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

ITA 613/BANG/2026Status: DisposedITAT Chennai24 September 2026AY 2018-199 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal of the assessee. It held that the assessee had filed the return of income belatedly on March 31, 2019, and the audit report in Form 10B was uploaded on December 10, 2019, when the appeal was pending before the CIT(A)/NFAC. The audit report itself was dated June 30, 2018, indicating that the audit was completed well before the due date. The Tribunal noted that the issue was the rejection of exemption under Section 11 for non-filing of the audit report within the due date. Citing various High Court judgments, including Gujarat High Court in Sarvodaya Charitable Trust Vs. ITO and Commissioner of Income-tax – IV v. Xavier Kelavani Mandal (P.) Ltd., and the Supreme Court in CIT v. G.M. Knitting Industries (P.) Ltd., the Tribunal held that procedural provisions, such as filing an audit report, are directory and substantial compliance is sufficient. The denial of exemption should not be based solely on a procedural lapse, especially when the audit report was obtained prior to the due date and filed at a later stage before the appellate authority. The Tribunal directed the Assessing Officer (AO) to grant the exemption under Section 11 as claimed by the assessee, as it is registered under Section 12AA of the Act. The issue of interest under Sections 234A, 234B, and 234C was not explicitly decided but was implicitly addressed by allowing the exemption, which would likely reduce or eliminate the taxable income and thus the interest liability.

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 under Section 143(1) of the Income Tax Act, 1961. The Central Processing Centre (CPC) issued a communication of proposed adjustments, noting that the audit report in Form 10B was not e-filed along with or before the return of income, leading to the disallowance of exemption under Section 11 of the Act. The intimation under Section 143(1) was passed on September 26, 2019, determining the total income at Rs. 1,38,80,728 by not allowing exemptions totaling Rs. 1,38,80,728. The assessee appealed to the Addl/JCIT(A), Kochi, who dismissed the appeal, holding that condonation of delay in filing Form 10B was not within their powers. The assessee then filed the present appeal before the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the intimation made under Section 143(1) of the Income Tax Act, 1961, is bad in law and liable to be quashed due to confirmation of adjustments made in the intimation. 2. Whether the adjustments made in the intimation under Section 143(1)(a) of the Act are beyond its scope, rendering the intimation bad in law. 3. Whether the failure to serve the proposal for adjustments under Section 143(1)(a) on the appellant, depriving it of an opportunity to be heard, makes the intimation liable to be quashed. 4. Whether the intimation is bad in law for not mentioning the reasons for denial of deduction under Section 11 of the Act. 5. Whether the delay in e-filing the audit report, constituting a procedural lapse, should have been condoned, and the deduction under Section 11 granted, given substantial compliance with Section 12A(b) by getting the books of accounts audited within the prescribed time. 6. Whether the assessee is liable to pay interest under Sections 234A, 234B, and 234C of the Act, and if such interest levied erroneously should be deleted. Assessee's Contentions: The assessee argued that 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 procedural irregularity. They relied on the Gujarat High Court judgment in Sarvodaya Charitable Trust Vs. ITO (Exemptions). The assessee also contended that the denial of deduction under Section 11 should be granted and interest under Sections 234A, 234B, and 234C should be deleted. Revenue's Contentions: The revenue relied on the order of the Addl/JCIT(A) and submitted that 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 11,Section 12A(b),Section 12AA,Section 234A,Section 234B,Section 234C,Section 250

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.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 11

All 7,190 judgments and leading authorities on Section 11 →

Recent GST High Court judgments

Search GST case law →