MATA LACHMI ROTARY CHARITABLE SOCIETY,ADIPUR vs. INCOME TAX OFFICER, EXEMPTION WARD - 1, RAJKOT

ITA 310/RJT/2025Status: DisposedITAT Rajkot16 October 2026AY 2022-234 pages
AI SummaryAllowed

What were the facts?

The assessee, Mata Lachmi Rotary Charitable Society, filed its return of income for Assessment Year 2022-23 on November 7, 2022, claiming an exemption of Rs. 69,30,776/- under Section 11 of the Income-tax Act, 1961. The Centralized Processing Centre (CPC) issued an intimation under Section 143(1) on March 31, 2023, disallowing this exemption. The disallowance was based on two grounds: a mismatch in the registration number in Schedule Part-A General versus Form No. 10AC, and the failure to furnish the audit report in Form No. 10B at least one month before the due date for filing the return under Section 139(1). The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], arguing the mismatch was due to a bona fide belief about a new registration and that denial of exemption for delayed Form 10B filing was incorrect. The CIT(A) dismissed the appeal, sustaining the CPC's order. The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT).

What did the Tribunal hold?

The Tribunal held that the denial of exemption under Section 11 of the Income-tax Act, 1961, was based solely on the ground that Form No. 10B was not furnished within the prescribed time. It was noted that the assessee had subsequently furnished the audit report electronically. Respectfully following the ratio laid down by the Hon'ble Gujarat High Court in CIT (Exemption) v. Laxminarayan Dev Shrishan Seva Khendra (supra), the Tribunal held that the requirement of furnishing the audit report in Form No. 10B is procedural in nature. The benefit under Section 11 of the Act cannot be denied merely because the audit report was furnished belatedly, provided it is available during the assessment or appellate proceedings. Therefore, the delay in furnishing Form No. 10B was condoned. The Assessing Officer was directed to allow the assessee's claim for exemption under Section 11 of the Act. The issue regarding the mismatch in the registration number was not explicitly decided, as the denial of exemption was primarily based on the delayed filing of Form 10B.

What were the issues?

1. Whether the denial of exemption under Section 11 of the Income-tax Act, 1961, by the Assessing Officer (CPC) for AY 2022-23, based on the delayed filing of the audit report in Form No. 10B, is legally sustainable? Assessee's Contentions: - The denial of exemption under Section 11 was solely due to the delayed filing of the audit report in Form No. 10B, which is a procedural requirement and directory, not mandatory. - The benefit of Section 11 cannot be denied merely because the audit report was filed belatedly, especially when competent authorities can condone such delays. - Reliance was placed on the judgment of the Hon'ble Gujarat High Court in CIT (Exemption) v. Laxminarayan Dev Shrishan Seva Khendra [2024] 167 taxmann.com 548 (Gujarat), which held that Form No. 10B can be furnished during assessment/appellate proceedings and exemption under Section 11 cannot be denied on that ground alone. - The adjustment made by the CPC was beyond the scope of prima facie adjustments permissible under Section 143(1)(a) as it involved a debatable question of law. Revenue's Contentions: - The Ld. DR supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 11,Section 139(1),Section 143(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Rajkot Bench, Rajkot

Before: Dr. Arjun Lal Saini & Shri Sonjoy Sarma

For Appellant: Shri Vimal Desai, Ld. AR
For Respondent: Shri Ganesh Iyer, Ld. Sr. DR
Hearing: 15/10/2026Pronounced: 16/10/2026

Per, Shri Sonjoy Sarma, JM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2022-23, is directed against the order under section 250 of the Income-tax Act, 1961 [hereinafter referred to as ‘the Act’] passed by the Commissioner of Income Tax (Appeals) [hereinafter referred to as ‘Ld.CIT(A)’], dated 18.03.2025, which in turn arises out of an order passed by assessing officer u/s. 143(1)

The order continues below.

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