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Facts
The assessee, a charitable organization registered under Section 12A/AB, filed appeals against orders disallowing application of income under Section 11 of the Income Tax Act for Assessment Years 2022-23 and 2023-24. The disallowance was due to the late filing of Form 10B (audit report under Section 12A(1)(b)) after the return of income. There was also a 56-day delay in filing the appeal before the Tribunal.
Held
The Tribunal condoned the 56-day delay in filing the appeal, noting it was not intentional. It also condoned the 31-day delay in filing Form 10B, relying on High Court and Tribunal decisions that allow audit reports filed later. The matter was restored to the jurisdictional Assessing Officer to verify the facts and allow appropriate relief for income application under Section 11.
Key Issues
Whether the delay in filing an appeal and Form 10B (audit report) for claiming exemption under Section 11 of the Income Tax Act should be condoned.
Sections Cited
254(1), 11, 12A(1)(b), 119(2)(b), 12A/AB
AI-generated summary — verify with the full judgment below
These two appeals by two different assessees are directed against the separate orders of ld. CIT(A)/NFAC dated 23.10.2024 & 14.02.2025 for A.Y. 2022-23 & 2023-24 respectively. In both the appeals facts are common, the assessee has raised certain common ground of appeal, therefore, with the consent of parties both the appeals are clubbed, heard together and are & 2512/Mum/2025 R.C. Church of St. Josephs & R.C. School of St. Teresa’s decided by common order to avoid the conflicting decisions. For appreciation of facts, appeal for AY 2022-23 in is treated as a lead case. Though, the assessee has raised multiple grounds of appeal, however, in our considered view the substantial ground of appeal relates to application of income under section 11 of Income Tax Act which was not allowed by lower authorities for not furnishing Form No. 10B (Audit report under section 12A(1)(b) in time or within extended time.
2. Perusal of record shows that impugned order was passed by ld. CIT(A) on 30.10.2024, but this appeal is filed before Tribunal on 25.02.2025. Thus, there is delay of 56 days in filing appeal before Tribunal. The ld. AR of the assessee submits that assessee has already filed affidavit of Fr. Christopher D J Alvares, one of the trustee and authorised signatory of assessee trust. The ld. AR of the assessee submits that assessee is charitable-organisation engaged in the charitable activities. The delay in filing appeal is neither intentional nor deliberate. The delay is only of 56 days and mainly caused due to the fact that assessee was pursing remedy for condonation of delay section 119(2)(b) from the office of ld. CIT(E). The delay is not inordinate or excessive. The assessee has good case on merit and is liable to be succeed, if the matter is heard on merit. The ld. AR of the assessee submits that the lenient view may be taken and delay may be condoned in filing appeal.
On merits of the case, the ld. AR of the assessee further submits that in a series of decision by Tribunal and Higher Courts it has been held that delay in & 2512/Mum/2025 R.C. Church of St. Josephs & R.C. School of St. Teresa’s filing Form 10B, is liable to be condoned. It is also held in several decisions that even audit report / Form 10B filed before assessing officer can be considered as a sufficient compliance. The ld. AR of assessee submits that delay in filing Form-10B, may be condoned and assessing officer may be directed to allow benefit of section 11 to the assessee. In support of his submission, the ld. AR of the assessee relied upon the following decision: Sarvodaya Charitable Trust vs. ITO(E) (2021) 125 taxmann.com 75 (Guj HC), Social Security Scheme of GICEA vs. CIT(E) (2023) 147 taxmann.com 283 (Gujarat HC), Association of Indian Panelboard Manufacturer vs. DCIT (2023) 157 taxmann.com 550 (Gujarat HC), Al-Jamia Mohammediya Education Society vs. CIT(Exemption) (2024) 162 taxmann.com 114 (Bom), Karnataka Sangha vs. CIT(Exemption) (2025) 171 taxmann.com 137 (Bom), Warkari Shikshan Sanstha vs. CIT(E)92025) 171 taxmann.com 269 (Bom), M/s. ArhamMitra Mandal vs. ITO Snehasadan vs. ITO(E) The National Sodality Centre vs. ITO ITA No. 2733/Mum/2024, Bhagwant Kishore Memorial Education Society vs. ITO(E) (2024) 209 ITD 179, Kedar Nath Saraf Charity Trust vs. DDIT CPC, Bangalore (2024) 207 ITD 161, ITO Vs. P K Kirshnan Educational Trust (2024) 207 ITD 7.
On the other hand, ld. Sr. DR for the Revenue on the plea of condonation by delay submits that the bench may take decision as per law. On merit, the ld. Sr. DR for revenue submits that the assessee has not fulfilled the condition required by stature. The assessee was required to file Form-10B before filing return of income, once such condition was not complied; the assessee was rightly not allowed the application of income under section 11 of the Income Tax Act.
& 2512/Mum/2025 R.C. Church of St. Josephs & R.C. School of St. Teresa’s
We have considered the rival submissions of both the parties and have gone through the lower authorities carefully. Firstly, we are considering the plea of condonation of delay in filing the appeal. We find that there is delay of 56 days in filing appeal. The foremost plea of ld. AR of the assessee to condone the delay is that assessee was pursuing alternative remedy. Delay is not inordinate or excessive. Considering overall facts of the present case, we find that the delay in filing is not intentional or deliberate therefore, keeping in view, the principle of law that when technical consideration and cause of substantial justice are pitted against each other the cause of substantial justice may be preferred. Thus, keeping in view, the aforesaid principle the delay in filing appeal is condoned.
So far as merits of the case is concerned, we find that Assessing Officer/CPC as well as ld. CIT(A) not allowed application of income to assessee under section 11 of Income Tax Act for the want of filing of Form 10B before filing return of income. The assessee is having valid registration under section 12A/AB, such facts is otherwise not disputed by revenue. The only basis of disallowance of application of income under section 11, is filing Form-10B after filing return of income. We find that higher courts in a series of decision including Gujarat High Court in Social Security Scheme of GICEA vs CIT (supra) and in Association of Indian Panelboard Manufacturer vs. DCIT (supra) held that even when audit report was filed at later stage and same was available to the assessing officer when return was processed the assessee was & 2512/Mum/2025 R.C. Church of St. Josephs & R.C. School of St. Teresa’s entitled to exemption. Similar view has been followed in a series of decision of various benches of Tribunal. Thus, considering the fact that assessee has filed Form 10B on 07.11.2022, therefore, small delay of 31 days in filing Form 10B is condoned and matter is restored back to the file of jurisdictional assessing officer (JAO) to verify the fact and allow appropriate relief to the assessee for application of income under section 11. The assessee is also directed to provide complete details to the jurisdictional assessing officer. In the result, the grounds of appeal raised by assessee are allowed for statistical purpose.
In the result, the appeal of assessee is allowed for statistical purpose.
As recorded above, the assessee has raised similar grounds of appeal as raised in appeal for AY 2022-23, which we have allowed for statistical purpose, thus, following the principle of consistency, this appeal is also allowed with similar direction.
In the result, both the appeals of the assessee are allowed for statistical purpose.