LIONS DISTRICT 323 A1 CHARITY TRUST,MUMBAI vs. ITO EXEM WARD 1(4), MUMBAI, MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER;

(A)dated 02.01.2026 for Assessment Year (A.Y.) 2016-17. The assessee has

raised the following grounds of appeal:

learned authorised representative (ld.AR) of the assessee submitted that the

assessee is a charitable institute/trust registered under Section 12AB. The

assessee is engaged in imparting education and providing medical relief and

assistance to poor and needy persons. For AY 2016-17 the assessee filed return

of income on 19.12.2017. The assessee filed its Form 10B on 20.12.2017. The

assessee has shown nil income. The gross receipt of assessee was of

Rs.4,87,269/-. The Ld. AR due to inadvertent the amount of corpus donation was

reported as Rs.8,39,370/- instead of Rs.3,30,000/-. Thus, total receipt was

reported inadvertently at Rs.12,81,021/-. The assessee claim application of

income under Section 11 of Income Tax (Act) on account of revenue expenditure

of Rs.8,15,483/-. The return was processed on 30.05.2018 by CPC Bangalore. 2 The CPC while processing return treated entirely gross receipts as per ITR of

Rs.12,81,021/- as income of assessee in place of 4,87,269/- without allowing

expenses incurred for the object of the assessee trust. The CPC treated entire

receipt as income of assessee. The assessee filed rectification under Section 154

on 12.04.2019. The application of assessee was dismissed/rejected on

28.06.2019. Application of assessee for condonation of delay before ld. CIT(E)

under Section 199(2)(B) in filing Form 10B was also rejected. The assessee filed

application for correction vide letter dated 04.02.2022 and again on 11.02.2022

for correcting the mistake in Form 10B. The Ld. CIT(E) sought response for

condoning the delay with necessary details. The Ld. CIT(E) again rejected the

application for correction in Form 10B.

wherein the action of CPC/AO was upheld. The Ld. AR of the assessee submitted

that there are series of decisions of Tribunal as well as of higher Courts, wherein,

it has been held that filing of Form 10B is directory and mere a procedural

irregularity. The matter may be restore back to the file of jurisdictional Assessing

Officer by condoning the delay in furnishing Form 10B and AO may be directed

to verify the fact for allowing the application of income under Section 11 as the

assessee fulfils all the condition for availing benefit under Section 11. The

assessee is having valid registration under Section 12AB. The application of

income under Section 11 cannot be denied for mere procedural delay. In without

prejudice and alternative and without prejudice, the Ld. AR of the assessee submits that lower authorities fails to appreciate that if exemption application

under Section 11 is not allowed, the trust is to be treated as Association of

Persons (AOP) and revenue expenditure is to be allowed against the actual

income and not gross receipts. The gross receipts itself cannot be taxed without

allowing legitimate expenses.

and order of CIT(A). The Ld. Sr. DR for the revenue submitted that Form 10B

was filed belatedly. The delay in filing Form 10B was rejected twice by Ld CIT(E)

so the assessee is not eligible for any relief whatsoever claimed before this

Bench and the appeal of assessee is liable to be dismissed.

the orders of lower authorities carefully. There is no dispute that assessee is a

trust having registration under Section 12AB. We find that the return of income

was filed on 19.12.2017. However, the Form 10B was filed subsequent to filing of

return of income i.e. on 20.12.2017. The CPC while processing the return of

income not allowed the application of income under Section 11 and entire receipt

as reported by assessee at Rs.12,81,021/- was treated as income of assessee.

Before us the Ld. AR of the assessee made two-fold submission that the

assessee due to inadvertent act shown corpus donation at Rs.8,39,370/- instead

of Rs.3,30,000/- and that filing of Form 10B is merely a directory and a

procedural delay in filing Form 10B cannot be biased for denying exemption

under Section 11. We find that in a series of decision, the High Court’s has held that is Form 10B was available at the time of assessment or at the time of first

appellate stage, the same may be considered as procedural irregularity. We find

that Hon’ble Supreme Court in CIT vs GM Knitting Industries Ltd. (2016) 71

taxmann.com 35 (SC) / 376 ITR 456 (SC) held that even though necessary

certificate in Form 10CCB along with return of income had not been filed but the

same was filed before final order of assessment was made, the assessee was

entitled to claim deduction under section 80IB. Thus, keeping in view the same

reasoning for filing Form-10B, that it available during assessment, though it was

not considered by CPC/AO. Hence, the delay in filing Form-10B is condoned and

matter is restore back to the file of jurisdictional Assessing Officer to verify the

fact and if the assessee fulfils all the conditions, allowed the application of

income to the assessee. The assessee has also given liberty to correct the error

in reporting corpus donation relief at Rs.8,39,370/- in place of 3,30,000/- in

Form-10B. The jurisdictional Assessing Officer is directed to verify all the facts

and pass order afresh in accordance with law.

Order pronounced in the open Court on 06/05/2026 at the time of hearing.

S S/ Sd/- Sd/-

GIRISH AGRAWAL PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, DATED:06/05/2026 Aniket, Sr. PS Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai