NANHA TARA WELFARE FOUNDATION ,MUMBAI vs. INCOME TAX OFFICER (E)-2(1), MUMBAI

आदेश / ORDER

PER BEENA PILLAI, JUDICIAL MEMBER:

Present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income Tax, Appeal, Addl/JCIT (A)-1 Delhi, [hereinafter referred to as “the Ld.CIT(A)”] dated 15/12/2025 for the Assessment Year 2021-22.

The assessee is a public charitable trust. For AY 2021–22, the Ld. AO, vide order dated 14.09.2022, disallowed the exemption claimed by the assessee on account of late filing of Form 10B. Subsequently, the assessee filed Form 10B and the return of income on 31.03.2022 as against the extended due date of 15.03.2022. The delay was caused due to unforeseen circumstances, as both the Managing Trustee and the Chartered Accountant were severely affected by COVID-19. The assessee thereafter filed a condonation application before the Ld. CIT(E) seeking condonation of delay in filing Form 10B but the Ld.CIT(E) rejected the application on the ground of delay.

Aggrieved by the order of AO/Ld.CIT(E) assessee preferred appeal before Ld.CIT(A).

2.1. Before the Ld.CIT(A), the assessee submitted that the Ld. AO erred in making an addition of Rs. 19,36,611/- by disallowing the exemption claimed for AY 2021–22, solely on account of delay in filing Form 10B. It was further submitted that Form 10B along with the return of income was filed on 31/03/2022 as against the extended due date of 15/03/2022. The delay occurred due to unavoidable and unforeseen circumstances, as both the Managing Trustee and the Chartered Accountant were severely affected by COVID-19 during the relevant period, resulting in delay in timely compliance. The assessee submitted that the delay was neither intentional nor due to any negligence and that a condonation application for delay in filing Form 10B had been filed before the Ld. CIT(E). Accordingly, it was prayed that the exemption u/s 11 ought not to be denied merely on technical grounds.

2.2. The Ld. CIT(A) observed that the CBDT, in exercise of powers conferred u/s 119(2)(b) of the Act, vide Circular No. 2/2020 dated 03/01/2020, has authorized the Commissioners of Income Tax to admit belated applications for condonation of delay in filing Form No. 10B for AY 2018–19 and subsequent years. It was noted that the assessee had filed an application for condonation of delay, which was stated to be pending before the Ld. CIT(E), Mumbai.

2.3. However, the Ld. CIT(A) held that since the condonation application was still pending before the Ld.CIT(E), no interference could be made in the jurisdiction vested with the said authority by the CBDT. It was further observed that the case laws relied upon by the assessee were distinguishable on facts, as in those cases the condonation applications had already been adjudicated, whereas in the present case, the same was still pending. The Ld.CIT(A) thus concluded that since the assessee failed to file Form 10B within the prescribed due date, the exemption u/s 11/12 had been rightly denied by CPC.

Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.

The Ld. AR submitted that the assessee had filed Form No. 10B along with the return of income on 31/03/2022 as against the extended due date of 15/03/2022. The delay occurred due to unavoidable and bona fide circumstances, as both the Managing Trustee and the Chartered Accountant were severely affected by COVID-19, resulting in delay in timely compliance.

3.1. Placing reliance on CBDT Circular No. 17/2021 dated 09/09/2021, the Ld. AR submitted that the due dates for filing audit reports were extended in view of the prevailing pandemic situation, thereby acknowledging the practical difficulties faced by taxpayers. It was submitted that the assessee’s case squarely falls within such exceptional circumstances and, therefore, a liberal view ought to be adopted.

3.2. The Ld. AR further submitted that the assessee has also filed a condonation application before the Ld. CIT(E) in terms of section 119(2)(b), which is pending for adjudication. It was contended that the procedural requirement of filing Form No. 10B should not defeat the substantive claim of exemption, especially when there is no dispute regarding the charitable nature of the activities carried out by the assessee. Accordingly, it was prayed that the exemption u/s 11 be allowed. In the alternative, it was prayed that the matter may be restored to the file of the appropriate authority to be decided after disposal of the condonation application.

3.3. Per Contra, The Ld. DR strongly supported the orders of the lower authorities and submitted that the denial of exemption u/s 11 is in accordance with law. It was contended that filing of audit report in Form No. 10B within the prescribed due date is a mandatory condition for claiming exemption, and failure to comply with the same disentitles the assessee from such claim. The Ld. DR submitted that the assessee admittedly filed Form No. 10B on 31/03/2022, beyond the extended due date of 15/03/2022. Therefore, the Ld. AO was justified in denying the exemption. It was further submitted that the reliance placed by the assessee on CBDT Circular No. 17/2021 dated 09/09/2021 is misplaced, as the said circular itself prescribes specific timelines, which the assessee failed to adhere to.

3.4. The Ld. DR further contended that the condonation application filed by the assessee before the Ld. CIT(E) is still pending and has not been adjudicated. In absence of any condonation of delay by the competent authority, the assessee cannot claim the benefit of exemption. It was submitted that the Ld. CIT(A) has rightly held that no interference is called for in such circumstances. Accordingly, it was prayed that the order of the Ld. CIT(A) be upheld and the appeal of the assessee be dismissed.

We have perused the submissions advanced by both sides in light of the records placed before this Tribunal.

4.1. It is an admitted position that the assessee had filed Form No. 10B on 31/03/2022 as against the extended due date of 15/03/2022. The explanation furnished by the assessee demonstrates that the delay occurred due to bona fide and unavoidable circumstances, as both the Managing Trustee and the Chartered Accountant were severely affected by COVID-19 during the relevant period. The said explanation has not been controverted by the revenue with any cogent material to establish mala fide intent or deliberate default.

4.2. We further note that the assessee has filed an application for condonation of delay before the competent authority i.e., Ld. CIT(E) in terms of section 119(2)(b) of the Act, which is stated to be pending. In such circumstances, the claim of exemption cannot be defeated merely on account of a technical lapse, especially when the substantive conditions for claiming exemption are not in dispute.

4.3. We find support from the decision of the coordinate benches of the Tribunal, wherein it has been consistently held that delay in filing Form No. 10B, when reasonably explained and when the audit report is otherwise available on record, should not result in denial of exemption. In the case of Rotary Club of Bombay Queens Necklace Charitable Trust vs. ITO (Exemption) (2026) 184 taxmann.com 168 (Mumbai - Trib.), it has been held that where delay in filing Form No. 10B was reasonably explained and the audit report was available during processing of return, the Assessing Officer was to be directed to consider the same and allow exemption. Similarly, in Shree Bhairav Seva Samiti vs. ITO (Exemption) (2023) 149 taxmann.com 478 (Mumbai - Trib.), it was held that exemption u/s 11 cannot be denied merely on technical grounds of delay in filing Form No. 10B when the procedural requirement has been substantially complied with.

4.4. Respectfully following the aforesaid judicial precedents, we hold that the delay in filing Form No. 10B in the present case deserves to be condoned, as the same is supported by reasonable cause and there is no allegation of any mala fide or deliberate default on the part of the assessee.

Accordingly, we direct the Ld. AO to consider Form No. 10B filed by the assessee and allow the claim of exemption u/s 11 in accordance with law, if the assessee is found otherwise eligible.

In the result, the appeal of the assessee stands allowed for statistical purposes.

Order pronounced in the open court on 30/04/2026.

Sd/- Sd/- ARUN KHODPIA BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 30/04/2026 SC. Sr.P.S.

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NANHA TARA WELFARE FOUNDATION , FLAT NO. 2 FAIR VIEW APPRTS 5TH ROAD, 1 CHEMBUR, MUMBAI-400071, MAHARASHTRA INCOME TAX OFFICER (E)-2(1), 2 6TH FLOORM MTNL TE EX BUIDLIGN CUMBALLL HILL, MUMBAI-400026, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE