NESAMONY MEMORIAL TRUST,KARUNGAL vs. CIT, EXEMPTIONS,, CHENNAI

ITA 1421/CHNY/2026Status: DisposedITAT Chennai05 October 2026AY 2018-1916 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the learned CIT(Exemptions) was not justified in invoking jurisdiction under section 263. The assessment order dated 20.03.2023 could not be held to be erroneous merely because the assessee furnished Form 10B belatedly or because the subsequent application under section 119(2)(b) was rejected by the CBDT. The AO had conducted an enquiry during the reassessment proceedings and adopted a view that was legally plausible and supported by judicial precedents, including the principle laid down in Malabar Industrial Co. Ltd. v. CIT, which states that where two views are possible and the AO adopts one permissible view, the order cannot be revised under section 263 simply because the Commissioner prefers another view. The Tribunal noted that the AO had conducted scrutiny proceedings, issued notices, examined transactions, and considered material furnished by the assessee, thus distinguishing it from a case of complete lack of enquiry. The Tribunal also referred to judicial pronouncements from the Bombay High Court in International Resources for Fairer Environment v. Union of India and the Gujarat High Court in Association of Indian Panel Board Manufacturers v. DCIT, which treated delayed filing of Form 10B as a procedural requirement that should not, by itself, result in denial of exemption. The subsequent rejection of the condonation petition did not retrospectively establish that the AO's view was unsustainable in law. Therefore, the twin conditions prescribed under section 263 were not satisfied, and the impugned order passed by the CIT(Exemptions) was quashed, restoring the original assessment order.

What were the facts?

The assessee, Nesamony Memorial Trust, a charitable trust registered under section 12AA, appealed against the order of the CIT(Exemptions) dated 20.02.2025 for Assessment Year 2018-19. The appeal was filed with a delay of 316 days, which was condoned. The assessee had substantial financial transactions, including large cash deposits and interest income. The assessment was reopened under section 148 due to these transactions. The assessee filed its return of income and audit report in Form 10B belatedly on 29.04.2022, against the due date of 31.10.2018. The Assessing Officer (AO) completed reassessment accepting the returned income and allowing exemption under section 11. Subsequently, the CIT(Exemptions) invoked section 263, holding the AO's order erroneous and prejudicial to the revenue due to the belated filing of the return and Form 10B, especially after the CBDT rejected the assessee's petition under section 119(2)(b) for condonation of delay.

What were the issues?

1. Whether the Assessing Officer (AO) was justified in allowing exemption under section 11 to the assessee trust despite the belated filing of the return of income and Form 10B, when the delay was subsequently not condoned by the CBDT? (Question of law and fact, concerning Section 11 of the Income Tax Act, 1961). 2. Whether the assessment order dated 20.03.2023 was erroneous and prejudicial to the interests of the Revenue so as to warrant revision under section 263? (Question of law, concerning Section 263 of the Income Tax Act, 1961). Assessee's arguments: - The delay in filing the return and Form 10B was due to genuine reasons, including damage to the server from Cyclone Ockhi and the departure of the Chief Accountant. - Filing Form 10B is a procedural requirement, not a mandatory condition for denial of exemption, especially when filed before the completion of reassessment proceedings. Reliance was placed on CIT(E) v. Anjana Foundation and Chandraprabhuji Maharaj Jain v. DCIT. - The AO had consciously examined the issues and adopted a plausible and legally sustainable view, which cannot be revised under section 263 merely because the CIT preferred another view. Reliance was placed on Malabar Industrial Co. Ltd. v. CIT. - There was no lack of or inadequate enquiry by the AO. - The subsequent rejection of the condonation petition under section 119(2)(b) should not retrospectively render the original assessment order erroneous. Revenue's arguments: - The CIT(Exemptions) argued that the belated filing of the return and Form 10B, coupled with the rejection of the condonation petition by the CBDT, rendered the AO's order erroneous and prejudicial to the revenue, justifying revision under section 263. Reliance was placed on Malabar Industrial Co. Ltd. v. CIT.

Which sections of the Income-tax Act were involved?

Section 11,Section 12AA,Section 12AB,Section 139,Section 147,Section 148,Section 144,Section 144B,Section 119(2)(b),Section 263,Section 143(2),Section 142(1),Section 12

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI

Hearing: 25.08.2026

PER MANU KUMAR GIRI, JM:

The captioned appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Exemption), Chennai, [CIT(A)] dated 20.02.2025 for Assessment Year 2018-19. 2. In the instant appeals, the registry has noted the delay of 316 days in filing the captioned appeal. We have gone through the condonation petition along with affidavit filed, we find that Nesamo

The order continues below.

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