SRI PRASANNA VENKATESWARA BHAKTHA MANDALI TRUST, vs. INCOME-TAX OFFICER,

PDF · subscribers
WP/26837/2026HC KarnatakaKAHC01059269202601 September 2026Bench: B M SHYAM PRASAD10 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court allowed the petition in part and quashed the impugned order dated 21.07.2026. The Court observed that the petitioner relied on the mandatory Audit Report in Form-10B dated 25.09.2015, which the petitioner claimed was filed with the communication dated 08.02.2019. The Court found that the respondents could not seriously contest that this report could have been part of the communication dated 08.02.2019, as the communication referred to enclosures. The Court was not persuaded to uphold the order solely on the ground that the report was not uploaded on the portal if it was indeed filed with the Assessing Officer. Therefore, the Court directed a re-examination of whether there was an error apparent in concluding the assessment notwithstanding the report being part of the record. The proceedings were restored to the first respondent to consider whether the petitioner had filed the mandatory Audit Report in Form-10B dated 25.09.2015 along with the communication dated 08.02.2019, and in any event, to permit the petitioner to file a copy of such report and examine if there was any error apparent justifying rectification.

What were the facts?

The petitioner, Sri Prasanna Venkateswara Bhaktha Mandali Trust, a religious trust seeking exemption, filed a writ petition challenging an order dated 21.07.2026 passed by the Income-Tax Officer (ITO) under Section 154 of the Income Tax Act, 1961. The assessment year in question is 2015-16. The ITO rejected the trust's application for rectification on grounds of limitation and failure to file the mandatory Audit Report in Form-10B. The procedural history involves the trust receiving a notice under Section 139 on 22.11.2016, an intimation under Section 143(1) on 27.03.2017, and filing revised returns on 27.02.2017. The trust's revised return was treated as invalid by an order dated 24.03.2017. The trust then sent a communication on 08.02.2019, followed by another on 20.05.2026, which led to the impugned order.

What were the issues?

1. Whether the petitioner's communication dated 08.02.2019, which referred to enclosures, could be construed as a valid application for rectification under Section 154 of the Income Tax Act, 1961, despite not explicitly requesting rectification. 2. Whether the petitioner had filed the mandatory Audit Report in Form-10B along with its original or revised returns, or if its filing with the communication dated 08.02.2019 was sufficient. 3. Whether the impugned order dated 21.07.2026, rejecting the rectification application on grounds of limitation and non-filing of Form-10B, was sustainable. Assessee's Contention: The petitioner argued that it had filed the requisite Audit Report in Form-10B dated 25.09.2015 along with its communication dated 08.02.2019. The petitioner asserted that the original returns were being processed despite the filing of revised returns, prompting the communication. Revenue's Contention: The revenue contended that the petitioner had not filed an application for rectification within the prescribed timeline. They argued that the communication dated 08.02.2019 did not constitute a request for rectification. Furthermore, they submitted that Form-10B, even if available, was not uploaded as required for the Central Processing Centre (CPC) to consider.

Which sections of the Income-tax Act were involved?

Section 154,Section 139,Section 143(1),Section 11,Section 12,Section 12A(1)(b)

AI-generated summary — verify with the full judgment below

HC-KAR IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF SEPTEMBER, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 26837 OF 2026 (T-IT) BETWEEN:

SRI PRASANNA VENKATESWARA BHAKTHA MANDALI TRUST, RAMAKRISHNAPURAM CHANDAPURAM PO, CHANDAPURA SO, BANGALORE -560 081 REP. BY THE MANAGING TRUSTEE, SRI. KALLE VENKATESWARA SASTRY, AGED ABOUT 70 YEARS, S/O. LATE KALLE SESHASAYANAM, NATURE OF BUSINESS RELIGIOUS TRUST RUNNING TEMPLE PAN CARD NO.AAQPK6808E MOB. NO.9886404328 E-MAIL ID:SASTRY.KALLE@GMAIL.COM …PETITIONER (BY SMT. JINITA CHATTERJEE, ADV. A/W SMT. DIMPLY KUMARI, ADV.)

AND:

1.

INCOME-TAX OFFICER, EXEMPTIONS WARD 3, INCOME-TAX DEPARTMENT UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU-560 027.

2.

DEPUTY DIRECTOR OF INCOME-TAX, CENTRALIZED PROCESSING CENTRE (CPC), POST BAG NO.2,

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA HC-KAR ELECTRONIC CITY POST OFFICE, BENGALURU - 560 500. …RESPONDENTS (BY SRI. ARAVIND V CHAVAN, ADV. A/W SRI NIRMAL MATHEW, ADV.)

THIS PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, IS PRAYING TO QUASHING THE ORDER DATED 21.07.2026 UNDER SECTION 154 OF THE INCOME-TAX ACT BEARING NO. ITBA/COM/F/17/2026- 27/1091285657(1) (DIGITALLY SIGNED) FOR ASSESSMENT YEAR 2015-16 ISSUED BY 1ST RESPONDENT (ANNEXURE-K) AND ETC.

THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioner is a Trust which claims exemption, and it relies upon the mandatory Form- 10B [Audit Report] furnished by its Chartered Accountant for such exemption. The petitioner's grievance is with the first respondent's order dated 21.07.2026 under Section 154 of the Income Tax Act, 1961 [for short, ‘the Act’] [Annexure-K]. The first respondent has rejected the petitioner's application on the ground of limitation as also the purported HC-KAR failure by the petitioner to file the mandatory Audit Report in Form-10B.

2.

The circumstances leading to the impugned order dated 21.07.2026 which relates to the assessment year 2015-16 are captured thus.

 The petitioner is served with Notice under Section 139 of the Act on 22.11.20161.  The petitioner is served with the Intimation under Section 143(1) of the Act on 27.03.2017.  In the meantime, the petitioner has filed revised Returns on 27.02.2017.  The petitioner is served with the order dated 24.03.2017 stating the Revised Return dated 24.02.2017 is treated as invalid.

1 The petitioner asserts that it has received this Notice on 24.02.2017.

HC-KAR  The petitioner has caused Communication dated 08.02.2019 to the first respondent bringing forth the afore facts.  The petitioner is served with the Intimation dated 02.12.2021 about the pending demand, and the petitioner has responded referring to the revised Returns dated 24.02.2017.  The impugned order is in response to the petitioner’s Communication dated 08.02.2019 and the later Communication dated 20.05.2026

Ms. Jinita Chatterjee, the learned counsel for the petitioner, and Mr. Nirmal Mathew and Mr. Aravind V. Chavan, the learned counsels who accept notice for the respondents, are heard for disposal of the petition.

HC-KAR

3.

Ms. Jinita Chatterjee submits that the petitioner, after the petitioner has filed revised Returns upon receipt of Notice dated 24.02.2017, is informed that the original returns are being processed, and as such, the petitioner has caused a Communication dated 08.02.2019. The learned counsel is categorical in stating that along with the Communication dated 08.02.2019, the petitioner has filed the requisite Audit Report dated 25.09.2015 in Form-10B.

4.

Sri. Aravind V. Chavan and Sri. Nirmal Mathew rely upon the following in Annexure-K to contend that no exception can be taken with the impugned order because the petitioner has not filed an application for rectification within the timeline contemplated asserting that the Communication dated 08.02.2019, which has no request for rectification, cannot be construed as an application for rectification. The learned Standing Counsel also HC-KAR submits that Form-10B, even if available, has not been uploaded as required for the second respondent to consider and cause communication thereof to the first respondent.

5.

The first respondent’s reasoning in the impugned order dated 21.07.2026 essentially reads as follows.

“On verification it is seen that CPC vide its letter dated 24.03.2017 has reconsidered the earlier invalidity order and has treated the original return filed on 28.09.2015 itself as valid and correct, and for that reason the subsequent revised return filed on 27.02.2017 was not processed. On further verification of the e-filing portal for Assessment Year 2015-16, it is seen that the assessee is a trust filing ITR-7 and claiming exemption under Section 11 and 12 of the Act, but has not filed the mandatory audit report in Form 10B as required under Section 12A(1)(b) either along with original return or along with revised return or till date. In the absence of HC-KAR Form 10B the exemption claimed by the trust cannot be allowed, and the entire receipts have to be treated as income. That is the reason why CPC while processing the original return under Section 143(1) on 27.03.2017 has correctly denied the exemption and raised the demand of Rs.35,39,160/-. This is as per law and is not a mistake apparent from record which can be rectified under Section 154.

Further, an application under Section 154 can be filed only within a period of four years from the end of the financial year in which the order sought to be rectified was passed as provided under Section 154(7). The intimation sought to be rectified was passed on 27.03.2017 falling in Financial Year 2016-17, and the limitation of four years expired on 31.03.2021. The present application filed on 01.06.2026 is beyond the period of limitation and is also liable to be rejected on this ground.”

6.

This Court must observe that the petitioner relies upon the mandatory Audit Report in Form-10B which is dated 25.09.2015 and the HC-KAR petitioner's case is that this is filed with the first respondent along with the Communication dated 08.02.2019. The request for rectification is rejected in the premise that this Report is not filed either with the original Returns or the revised Returns. However, the respondents cannot seriously contest that this mandatory Audit Report could be part of the Communication dated 08.02.2019 because this Communication refers to enclosures.

7.

If indeed the petitioner has filed this Audit Report in Form-10B with the Assessing Officer, this Court is of the view that there must be re- examination to understand whether there is an error apparent in concluding the assessment notwithstanding such mandatory report being part of the record. This Court is not persuaded to uphold this order only on the ground that the Report is not uploaded by the petitioner on the portal for the Central Processing Centre, if indeed the petitioner HC-KAR has filed the Report with the Assessing Officer. This Court, therefore, opines that there must be a re- consideration of the question whether there is error apparent in the Intimation dated 27.03.2017. In the light of afore, the following ORDER. The petition is allowed in-part, and the impugned order dated 21.07.2026 [Annexure- K] is quashed, restoring the proceedings to the first respondent, calling upon this respondent to consider – [a] Whether the petitioner has filed the mandatory Audit Report in Form-10B dated 25.09.2015 along with the Communication dated 08.02.2019, and [b] in any event to permit the petitioner to file copy of such Report dated 25.09.2015 and examine whether HC-KAR there is any error apparent that could justify a rectification.

Sd/- (B M SHYAM PRASAD) JUDGE

NC CT:bms List No.: 2 Sl No.: 16

More judgments on Section 154

All 8,676 judgments and leading authorities on Section 154 →

Latest GST High Court judgments

Search GST case law →