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Facts
The assessee, a charitable organization, claimed exemption under Section 11. Their return was processed, and an intimation was issued. Subsequently, a rectification order denied the exemption because Form 10B was filed belatedly.
Held
The Tribunal noted that the delay in filing Form 10B was only 2 days and an application for condonation of delay was pending. The CIT(A) should have awaited the decision on this application before dismissing the appeal.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without awaiting the decision on the assessee's application for condonation of delay in filing Form 10B, and consequently denying exemption under Section 11.
Sections Cited
250, 154, 11, 12, 143(1)(a), 119(2)(b), 12A(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
order : 27.05.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 20/11/2024, passed by the Additional/Joint Commissioner of Income Tax (Appeals) – 2, Gurugram [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Rectification Order, dated 07/03/2023, passed under Section 154 of the Act for the Assessment Year 2021-2022.
The Assessee has raised following grounds of appeal : “1. Commissioner of Income-tax Appeals erred in:
1. Assessment Year 2021-2022 (i) Denying exemption u/s.11 and 12 of the Income-tax Act, 1961 to the appellant. (ii) Confirming the decision of the Asst. Deputy Director of Income-tax in not accepting filing of Form 10B being Auditors Report under Section 12A(b) of the Act on 15th February, 2022 , the extended date. (iii) Confirming the decision of Asst. Deputy Director of Income-tax that the issue is “not a mistake on record” that can be rectified u/s.154 of the Act and hence original order cannot be rectified under Section 154.”
3. The relevant facts in brief are that the Assessee-company is stated be registered as a charitable organization under Section 12A/12AA/12AB of the Act. While processing the return of income for the Assessment Year 2021-2022, the exemption claimed by the Assessee under Section 11 of the Act was accepted and Intimation Order, dated 19/07/2022 was issued under Section 143(1)(a) of the Act. Subsequently, Order, dated 15/03/2023 was passed under Section 154 of the Act carrying out a suo moto rectification whereby the exemption claimed by the Assessee under Section 11 of the Act was denied on the ground that the Assessee had filed audit report Form 10B belatedly.
It was explained during the course of hearing that the Form No. 10B was required to be filed electronically. Usually, the Auditor uploads the Form. A message goes to assessee who can access the relevant part of the online portal and after verification, accepts the form uploaded by the Auditor. In the case of the Assessee, the Auditor had uploaded the Form 10B on 15/02/2022 (being the last extended date for filing Form 10B). Thus, the uploading of Form 10B by the Auditor was within time. However, the acceptance/approval by the Assessee was given belatedly on 17/02/2022. The Central Processing Unit took that stand that date on which the Form 10B was approved should be taken as the date of filing Form 10B. Since there was a delay of 2 days, exemption claimed by the Assessee was Assessment Year 2021-2022
denied by way of the Rectification Order, dated 15/03/2023, passed under Section 154 of the Act.
The Assessee has move application for seeking condonation of delay of 2 days in filing Form 10B. Copy of the Application addressed to The Secretary, Central Board of Direct Taxes, Mumbai has been placed before us at page No.9 to 11 of the paper-book. The aforesaid application was also forwarded to the Commissioner of Income Tax (Exemptions) on 01/02/2024. It is the contention of the Assessee that while the aforesaid application was pending adjudication by the concerned authority, the CIT(A) dismissed the appeal preferred by the Assessee. As a result the Assessee is now in appeal before the Tribunal.
We have heard both the sides and have perused the material on record.
The issue at the core of the dispute is denial of exemption claimed by the Assessee under Section 11 of the Act. The exemption has been denied since the Audit Report in Form 10B was allegedly filed by the Assessee after a delay of 2 days. The Assessee has already moved application for seeking condonation of delay in filing Form 10B. As per Section 119(2)(b) of the Act, an application for seeking condonation of delay can be filed before Central Board of Direct Taxes (CBDT). However, as per Circular No. 16/2026, dated 18/11/2024, [F.No. 197/639/2024-ITA-I], for the Assessment Years 2018-2019 and the subsequent assessment years, the CBDT has delegated power to condone delay upto 365 days in filing Form 10B to Principal Commissioner of Income Tax or Commissioner of Income Tax. The aforesaid circular provides that as far as possible the aforesaid application should be disposed off with a period of 6 months from the end of the month in which such application is received. Given the fact that there is only a delay of 2 days in filing Assessment Year 2021-2022
the Form 10B, and the Application filed by the Assessee is pending adjudication. Therefore, we are of the view that in the facts of the present case the Ld. CIT(A) could have, in the interest of substantial justice, awaited the adjudication of the said application to avoid any hardship to the Assessee. Accordingly, we deem it appropriate to set aside the Order dated 20/11/2024 passed by the CIT(A) with the directions to CIT(A) to adjudicate the appeal afresh after taking into consideration the order passed on the application seeking condonation of delay filed by the Assessee.
The Assessee is directed to place a copy of the Application filed under Section 119(2)(b) of the Act before the Learned Principal Commission or the Learned Commissioner, as the case may be, along with a copy of the present order with a written request for early disposal of the application. The Learned Principal Commission / the Learned Commissioner is directed to dispose off the application at the earliest within a period of 6 months from the end of the month of the receipt of the aforesaid request.
In terms of the above, Ground No. 1(ii) raised by the Assessee is allowed for statistical purposes while all other grounds are dismissed as having been rendered infructuous at this stage.
In result, the appeal preferred by the Assessee is treated as allowed for statistical purposes.
Order pronounced on 27.05.2025.