INCOME TAX OFFICER, EXEMPTIONS, KOLHAPUR, KOLHAPUR vs. SAHYADRI EDUCATION SOCIETY, KOLHAPUR

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ITA 137/PUN/2026Status: DisposedITAT Pune13 October 2026AY 2020-2110 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal allowed the Cross Objection filed by the assessee and dismissed the Revenue's appeal as infructuous. The Tribunal held that the belated filing of Form-10B does not disentitle the assessee from claiming exemption under Section 11 of the Act. The Tribunal noted that the issue is covered by several decisions, including that of the Co-ordinate Bench in Prof. J.P. Trivedi Memorial Trust vs. ITO. The Tribunal found that the Ld. CIT(A) had misdirected himself by dismissing the appeal on grounds not raised by the CPC, and by erroneously assuming Form-10B was not filed. The Tribunal referred to the decision of the jurisdictional High Court in CIT v. SPIC Educational Foundation, which held that filing of Form 10 for accumulation beyond the due date could not disentitle the trust from exemption. The Tribunal set aside the order of the Ld. CIT(A) and directed the AO to allow the assessee's claim of exemption under Section 11. The Tribunal also noted that the assessee had filed the Return of Income along with the Audit Report before the due date under Section 139(1), and Form 10 was subsequently uploaded. The Tribunal cited numerous judicial precedents supporting the view that the requirement of filing Form 10/10B is directory and not fatal to the claim of exemption. Consequently, the Revenue's appeal was dismissed as infructuous.

What were the facts?

The assessee, Sahyadri Education Society, a registered charitable trust, claimed exemption of Rs. 2,39,05,709/- under Section 11 of the Income Tax Act, 1961, for Assessment Year 2020-21. The return of income was filed on 29-05-2021, and the audit report in Form-10B was filed on 28-05-2021, which was after the extended due date of 15-01-2021. The Assessing Officer (AO)/CPC disallowed the entire exemption under Section 11, treating the gross receipts as income, due to the belated filing of Form-10B. The assessee's appeal to the Ld. ADDL/JCIT(A) was dismissed, upholding the AO's decision. The assessee also argued that the addition should have been restricted to net commercial income, which the Ld. ADDL/JCIT(A) accepted, directing the AO to compute income as per departmental guidelines.

What were the issues?

1. Whether the assessee is disentitled to claim exemption under Section 11 of the Income Tax Act, 1961, solely on the ground of belated filing of the audit report in Form-10B for AY 2020-21? - Assessee's contention: Submission of Form-10B is a procedural requirement and not a condition precedent for exemption. Reliance was placed on the Pune Tribunal's decision in Shri Upasani Kanyakumari Sansthan vs. ITO and other cases where the audit report was considered if available during assessment proceedings. - Revenue's contention: The Ld. ADDL/JCIT(A) supported the AO's order, noting that Form-10B was filed after the due date and that the assessee had not sought condonation of delay under Section 119(2)(b) from the Pr. Commissioner/Commissioner of Income Tax. Reliance was placed on CBDT Circular No. 16/2024 and an Ahmedabad ITAT decision in Association of Indian Panelboard Manufacturer v. DCIT. 2. Whether the Ld. CIT(A) erred in directing the computation of total income as per departmental guidelines, which the Revenue argued mirror Section 13(10) applicable from AY 2023-24 onwards? - Revenue's contention: The guidelines relied upon by the Ld. CIT(A) are prospective and not applicable to the current assessment year.

Which sections of the Income-tax Act were involved?

Section 11,Section 139(1),Section 119(2)(b),Section 13(10)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI RAMA KANTA PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Pramod Shingte
For Respondent: Shri Sandeep Sathe, JCIT

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER

ITA No. 137/PUN/2026 Assessment Year : 2020-21 Income Tax Officer Sahyadri Education Society, (Exemptions), At Post Ambap Tal. Tarabai Park, vs. Hatkanangale, Kolhapur-416003 Kolhapur-416112. PAN : AAITS8149L (Appellant) (Respondent) C.O.No. 37/PUN/2026 (Arising out of ITA No. 137/PUN/2026) Assessment Year : 2020-21 Sahyadri Education Society, Income Tax Officer At Post Ambap Tal. (Exemptions), Hatkanangale, vs. Tarabai Park, Kolhapur-416112. Kolhapur-416003 PAN : AAITS8149L (Cross-Objector) (Respondent) Assessee by : Shri Pramod Shingte Department by : Shri Sandeep Sathe, JCIT Date of Hearing : 29-07-2026 Date of Pronouncement : 13-10-2026 O R D E R PER ASTHA CHANDRA, J.M.:

The appeal filed by the Revenue and the Cross Objection (“CO”) filed by the assessee are directed against the order dated 18-11-2025 of the Ld.ADDL/JCIT(A)-4, Kolkata, u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2020-21.

2.

Briefly stated, the facts of the case are that the assessee is a charitable trust registered under Societies Registration Act, 1880 and also under the Bombay Public Trust Act, 1950. It is also registered u/s. 12A of the Act and thus, eligible for exemption u/s. 11 of the Act. For AY. 2020- 21, the assessee filed its return of income on 29-05-2021 declaring total income at Rs. NIL, after claiming exemption of Rs. 2,39,05,709/- u/s. 11

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of the Act. The assessee filed audit report in Form-10B on 28-05-2021, which was due to be filed within the extended due date i.e.15-01-2021. The return of the assessee was processed by the Central Processing Centre/Assessing Officer (“CPC/AO”). The Ld.AO/CPC vide its intimation order passed u/s. 143(1) of the Act, dt. 30-11-2021 disallowed the entire exemption claimed u/s. 11 of the Act and treated the gross receipts of Rs. 2,39,05,709/- as the income of the assessee for the reason that the assessee filed Form-10B belatedly.

3.

Aggrieved, the assessee filed appeal before the Ld.ADDL/JCIT(A). Before the Ld.ADDL/JCIT(A), the assessee claimed that submission of Form-10B is only a procedural requirement and is not a condition precedent for availing exemption u/s. 11 of the Act and hence, the addition of gross receipts on the ground of belated filing of Form-10B is incorrect. The assessee relied on the decision of the Pune Tribunal in the case of Shri Upasani Kanyakumari Sansthan vs. ITO (Exemption) in ITA No. 1456/PUN/2025, dt. 06-08-2025 and several other cases wherein it has been held that if the audit report is available at the time of processing of the return or assessment proceedings, the same needs to be considered while deciding eligibility for exemption u/s. 11 of the Act. However, rejecting the assessee‟s contentions, the Ld.ADDL/JCIT(A) dismissed the assessee‟s ground by observing as under:

“Ground no. 1: The assessee has argued that submission of Form 10B is only a procedural requirement and addition of the gross receipts on such ground is incorrect. The return of income was filed by the assessee on 29.05.2021 declaring Total Income of Rs. NIL after claiming exemption of Rs. 2,39,05,709/- u/s. 11 of the Income Tax Act, 1961. The return of income was filed after extended due date of filing ITR u/s. 139(1) of the Income Tax Act. The Tax Audit Report in Form No 10B was also filed on 28.05.2021 i.e. after the due date. I find that as per the Act, the Form No 108 has to be filed one month before the due date of filing the ITR u/s 139(1). If the same is not filed, the exemption is not allowable. Hence, the entire exemption claimed u/s. 11 of the income Tax Act was denied by CPC treating the gross receipts as income of the assessee.

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The assessee has submitted that it has complied with the requirement of filing Form 10B online. The assessee has relied on the decision of jurisdictional Pune ITAT in the case of Shri Upasani Kanyakumari Sansthan vs ITO (Exemption) in ITA No. 1456/PUN/2025 dated 06.08.2025 wherein it was held that if the audit report is available at the time of carrying out assessment proceedings, the same needs to be considered while deciding eligibility for exemption u/s. 11.) In this regard attention of assessee is brought towards CBDT Circular No. 16/2024 dated 18.11.2024 wherein it has been categorically explained that the competent authority to condone delay in filing Form 108 for A.Y. 2018-19 onwards is Ld Pr. Commissioner of Income Tax/Commissioner of Income Tax provided the delay in filing the said form is up to 365 days.

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In the instant case, the delay in filing Form 108 was less than 365 days. However, there is no information available on record as to whether the assessee has made any such condonation petition before the Ld. Pr. Commissioner of Income Tax/Commissioner of Income Tax u/s, 119(2)(b) of the Income Tax Act for condonation of delay in filing Form 108. Moreover, the JCIT(Appeals) is not empowered to condone the delay in filing Form 10B. Reliance is also placed on ITAT Ahmedabad decision dated 22-07-2022 in case of Association of Indian Panelboard Manufacturer v. DCIT wherein on a similar matter assessee's appeal was dismissed. Hence, the contention of the assessee cannot be accepted. Case laws cited by assessee are also distinguishable as in the instant case assessee has filed even the ITR late. Accordingly, this ground is dismissed.”

4.

Before the Ld.ADDL/JCIT(A), the assessee also raised a ground that the addition, if any, ought to have been restricted only to the net commercial income and not the entire gross receipts and relied upon various case laws in support thereof. The Ld.ADDL/JCIT(A) found the contention of the assessee to be in order and placing reliance on the tutorial issued by the Income Tax Department wherein guidelines have been provided to tax income of trust which are not eligible for claim of exemption, he directed the Ld.AO to compute the total income of the assessee as per the provisions of the Act and the guidelines issued by the Department.

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5.

Dissatisfied, the Revenue is in appeal before the Tribunal raising the following solitary ground of appeal: “1) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in directing to compute the total income as per the guidelines issued by the Department, without considering that, the guidelines on which the appellate authority had relied upon are mirror to the provisions of Section 13(10), of the Act, which is applicable from the Α.Υ. 2023-24 onwards.”

6.

The assessee has also filed Cross Objection (C.O.No. 37/PUN/2026), raising the following grounds: 1. On the facts and circumstance of the case and in law the CIT(A) erred in confirming the action of the Assistant Director of Income Tax, CPC, Bengaluru (hereinafter referred to as the 'AO') of denying exemption under S. 11 for delayed filing of Form 10B not accepting the submission of the appellant that: Submission of Form 10B being only a procedural requirement, addition of the gross receipts is incorrect only on such ground particularly when, though late, the appellant having complied with requirement. The appellant prays that the AO be directed accordingly in the matter. The appellant craves leave to add to, amend, alter, modify, delete or add a new ground of appeal before or at the time of hearing.”

7.

The Ld.AR at the outset submitted that the impugned issue is squarely covered in favour of the assessee by catena of decisions, wherein it has been held that mere failure to file Form-10B in due time cannot disentitle the assessee-trust to claim benefit of exemption u/s. 11 of the Act. He submitted that the impugned issue is no more res integra and Courts/Tribunals under similar set of facts, have allowed the claim of exemption u/s. 11 of the Act even if there is delay in filing of Form-10B. In support thereof, he relied on the decision of the Co-ordinate Bench of the Tribunal in the case of Prof. J.P. Trivedi Memorial Trust vs. ITO (Exemption), in ITA Nos. 2147 & 2148/PUN/2025, dt. 27-03-2026.

8.

The Ld.DR, on the other hand, supported the order of the Ld.ADDL/JCIT(A).

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9.

We have heard the Ld. Representatives of the parties and perused the material on record as well paper book filed by the Ld. AR on behalf of the assessee. We have also perused the decision cited by the Ld. AR. The facts of the case are not in dispute. Admittedly, there was delay in filing Form-10B by the assessee trust for the relevant AY 2020-21 under consideration. The Ld. AO/CPC has denied the assessee‟s claim of exemption u/s. 11 of the Act on account of non-filing of Form-10B within the prescribed time limit. The Ld.ADDL/JCIT(A) has dismissed the appeal of the assessee for the reasons reproduced in the preceding paragraphs which is mainly on account of filing of Form-10B being barred by limitation. We find that the assessee filed its return of income for the relevant AY. 2020-21 on 29-05-2021 and claimed exemption u/s. 11 of the Act. The assessee filed audit report in Form-10B on 28-05-2021. The return of the assessee was processed u/s. 143(1) of the Act on 25-11-2021 (pgs. 30-32 of the paper book refers). It is the submission of the Ld. Counsel for the assessee that since the assessee had filed Form-10B well before the return was processed, therefore, the assessee should not be denied the benefit of exemption u/s. 11 of the Act. Placing reliance on the decision of the Pune Bench of the Tribunal in the case of Prof. J.P. Trivedi Memorial Trust vs. ITO (Exemption) (supra), he argued that mere failure to file Form-10B in due time would not disentitle the assessee to claim benefit of exemption u/s 11 of the Act.

10.

We find some force in the arguments advanced by the Ld. Counsel for the assessee. We find that a similar issue had come up for consideration before the Co-ordinate Bench of the Tribunal in the case of Prof. J.P. Trivedi Memorial Trust vs. ITO (Exemption) (supra), wherein the Tribunal decided the impugned issue in favour of the assessee by observing as under:

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“10. As regards the assessee‟s contention that mere failure to file Form 10/10B in due time would not disentitle the assessee to claim benefit of exemption u/s 11(2) of the Act, we find that Chennai Bench of the Tribunal in the case of Joy of Sharing Foundation-Charitable Trust (supra) has upheld this view by observing as under : “6. We have heard both the parties and perused the material available on record. It is noted that the assessee is a public Charitable Trust formed in the year 2010 and was enjoying registration u/s.12AB of the Act and carrying on charitable activities. The assessee Trust is noted to have filed its RoI for AY 2022-23 on 07.09.2022 u/s.139(1) of the Act admitting „Nil‟ income along with mandatory Form 10B i.e. Audit Report. In the RoI filed on 07.09.2022, the assessee Trust is noted to have duly disclosed under Schedule-I, the details of amount accumulated as per sec.11(2) of the Act as well as the same was duly disclosed in Form No.10B (Audit Report) at Column Nos.5 & 6 [refer Annexure-B] wherein we note that the sum of Rs.54 lakhs has been clearly mentioned therein as amount accumulated as per sec.11(2) of the Act. It is further noted that the assessee Trust while filing the ITR on 07.09.2022 has uploaded the Audit Report in Form No.10B [which was well before the due date u/s.139(1) of the Act] but the CPC in its intimation u/s.143(1) of the Act on 31.03.2023 has disallowed the accumulation of income of Rs.54 lakhs, only on the reason that assessee Trust didn‟t file Form No.10 [accumulation of income]. 7. According to the assessee, while uploading RoI & Audit Report [Form 10B], the assessee also uploaded Form 10 [accumulation of income] and was of the bona fide belief that it has uploaded the Form 10 in the Income Tax Portal, but to its dismay when the return was processed by the CPC, and intimation dated 31.03.2023 was passed, it came to know that accumulation of income of Rs.54 lakhs has been denied, for not uploading the Form 10. The assessee Trust is noted to have re-filed/uploaded Form No.10 on 02.06.2023; and during the appellate proceedings before the Ld.CIT(A), has brought to his notice that the assessee Trust had filed/uploaded return as well as Audit Report in Form No.10B before the due date u/s.139(1) of the Act i.e. on 07.09.2022 as well as Form No.10 was uploaded, but due to technical glitches, it was unsuccessful and since, there was heavy load server got hung and which resulted in CPC rejecting the accumulation of Rs.54 lakhs. And assessee had again re-filed/uploaded on 02.06.2023 and a copy of Form No.10 has been filed before us. However, we note that the Ld.CIT(A) has dismissed the appeal of the assessee albeit on a different reason that for claiming exemption u/s.11 of the Act, it is mandatory to file Form No.10B before the due date of filing of return or should have got condonation of delay for belated filing of Form No.10B from the CIT (Exemption). However, we find that this findings of fact recorded by the Ld.CIT(A) is erroneous for the simple fact that the assessee had filed the Form 10B (audit-report) before the due date u/s.139(1) of the Act i.e. on 07.09.2022 and the CPC has refused accumulation of income u/s.11(2) of the Act only on the reason that Form No.10 [accumulation of income] has not been filed. Thus, we find that the Ld.CIT(A) has misdirected himself on the erroneous assumption that assessee Trust didn‟t file Form No.10B [i.e. Audit Report] when the correct fact is that assessee Trust had filed the Audit Report in Form No.10B along with the RoI on 07.09.2022. Thus, impugned action of the Ld.CIT(A) cannot be countenenced and need to be interfered with. 8. As discussed, the Ld.CIT(A) erred in rejecting the appeal on the ground which was not raised/flagged by the CPC i.e. non-filing of Form 10 [accumulation of income of a Trust] whereas the Ld.CIT(A) has denied the accumulation of income only on the ground that the assessee Trust didn‟t file the Form No.10B [i.e. Audit Report]. We find that the assessee Trust has filed the RoI along with Audit Report before the due date u/s.139(1) of the Act and in the RoI as well as the Audit Report has clearly shown the accumulation of income u/s.11(2) of the Act to the tune of Rs.54 lakhs. In

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such a scenario, we are of the view that the Income Tax Authorities while processing the return for assessment/appellate order ought not to have rejected the accumulation of income on the aforesaid facts and circumstances of the case. In this regard, we refer to the decision of the Hon‟ble jurisdictional High Court in the case of CIT v. SPIC Educational Foundation (TCA No.1593 of 2008 dated 12.12.2018), wherein the Hon‟ble High Court has held that filing of Form 10 for accumulation of income u/s.11(2) of the Act which was filed beyond due date couldn‟t disentitle the trust from exemption claimed u/s.11 of the Act. The Hon‟ble Court directed the AO to examine the benefit of admissibility rather than to foreclose the claim of assessee on technicalities. Therefore, respectfully taking note of the binding decision of the Hon‟ble High Court (supra), we hold that the Ld.CIT(A) erred by misdirecting on an issue which wasn‟t raised by CPC; and since the TAR had been filed along with RoI filed within due date u/s.139(1) of the Act, and Form No.10 was again uploaded by the assessee on 02.06.2023, we are of the view that the First Appellate Authority erred in passing the impugned order, which we set aside and direct the CPC/AO to allow the accumulation of income claimed by the assessee u/s.11(2) of the Act to the tune of Rs.54 lakhs.” 11. Similar view has been taken by the Ahmedabad Bench of the Tribunal in the case of Takshshila Foundation (NGO) (supra) wherein it has been held as under : “6.2. It has been held by various Courts that the requirement of filing Form 10/10B is merely directory in nature and failure to furnish Form 10/10B before due-date prescribed u/s 139(1) of the Act cannot be so fatal so as to deny they very claim of exemption u/s.11(2) of the Act. The following judicial precedents have reiterated the aforesaid principal: I. Association of Indian Panelboard Manufacturer v. Dy. CIT [2023] 157 taxmann.com 550 - TA 655 of 2022 (Guj.); II. II. Dy. CIT v. Croygas Equipments (P.) Ltd. [IT Appeal No. 415 (Ahd.) of 2020, dated 16-6-2023]; III. III. True Sparrow Systems (P.) Ltd. v. Pr. CIT [IT Appeal No. 765 (Ahd.) of 2019, dated 22-4-2022]; IV. IV. Shardaben Education Trust v. ITO [IT Appeal No. 2312 (Ahd.) of 2018, dated 16-11-2022]; V. V. CIT v. Xavier Kelavani Mandal (P.) Ltd. [2014] 41 taxmann.com 184/221 Taxman 43 (Mag.) (Guj.); VI. VI. Zenith Processing Mills v. CIT [1996] 219 ITR 721 (Guj.); VII. VII. CIT v. Mayur Foundation [2005] 274 ITR 562 (Guj.); VIII. VIII. CIT v. Gujarat Oil & Allied Industries [1993] 201 ITR 325 (Guj.); IX. IX. CIT v. G. M. Knitting Industries (P.) Ltd. [2016] 71 taxmann.com 35/[2015] 376 ITR 456 (SC); X. X. CIT v. Web Commerce (India) (P.) Ltd. [2009] 178 Taxman 310/318 ITR 135 (Delhi); XI. XI. CIT v. Contimeters Electricals (P.) Ltd. [2009] 178 Taxman 422/317 ITR 249 (Delhi); XII. XII. Pr. CIT v. Surya Merchants Ltd. [2016] 72 taxmann.com 16/387 ITR 105 (All.); XIII. DIC Fine Chemicals (P.)Ltd. v. Dy. CIT [2019] 107 taxmann.com 213/177 ITD 672 (Kol.).

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6.3. In light of the above facts and judicial pronouncements, we find that the delay in filing Form 10B was due to technical issues and was beyond the control of the assessee. The procedural requirement should not deny the substantive claim of exemption under section 11 of the Act. Therefore, we direct the Assessing Officer to grant the exemption under section 11 as claimed by the assessee. Hence, the Cross Objection filed by the assessee is accordingly allowed.” 12. Based on the facts and circumstances of the case and legal position enumerated above, we set aside the order of the Ld. CIT(A)/NFAC and direct the Ld. AO to allow the assessee‟s claim of exemption u/s 11 of the Act. The grounds raised by the assessee are accordingly allowed.”

11.

Considering the facts of the case and the legal position enumerated above, we set aside the order of the Ld.ADDL/JCIT(A) on this issue and direct the Ld.AO/CPC to allow the assessee‟s claim of exemption u/s. 11 of the Act. Accordingly, the Cross Objection filed by the assessee is allowed.

12.

Since we have allowed the Cross Objection filed by the assessee, the solitary ground raised by the Revenue becomes infructuous and accordingly, the appeal of the Revenue is dismissed as infructuous.

13.

In the result, the appeal of the Revenue is dismissed and CO of the assessee is allowed.

Order pronounced in the open Court on 13-10-2026

Sd/- Sd/- (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 13-10-2026 TNMM

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आिेश की प्रदिदिदप अग्रेदिि / Copy of the Order is forwarded to: 1. अपीि र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „B‟ Bench, Pune 5. ग र्ड फ ईि / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Sunil Kumar More Digitally signed by Sunil Kumar More Date: 2026.10.24 12:00:25 +05'30' Assistant Registrar आयकर अपीिीय अदिकरण ,पुणे / ITAT, Pune

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