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Facts
The assessee, a charitable trust, failed to file Form 10B before filing its income tax return for AY 2019-20. This led to the disallowance of deductions claimed under sections 11 and 12 of the Income Tax Act. The lower authorities upheld the disallowance, stating they lacked the power to condone the delay in filing Form 10B.
Held
The Tribunal held that the assessee had already filed an application for condonation of delay with the PCIT. Recognizing this, the Tribunal directed the PCIT to expeditiously dispose of the condonation application. Subsequently, the lower authorities were to decide the matter afresh.
Key Issues
Whether the disallowance of deductions under sections 11 and 12 is justified due to the belated filing of Form 10B, and if the appellate authorities have the power to condone such delay.
Sections Cited
11, 12, 139(1), 250, 119(2)(b), 12A(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHIR OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order of Ld. Commissioner of Income Tax (Appeals) / Addl./JCIT (A)-1, Ludhiana [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] dated ICL Education Society 25.02.2025 for the A.Y. 2019-20 wherein the disallowance of deduction u/s 11 and 12 of the Act was made by AO for non filing of Form 10AB on or before filing the return of income and the said order was upheld by the Ld. CIT(A) observing that the Addl/JCIT does not have the authority to condone the delay in filing of Form 10B and the assessee may approach the competent authority authorized by CBDT for condonation of delay in filing Form 10B and to claim the benefit of section 11 and 12 of the Act.
The brief facts as culled out from the proceedings of lower authorities are that the assessee is a charitable Trust registered with Charity Commissioner, Mumbai vide Registration No. F-5038, Mumbai dated 16th October, 1978. The Trust is also registered with the Director of Income Tax (Exemption) under registration No. INS/34584 vide order No.DIT(E)MC/12-A/34584/99-2000 dated 31/01/2000. The assessee has filed its return of income on 30th October, 2019 returning income of Rs.1,23,452/- and claiming a refund of Rs.1,01,085/-. On 30th October, 2019, the assessee received an intimation that Form 10B had not been filed as required on or before filing the income tax return. The CPC vide letter dated 23.06.2020 has declared income at Rs.23,33,54,644/- ICL Education Society raising a demand of Rs.10,02,33,896/- which included interest of Rs.1,67,30,501/-. The benefit of section 11 was rejected on the ground that assessee who is registered u/s 12A / 12AA has not e-filed the audit report in Form 10B on or before filing the return of income, hence the exemption claimed u/s 11(1)(d) of the Act was not allowed in accordance with the provision of section 12A(1)(b) of the Act.
During the appellate proceedings, the Ld. CIT(A) observed that the due date for filing the return of income for AY 2019-20 was 30.09.2019 and assessee was required to file its Tax Audit Report in the prescribed Form 10B on or before 30.08.2019 (i.e. prior to one month before the due date of furnishing of ITR u/s 139(1) of the Act). The assessee filed Form 10B on 22.11.2022 for the year under consideration. The assessee filed its ITR on 30.10.2019 and failed to file Form 10B before filing of its ITR. Accordingly, the CPC processed the ITR without allowing deduction of Rs. 23,32,31,192/- as per the provisions of section 11 of the Act due to non-filing of Form 10B as required for trust or institution. Ld. CIT(A) has dismissed the grounds in appeal stating that they do not have power to condone the delay in filing Form 10B, however the assessee was at liberty to seek condonation of delay from the Ld. PCIT.
ICL Education Society 4. In this background, the Ld. AR at the very outset submitted that the assessee has already filed the condonation of delay application before the Ld. PCIT and the same has been recorded by the Ld. CIT(A) in para 6.5 of its impugned order, therefore Ld. AR submitted that the matter may be restored to the file of Ld. CIT(A) or Ld. AO for considering the deletion of disallowances so made after condoning the delay by the Ld. PCIT before whom the application is pending for disposal.
Ld. DR did not oppose the contentions of Ld. AR and left it to the Tribunal to consider the same.
Before proceeding, we are extracting para 6.8 and 6.9 of the impugned order as under:-
“6.8 Hence, based upon the above discussion and the decision of the Apex Court in the case of Principal Commissioner of Income -tax v Wipro Ltd, the case of the appellant falls under section 11 and 12 of the Act which is part of Chapter -III of the Act and the claim of the appellant’s plea for want of Form 10B is rejected and the action of the A.O of disallowing the deduction per provision of the Act is hereby upheld and confirmed. Also, it is evident from the above discussion that the Assessing Officer (AO), Addl./Joint Commissioner of Income (Appeals)[Addl/JCIT(A)], and Commissioner of Income Tax (Appeals)[CIT(A)] do not have the authority under section 119(2)(b) of the Act to grant condonation for delay in filing of Form no. 10B. The appellant has the option to approach the competent authority
6.9 Hence, I find no merit in the current appeal, grounds of appeal are hereby dismissed.”
7. It is thus evident that the appeal has been dismissed for not filing the Form 10B and further on the ground that the appellate authority has no power to condone the delay and assessee was at liberty to approach the competent authority for seeking condonation of delay. The fact that assessee has already approached the competent authority for seeking condonation of delay and the same was pending before the Ld. PCIT, are mentioned in para 6.5 of the impugned order. Therefore, we find force in the arguments of the Ld. AR that the matter be restored to the file of lower authorities for reconsidering and deciding the matter afresh about the claim of the assessee as the assessee has already moved the application for seeking condonation of delay in filing Form 10B before the competent authority.
In view of these facts and circumstances and in the interest of justice, we direct the Ld. PCIT for the expeditious disposal of the application of condonation of delay in filing of Form 10B filed by the assessee, and thereafter the lower authorities shall decide the matter afresh as per ICL Education Society provision of law. For these reasons, we set aside the impugned order and restore the matter back to the file of Ld. AO for deciding the matter afresh in view of the direction given above.
In the result, appeal filed by the assessee is allowed for statistical purposes in above terms.
Order pronounced in the open court on 18.06.2025.