SHREE HARIKRUSHNA VELFARE TRUST,BHACHAU vs. THE ITO EXEMPTION WARD 1, RJAKOT, RAJKOT

ITA 677/RJT/2026Status: DisposedITAT Rajkot09 October 2026AY 2016-175 pages
AI SummaryRemanded

What were the facts?

The assessee, Shree Harikrushna Velfare Trust, filed its return of income for Assessment Year 2016-17 on October 17, 2016, declaring Nil income after claiming deductions under Section 11 of the Income Tax Act, 1961. The Central Processing Centre (CPC), Bengaluru, issued an intimation under Section 143(1) on January 3, 2018, computing the total income at Rs. 39,18,908/-, by disallowing deductions claimed under Section 11. This disallowance was primarily due to the late filing of Form 10B, the audit report, which was uploaded on April 15, 2019, significantly after the due date. The Commissioner of Income-tax (Appeals) [NFAC/Ld.CIT(A)] confirmed the adjustments made by the CPC, holding that the delay in filing Form 10B was not condonable by the CIT(A). The assessee's appeal to the ITAT was filed with a delay of 30 days, which the Tribunal condoned.

What did the Tribunal hold?

The Tribunal condoned the 30-day delay in filing the appeal, finding mitigating circumstances based on the assessee's affidavit and the explanation of the advocate's mistake. Regarding the substantive issues, the Tribunal held that the denial of exemption under Section 11 by the CPC solely on account of the delayed uploading of Form 10B could not be sustained. The Tribunal relied on the jurisdictional Gujarat High Court's judgment in Laxmanarayan Dev Shrishan Seva Khendra (167 taxmann.com 548) and the ITAT Rajkot Bench's decision in Suryoday Kelavani & Sanskrutik Mandal, which held that the requirement of furnishing the audit report along with the return is procedural and directory, and substantial compliance is sufficient. The benefit of exemption should not be denied for a delay in furnishing the audit report, especially when it is subsequently produced. Consequently, the Tribunal set aside the order of the Ld. CIT(A) and remitted the issue back to the file of the jurisdictional Assessing Officer to verify Form 10B and adjudicate the claim of exemption under Sections 11 and 12 in accordance with law. The issue of condonation of delay in filing Form 10B was implicitly addressed by remanding the matter for verification. The Tribunal did not expressly decide on the specific amounts of deductions claimed under Section 11 and 11(1A) but directed the AO to examine them.

What were the issues?

1. Whether the Tribunal had the jurisdiction to condone the delay in filing the appeal, which was 30 days late? 2. Whether the National Faceless Appeal Centre (NFAC)/Ld. CIT(A) erred in confirming the adjustments made by CPC Bengaluru under Section 143(1) by denying the benefit of Section 11 to the assessee, considering it was not a case of prima facie adjustment? 3. Whether the NFAC/Ld. CIT(A) erred in holding that the power to condone the delay in filing Form 10B rests solely with the CIT (Exemptions) and not with the CIT(A)? 4. Whether the NFAC/Ld. CIT(A) erred in upholding the CPC's action of assessing total income at Rs. 39,18,908/- against the declared Nil income, and in not granting deductions under Section 11 and Section 11(1A)? Assessee's Contentions: The assessee argued that the delay in filing Form 10B was due to the mistake of its accountant and the lack of internet facilities in its small town, and that the assessee should not be penalized for this. They relied on the principle that substantial compliance should suffice and that the benefit of exemption should not be denied for procedural delays. The assessee cited the Gujarat High Court's decision in Laxmanarayan Dev Shrishan Seva Khendra and the ITAT Rajkot Bench's decision in Suryoday Kelavani & Sanskrutik Mandal. Revenue's Contentions: The revenue contended that the assessee was negligent in filing Form 10B on time and therefore, the appeal should be dismissed.

Which sections of the Income-tax Act were involved?

Section 11,Section 11(1A),Section 12,Section 143(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC”

Before: Dr. Arjun Lal Saini

For Appellant: Shri Hinal Shah, Ld. AR
For Respondent: Shri Gopi Nath Chaubey, Ld. Sr. DR
Hearing: 28/07/2026Pronounced: 09/10/2026

Per, Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2016-17, is directed against the order under section 250 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the National Faceless Appeal Centre (NAC) Delhi/Commissioner of Income-tax (Appeals) [in short ‘NFAC/Ld.CIT(A)’], dated 21.01.2026, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(1) of the Act, dated 03.01.2018. 2. The appeal filed b

The order continues below.

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