ANKUR FOUNDATION ,MUMBAI vs. ITO (EXEMP) WARD 2(2), MUMBAI

ITA No. 280/Mum/2026; Ankur Foundation Per Arun Khodpia, AM:

The instant appeal of the assessee is directed against the order of

Commissioner of Income Tax Appeals Additional/JCIT (A)- 1 Ludhiana [“the Ld.

CIT(A)] dated 12.12.2025 for the assessment year 2015-16, arises from

assessment order u/s 143(1) of the Income Tax Act, 1961 (“the Act”) dated

08.09.2017 passed by CPC, Bangalore (in short, “the Ld. AO”). The grounds of

appeal raised by the assessee are as under:

“1) The Ld. CIT(A) is erred in confirming the Order of the A.O. in not allowing deduction U/s 11 of the IT Act, 1961. 2) The Ld. CIT(A) is also erred in not allowing Late filing of Form-10B/ITR knowing that the Ld. PCIT(E) had also rejected the condonation of delay filed before him on the grounds of natural justice, As the A.Y.2015-16 was the 1st year of filing Form no 10B ONLINE. 3) Without prejudice to the above grounds of appeal, the Appellant requests to kindly allow the administrative expenses if not deduction u/s 11 of the Act, to ensure natural justice. 4) The appellant request to delete the addition confirmed by the CIT (A). 5) The appellant craves to add, alter or omit any or all of the above grounds of appeal before or at the time of hearing of the appeal.” 2. The brief facts of the case are that the assessee is a trust formed on

01.08.1995 and registered with Income Tax Department since 19.01.1996. The

assessee trust filed its return of income on 28.03.2017, declaring total income at

Rs. 77,371/-. The original return furnished by the assessee u/s. 139(1), was

processed by the CPC u/s 143(1) of the Act, making a disallowance of

administrative expenses and denying the exemption of claim u/s. 11, thereby

total income of assessee was assessed at Rs. 9,50,150/-. Being aggrieved,

ITA No. 280/Mum/2026; Ankur Foundation assessee preferred an appeal before the Ld. CIT(A). Before Ld. CIT(A) it is clarified

by the assessee that the assessee was not allowed administrative expenses and

exemption u/s. 11 for the reason that there was a delay of 566 days in filing of

form 10AB. Whereas the due date for filing of form 10AB in the instant case was

31st October, 2015, but the assessee had filed it on 19th May, 2017. It was the

submission that the delay was occurred due to genuine oversight as the draft of

form 10AB along with return of income was received by the assessee from its CA

on 16th June, 2016 and on very next date on 17.06.2016, it was approved by the

assessee trust. However, the approval from the side of Chartered Accountant

remains pending due to oversight and finally it got uploaded on 28th March,

2017. Further, the assessee has received a notice u/s. 139(9) from CPC on

14.05.2017. Then the assessee had come to know that filing of form 10B was still

pending. Thereafter, form 10AB was uploaded on 19th May, 2017 i.e., within five

days from date of receiving notice for defective notice u/s. 139(9). Finally, the

return got accepted from assessee’s side on 29.05.2017. The Ld. CIT(A)

considered the submission of the assessee. However, had shown his inability to

condone the delay in filing of Form 10AB for which a suggestion was given that

the power to condone the delay u/s. 119 of the Act is with Principal

Commissioner of Income Tax or Commissioner of Income Tax only, as per

directions of CBDT and, therefore, the assessee was required to approach

ITA No. 280/Mum/2026; Ankur Foundation Jurisdictional Commissioner/ Director of Income Tax to condone the delay in

filing of Form 10AB. Accordingly, the Ld. CIT(A) upheld the findings of Ld. AO and

confirmed the disallowances. Meanwhile, the assessee also approached the

Jurisdictional Commissioner of Income Tax i.e., Ld. CIT(Exemption), Mumbai for

condonation of delay in filing of Form 10B. However, the application of assessee

was rejected by Ld. CIT(Exemption) also. With the observations that the delay

was for considerable number of days and the reasons offered by the assessee

cannot be constitute ‘reasonable cause’ for which the delay can be condoned.

The Ld. CIT(Exemption) further observed that sheer negligence on the part of

applicant for a period extending over one and a half years cannot be acceptable

as a sufficient cause. The Ld. CIT(Exemption) further noted that the assessee

trust is a habitual defaulter, who had filed Form 10B with a delay for assessment

years 2016-17, 2017-18, 2018-19, 2019-20 and 2022-23 as well. He noted that “I

am constraint to note that the applicant trust had not observed with ‘due

diligence’ and carefulness required in making the statutory compliance on the

given fact. I find that the assessee trust has not been able to show that it was

prevented by any reasonable cause from furnishing the audit report within the

specified time.” In conclusion, the Ld. CIT decided that where there exist

inordinate delay and the same is attributable to the parties in action and

negligence, the court have to take a strict approach so as to protect the

ITA No. 280/Mum/2026; Ankur Foundation substantial rights of the parties. He referred to certain decisions of Hon’ble Court

and rejected the application of assessee seeking condonation of delay in

furnishing the audit report in Form 10B vide his order dated 14.02.2025.

appeal before us against the impugned order u/s. 250 passed by the Ld. CIT(A).

the facts of the case and submitted that the delay was occurred due to genuine

and bona fide reasons without any negligence or willful default on the part of

assessee trust. Regarding the delay in various years the assessee trust

undertakes not to repeat such delay in future. It is further submitted by Ld. AR

that the decision of Ld. CIT(A) was erroneous so far as the delay in filing of Form

10B/ITR was not allowed. Further, the Ld. PCIT(Exemption) had also rejected the

condonation of delay filed before him on the grounds of natural justice.

Alternatively, it is also submitted by the Ld. AR that the assessee’s request for

condonation of delay was not accepted, kindly allow the administrative expenses

if not the deduction u/s. 11 of the Act to ensure natural justice. It is submitted

that the addition made only on account of delay in Form 10B to be deleted and

the addition confirmed by Ld. CIT(A) is to be set aside. The Ld. AR further placed

his reliance on the orders of Hon’ble Gujarat High Court in the case of

Association of Indian Panel Board Manufacturers Vs. DCIT in tax appeal no. 655

ITA No. 280/Mum/2026; Ankur Foundation of 2022 vide judgment dated 21st March, 2023, wherein the identical issue has

been decided in favour of assessee while the Hon’ble Court has observed that

the assessee has to held to be eligible and entitled to exemption u/s. 11(1) and

11(2) of the Act and the alleged ground of non-filing of audit report along with

return of income which was at the best procedural omission could never to an

impediment in law in claiming the exemption.

the orders of revenue authorities.

available on the record and the case laws relied upon by the assessee.

Admittedly in present case, the ITR of assessee as well as Form 10B i.e., audit

report was filed with a delay by the assessee. Therefore, the Central Processing

Center (CPC), Bangalore has denied exemption u/s. 11 as well as allowability of

expenditure incurred by the assessee. The assessee preferred an appeal before

the Ld. CIT(A). However, the Ld. CIT denied allowing relief to the assessee

whereas, suggested to get delay condoned from Jurisdictional Commissioner.

Assessee also applied before the Ld. CIT(Exemption), who had rejected the

assessee’s contention stating that the reasons provided by the assessee for delay

are not sufficient to condone the delay. Further, he noted that the assessee is a

habitual defaulter, who had filed Form 10B for delay for several other years also.

ITA No. 280/Mum/2026; Ankur Foundation The assessee referred to the decision of Hon’ble Gujarat High Court in the case

of Association of Indian Panel Board Manufacturers (supra), wherein an

identical question was raised by the assessee before the Hon’ble Court. The

question so raised is extracted as under:

“(i) Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was

right in confirming the order of the respondent in denying the claim of exemptions under

section 11(1) and 11(2) of the Act merely on the ground of belated filing of Audit Report in Form

10B, more so when such audit report was admittedly filed electronically well before the order

denying such exemptions came to be passed?”

allowed the appeal of assessee with the following observations:

“6. The moot aspect thus centres around to the requirement of the availability of the audit

report when the assessment was undertaken by the Assessing Officer even though the same

may not have been filed along with the return of income. Filing of audit report is held to be

substantive requirement but not the mode and stage of filing, which is procedural. Once the

audit report in Form 12B is filed to be available with the Assessing Officer, before assessment

proceedings take place, the requirement of law is satisfied. In that view, the Income Tax

NEUTRAL CITATION C/TAXAP/655/2022 JUDGMENT DATED: 21/03/2023 undefined Tribunal

was not justified in dismissing the appeal of the assessee.

6.1 The appellant assessee has to be held to be eligible and entitled to exemptions under

Section 11(1) and 1192) of the Act and the alleged ground of non-filing of audit report along

with return of income which was at the best procedural omission, could never to an

impediment in law in claiming the exemption.

ITA No. 280/Mum/2026; Ankur Foundation 6.2 Accordingly the substantial questions of law have to be decided in favor of the appellant.”

High Court, it is found that the return of income in that case was filed on 31st

August, 2018, whereas Form 10B was filed on 15.03.2019. Hon’ble Court has held

that the requirement of availability of audit report is when the assessment was

undertaken by the Assessing Officer, even though the same may not have been

filed by the return of income. The filing of audit report is held to be substantive

requirement but not the mode and stage of filing which is procedural. Once the

audit report is Form 12B is filed to be available with Assessing Officer before

assessment proceedings takes place, the requirement of law is satisfied.

Through Sports Foundation Vs. Assistant Director of Income Tax in ITA No.

2825/Mum/2024 vide order dated 27.05.2026, wherein the Tribunal has held as

under:

“8. We have considered the rival submissions and perused the material available on the record. On perusal of the grounds No.1 raised by the revenue before the ITAT in the case of P. K. Krishnan Educational Trust (supra), we find that the issue herein is identical to the issue in case relied upon. The relevant ground in the said appeal was as under:

ITA No. 280/Mum/2026; Ankur Foundation

the said A.Y. 2021-22 as stipulated in CBDT circular number 01/2022 in F.No. 225/49/2021/ITA-II dated 11.01.2022?

is that the appellant in this case is the assessee, whereas in the case of P.K. Krishnan Education

Trust (supra) the revenue was the appellant. The difference in the case relied upon and the

case before us is that the 10B report in the said case was filed on 14th March 2022, whereas

in the present case the assessee has filed the 10th report on 31st March 2022. The due date for

filing of form 10B in both the cases was 15th January 2022, as per CBDT’s circular referred to,

however was further extended up to 28th February, 2022.

tribunal in favour of the assessee and against the revenue by condoning the delay in filing of

Form 10B. The relevant observations of the tribunal are as under:

“13. The impugned assessment year is assessment year 2021-22, the learned CITA has considered the issue in earlier assessment year. However, CBDT has extended due date of filing of the return of income my press release dated 9/9/2021 as under :- 5. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 30th November, 2021 under sub-section (1) of section 139 of the Act, as extended to 31st December, 2021 vide Circular No.9/2021 dated 20-5-2021, is hereby further extended to 28th February, 2022; 6. The due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31st December, 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, as extended to 31st January, 2022, vide Circular No.9/2021 dated 20-5-2021, is hereby further extended to 31st March, 2022; 014. Therefore, the extended time limit available to the assessee for the due date of filing of the return of income was 28 February 2022. Admittedly assessee filed return of income on 14/3/2022 and also furnished form number 10 B along with that. Therefore, the due date for filing of form number 10 B was one month prior to the due date of filing of the return of income i.e. 31 January 2022. As, the due date of filing of the return have been extended by the CBDT, the delay caused in filing form number 10 B is minimal and also due to the uncertainty of the due date of filing of the return which is duly extended by CBDT. Identical issue arose before the coordinate bench in

ITA No. 280/Mum/2026; Ankur Foundation case of Kedar Nath Saraf Charity Trust [2024] 161 taxmann.com 671 (Kolkata - Trib.) albeit for assessment year 2021 -22 wherein coordinate bench held as under:- 4.1. It is an admitted fact that from March, 2020 to March, 2022, country was passing through Covid Pandemic and there were various restriction on the movements of the citizens and carrying out of the normal official works was hindered. It is also an accepted fact that many changes have been brought into the Act regarding procedure of filing of income-tax return as well as audit reports and certain technical glitches have been faced time and again. Also on account of change of the utility of furnishing the reports, the forms and change in the due dates have given rise to delay in furnishing of details and documents with the revenue authorities. Considering these aspects, CBDT firstly came up with a Notification dt. 03/01/2020 authorising the Commissioners to of admit applications condonation of delay in filing Form No. 10B for Assessment Year 2018-19 and subsequent Assessment Years, where there is a delay of up to 365 days. Subsequently on 19/07/2022 i.e., after the end of the Covid Pandemic restrictions again a Circular 16/2022 was issued where the delays in filing of Form 10B beyond 365 days but upto three years were also directed to be considered for admitting the application for condonation of delay. This Circular in itself shows that the Income-tax Department was aware about the technical glitches and the problems faced by the tax-payers in furnishing various types of Forms including Form No. 10B is with regard to the furnishing of audit report in case of Trusts and Societies. In the instant case since, delay is merely 28 days, we find that the said delay deserves to be ignored in larger interest of justice. The assessee is thus entitled to claim exemption u/s 11 of the Act made in the Income-tax return e-filed by it. We further fund support from the decisions of this Tribunal in the case of Bangarh Educational Welfare Trust v. ITO (Exemptions) in ITA No. 496/Kol/2021; Assessment Year 2018-19, order dt. 02/01/2022, wherein also similar issue was raised for Assessment Year 2018-19 and the return was filed within time limit prescribed u/s 139(1) of the Act but there was a delay in furnishing of the auditreport on Form 10B and this Tribunal after considering the facts of the case as well as judicial precedents allowed the benefit of Section 11 & 12 of the Act to the assessee." 015. Coordinate bench held that up to March 2022, the country was passing through pandemic. The due dates for filing of the return of income as well as compliance made by the assessee also falls during that period. In view of this, we find that the delay caused in filing of number 10 B deserves to be condoned. Accordingly, as indicated above, the learned CIT - A was correct in allowing the appeal of the assessee.”

ITA No. 280/Mum/2026; Ankur Foundation 11. We thus, in terms of observations find, it appropriate to condone the delay in filing of Form 10B in the present case. Accordingly, the assessee would be entitled to exemption u/s 11, which was denied only on account of delay in filing of Form 10B. We therefore note that the expenses incurred by the assessee would be eligible for deduction under the provisions of section 11 and 12 of the Act. However, the factual verification of expenditure needs to be undertaken by the Ld. AO, therefore, the matter is restored back to the file of Ld. Assessing Officer for verification of expenditure incurred by the assessee and entitlement of such expenditure under the provisions of section 11 of the Act.

to condone the delay in filing of Form 10B in the present case, at the same time

the assessee is also cautioned to be compliant with provisions of Act to adhere

with the same in timely manner under prescribed procedures, as the conduct of

assessee has been found to be persistent defaulter as per observations of Ld.

CIT(E). We respectfully following the jurisprudence are inclined to restore this

matter back to the file of Ld. Assessing Officer for verification of expenditure

incurred by the assessee and its entitlement of such expenditure under the

provisions of Section 11 of the Act.

opportunity of being heard during the set aside assessment proceedings.

ITA No. 280/Mum/2026; Ankur Foundation 12. In result, the appeal of assessee stands partly allowed, in terms of our

aforesaid observations.

Order pronounced in the open court on 17-06-2026.

Sd/- Sd/- (SHRI NARENDER KUMAR CHOUDHRY ) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 17-06-2026. Soumili Das, PS

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai