A.Y.2018-19, the assessee filed its return of income (in short ‘ROI’) on 17.10.2018 declaring ‘Nil’ total income after claiming exemption

ITA No. 654/Chny/2026 (AY 2018-19) Bharathamatha Family Welfare Foundation :: 2 :: u/s.11 of Income Tax Act. 1961 (hereinafter referred to as ‘the Act’). The CPC, while processing the return u/s.143(1) of the Act, took the view that in the absence of an audit report in Form No.10B, the assessee was not entitled to exemption u/s.11 of the Act. Consequently, the CPC denied the assessee’s claim of exemption and brought to tax the entire gross receipts amounting to Rs.1,23,08,496/- as taxable income, while issuing the intimation u/s.143(1) of the Act. In this regard, it was brought to our notice that the assessee, had duly obtained and furnished the audit report in Form No.10B, as prescribed for Trusts registered u/s.12A of the Act, on 19.10.2018 [i.e., within two days of filing the return of income and well within the extended time of filing both ROI and audit report]. And that CBDT had extended the time for filing of ROI and report of audit for AY.2018-19, from 15 October, 2018 to 31st October, 2018. Aggrieved, assessee filed rectification application u/s.154 of the Act, which was dismissed on 10.08.2020 stating the reason that audit report in Form 10B was not furnished along with ITR.

3.

Aggrieved by the rejection of rectification order passed by the CPC, the assessee preferred an appeal before the Ld.CIT(A). During the course of appellate proceedings, the assessee brought to the notice of the Ld. CIT(A) that it is a Trust duly registered u/s.12A of the Act, and that it was required to furnish its audit report in Form No.10B and had filed the audit report in Form No.10B on 19.10.2018. Accordingly, it was contended

ITA No. 654/Chny/2026 (AY 2018-19) Bharathamatha Family Welfare Foundation :: 3 :: before the Ld. CIT(A) that the exemption claimed u/s.11 of the Act, which had been denied by the CPC while processing the return, ought to be allowed.

4.

The Ld. CIT(A), while disposing of the appeal, observed that the assessee is indeed a registered trust u/s.12A of the Act, but had to mandatorily furnish the audit report in Form No.10B on or before the due date of filing the return of income, in terms of Rule 12(2) of the Income- Tax Rules, 1962. And further observed that the audit report in Form No.10B had been digitally signed on 19.10.2018, which was subsequent to the filing of the return of income on 17.10.2018. And expressed his helplessness in condoning the delay in furnishing the said audit report because he was not vested with the authority to do so. Consequently, the Ld. CIT(A) upheld the action of the CPC denying the assessee’s claim of exemption u/s.11 of the Act and dismissed the appeal of the assessee.

5.

Aggrieved by the impugned action of the Ld. CIT(A), assessee is in appeal before us.

6.

We have heard the rival submissions, perused the material available on record, and carefully considered the orders of the authorities below. It is an admitted fact that the assessee is duly registered u/s.12A of the Act; and filed the RoI for AY.2018-19 on 17.10.2018 as well as the Audit Report in Form 10B on 19.10.2018, well before the extended due date of

ITA No. 654/Chny/2026 (AY 2018-19) Bharathamatha Family Welfare Foundation :: 4 :: furnishing of ITR on 31.10.2018. The CBDT vide its order u/s 119 of the Act, dated 08.10.2018 had extended due date of furnishing of ITR for AY 2018-19 on 31.10.2018 which is reproduced as under: -

Order under Section 119 of the Income-tax Act, 1961 On consideration of representations from various stakeholders for further extension of due date being 30th September, 2018 for purpose of filing return of income as well as various reports of audit pertaining to Assessment Year 2018-2019 for assessees covered under clause (a) of Explanation 2 of section 139(1) of the Income-tax Act, 1961 (Act), the Board, in partial modification of its order dated 24.09.2018 in file of even number, hereby, further extends the due date for filing of return of income and reports of audit pertaining to Assessment Year 2018-2019 from 15th October, 2018 to 31st October, 2018. However, as specified in earlier order dated 24.09.2010, assessees filing their return of income within the extended due date shall be liable for levy of interest as per provisions of section 234A of the Act. Thus, it is noted that CBDT had extended the time for filing of ROI and report of audit for AY.2018-19, from 15 October, 2018 to 31st October, 2018, and hence, assessee filed both ITR & Form 10B before the extended time for filing the same. Merely because the assessee didn’t file the Form 10B along with ITR, exemption claimed has been denied by the CPC u/s.143(1) of the Act by the order dated 04.03.2020. In this regard, it is noted that (i) assessee had obtained the Audit Report in Form 10B on 15.05.2018, whereas had (ii) e-verified the Audit Report on 19.10.2018 and thereafter, filed rectification application before CPC, which was dismissed vide order dated 10.08.2020. On appeal, the Ld.CIT(A) ignored the assessee’s assertion of e-verifying the Audit Report on 19.10.2018, well before filing of rectification application, but CIT(A) was pleased to dismiss

ITA No. 654/Chny/2026 (AY 2018-19) Bharathamatha Family Welfare Foundation :: 5 :: the appeal on the ground that filing of Form 10B along with ITR was mandatory, which impugned action cannot be countenanced for the reasons given infra.

7.

It is an admitted fact that the assessee had filed its return of income on 17.10.2018 declaring ‘Nil’ income. It is observed that the audit report in Form No.10B was duly uploaded on 19.10.2018, whereas the statutory due date for furnishing the said audit report under the Act was 30.09.2018, it was extended up to 31.10.2018. Hence, it is evident that the assessee had furnished the audit report within the prescribed due date, though there was a gap of two days between the date of filing of the return and the uploading of the audit report.

8.

It is a settled position of law, as consistently held in a catena of judicial pronouncements, that the requirement of filing the audit report along with the return of income is directory and not mandatory in nature. It has been further held that exemption u/s.11 of the Act cannot be denied merely on account of procedural or technical lapses, provided the substantive conditions prescribed under the law are duly complied with, In the present case, it is not the case of the Revenue that the assessee is otherwise ineligible to claim exemption w/s.11 of the Act.

ITA No. 654/Chny/2026 (AY 2018-19) Bharathamatha Family Welfare Foundation :: 6 :: 9. We, therefore, hold that once the assessee in the facts of the case has obtained and furnished the audit report in Form No.10B within the time prescribed under law, the benefit of exemption u/s.11 of the Act cannot be denied merely on the ground that such report was uploaded a few days subsequent to the filing of the return, or that the return had inadvertently mentioned section 10(23C) (iv) of the Act instead of section 11 of the Act. Such technical discrepancies cannot defeat the substantive right of the assessee, particularly when all the statutory preconditions for availing exemption have been duly satisfied.

10.

We further note that an identical issue had arisen in the case of M/s Alternative for India Development for the A.Y.2016-17 in ITA No.2114/Chny/2024, wherein this Tribunal, after considering several judicial pronouncements, held that the filing of Form No.10B along with the return of income is a procedural requirement and not a statutory mandate, and that the exemption u/s.11 cannot be denied merely for not filing Form No.10B simultaneously with the return. The relevant operative portion of the order reads as under:

3.0 We have heard the rival submissions in the light of material available on records. The Ld. DR placed reliance upon the order of the lower authorities. It is the case of the assessee that filing of Form-10B is merely a directory exercise and not a mandatory requirement. In support of its contentions, the Ld. Counsel for the assessee has relied upon the decisions of Hon'ble Madras, Bombay and Gujarat High Courts and Hon'ble Coordinate benches of this tribunal as well as those emanating from Delhi Benches, Ahmadabad Benches, Bangalore Benches. Thus, our attention is

ITA No. 654/Chny/2026 (AY 2018-19) Bharathamatha Family Welfare Foundation :: 7 :: drawn to the decisions of ITA No. 1166/Chny/2024 of Chennai in the case of Kaakkum Karangal, ITA No.302/DEL/2024 of Delhi in the case of Rajdhani Maitri Club Foundation, ITA No.209/Ahd/2022 of Ahmedabad in the case of Gujarat Energy Development Agency, ITA No.3657/Del/2023 of Delhi in the case of Bhagwant Kishore Memorial Educational Society, ITA No. 1396/Bang/2024 of Banglore in the case of M/s.Sarvadeivatha Education Trust and ITA No.695/Ahd/2023 of Ahmedabad in the case of Anjana Foundation Vadodara and of Hon'ble Gujarat High Court decision in the case of Indian Panel Board Manufacturer v. DICT (ITA No.655 of 2022 dated 21.03.2022), decision of the Hon'ble Madras High Court in the case of Chandraprabhuji Maharaj Jain v. DCIT reported in 110 Taxmann.com 11, decision of the Hon'ble jurisdictional High Court in the case of CIT v. SPIC Educational Foundation (TCA No. 1593 of 2008 dated 12.12.2018 and of Hon'ble Bombay High Court in the case of Xavier Mandel Pvt Ltd. As regards decision of Hon'ble Coordinate bench of this tribunal in the case of Kakkum Karangal ITA No.1166/Chny/2024 the following was held:- "....10. For completeness, we make it clear that the Ld.CIT(A) erred in rejecting the appeal preferred by the assessee on a ground which was not raised/flagged by the CPC i.e. delay of less than one month in filing/uploading of Audit Report. In this context, it is noted that such an issue is no longer res integra i.e. filing of Form 10AB (Audit Report) would be directory in nature and as such if the assessee files the Audit Report before completion of assessment, then, the same should be considered by the Income Tax Authorities for processing of the assessment/appellate order (refer the Hon'ble Gujarat High Court decision in the case of Indian Panel Board Manufacturer v. DICT (ITA No.655 of 2022 dated 21.03.2022) and also the decision of the Hon'ble Madras High Court in the case of Chandraprabhuji Maharaj Jain v. DCIT reported in 110 Taxmann.com 11; and also the decision of the Hon'ble jurisdictional High Court in the case of CIT v. SPIC Educational Foundation (TCA No.1593 of 2008 dated 12.12.2018), wherein the Hon'ble High Court has held that filing of Form 10 for accumulation of income u/s.11(2) of the Act which was filed beyond due date couldn't disentitle the trust from exemption claimed u/s. 11 of the Act. The Hon'ble Court directed the AO to examine the benefit of admissibility rather than to foreclose the claim of assessee on technicalities. Therefore, respectfully taking note of the binding decision of the Hon'ble High Court (supra), we hold that the Ld.CIT(A) erred by misdirecting on an issue which wasn't raised by CPC……….’’ 11. The assessee is noted to have obtained and furnished the audit report in Form No.10B within the time prescribed under law, hence, the benefit of exemption u/s.11 of the Act cannot be denied merely on the ground that such report was uploaded a few days subsequent to the filing of the return, In the light of the discussion supra, we hold that the filing of Form No.10B is a procedural formality and few

ITA No. 654/Chny/2026 (AY 2018-19) Bharathamatha Family Welfare Foundation :: 8 :: days gap in filing of the same along with ROI, cannot be a ground to deny exemption otherwise available u/s.11 of the Act. Accordingly, we hold that the CPC as well as the Ld. CIT(A) were not justified in denying the assessee exemption u/s.11 of the Act. We therefore set aside the order of the Ld CIT(A) and direct the CPC to consider the Form 10B uploaded/e-verified on 19.10.2018 as valid and allow the exemption u/s.11 of the Act. Thus, the grounds of appeal raised by the assessee are allowed.

12.

In the result, appeal filed by the assessee is allowed.

Order pronounced on the 29th day of June 2026, in Chennai.

Sd/- Sd/- (प�ावती. एस) (एबी टी. वक�) (PADMAVATHY. S) (ABY T. VARKEY) लेखा सद�/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 29th June, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.07.07 13:02:13 +05'30'

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