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Facts
The assessee claimed deduction under Section 11 of the Income Tax Act. However, the CPC denied the deduction during processing under Section 143(1) as Form 10B was not filed. The assessee's subsequent application for rectification under Section 154 was rejected, and the appeal before the CIT(A) was also dismissed.
Held
The Tribunal held that the assessee had filed Form 10B along with the return of income within the extended due date. Therefore, the denial of exemption on a hyper-technical ground was incorrect, especially considering the delay might be due to the peak Covid period. The filing of the form is a procedural requirement.
Key Issues
Whether denial of exemption under Section 11 & 12 for non-filing of Form 10B within prescribed time, when filed along with return of income, is justified.
Sections Cited
11, 12, 154, 143(1), 139, 12AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
1. This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 09.12.2025 for the Assessment Year (A.Y.) 2020-21 in the proceeding u/s 154 of the Income Tax Act.
The brief facts of the case are that the assessee had filed its return of income for A.Y. 2020-21 on 10.02.2021. While processing the return u/s. 143(1) of the Act, in the CPC did not allow the deduction claimed under section 11 of the Act, presumably for the reason that Form No. 10B was not filed. Thereafter, the assessee had moved an application u/s. 154 Savli Taluka Rifle Association Vs. AO, AY- 2020-21 2 of the Act, with a request to rectify the intimation on the ground that the Form No. 10B was filed along with the return of income. The request of the assessee was, however, rejected vide order u/s. 154 of the Act dated 05.05.2025 on the ground that the Form No. 10B was not filed within the prescribed time limit.
Aggrieved with the rectification order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th
Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:
Your honour sir, the only ground of disallowance of expenditure of Rs. 57,25,256/-plus 15% of Income Rs. 2,93,829/- so made may be allowed and the resultant demand be quashed in view of the fact that The return of income was filed under the provision of section 139 suo moto. The Company is registered under the provision of the section 12AA. The Company has filed audit report in Form 108 on 10.02.2021 after extended due date ie. 15.01.2021 provided under the section 139 which is venial breach. The Company has also incurred and claimed expenditure under the provision of section 11 and 12 having spent the amount for the charitable objects of the trust/company The Company has also provided balance sheet and profit account and audit report in prescribed form 10B. Your honour sir, the breach may be looked upon in view of the various circular issued by the Central Board of Direct taxes. Circular number 17/2021 & 16/2023 to justify the gravity of offence and board's view for filing the Form 108 and its relevance. And also, to grant the petitioner the relief as your court may decide in the interest of justice and equity.
Savli Taluka Rifle Association Vs. AO, AY- 2020-21 3 5. Shri Parin Shah, the Ld. AR of the assessee explained that the accounts of the assessee Trust were audited under the provision of section 12A of the Act, vide Form No. 10B dated 04.12.2020 which was filed along with the return of income on 10.02.2021, within the due date for filing of return of income for that assessment year. Therefore, the CPC was not correct in denying the deduction claimed u/s. 11 of the Act on the ground that no forms were filed. He further submitted that the filing of form was only a procedural requirement and since the Form No. 10B was filed within the due date of filing of return, the Revenue was not correct in denying the deduction claimed u/s. 11 and 12 of the Act.
Per Contra, Shri Abhijit, the Ld. SR-DR supported the order of the lower authorities.
We have considered rival submissions. There is no dispute to the fact that the assessee had audited its books of account and the Form no. 10B was issued by the Auditor on 04.12.2020. This audit report was required to be filed within the specified date which was one month prior to the due date of filing of the return. For the A.Y. 2020-21, the due date of filing of return was extended till 15.02.2021 and, therefore, the audit report was required to be filed by 15.01.2021. The assessee had, however, filed the audit report along with the Income Tax return on 10.02.2021. There is no dispute to the fact that he Income-Tax return as well as the audit report was filed within the due date of filing of return. Thus the audit report was available with the Department at the time of processing of the return. Therefore, the CPC was not correct in denying the exemption claimed u/s. 11 and 12 of the Act on the ground that no forms were filed since the Form Savli Taluka Rifle Association Vs. AO, AY- 2020-21 4 No. 10B was duly filed by the assessee. Considering the fact that financial year 2020-21 was the peak covid period, there might have been certain delay on the part of the assessee in filing the audit report in time, which should not have been taken adversely. Since the Form No. 10B was already available, the Revenue was not correct in denying the exemption u/s. 11 and 12 of the Act on a hyper-technical ground. It is a settled position of law that the filing of form is only a technical requirement and the Courts have allowed the deduction even in the cases where the audit report was filed in the course of assessment proceeding. Accordingly, the Revenue is directed to allow the exemption claimed u/s. 11 and 12 of the Act, as the audit report was already filed along with the return of income in this case.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 07/04/2026 at Ahmedabad.