GURUDWARA SRI DASHMESH DARBAR ,MUMBAI vs. ITO, EXEMPTION WARD 1(3), MUMBAI

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ITA 4047/MUM/2026Status: DisposedITAT Mumbai23 June 2026AY 2017-189 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 condoned the delay in filing the appeal before the CIT(A) due to bona fide reasons and the assessee's continuous pursuit of alternate remedies. The Tribunal then adjudicated the issue on merits and directed the Assessing Officer to allow the exemption under section 11.

What were the facts?

The assessee, a charitable trust, filed its return claiming exemption under section 11. The exemption was denied under section 143(1) due to delayed filing of the audit report (Form 10B). The CIT(A) dismissed the appeal in limine due to delay in filing the appeal before it.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) should be condoned and whether exemption under section 11 can be denied solely for delayed filing of the audit report.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 12AA,Section 119,Section 143(1),Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘E’ BENCH

For Appellant: Shri Dharmesh Shah a/w, Ms. Saiyami Shah
For Respondent: Smt. Sujatha Iyyanger
Hearing: 18/06/2026Pronounced: 23/06/2026

आदेश / O R D E R PER AMIT SHUKLA (J.M): This appeal has been filed by the assessee trust against the order dated 25.03.2026 passed by the Ld. Addl./JCIT(A)- 7, Delhi, for Assessment Year 2017-18. The assessee has challenged the action of the Ld. CIT(A) in dismissing the appeal in limine on the ground of delay in filing the appeal

2 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar and has further challenged the denial of exemption under section 11 of the Income Tax Act, 1961, amounting to Rs.2,98,05,433/-, which was disallowed while processing the return under section 143(1) on account of delayed filing of audit report in Form No.10B.

2.

Briefly stated, the assessee is a charitable and religious institution registered under section 12A/12AA of the Act and has been carrying on charitable, educational and religious activities for several decades. For the year under consideration, it filed its return of income declaring total income of Rs.2,05,800/- after claiming exemption under section 11 of the Act. While processing the return under section 143(1), the CPC denied the exemption claimed under section 11 on the ground that the audit report in Form No.10B had not been furnished within the prescribed time and consequently determined the total income at Rs.3,00,11,230/-, resulting in a demand being raised against the assessee. Aggrieved by the said adjustment, the assessee preferred an appeal before the Ld. CIT(A) along with a petition seeking condonation of delay. However, the Ld. CIT(A) declined to condone the delay and dismissed the appeal without examining the grounds raised on merits. The assessee is thus in further appeal before us.

3 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar 3. Before us, the Ld. Counsel submitted that the delay in filing the appeal before the first appellate authority occurred due to bona fide and unavoidable circumstances. It was submitted that the trustees managing the affairs of the institution were not conversant with technical tax compliances and had entrusted the entire taxation work to their long-standing Chartered Accountant who had been advising the trust for nearly two decades. It was further pointed out that one of the trustees who was looking after the accounts and tax affairs of the trust was of advanced age, suffered from prolonged illness and subsequently expired on 24.01.2019. It was submitted that the intimation issued under section 143(1) did not come to the notice of the trust at the relevant point of time and the demand was noticed only when the income tax portal was accessed on 28.03.2023. Immediately thereafter, the assessee filed an application under section 154 seeking rectification of the adjustment and simultaneously, acting upon professional advice, invoked the remedy available under section 119 of the Act by filing an application before the competent authority seeking condonation of delay in filing Form No.10B. It was contended that the assessee remained under a bona fide belief that once the delay in filing Form No.10B was condoned, the consequential denial of exemption under section 11 would automatically stand rectified and, therefore, the assessee continued to pursue the said remedy before the competent

4 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar authority. It was only after the application under section 119 came to be rejected by the Ld. CIT(E) vide order dated 10.06.2025 that the assessee, upon obtaining further legal advice, preferred the appeal before the Ld. CIT(A).

4.

We have carefully considered the rival submissions and perused the material available on record. The first issue requiring adjudication is whether the delay in filing the appeal before the Ld. CIT(A) deserved to be condoned. The chronology of events placed before us demonstrates that the assessee had not abandoned its remedies nor remained inactive after becoming aware of the adjustment made under section 143(1). On the contrary, immediately upon noticing the demand, it filed an application under section 154 seeking rectification and thereafter pursued proceedings before the competent authority under section 119 of the Act for condonation of delay in filing Form No.10B. The said proceedings remained pending for a considerable period and culminated in an order passed by the Ld. CIT(E) only on 10.06.2025. The explanation furnished by the assessee thus finds support from contemporaneous events and documentary material placed on record. The delay in filing the appeal cannot be viewed in isolation from the proceedings continuously pursued by the assessee before the competent authority under the bona fide belief that the denial of exemption under section 11 would stand resolved through the

5 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar statutory mechanism specifically provided for condonation of delay in filing Form No.10B.

5.

We further find that the assessee is a charitable institution managed by trustees who are not shown to possess specialised knowledge of tax laws and who had entrusted the compliance requirements to professionals and office bearers looking after the affairs of the trust. The explanation regarding the advanced age and deteriorating health of the persons handling the tax affairs of the institution has not been controverted by the Revenue. More importantly, the conduct of the assessee throughout the relevant period does not indicate deliberate negligence, conscious disregard of statutory remedies or any attempt to gain advantage from the delay. The material on record rather shows that the assessee remained actively engaged in pursuing the remedies available under the Act and was prosecuting its claim in a manner which, according to the professional advice available to it, constituted the appropriate course. Viewed in the entirety of the surrounding circumstances, namely the nature of the assessee as a charitable institution, the factual circumstances relating to the management of its affairs, the immediate steps taken after discovery of the adjustment, the continuous pursuit of alternate statutory remedies and the absence of any material suggesting mala fide conduct, we are of the considered opinion that the assessee had established

6 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar sufficient and reasonable cause for not filing the appeal within the prescribed period. Accordingly, the delay in filing the appeal before the Ld. CIT(A) deserves to be condoned and we order accordingly.

6.

Having condoned the delay, the next question is whether the matter should be restored to the file of the Ld. CIT(A) for adjudication on merits. Ordinarily, where an appeal has been dismissed on the ground of limitation, the matter is restored to the first appellate authority after condoning the delay. However, the peculiar facts of the present case persuade us to adopt a different course. The controversy involved is confined to a narrow issue arising from denial of exemption under section 11 solely on account of delayed filing of Form No.10B. The relevant facts are not in dispute and are already available on record. Both parties have addressed us on the merits of the issue and no further factual verification is required. In these circumstances, remanding the matter to the first appellate authority would merely prolong the litigation and subject the assessee to another round of proceedings despite the entire controversy being capable of adjudication on the basis of the material already available before us. We therefore consider it appropriate, in the interest of substantial justice and finality of proceedings, to adjudicate the issue on merits ourselves.

7 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar 7. On merits, we find that the sole basis on which exemption under section 11 has been denied is the delayed filing of audit report in Form No.10B. There is no dispute regarding the registration of the assessee under section 12A/12AA, the charitable nature of its objects and activities, the genuineness of its functioning or the application of income for charitable purposes. The adjustment made under section 143(1) does not emanate from any finding that the assessee was otherwise disentitled to exemption under section 11 but rests entirely upon a procedural lapse relating to delayed furnishing of the audit report. The material available on record shows that the audit report was ultimately furnished and the reasons for delay have been consistently explained by the assessee. It has further been brought to our notice that applications seeking condonation of delay in filing Form No.10B for subsequent assessment years on substantially identical facts were accepted by the competent authority. While each assessment year is independent, the acceptance of similar explanations for the subsequent years lends support to the bona fides of the explanation furnished by the assessee for the year under consideration as well.

8.

Considering the totality of facts and circumstances, we are unable to sustain the denial of exemption under section 11 merely on account of delayed filing of Form No.10B. Once the substantive eligibility of the assessee for exemption under

8 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar section 11 is not in dispute, the charitable character of the institution is accepted, the audit report has ultimately been furnished and the delay stands satisfactorily explained, denial of exemption solely on account of such procedural lapse would not be justified on the peculiar facts of the present case. No material has been brought on record by the Revenue to demonstrate that the assessee was otherwise ineligible for exemption under section 11. We therefore direct the Assessing Officer to allow the exemption claimed under section 11 and delete the adjustment made while processing the return under section 143(1).

9.

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

Order pronounced on 23rd June, 2026.

Sd/- Sd/- (GIRISH AGRAWAL) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 23/06/2026 KARUNA, sr.ps

9 ITA No.4047/Mum/2026 Gurudwara Sri Dashmesh Darbar

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER,

(Asstt. Registrar) ITAT, Mumbai

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