SHRI CUTCHI LOHANA MAHAJAN BOMBAY ,MUMBAI vs. ITO EXEM WARD 2(3), MUMBAI

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ITA 423/MUM/2026Status: DisposedITAT Mumbai07 October 2026AY 2022-234 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the procedural requirement of filing the audit report in Form 10B is directory in nature. It acknowledged that the assessee filed Form 10B on March 29, 2023, along with its return of income, albeit with a delay beyond the statutory due date. The Tribunal noted that the CIT(A) had not adjudicated the issue on merits but merely directed the assessee to pursue condonation before the PCIT(E). In the interest of substantial justice, the Tribunal set aside the order of the CIT(A) and restored the matter to the file of the Assessing Officer. The Assessing Officer was directed to re-examine the claim for exemption under Section 11 after considering the Audit Report in Form 10B and the outcome of the condonation proceedings before the PCIT(E) or the competent authority. The assessee was to be provided a reasonable opportunity of being heard. The ratio decidendi is that a delay in filing Form 10B does not automatically disentitle the assessee to Section 11 exemption if the report is available before assessment completion and the delay is condoned.

What were the facts?

The assessee, Shri Cutchi Lohana Mahajan Bombay, a public charitable trust, filed its return of income for Assessment Year 2022-23 on March 29, 2023, reporting a total income of Rs. 46,22,210/-. The audit report in Form 10B was also uploaded on the same date. However, the CPC, Bengaluru, while processing the return under Section 143(1) on December 29, 2023, denied the exemption under Section 11 due to the delayed filing of Form 10B. This resulted in the total income being assessed at Rs. 1,50,92,140/-, creating a tax demand of Rs. 64,58,470/-. The assessee appealed to the CIT(A), who directed the assessee to pursue condonation of delay before the PCIT(E) and disposed of the appeal as statistically allowed without adjudicating on merits. The assessee is now in appeal before the ITAT.

What were the issues?

1. Whether the Ld. CIT(A) erred in not allowing deduction under Section 11 of the Income-tax Act, 1961 ('the Act') as the Audit Report in Form 10B was filed late? 2. Whether the Ld. CIT(A) erred in directing the Appellant to either file a formal condonation of delay before the PCIT(E) or pursue the condonation letter already filed before the PCIT(E)? Assessee's Contentions: - Form 10B was available on record before the Assessing Officer/CPC prior to the processing of the return. - Genuine internal management reasons, including election disputes pending before the Hon'ble High Court, caused the procedural delay. - Relied on the principle that procedural requirements are directory and exemption should be considered if the report is available before assessment completion. Revenue's Contentions: - Filing of Form 10B within the prescribed time is mandatory for claiming exemption under Section 11. - Supported the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 11,Section 143(1),Section 139(1),Section 139(8A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI GIRISH AGRAWAL

For Respondent: Shri Ajay Soneji, Sr. DR
Pronounced: 07.10.2026

INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: C BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA 423/MUM/2026 (िनधा�रण वष�/Assessment Year: 2022-23) Shri Cutchi Lohana Mahajan Bombay ITO Exem Ward 2(3) 33, Dariyasthan, Street, Pratishtha Bhavan, Vadgadi, Mumbai-400003, Old CGO Complex Annexe Vs. Maharashtra Building Mumbai-400020, Maharashtra अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of Assessee: AABTS3668R

अपीलाथ� �ारा/Appellant represented by: Shri Anil Thakrar, CA ��थ� �ारा/Respondent represented by: Shri Ajay Soneji, Sr. DR

सुनवाई की तारीख / Date of conclusion of hearing: 13.07.2026 घोषणा की तारीख / Date of pronouncement: 07.10.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by assessee is against the order of the ld. Addl/JCIT (A), Ranchi, Order No. ITBA/APL/S/250/2025- 26/1084141230(1) dated 27.12.2025 passed against the intimation issued by CPC, Bengaluru, u/s. 143(1) of the Income-tax Act, 1961 (‘the Act’) dated 29.12.2023, for Assessment Year 2022-23.

2.

Assessee has raised the following grounds of appeal: 1) The Ld. CIT(A) is erred in not allowing deduction u/s 11 of the Act, as the Audit report in Form 10B was delay filed by the appellant.

2) The Ld. CIT(A) is also erred in directing the Appellant to either file a formal condonation of delay before PCIT(E) or pursue condonation letter already filed before PCIT(E) by the Appellant. 3) The appellant request to delete the addition confirmed by the CIT (A).

3.

Brief facts of the case are that assessee is a public charitable trust registered under the Bombay Public Trusts Act, 1950. Assessee filed its return of income as an updated return under section 139(8A) on 29.03.2023, reporting total income at Rs. 46,22,210/-. Assessee also uploaded the Audit Report in Form No. 10B on 29.03.2023. However, while processing the return of income under section 143(1) on 29.12.2023, ld. Assessing Officer / CPC denied the benefit of exemption under section 11 on account of delay in filing Form No. 10B and processed the return at total income of Rs. 1,50,92,140/-, creating a tax demand of Rs. 64,58,470/-.

4.

Aggrieved, assessee went in appeal before ld. CIT(A) who observed that the power to condone delay in filing Form No. 10B rests with the Jurisdictional Commissioner of Income Tax (Exemption). Ld. CIT(A) directed assessee to pursue the condonation petition filed/to be filed before the competent authority and stayed the adjudication on merits, disposing of the appeal as statistically allowed. Aggrieved, assessee is now in appeal before the Tribunal

5.

During the course of hearing, it was submitted on behalf of assessee that Form No. 10B was available on record before ld. Assessing Officer / CPC prior to processing of the return and that there were genuine and internal management reasons, including election disputes pending before the Hon'ble High Court, which caused procedural delay. On the other hand, ld. Sr. DR supported the orders of authorities below and submitted that filing of Form 10B within prescribed time is mandatory for claiming exemption under section 11.

6.

We have heard the rival contentions and perused the material available on record. It is an admitted fact that assessee filed Form No. 10B on 29.03.2023 along with its return of income, though there was a delay in filing the audit report within the statutory due date specified under section 139(1). It is well settled that procedural requirement of filing audit report in Form No. 10B is directory in nature and where the report was available on record prior to the completion of processing of return or of assessment, exemption under section 11 ought to be considered upon verification of compliance and merits.

6.1. Since ld. CIT(A) did not adjudicate the issue on merits and merely relegated assessee to pursue condonation before ld. PCIT (Exemptions), we find it fit and appropriate in the interest of substantial justice to set aside the order of ld. CIT(A) and restore the matter back to the file of ld. Assessing Officer. Ld. Assessing Officer is directed to re-examine the claim of exemption under section 11 after considering the Audit Report in Form No. 10B filed by assessee and after considering the outcome of the condonation proceedings before ld. PCIT(E) / competent authority. Assessee shall also be provided a reasonable opportunity of being heard to substantiate its claim.

7.

In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced in the open court on 07 October, 2026

Sd/- Sd/- (Saktijit Dey) (Girish Agrawal) Vice President Accountant Member Dated: 07 October, 2026 MP, Sr.P.S.

Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER, ABHINAV ANANT Digitally signed by ABHINAV ANANT GAVANDE GAVANDE Date: 2026.10.15 15:40:35 +05'30' (Dy./Asstt.Registrar) ITAT, Mumbai

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