GITA MOHAN BUDHIA CHARITY TRUST,KOLKATA vs. I.T.O., WARD - 1(1), EXEMPTION,, KOLKATA

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ITA 169/KOL/2026Status: DisposedITAT Kolkata11 May 2026AY 2023-20247 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT found that for AY 2023-24, Form 10BB was required, not Form 10B, and the assessee had filed Form 10BB. The tribunal set aside the CIT(A)'s order and remitted the matter to the AO for proper adjudication.

What were the facts?

The assessee trust claimed exemption under Section 11 but did not file Form 10B, leading to an addition of income by the CPC. The CIT(A) dismissed the grounds related to this denial. The assessee appealed to the ITAT.

What were the issues?

Whether the denial of exemption under Section 11 for non-filing of Form 10B was justified when Form 10BB was filed and applicable for the assessment year.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Addl/JCIT(A)- Panaji [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2023-24 dated 19.11.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the action of the CPC in assessing the income of the assessee at Rs.7,72,164/- by denying the exemption claimed u/s. 11 of the Act on the ground that the assessee did not file Form 10B of the Act.

2.

The appellant craves leave to add, alter or delete all or any of the grounds of appeal at the time of hearing.”

3.

Brief facts of the case as culled out from the statement of facts in the appellate order are that the assessee had filed the return of income on 20.09.2023 showing ‘NIL’ income. Thereafter, the return was processed on 18.11.2024, where the CPC assessed the total income of the assessee at ₹7,12,164/- instead of ₹‘NIL’, The Assessing Officer (hereinafter referred to as Ld. 'AO') made an addition on the ground that the Trust fund was applied out of India and if any fund is applied out of India then Form No. 10B has to be filed. Since the assessee had not filed Form No. 10B, the Ld. AO added a sum of ₹7,12,164/- to the total income of the assessee and an intimation was sent u/s 143(1) of the Act. Aggrieved with the intimation, the assessee filed an appeal before the Ld. Addl/JCIT(A), who vide order dated 19.11.2025 para 8.0 of the appellate order held that the appeal filed by the appellant for the AY 2023-24 was allowed. However, while adjudicating the grounds of appeal, the Ld. Addl/JCIT(A) had dismissed the first two grounds and did not adjudicate the last two grounds raised by the assessee. The relevant extracts from the order of the Ld. CIT(A) are as under: “7.0 There are four (04) grounds of appeal raised by the appellant which are adjudicated on the basis of merit of the case, facts, written submission filed by the appellant and information available on record as under:

7.

1 Ground no.01(a) and 1(b) raised by the appellant are related with the issue which challenge the validity of intimation u/s.143(1) of IT Act which are adjudicated on the basis of facts of the case, merit and impugned assessment order as under: Upon careful perusal of impugned assessment order and information available or record it is seen that the appellant contends that the intimation issued u/s 143(1) is "bad in law" and that the CPC should have considered the computation of income in a proper manner. The appellant has not, however, demonstrated any specific violation of statutory provisions in the processing of the return. Section 143(1) provides a mechanical, system-based processing of return, restricted to only those adjustments expressly permitted under clauses (i) to (vi) of section 143(1)(a). The CPC is empowered to make prima facie disallowances, including:

disallowance of exemption/deduction/rebate/allowance, disallowance for non-furnishing of mandatory audit report, and adjustments apparent from information in return. Clause 143(1)(a)(iv) explicitly covers the situation where an assessee fails to furnish the audit report required under any provision. The appellant admittedly did not file the mandatory audit report in Form No. 10B, which is statutorily required under section 12A(1)(b). Where the statute mandates filing of a particular audit form, the CPC is justified in making adjustment. The Hon'ble Supreme Court in CIT v. Nagpur Hotel Owners Association (2001) 247 ITR 201 (SC) held that filing the audit report in the prescribed form is a condition precedent for claiming exemption under section 11. Similarly, in Rajesh Jhaveri Stock Brokers (P) Ltd. v. CIT (2007) 291 ITR 500 (SC), it was held that processing of return u/s 143(1) is purely a computational exercise and does not require detailed verification or investigation. The validity of an intimation can be challenged only when the CPC records adjustments beyond its statutory powers, which is not the case here. The appellant's argument that the CPC should have "considered computation" cannot override the explicit statutory mandate. No illegality or procedural infirmity is found in the issuance of intimation u/s 143(1). Accordingly, grounds no.1(a) and 1(b) raised by the appellant being devoid of merit are dismissed herewith.

7.

2 Ground no.02 raised by the appellant is related with the issue of addition of Rs.7,12,164/- on account of non-filing of Form-10B which is adjudicated on the basis of facts of the case, merit and impugned assessment order as under: Upon careful perusal of impugned assessment order and information available or record it is seen that the appellant disputes the denial of exemption u/s 11 on the ground that Form 10B was not filed. The appellant contends that Form 10B is applicable only when the trust applies funds outside India and that Form 10BB was duly filed. This submission is factually incorrect and legally untenable.

1.

Statutory requirement of Form 10B Under section 12A(1)(b) read with Rule 17B, every trust claiming exemption u/s 11 must get its accounts audited, and furnish an audit report in Form No. 10B, on or before the due date u/s 139(1). This requirement is universal for all trusts claiming exemption u/s 11/12, regardless of whether funds were applied inside or outside India. Form 10BB is relevant only to institutions claiming exemption u/s 10(23C). The appellant is registered u/s 12A. Hence, submission of Form 10BB does not satisfy the statutory requirement.

2.

Consequence of Non-filing of Form 10B The Supreme Court in CIT v. Gujarat Oil & Allied Industries (1993) 201 ITR 325 (SC) clearly held that filing of audit report is mandatory and the exemption cannot be allowed in its absence. Similarly, in CIT v. Xavier's Educational Trust (2014) 369 ITR 194 (Mad.), it was held that Form 10B is a mandatory condition for claiming exemption, and its-non-filing is fatal. The CPC, therefore, was justified in invoking section 143(1)(a)(iv) and computing income without granting exemption.

3.

Issue of Opportunity of Hearing Processing u/s 143(1) is a system generated intimation and no personal hearing is required. This legal position has been affirmed in several judicial decisions, including Rajesh Jhaveri Stock Brokers (supra). The CPC does not perform an adjudicatory assessment; hence the principles of natural justice are not violated. Since the assessee did not file the mandatory Form 10B, the CPC rightly denied exemption u/s 11 and made the consequential addition of Rs. 7,12,164/-Accordingly, ground no.02 raised by the appellant being devoid of merit is dismissed herewith.

7.

3 As the interest provisions mentioned under section 234A, 234B and 234C of IT Act are mandatory and consequential in nature, ground no.03 raised by the appellant does not require separate adjudication.

7.

4 As the appellant has not adduced any additional grounds of appeal and also not altered or deleted any grounds of appeal during the course of appellate proceedings, grounds no.04 raised by the appellant does not required separate adjudication.

8.

0 In the result, the appeal filed by the appellant for the AY 2023-24 is allowed herewith.”

4.

Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.

5.

None appeared on behalf of the assessee and the Council of appeared was not having any valid authorisation and therefore, the case was heard with the assistance of the Ld. DR. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

6.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. Addl./Joint CIT(A). A perusal of the Statement of Facts filed before the appellate authority shows that the assessee had contended that Form No. 10B was required to be filed only if any fund is applied outside India and as the assessee had never applied any fund outside India, which is apparent from ITR 7 where the details can be found, therefore, the question of filing Form No. 10B did not arise. This, however, was not appreciated by the Ld. CIT(A). The assessee had filed Form No. 10BB in the prescribed form as per the Act, which is also mentioned in the intimation issued under section 143 (1) of the Act. We also note that with effect from 01/04/2023, Form No. 10BB is required to be filed and not Form No. 10B as per the facts of the case of the assessee. Our attention was drawn to page 20 of the order of the Ld. CIT(A) by the Ld. DR. The figure of ₹7,72,164/- is apparently incorrectly mentioned on account of clerical error in column 4 on page 52 of the memo of appeal, which is a copy of the return filed. In the interest of justice and fair play it was considered by the Bench that the order of the Ld. CIT(A) may be set aside as the correct provisions of the law had not been applied as per Rule 17B of the Income Tax Rules, 1962 and the issue may be set aside before the Ld. AO so that a proper opportunity of being heard may ITA No(s). 169/KOL/2026 Assessment Year(s) 2023-24 be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. Addl/JCIT(A) and remit the matter to the Ld. AO for amending the intimation issued as the assessee had filed the required Form No. 10BB and there was no question of denial of the exemption claimed in the intimation issued. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make by filing the required evidence. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

7.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 11th May, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 11.05.2026 Bidhan (Sr. P.S.)

Copy of the order forwarded to:

1.

Gita Mohan Budhia Charity Trust, 208, J. L. Bajaj Street, Kolkata, West Bengal, 700007. 2. ITO, Ward-1(1), Exemption, Kolkata.

3.

Addl/JCIT(A)-Panaji.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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