KAMMAVARI SANGHAM (REGD), BENGALURU,BENGALURU vs. DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTION), CIRCLE-1, BENGALURU, BENGALURU

ITA 1181/BANG/2026Status: DisposedITAT Bangalore30 September 2026AY 2015-166 pages
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What were the facts?

The assessee, Kamma Vari Sangham (Regd.), is a society that had its registration under section 12A of the Income-tax Act, 1961, cancelled and subsequently restored. For assessment year 2015-16, it filed its return claiming exemption under section 11. During processing under section 143(1), the exemption claim of ₹4,47,39,679 was disallowed because Form No. 10, required for accumulation of income, was not filed with the return. The assessee stated that electronic filing facilities were unavailable. It subsequently filed Form No. 10 on 20th February 2017 and sought rectification of the disallowance. The Central Processing Centre (CPC) rejected the rectification, and the Commissioner of Income Tax (Appeals) upheld this decision, stating that Form No. 10 had to be filed electronically with the return within the prescribed time.

What did the Tribunal hold?

The Tribunal held that the time limit for filing Form No. 10 under section 11(2)(a) is prescribed by the Act itself and cannot be treated as discretionary or merely directory. Ignoring such a statutory time limit would render all limitation periods under the Income-tax Act directory, which is not permissible. The Tribunal acknowledged that the legislature has empowered competent authorities to condone delays under section 119(2) of the Act to advance substantial justice, and CBDT Circular No. 7/2018 permits condonation of such delays. Therefore, the Tribunal directed the assessee to file an application before the CBDT seeking condonation of the delay in filing Form No. 10 within 90 days from the receipt of the order. The assessing officer is to consider this application and, if condonation is permitted, grant the assessee the benefit of Form No. 10. The Tribunal found no error in the CIT(A)'s conclusion that the time limit is not directory but emphasized that the power to condone delay should be exercised after duly considering the assessee's explanation.

What were the issues?

1. Whether the denial of exemption under section 11(2) of the Income-tax Act, 1961, to the extent of ₹4,47,39,679 in proceedings under section 154 was justified, after the assessee had filed Form No. 10 before the completion of assessment. Assessee's contentions: - The assessee argued that it had reasonable cause for not filing Form No. 10 with the return due to the unavailability of electronic filing facilities at the time. - It contended that the time limit for filing Form No. 10 is directory, not mandatory, and a delay should not impede the determination of tax liability, especially since no prejudice was caused to the Revenue. - Relied on the coordinate bench decision in ITO v. St. Agnes Society and the Supreme Court's decision in Hotel Owners’ Association. Revenue's contentions: - The Revenue supported the CIT(A)'s order, arguing that Form No. 10 must be filed within the statutory time limit. - If filed late, the only remedy is to seek condonation from the Central Board of Direct Taxes (CBDT). - The Revenue distinguished earlier decisions by stating that the time limit is now set out in the Act itself, not just the rules, making it mandatory.

Which sections of the Income-tax Act were involved?

Section 11,Section 11(2),Section 11(2)(a),Section 12A,Section 12AA(3),Section 143(1),Section 154,Section 119(2),Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL

PER SHRI PRASHANT MAHARISHI, VICE PRESIDENT 1)

The assessee has filed this appeal against the order dated 29th January 2026 passed by the learned Commissioner of Income Tax (Appeals)-6, Mumbai [the learned CIT(A)”]. By that order, the learned CIT(A) partly allowed the assessee’s appeal against the rectification order under section 154 of

The order continues below.

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