INCOME TAX OFFICER (EXEMPTIONS), AURANGABAD vs. FRANSALIAN TECHNICAL INSTITUTE, AURANGABAD

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ITA 1560/PUN/2026Status: DisposedITAT Pune22 October 2026AY 2020-214 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the grounds of appeal raised by the Revenue. The Tribunal noted that Form 10B was filed belatedly, but the delay had been condoned. Furthermore, the assessee had made mistakes in furnishing the Income Tax Return, declaring expenses of Rs. 2,22,34,901/- as revenue expenses and Rs. 92,02,468/- as capital expenses. When these expenses were considered along with the gross receipts, the application of income exceeded the receipts for the year, indicating nil income. Therefore, the Tribunal found no reason to interfere with the finding of the Ld. Addl/JCIT(A), Gwalior, who had directed the Assessing Officer to grant exemption under section 11 of the Act. The ratio decidendi is that if the delay in filing Form 10B is condoned and the assessee demonstrates that application of income exceeds receipts, exemption under section 11 should be granted. The appeal of the Revenue was dismissed.

What were the facts?

The Revenue has appealed against an order of the Ld. Addl/JCIT(A)-Gwalior concerning Assessment Year 2020-21. The appeal arises from an intimation passed by the CPC under section 143(1) of the Income Tax Act, 1961. The assessee, Fransalian Technical Institute, filed its return of income declaring a total income of Rs. 1,97,36,180/-. The CPC processed this under section 143(1)(a) and denied exemption under section 11 due to a delay in furnishing the Audit Report in Form 10B. The assessee appealed to the Ld. CIT(A). During the appeal, the assessee filed a rectification application under section 154, highlighting mistakes in the return regarding expenses and capital expenditure, indicating nil income. Subsequently, the delay in furnishing Form 10B was condoned by the Ld. CIT(Exemption), Pune. Based on this condonation, the Ld. Addl/JCIT(A) granted relief to the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Ld. JCIT(A) erred in allowing the claim of exemption at the appellate stage despite the assessee not having claimed any application of income in the return of income filed (Section 11 and Section 10(23C) of the Income Tax Act, 1961)? 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. JCIT(A) failed to appreciate that the Intimation u/s 143(1) dated 21-03-2022 was issued correctly on the information furnished by the assessee in the return of income, wherein the assessee itself has declared total income at Rs. 1,97,36,180/-? 3. Whether, on the facts and in the circumstances of the case and in law, the Ld. JCIT(A) erred in not taking cognizance of the order passed u/s 154 dated 14-06-2024 that has categorically recorded that the CPC has issued demand correctly on the basis of income declared by the assessee in its return of income? 4. Whether, on the facts and in the circumstances of the case and in law, the Ld. JCIT(A) erred in deciding that the assessee was denied exemption u/s 11 by the CPC, Bangalore for not filing of Form no.10B within the prescribed time limit, despite the fact that the CPC, nowhere gave such reason? 5. Whether, on the facts and in the circumstances of the case and in law, the Ld. JCIT(A) erred in allowing assessee's appeal adjudicating only intimation u/s 143(1) and not adjudicating the rectification order u/s 154 that was passed subsequent to Intimation u/s 143(1) of the Act? Revenue's contentions: The Ld. JCIT(A) erred in allowing exemption at the appellate stage, not appreciating that the intimation under section 143(1) was correctly issued based on the assessee's declared income. The Ld. JCIT(A) also failed to consider the section 154 order which confirmed the correctness of the CPC's demand. The Revenue argued that the CPC did not state that exemption was denied for delay in filing Form 10B and that the Ld. JCIT(A) should not have adjudicated only the section 143(1) intimation and ignored the subsequent section 154 order. The Revenue sought a direction for the Ld. JCIT(A) to revisit the appellate order considering the correct facts. The assessee did not appear before the Tribunal.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 12A(1)(b)(ii),Section 10(23C),Section 11,Section 154

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE

Before: DR.MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri Rajesh Haladkar
Hearing: 10.09.2026Pronounced: 22.10.2026

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of Revenue pertaining to A.Y. 2020-21 is directed against the order of Ld. Addl/JCIT(A)-Gwalior emanating out of Intimation dated 15.02.2021 passed u/s.143(1) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

When the case called for, there is no representation from the side of respondent-assessee despite due service of notice. We therefore proceed to adjudicate the appeal with the assistance of ld. DR and the material available on record.

3.

Revenue has raised following grounds of appeal :

“1. On the facts and in the circumstances of the case and in law, the Ld. JCIT(A) erred in allowing claim of exemption at the appellate stage despite the fact that the assessee has not claimed any application of income in the return of income filed.

2 Fransalian Technical Institute

2.

On the facts and in the circumstances of the case and in law, the Ld. JCIT(A) failed to appreciate that the Intimation u/s 143(1) dated 21-03-2022 was issued correctly on the information furnished by the assessee in the return of income, wherein the assessee itself has declared total income at Rs. 1,97,36,180/-.

3.

On the facts and in the circumstances of the case and in law, the L.d. JCIT(A) erred in not taking cognizance of order passed u/s 154 dated 14-06- 2024 that has categorically recorded that the CPC has issued demand correctly on the basis of income declared by the assessee in its return of income.

4.

On the facts and in the circumstances of the case and in law, the Ld. JCIT(A) erred in deciding that the assessee was denied exemption u/s 11 by the CPC, Bangalore for not filing of Form no.10B within prescribed time limit, despite the fact that the CPC, nowhere given such reason.

5.

On the facts and in the circumstances of the case and in law, the Ld. JCIT(A) erred in allowing assessee's appeal adjudicating only intimation u/s 143(1) and not adjudicating the rectification order u/s 154 that was passed subsequent to Intimation u/s 143(1) of the Act.

6.

On the facts and in the circumstances of the case, it is prayed to direct the Ld. JCIT(A) to revisit the appellate order dated 29-01-2026 after considering the correct facts, income declared by the assessee in its return of income, intimation u/s 143(1) dated 21-03-2022 and order passed by the assessing officer u/s 154 dated 14-06-2024. 7. The appellant craves leave to add, alter or amend any or all the grounds of appeal.”

4.

We have heard the ld. Departmental Representative and perused the record placed before us. We note that the assessee is a trust and declared income of Rs.1,97,36,180/- in the return for A.Y. 2020-21 e-filed on 15.02.2021 . Same has been processed u/s.143(1)(a) of the Act and for delay in furnishing the Audit Report on Form 10B u/s.12A(1)(b)(ii) read with proviso to section 10(23C) of the Act, the CPC denied the benefit of exemption u/s.11 and taxed the total income of the assessee. Against which the assessee preferred appeal before ld.CIT(A) and during the course of pendency of the appellate proceedings though the assessee filed Rectification application u/s.154 of the Act stating that there has been some mistakes in the furnishing of return and against the 3 Fransalian Technical Institute

gross receipts shown in the Income Tax Return at Rs.1,97,36,175/- assessee has incurred expenses of Rs.2,22,34,901/- and also spent Rs.92,02,468/- for the capital expenses and therefore there is Nil income, but assessee failed to succeed. In the meantime assessee also filed an application for condoning the delay and find favour from the ld.CIT(Exemption), Pune who vide order dated 26.04.2024 has condoned the delay in furnishing of Form 10B. Considering the same ld.Addl/JCIT(A), Gwalior granted relief to the assessee observing that since the assessee is eligible for exemption u/s.11 of the Act and delay in furnishing Form 10B has been condoned, therefore, the Assessing Officer is directed to allow exemption u/s.11 of the Act.

5.

Before this Tribunal Revenue has raised certain grounds challenging the finding of ld.CIT(A) mainly stating that it is no where mentioned in the reasons by the CPC that exemption u/s.11 has been denied for delay in furnishing Form 10B. We have taken note of the grounds of appeal raised by the Revenue and also the return processed u/s.143(1)(a) of the Act and find that firstly Form 10B has been filed belatedly and the delay for the same has been condoned and secondly there were mistakes in furnishing the Income Tax Return and the assessee has filled the figure of expenses at Rs.2,22,34,901/-in Schedule ER (Revenue expenses) and figure of Rs.92,02,468 in Schedule EC for the capital expenses incurred and the total of both expenses and gross receipts reveal that application of income is more than the receipts during the year. Therefore, considering these facts, we find no reason to interfere with the finding of Addl/JCIT(A), Gwalior directing the Assessing Officer to grant exemption u/s.11 of the Act to the assessee. Grounds of appeal raised by the Revenue are accordingly dismissed.

4 Fransalian Technical Institute

6.

In the result, the appeal of the Revenue is dismissed. Order pronounced on this 22nd day of October, 2026. (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; दिन ंक / Dated : 22nd October, 2026. Satish

आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent.

2.3.

The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, “A” बेंच, 4. पुणे / DR, ITAT, “A” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER, Sunil Kumar More More Date: 2026.10.25 10:45:37 +05'30' ////

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