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Facts
The assessee, a charitable trust, filed an appeal against the CIT(A)'s order confirming a disallowance of Rs. 7,44,376/- due to delayed filing of Form 10B. The assessee also sought condonation of a significant delay in filing the appeal before the Tribunal.
Held
The Tribunal condoned the delay in filing the appeal, preferring substantial justice over technical considerations. On merits, the Tribunal held that a procedural omission of delayed filing of Form 10B should not impede the claim for exemption, especially when the form was eventually filed and supported by High Court decisions.
Key Issues
Whether the delay in filing the appeal and the delay in filing Form 10B should be condoned. Whether the delayed filing of Form 10B, a procedural omission, can lead to the denial of exemption under Section 11.
Sections Cited
11, 119(2)(b), 143(1), 143(1)(a), 12A(1)(b), 12A/AB, 44AB
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the assessment order of ld. CIT(A) dated 16.10.2023for A.Y. 2022-23. The assessee has raised the following grounds of appeal:
“1. On the facts and in the circumstances of the case, the bonafide delay in filing the present appeal may kindly be condoned and the appeal may kindly be heard and decided on merits as the delay in filing the appeal is for valid and sufficient reasons.
It is submitted that the Appellant sought redressal of the issue by filing a petition for Condonation of Delay under Section 119(2)(b) of the Act with the Commissioner of Income Tax (Exemptions) in line with the CBDT Circular No. 16/2022. However, no further communication was received by the Appellant. Subsequently, the CIT(A) dismissed the appeal of the Appellant. The appeal was technically required to be filed on or before 15.12.2023. However, since the Petition for Condonation of Delay in Filing Form No. 10B was pending before the CIT(E), the Appellant did not initially file the appeal against the Appellate Order. Thus, there is a delay of 434 days in filing the above appeal.
3. On the facts and in circumstances of the case and in law the learned CIT(A) erred in confirming the entire amount of Rs. 7,44,376/- being amount applied/set aside under Section 11 of the Act on the ground that the Appellant has not e-filed the Form No. 10B being Audit Report under Section 12A(1)(b) of the Act for the Assessment Year 2022-23 within the extended due date as specified under Section 44AB of the Act viz 07.10.2022. This addition has resulted to levy of a demand of Rs. 1,56,700/-.
The learned CIT (A) and the learned Assessing Officer failed to appreciate the submissions made. It is submitted that non-filling/delayed filing of Audit Report in Form No 10-B is a procedural omission, and it cannot be an impediment in law in claiming the exemption.
5. On the facts and in circumstances of the case and in law the learned CIT(A) erred in confirming the denial of deduction/deemed application of Income of Rs. 3,00,000/- in respect of the Option exercised under the Explanation 2 to Section 11(1) of the Act.
6. The learned CIT(A) and the Assessing Officer (CPC) failed to appreciate the fact that the Appellant has duly been uploaded/e-filed the Form-9A as required by the law and the same is visible in the e-filing account of the Trust.
The learned CIT (A) failed to appreciate the submissions made. It is submitted that non-filling/delayed filing of Audit Report in Form No 10-B is a procedural omission, and it cannot be an impediment in law in claiming the exemption.
On the facts and in circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in confirming adjustment while processing the Return of Income under Section 143(1) of the Act made by the Deputy Director of Income Tax, CPC (The Assessing Officer).
It is submitted that the issue involved is a highly debatable question of law and the same cannot be ground for adjustment under Section 143(1)(a)/143(1) of the Act. The learned Assessing Officer has resorted to the adjustments without complying with the provisions of Section 143(1) of the Act. 2. Perusal of record shows that impugned order was passed by ld. CIT(A) on 16.10.2023, however, present appeal is filed before Tribunal on 25.02.2025.
Thus, there is delay of 422 days in filing appeal before Tribunal. The ld. AR of the assessee submits that assessee has already filed affidavit of Vandan Agarwal, 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 and it was for the reasons that the person who was authorised in finalising accounts and financial statement for the year ending on 31.03.2022 was out of country for his official work. The assessee is a small trust and he was the only person who was acquainted with all financial transactions/ statements. Soon after his come to India Audit Report in Form 10B was prepared and was filed before assessing officer. The said report was filed after filing return of income, though it was filed within extended time period. Since, there was delay of 29 days in filing Form 10B, the assessee filed application for condonation of delay before Commissioner (Exemption) under section 119(2)(b) on the basis of circular No. 20 of 2022 dated 30/09/2022 issued by Central Board of Direct Taxes (CBDT). In the meantime, the Central Processing Centre (CPC) processed the return of income and not allowed the application of income under section 11. The appeal filed before ld. CIT(A) was also dismissed for the reasons that there was delay in filing Form 10B. The application for condonation of delay pending before ld. CIT(Exemption) was rejected vide order dated 14.01.2025. Soon after rejection of application for condonation of delay in furnishing Form 10B, the assessee has filed present appeal. The delay occurred due to the fact that assessee was pursuing alternative remedy for condonation of delay. The ld. AR of the assessee submits that the lenient view may be taken and delay may be condoned in filing appeal. 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 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 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 there is inordinate delay in filing appeal. The assessee has not explained the delay in proper way. The explanation of assessee for condoning the delay is nothing but a self serving story. Affidavit is not a drafted in a proper manner and format required for affidavit. The delay may not be condoned. 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.
4. I have considered the rival submissions of both the parties and have gone through the lower authorities carefully. Firstly, I am considering the plea of condonation of delay in filing the appeal. I find that ld. CIT(A) dismissed the appeal of assessee on 16.10.2023, however, the present appeal is filed before Tribunal only on 25.02.2022. In the affidavit, there is verification by Vandan Agrawal who is allegedly authorised signatory of assess-trust. The foremost plea of ld. AR of the assessee to condone the delay is that assessee was pursuing alternative remedy. Such plea is not tenable being misconceived. The appeal of assessee was dismissed on 16.10.2023. The application of condonation of delay was pending much prior to filing of appeal before ld CIT(A). The assessee is is a charitable institution and having registration under section 12A/AB of the Income Tax Act. The assessee-trust depend on the advice of professional either Chartered Accountant or the Advocate and such plea may have taken such plea on their in house of legal advicer. Thus, the assessee should not be suffered on ill advice of the professional, 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, I 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, copy of which is placed on record. The only basis of disallowance of application of income under section 11, is filing Form-10B after filing return of income. I 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 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 29 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 appeal of assesseeis allowed for statistical purpose.