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Facts
The assessee claimed exemption under Section 10(23C) of the Act. The Assessing Officer disallowed the claim because the audit report in Form 10B was not filed on time. The assessee also faced a penalty under Section 271B for the same reason. The appeals were filed with a delay.
Held
The Tribunal condoned the delay in filing the appeals. It held that the First Appellate Authority's order was vulnerable due to an erroneous finding of fact regarding the condonation of delay in filing Form 10B. The issue of exemption was restored to the AO for fresh adjudication pending the decision on condonation of delay.
Key Issues
Whether the claim of exemption under Section 10(23C) can be disallowed for non-filing of Form 10B on time, when the application for condonation of delay is pending. Whether penalty under Section 271B is leviable in such circumstances.
Sections Cited
10(23C), 12A, 271B
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, VP & SHRI NARENDRA KUMAR BILLAIYA, AM
The captioned appeals by the assessee arise out of two separate orders of learned First Appellate Authority, both dated 21.03.2025, passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi, pertaining to the assessment year (A.Y. 2018-19). arises out of quantum proceeding, in the assessee has challenged the order imposing penalty u/s. 271B of the Act. Before we proceed to decide the appeal, it is necessary to observe, both the appeals have been filed with delay of 15 days.
Before us, the assessee has furnished an application seeking condonation of delay.
Having taken note of the reasons explaining the delay in filing the appeals, we are satisfied appeals for adjudication on merits.
At the outset, we will deal with the quantum appeal, being ITA No. 4107/Mum/2025. The dispute basically is with regard to denial of claim of exemption u/s. 10(23C) of the Act. Briefly stated, the assessee is registered as a Charitable Trust u/s. 12A of the Act. In the return of income filed for the assessment year under dispute, the assessee had claimed exemption u/s. 10(23C) of the Act. However, in course of assessment proceeding, the Assessing Officer (AO) observed that the audit report in Form 10B was uploaded in the portal of the department on 15.03.2021. The A.O. observed, as per the statutory requirement, Form 10B should have been uploaded on and before the due date of filing of the return of income for the assessment year under dispute. Being of the view that the assessee has not complied with the statutory requirement, the A.O. proceeded to frame the assessment, disallowing assessee’s claim of exemption and determined the taxable income at Rs.49,03,552/-. Simultaneously, the A.O. also initiated proceedings for imposition of penalty u/s. 271B of the Act for non-furnishing of Form 10B within the due date and ultimately passed an order imposing penalty of Rs.1,22,898/- u/s. 271B of the Act.
Be that as it may, being aggrieved with the assessment order, the assessee preferred an appeal before learned First Appellate Authority. While deciding the appeal, learned First Appellate Authority observed that assessee’s appeal has been filed with delay of 84 days and the assessee has not filed any application seeking condonation of delay. Therefore, he held that the appeal filed beyond the period of limitation is to be rejected. so, learned First Appellate Authority, though, acknowledged the fact that the assessee had filed an application before Pr. CIT(Exemption), Mumbai, seeking condonation of delay in filing Form 10B, however, he observed that since the Pr. CIT(Exemption), Mumbai has not condoned the delay in filing Form 10B, assessee’s claim of exemption u/s. 10(23C)/11/12 of the Act, cannot be considered. Accordingly, he dismissed the appeal.
Before us, ld. Counsel appearing for the assessee, at the outset, submitted that there is no delay in filing the appeal before Commissioner (Appeals), as the limitation period in filing the appeal was extended by virtue of the directions of Hon'ble Supreme Court on account of lock down for Covid-19. Therefore, there was no delay in filing the appeal.
Insofar as, merits of the issue is concerned, ld. Counsel emphasized that assessee’s application seeking condonation of delay in furnishing Form 10B is still pending before the competent authority, i.e., Pr. CIT(Exemption), Mumbai. Thus, he submitted that the order of learned First Appellate Authority may be set aside and the issue of claim of exemption may be restored back to the A.O. for fresh consideration after disposal of assessee’s application seeking condonation of delay in uploading Form 10B pending before Pr. CIT(Exemption), Mumbai.
Learned Departmental Representative ('ld. DR' for short) relied upon the observations of learned First Appellate Authority.
We have considered rival submissions and perused the materials available on record. As discussed earlier, learned First Appellate Authority though rejected assessee’s appeal on the ground of limitation, still he proceeded to decide the appeal on merits. This condoned, technically, the appeal is not admitted. Once the appeal is not admitted, it cannot be decided on merit. However, we do not intend to detain ourselve on this aspect. As could be seen from the discussions made in the foregoing paragraphs, assessee’s claim of exemption u/s.10(23C)/11/12 of the Act, was rejected solely for the reason that the audit report in Form 10B was not uploaded in the system of the department on or before the due date of filing of the return of income. However, before the departmental authorities, the assessee has explained that application seeking condonation of delay has been filed with the competent authority, i.e., Pr. CIT(Exemption), Mumbai, which is still pending with him. In fact, a reading of order passed by learned First Appellate Authority would reveal that learned First Appellate Authority accepts the aforesaid factual position. However, strangely enough, in paragraph 5.14 of the appellate order, learned First Appellate Authority has observed that Pr. CIT(Exemption), Mumbai having not condoned the delay in filing Form 10B, the decision of the A.O. in denying the claim of exemption, is upheld.
Before us, ld. Counsel appearing for the assessee has asserted that the application seeking condonation of delay in uploading Form 10B is still pending with Pr.
CIT(Exemption), Mumbai and no decision yet has been taken. Submission in similar line seems to have been made before learned First Appellate Authority, as it is reflected in para 5.9 and 5.11 of first appeal order. Thus, when assessee’s application seeking condonation of delay is still pending before the competent authority, we do understand how learned First Appellate Authority has upheld the decision of A.O. on an erroneous of finding of fact that Pr. CIT(Exemption), Mumbai has not condoned the delay in filing Form 10B. order vulnerable. Accordingly, we are inclined to set aside the impugned order of learned First Appellate Authority and restore the issue relating to assessee’s claim of exemption u/s.10(23C)/11/12 of the Act to the file of the A.O. for fresh adjudication. The A.O. is directed to await the decision of ld. Pr. CIT(Exemption), Mumbai on assessee’s application seeking condonation of delay in furnishing Form 10B and thereafter decide the issue after providing due and reasonable opportunity of being heard to the assessee. of the Act is concerned, in view of our decision in the quantum of appeal, being the orders passed by the departmental authorities on the issue are set aside. However, it will be open to the A.O. to initiate penalty proceeding u/s. 271B of the Act afresh, if warranted, depending upon the outcome of assessee’s application seeking condonation of delay in furnishing Form 10B pending before Pr. CIT(Exemption), Mumbai. Accordingly, both the appeals are allowed for statistical purposes.
In the result, the appeals in & 4018/Mum/2025 are allowed for statistical purpose.
Order pronounced in the open court on 31.07.2025 Sd/- Sd/- (N. K. Billaiya) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 31.07.2025 Roshani, Sr. PS & 4018/Mum/2025 (A.Y. 2018-19) Vesava Koli Samaj Shikshan Sanstha vs. ITO(E) Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,