ANNA NAGAR KK NAGAR NADAR URAVINMURAI,MADURAI vs. ITO, EXEMPTIONS WARD,, MADURAI

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ITA 612/CHNY/2026Status: DisposedITAT Chennai02 November 2026AY 2021-229 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the learned CIT(A) was correct in upholding the adjustment made by the CPC/AO. The issue for consideration was whether the CIT(A) was correct in law in upholding the disallowance of exemption under Section 11 due to the delayed filing of Form-10B. The Tribunal acknowledged the admitted delay of 44 days in filing the Audit Report. It noted that neither the Assessing Officer nor the CPC has the power to condone the delay in filing the Audit Report. The provisions of Section 12A(1)(b) of the Act mandate that to avail exemption under Section 11, the prescribed Audit Report in Form-10B must be filed one month before the due date for filing the return of income. Non-filing within the prescribed due date disentitles the assessee from claiming exemption under Section 11, as it is a statutory condition precedent. The Tribunal further stated that this amounts to an incorrect claim within the meaning of the explanation to Section 143(1) of the Act. Therefore, the CPC had rightly made the adjustment by disallowing the claim. The Tribunal also observed that the ratio of the decisions relied upon by the assessee's counsel had no application for assessment years from 2020-21 onwards. Consequently, the grounds of appeal raised by the assessee were dismissed.

What were the facts?

The assessee, ANNA NAGAR KK NAGAR NADAR URAVINMURAI, a charitable trust registered under Section 12A, filed its return of income for Assessment Year 2021-22 on March 31, 2022, declaring NIL income after claiming exemption under Section 11 of Rs. 1,21,00,678/-. The appellant also filed the Audit Report in Form-10B belatedly with a delay of 44 days, as the extended due date was February 15, 2022. The Central Processing Centre (CPC)/Assessing Officer (AO) processed the return and issued an intimation on August 23, 2022, disallowing the Section 11 exemption of Rs. 1,21,00,678/-. The reason cited was the non-filing of the prescribed Audit Report in Form-10B within the time stipulated under Section 12A(b) read with Section 139 of the Act. The assessee's appeal before the Additional/Joint Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed, confirming the CPC's action. The CIT(A) noted that a petition filed by the appellant under Section 119(2)(b) of the Act for condonation of delay was rejected by the CIT(Exemptions), Chennai.

What were the issues?

1. Whether the learned CIT(A) was correct in law in upholding the adjustment made by the CPC/AO by disallowing the claim for exemption under Section 11 of the Income Tax Act, 1961, for the reason that the prescribed Audit Report in Form-10B was not filed within the period of one month before the due date for filing the return of income. Assessee's Contentions: - The requirement of filing the Audit Report in Form-10B within the prescribed period is merely directory and not a condition precedent for availing exemption under Section 11. - The Audit Report in Form-10B was available with the CPC at the time of processing the return. - Relied on the decisions in Sarvodaya Charitable Trust Vs. CIT(Exemption) and Associate Chambers of Commerce and Industry of India (ASSOCHAM) Vs. DCIT. Revenue's Contentions: - It is a mandatory requirement under Section 12A(1)(b) of the Act to file the Audit Report in Form-10B one month before the due date for filing the return of income, effective from 2021. - This is a condition precedent for availing exemption under Section 11. - The power of condoning the delay was conferred on the learned CIT(E), which was denied.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A(1)(b),Section 139,Section 143(1),Section 119(2)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHENNAI BENCHES,

Before: SHRI INTURI RAMA RAO & SHRI MANU KUMAR GIRI

Pronounced: 02.11.2026

PER INTURI RAMA RAO, ACCOUNTANT MEMBER :

This appeal filed by the Assessee directed against the order passed by the learned Additional/Joint Commissioner of Income Tax(Appeal), Kochi dated 16.01.2026 passed u/s.250 of the Income Tax Act, 1961 for the Assessment Year 2021-22. 1

2.

The Assessee raised the following grounds of appeal :

“1. The order of the ADDL/JCIT (A) Kochi dated 16.01.2026 vide DIN & Order No. ITBA/APL/S/250/2025-26/1084878833(1) for the assessment year under consideration is contrary to law, facts and in the circumstances of the case.

2.

The ADDL/JCIT (A) Kochi erred in sustaining the action of the CPC, Bengaluru in disallowing the claim of tax exemption computation benefit under Section 11 of the Act to the tune of Rs.1,21,00,678/- being the gross receipts in the intimation order passed under Section 143(1) of the Act and consequently erred in sustaining the addition of such sums as income of the appellant in the computation of taxable total income without assigning proper reasons and justification.

3.

The ADDL/JCIT (A) Kochi failed to appreciate that the disputed adjustment made was outside the purview of the scope of adjustment contemplated in Section 143(1) of the Act, there by vitiating the impugned adjustment made in the intimation order dated 23.08.2022. 4. The ADDL/JCIT (A) Kochi failed to appreciate that in any event, the action in adding back the entire receipts earned / received during the assessment without taking into consideration the related expenditure incurred in relation to earning of such receipt, i.e. surplus / deficit as per the receipts and payments account, the consequential re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

5.

The ADDL/JCIT (A) Kochi failed to appreciate that the presumption of non availability of tax exemption benefit was wholly unjustified and hence ought to have appreciated that the assessment of gross income should be considered as nullity in law.

6.

The ADDL/JCIT (A) Kochi failed to appreciate that the mere delay in filing of tax audit report in Form No. 10B within the stipulated time could not automatically result in taxation of the entire gross receipts, there by vitiating the passing of the impugned order.

7.

The ADDL/JCIT (A) Kochi failed to appreciate that the conditions prescribed in relation to filing of tax audit report in Form No. 10B were only directory and not mandatory and further ought to have appreciated that the delay in filing the said Form was neither wilful nor deliberate but due to reasons beyond the control of the appellant, there by vitiating the impugned order passed in its entirety.

8.

The ADDL/JCIT (A) Kochi failed to appreciate that in any event, the Form No. 10B was made available at the time the processing of the return of income, and hence ought to have appreciated that the action in disallowing the claim of tax exemption computation under Section 11 of the Act, which claim is otherwise eligible was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

9.

The ADDL/JCIT (A) Kochi failed to appreciate that rejection order passed under Section 119(2)(b) of the Act by the CIT (Exemptions), Chennai would not automatically result in sustenance of disallowance of the claim of tax exemption in terms of Section 11 of the Act, there by vitiating the impugned order passed in this regard and further ought to have appreciated that the appeal being the continuation of assessment proceedings for adjusting the tax payer's liability, the small delay in filing the tax audit report was erroneously not condoned by overlooking the inherent appellate power.

10.

The ADDL/JCIT (A) Kochi failed to appreciate that the entire computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law.

11.

The ADDL/JCIT (A) Kochi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential appellate order passed should be reckoned as bad in law.

12.

The ADDL/JCIT (A) Kochi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.

13.

The Appellant craves leave to file additional grounds/arguments at the time of hearing.”

3.

Briefly the facts of the case are that the appellant is a Charitable Trust. It was duly registered u/s.12A of the Income Tax Act, 1961 vide order dated 10.02.2022. The return of income for the Assessment Year 2021-22 was filed on 31.03.2022 disclosing NIL Income after seeking the exemption u/s.11 of the Act of Rs.1,21,00,678/-. The appellant also filed Audit Report in Form-10B along with return of income on 31.03.2022 belatedly as against extended due date of 15.02.2022 with a delay of 44 days. The said return of income was processed by the CPC/AO intimation vide dated 23.08.2022 disallowing the claim for exemption u/s.11 of Rs.1,21,00,678/- for the reason that the prescribed Audit Report in Form-10B was not filed within the time stipulated u/s.12A(b) r.w.s 139 of the Act.

4.

Being aggrieved by the said intimation, an appeal was filed before the Learned CIT(A), who vide impugned order confirmed the action of the CPC taking into consideration the fact that the petition filed by the appellant u/s.119(2)(b) of the Act was rejected by the Learned CIT(E), Chennai vide order dated 29.12.2024. 5. Being aggrieved by the order of the Learned CIT(A), the appellant filed appeal before us in the present appeal. It is submitted that the requirement of filing Audit Report in Form- 10B within the prescribed period is merely a directory is not a condition precedent for availing the exemption u/s.11 of the Income Tax Act, 1961. It is further contended that Audit Report in Form-10B was very much available with the CPC at the time of processing the return of income. The appellant also placed reliance on the decision of Gujarat High Court in the case of Sarvodaya taxmann.com 75 and also the Hon’ble Delhi High Court in the case of Associate Chambers of Commerce and Industry of India (ASSOCHAM) Vs. DCIT 165 taxmann.com 510. 6. On the other hand, the Learned Sr.DR vehemently opposed the above submissions and submits that it is a mandatory requirement u/s.12A(1)(b) of the Act to file the Audit Report in Form-10B one month before the due date for the filing of return of income w.e.f 2021. It is a condition precedent for availing the exemption u/s.11 of the Act. The power of condoning the delay was conferred on Learned CIT(E) which was denied by the Learned CIT(E), therefore, the Learned CIT(A) confirmed the action of the CPC.

7.

We heard rival submissions and perused the material on record. The issue that arises for our consideration is whether the Learned CIT(A) was correct in law in upholding the adjustment made by the CPC/AO by disallowing the claim for exemption u/s.11 of the Act for the reason that the prescribed Audit Report in Form -10B was not filed within the period of one month before the due date for filing the return of income. Admittedly, there was delay of 44 days in filing the Audit Report in Form-10B. The Assessing Officer or CPC has not power to condone the delay in filing the Audit Report. The provisions of section 12A(1)(b) of the Act mandates that in order to avail exemption u/s.11 of the Act, the prescribed Audit Report in Form-10B is mandatorily required to be filed one month before due date for filing return of income. Non-filing of Audit Report within the prescribed due date would disentitle the assessee to claim exemption u/s.11 of the Act as it is a statutory condition precedent to avail the exemption u/s.11 of the Act. It amounts to incorrect claim within the meaning of explanation inserted to section 143(1) of the Act. Therefore, the CPC had rightly made the adjustment by disallowing the claim. The ratio of the decisions relied upon by the Learned Counsel have no application for the assessment year 2020-21 onwards, accordingly, grounds of appeal raised by the assessee are dismissed.

8.

In the result, appeal filed by the assessee stands dismissed. Order pronounced in the open Court on 2nd November, 2026. (MANU KUMAR GIRI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai; िदनांक / Dated : 2nd Nov, 2026 SGR, Sr.PS आदेश क" "ितिलिप अ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant.

1.

""यथ" / The Respondent.

2.3.

The CIT Chennai/Madurai/Coimbatore/Salem. 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब"च, चे"नई / DR, ITAT Chennai. गाड" फ़ाइल / Guard File.

5.

GANGADHARA RAO SALEELA Date: 2026.11.10 18:44:18 +05'30'

9

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