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Facts
The assessee, a trust, filed its Form 10B for claiming deduction under Section 11 of the Income Tax Act, 1961, belatedly by 14 days. The CPC rejected this claim and made an addition to the total income. The Ld. CIT(A) dismissed the assessee's appeal, holding that a direct appeal against an intimation under Section 143(1)(a) is not maintainable without first applying for rectification under Section 154, as per CBDT Circular No. 549.
Held
The Income Tax Appellate Tribunal upheld the decision of the Ld. CIT(A), ruling that an appeal against an intimation order under Section 143(1)(a) is procedurally inadmissible if the assessee has not first exhausted the rectification mechanism under Section 154 of the Act. The Tribunal noted that while the merits might favor the assessee, the procedural bar made the appeal unmaintainable.
Key Issues
Whether an appeal against an intimation order under Section 143(1)(a) of the Income Tax Act is maintainable without first filing a rectification application under Section 154 of the Act.
Sections Cited
250, 143(1), 11, 12A(1)(b), 44AB, 10(23C), 13(10), 119, 143(1)(a), 143(1A), 154
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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNT MEMBER & SHRI ANIKESH BANERJEE
O R D E R Per Anikesh Banerjee (JM):
Instant appeal of the assesse was filed against the order of the Learned Commissioner of Income-tax / ADDL / JCIT(A)-2, Coimbatore, [in short, ‘Ld. CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment year 2023-24, date of order 21/03/2025. The impugned order was emanated from the order of the CPC, Bengaluru passed under section 143(1) of the Act, date of order 19/11/2024.
2 ITA 3398/Mum /2025 St. Sebastians Church 2. We heard the rival submissions and considered the documents available on the record. The assessee is a trust and registered under the Maharashtra Public Trust Act, 1950 on 20/06/1955. The assesse is liable to file Form 10B for claiming deduction under section 11 of the Act and accordingly, the assessee filed the Form 10B along with the return of income belatedly by 14 days. The details of facts and dates are duly fled by the Ld.AR, which is extracted as below: - “B. Details of Filing Audit Report in Form No.10B 30th September 2023 1. Due Date of Filing Form No.10B 31st October 2023 2. Extended Due Date of Filing Form No.10B (as per circular no.16/2023 dated 18/09/2023)
30th November 2023 3. Date of Filing of Form No.10B C. Details of Filing Return of Income (ITR 7) 31st October 2023 4. Due Date of Filing Return of Income 5. Extended Due date of Filing Return of Income 30th November 2023 (as per circular no.16/2023) 30th November 2023 6. Date of Filing Return of Income. D. Details of Filing Form 10 u/s 11(2) for Accumulation of Income 30th November 2023 7. Due Date of Filing of Form 10 29th November 2023” 8. Date of Filling of Form 10
The CPC rejected assessee’s claim under section 11 of the Act and added the same back with the total income on the ground of delayed filing of Form 10B. The assessee being aggrieved, filed an appeal before the Ld. CIT(A). The Ld.CIT(A), considering the submissions of the assesse noted the following observations: -
3 ITA 3398/Mum /2025 St. Sebastians Church “6. I have gone through the submissions of the appellant, return of income and intimation u/s.143(1) passed by CPC, Bangalore. The case laws relied upon by the appellant is also carefully noted. On examination of such details, as discussed in para 6 and 6.1, the appellant has failed to file audit report in the form 10B as required u/s 12A(1)(b) read with sec 44AB of the Income Tax Act 1961 within the specified extended due date i.e 31/10/2023 which is mandatory for claiming exemption, but filed Form 10 B electronically only on 30/11/2023 (after 30 days of delay).
6.1 As per the present provisions of sec 143(1) of the Income Tax Act 1916, while processing any return of income, before making any adjustments u/s 143(1)(a), the CPC has to provide intimation to the assessee either in writing or through electronic mode requiring him to respond to such adjustments, in the interest of natural justice as the proviso to sec 143(1). Subsequently, the response received, if any, will be duly considered before making any adjustment. However, if no response is received within thirty days of issue of such intimation, the processing shall be carried out incorporating the adjustments. In the case of appellant, for the opportunity provided by the CPC u/s 143(1)(a)(ii) stating that "As per the return of income filed provisions of twenty second proviso to section 10(23C) or section 13(10) are applicable in the case. The assessee is required to fill Part B3 of Schedule Part BTI. Since, assessee has not filled Part B 3, the values at Sl.No. C 'Total Contributions of Schedule VC and Sl.No. 10 of Schedule Al has been taken to arrive at the Total Income of the previous year".
6.2 In response, the appellant has objected the adjustments proposed by the CPC. However, the CPC, Bangaluru has processed the return with an addition of Rs. 2,64,16,269/- and assessed the appellant's total Income of Rs. 2,64,16,269/- against returned income of Rs. NIL on account of failure to file Form 10B within the extended due date as per the provision of application of sec13(10).
6.3 In the case of appellant, for the issue delay in filing audit report which is mandatory as per sec 12A(1)(b) of the Income Tax Act 1961, the 370142/6/2024-CBDT vide CIRCULAR NO. 2/2024 [F.NO. TPL], DATED 5-3-2024 has extended due date to file Form 10B/10BB for the A.Y 2023-24
4 ITA 3398/Mum /2025 St. Sebastians Church till the period of 31/3/2024 on account of hardships faced by the assessee. The relevant part of the CBDT's circular as cited above are reproduced as under: “ 4. The new forms, Form No. 10B Form No, 10BB, notified vide Notification No. 7 of 2023, dated 21st February, 2023. The above were prescription was put in place w.e.f. 1-4-2023, vide the Income-tax (Third Amendment) Rules, 2023, and is therefore, effective for assessment year 2023-24 and subsequent assessment years. The due date for fumishing such audit reports for the A. Y. 2023-24 was 31st October, 2023.
Prior to the aforesaid amendment of the Rules, the earlier prescribed form for audit report was Form No. 10BB for trust/institution in the first regime and Form No. 10B for trust/institution in the second regime.
Thus, A.Y, 2023-24 is the first year when changes described in paragraphs 3 and 4 take effect.
It has come to the attention of the Board that in a number of cases trusts /institutions have furnished audit report in Form No. 10B, where Form No. 10BB was required to be furnished for the A.Y. 2023-24, Similarly, in a number of cases trusts/institutions have furnished audit report in Form No. 10BB, where Form No. 10B was required to be furnished for the A.Y. 2023-24.
As noted above, non-furnishing of audit report in the prescribed form would result in denial of exemption in such cases as it is one of the conditions which is required to be satisfied for claim of exemption.
8. In view of the above, the Central Board of Direct Taxes, in exercise of its powers under section 119 of the Act hereby allows those trusts /institutions which have furnished audit report on or before 31st October, 2023 in Form No. 10B where Form No. 10BB was applicable and vice-versa, to furnish the audit report under clause (b) of the tenth
5 ITA 3398/Mum /2025 St. Sebastians Church proviso to clause (23C) of section 10 and sub-clause (ii) of clause (b) of sub-section (1) of section 12A of the Income-tax Act, 1961, in the applicable Form No. 10B/10BB for the assessment year 2023-24, on or before 31st March, 2024."
6.4 Considering the above, the adjustments made by the CPC vide order dated 19/11/2024 on account of delay in filing Form10B is incorrect and needs to be deleted.
7. Further, it is observed from submissions made by the appellant that the appellant has filed appeal without filing any rectification application before the AO for rectifying the mistake apparent from records in the intimation order passed by CPC u/s 143(1).
7.1 Therefore, now the issue pending before this appellate authority is to decide whether any appeal can be filed against the intimation order of 143(1a) passed by CPC, without filing any rectification application before AO.
7.2 In this regard, the CBDT vide circular no 549 dated 31.10.1989 has clearly addressed the issue of – I. Whether any appeal is provided against an adjustment made under the proviso to section 143(1)(a) or the levy of additional income-tax under section 143(1A) - A direct appeal has not been provided against adjustments made under the proviso to section 143(1)(a) and the consequential charge of additional income-tax under section 143(1A), because the adjustments are to be made only in respect of arithmetical errors and prima facie admissible or inadmissible. Any action of the Assessing Officer in contravention of these provisions will be clearly a mistake. Therefore, section 154 relating to rectification of mistakes has been amended to bring an intimation/refund issued under section 143(1) within the purview of that section (refer para 9.1 of these Explanatory Notes). Therefore, if an assessee is aggrieved by an adjustment made to the returned income/loss and also the consequential charge of additional income-tax he can move an application under section 154 before the Assessing Officer for rectification of the mistake. If the said application is rejected, the assessee can file an appeal or revision against such 6 ITA 3398/Mum /2025 St. Sebastians Church order or rejection. Thus, in effect, an adjustment made under the proviso to section 143(1)(a) or additional income-tax charged under section 143(1A) are appealable, though not directly but through the provisions of section 154.
7.3 In view of above, as per the clarification issued by the CBDT vide circular no 549 dated 31.10.1989, in the case of appellant, the appeal has been filed directly against the intimation order of adjustments made under the proviso to section 143(1)(a) without filing any rectification application along with revised tax audit report. As the appellant has directly filed appeal against the order of adjustments made under the proviso to section 143(1)(a) without filing any rectification application is procedurally inadmissible. Therefore, the appellant is instructed to file rectification application u/s 154 before the AO to rectify the mistake apparent from record and assessing officer is directed to rectify the mistake apparent from record as discussed above after obtaining rectification application from the appellant.
In the result, the appeal is dismissed.” Being aggrieved the assessee filed an appeal before us.
The Ld. DR stands in favour of the orders of the revenue authorities.
The Ld. AO processed the return under section 143(1) of the Act and denied the claim of exemption under section 11 of the Act on the ground that Form 10B was not filed within the prescribed time. Accordingly, the total income was assessed at Rs.2,64,16,269/-, as against the returned income of NIL. The Ld. CIT(A), while disposing of the appeal, considered all submissions of the assessee and observed that although the Ld. AO erred in making the adjustment on merits, the assessee had not filed a rectification application under section 154 of the Act before the Assessing Officer. Relying on CBDT Circular No. 549 dated 31/10/1989, the Ld. CIT(A) held that an appeal against an intimation under section 143(1)(a) is not maintainable unless the assessee first seeks rectification under 7 ITA 3398/Mum /2025 St. Sebastians Church section 154 of the Act. Since the assessee bypassed this mandatory procedural requirement, the Ld. CIT(A) dismissed the appeal as not maintainable. Before us, the Ld. DR strongly supported the findings of the revenue authorities. We have given our thoughtful consideration to the matter. It is evident that the Ld. CIT(A) examined the merits of the assessee’s claim and was inclined to allow the benefit of exemption, subject to rectification of the procedural lapse. However, the Ld. CIT(A) rightly noted that the appeal itself was not maintainable without first exhausting the rectification mechanism under section 154, as clarified by CBDT Circular No. 549 dated 31/10/1989. The Ld. AR submitted that a rectification application has been filed and is pending before the Ld. AO. However, pendency of such rectification does not render the present appeal maintainable when the appeal itself is procedurally barred. In view of the above, we find no infirmity in the order passed by the Ld. CIT(A). We, therefore, uphold the impugned order and dismiss the appeal of the assessee. Accordingly, appeal filed by the assesse is dismissed.