SHREE STHANAKWASI JAIN TRUST THYAGARAJANAGAR,BANGALORE vs. INCOME TAX OFFICER (EXEMPTIONS), WARD - 3, BANGALORE

ITA 613/BANG/2026Status: DisposedITAT Bangalore24 September 2026AY 2018-199 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal of the assessee. The Tribunal noted that the assessee had obtained registration under Section 12AA of the Act. It was undisputed that the return of income was filed belatedly on March 31, 2019, and the audit report in Form 10B was filed on December 10, 2019, when the appeal was pending before the CIT(A)/NFAC. The Tribunal observed that the Form 10B was dated June 30, 2018, and uploaded on December 10, 2019. The Tribunal, respectfully following the decisions of the Hon'ble High Court of Gujarat in Sarvodaya Charitable Trust Vs. ITO and Commissioner of Income-tax – IV v. Xavier Kelavani Mandal (P.) Ltd., and other High Courts, held that the provision regarding furnishing of the audit report along with the return is procedural and directory in nature, and substantial compliance would suffice. The Tribunal found that the audit was completed well before the due date, and the delay in filing was a procedural lapse. Therefore, the exemption under Section 11 was directed to be granted to the assessee.

What were the facts?

The assessee, Shree Sthanakwasi Jain Trust, filed its return of income for Assessment Year 2018-19 on March 31, 2019, declaring nil taxable income. The return was processed by the CPC, which issued a communication of proposed adjustments under Section 143(1)(a) of the Income Tax Act, 1961, disallowing an exemption of Rs. 1,38,80,728. This disallowance was based on the non-filing of the audit report in Form 10B along with or before the return of income, as required by Section 12A(1)(b) read with Rule 12(2). The intimation under Section 143(1) was passed on September 26, 2019, confirming the disallowance. The assessee appealed to the Addl/JCIT(A), Kochi, who dismissed the appeal, holding that the power to condone the delay in filing Form 10B was not vested with them. The assessee then filed the present appeal before the ITAT.

What were the issues?

1. Whether the Intimation made under Section 143(1) of the Act is bad in law and liable to be quashed, as the adjustments made were beyond the scope of Section 143(1)? (Question of law) 2. Whether the assessee was deprived of the opportunity of being heard because the proposal to make adjustments under Section 143(1)(a) was not served on the appellant, making the Intimation bad in law? 3. Whether the Intimation is bad in law because the reasons for denial of deduction under Section 11 of the Act were not mentioned? 4. Whether the denial of deduction under Section 11 of the Act is to be granted to the appellant, as the assessee had substantially complied with Section 12A(b) by getting the books of accounts audited within the prescribed time, and the delay in e-filing the audit report is a procedural lapse? Assessee's Contentions: - The Addl/JCIT(A) should have accepted the audit report in Form 10B dated June 30, 2018, uploaded on December 10, 2019, while the appeal was pending. - Exemption under Section 11 should not be denied merely due to a procedural irregularity. - Relied on the judgment in Sarvodaya Charitable Trust Vs. ITO (Exemptions) (2021) 278 taxman 148. Revenue's Contentions: - The audit report in Form 10B was not available at the time of processing the return by the CPC, and therefore, the CPC rightly disallowed the claim of exemption under Section 11.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(1)(a),Section 11,Section 12A(1)(b),Section 12AA,Section 250,Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY

For Appellant: CA Suman Lunkar, A.R
Hearing: 29.07.2026Pronounced: 24.09.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. Addl/JCIT(A), Kochi dated 06.12.2025 vide DIN & Order No. ITBA/APL/S/250/2025-26/1083375038(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2018-19. 2. The assessee has raised the following grounds of appeal:-

1.

The learned Addl/JCIT (Appeals) -Kochi has erred in confirming the Intimation made u/s 143(1) of the Act. The order passed confirming the Intimation made is bad in law and such order is liable to be quashed.

2.

In any case, the learned

The order continues below.

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