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Facts
The assessee, a charitable institution, filed its return of income and the audit report in Form 10B one day after the return but within the extended due date. The CPC denied exemption under sections 11 & 12 of the Income Tax Act, 1961, citing the audit report not being filed along with the return.
Held
The Tribunal held that since the audit report was filed within the extended due date granted by the CBDT, there was no non-compliance. The CPC had erred in denying the exemption, and the findings of the First Appellate Authority were also set aside.
Key Issues
Whether denial of exemption under sections 11 & 12 was justified when the audit report was filed within the extended due date, though not simultaneously with the return.
Sections Cited
11, 12, 12A, 143(1)
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, dated 02.01.2026 for the assessment year 2018-19 as per the grounds of appeal on record.
2. The relevant facts in this case are that the assessee is a charitable institution registered under the C.G. Society Act and u/s.12A of the Income Tax Act, 1961 (for short ‘the Act’). It had filed return of income for A.Y.2018-19 on 27.10.2018 in Form ITR-7 declaring nil income. Audit report in Form 10B was filed on 28.10.2018 i.e. only one day after filing the return but within the extended due date of 31.10.2018 as per CBDT circular dated 08.10.2018. That the CPC while processing u/s.143(1) of the Act denied exemption u/ss.11 & 12 of the Act only on the ground that the audit report in Form 10B had not been filed a/w. return of income and raised a demand of Rs.1,40,336/-.
I have heard the submissions of the parties herein, carefully considered the documents placed on record and analyzed the facts and circumstances in this case. The law mandates in order to claim exemption u/ss.11 & 12 of the Act certain condition have to be complied with as stipulated u/s. 12A of the Act including requirement for filing of the audit
1. 3 Association of Reputed Institute of School Education Vs. ITO, Exemption, Ward-2, Raipur (C.G.) report a/w. the return of income. In the present case, the return of income for A.Y.2018-19 was filed on 27.10.2018 in ITR-7 declaring nil income. The audit report in Form 10B was filed just on the next date i.e. on 28.10.2018 when already the CBDT vide its circular dated 08.10.2018 had extended due date upto 31.10.2018. This means in the present case, the audit report has been filed by the assessee within the time framed as prescribed by the Board and in that manner, there is no discrepancy at all. If the due date would not have been extended upto 31.10.2018 and if the audit report as had been filed in this case on 28.10.2018, in such scenario, requirement of Section 12A of the Act could be said to have not been fulfilled by the assessee. But this is a case, where within the extended due date itself, the audit report has been filed by the assessee, therefore, it cannot be said that there is any non-compliance of the provisions on the part of the assessee. That on similar facts and circumstances, ITAT, Division Bench, Raipur in the case of Jhaiji Shikshan Samiti Vs. DCIT (Exemption), A.Y.2018-19, dated 09.09.2025 relying on the decision in the case of ITO Vs. Takshshila Foundation (2024) 208 ITD 677 and Sirur Shikshan Prasarak Mandal Vs. ACIT (2024) 166 taxmann.com 525 had provided relief to the assessee directing the CPC to provide exemption to the assessee holding that the requirement of Section 12A of the Act has been complied with since the assessee had filed audit report within the 4 Association of Reputed Institute of School Education Vs. ITO, Exemption, Ward-2, Raipur (C.G.) extended due date. That on examination of the aforesaid facts in the present case before me and considering the aforesaid judicial pronouncements on the same parity of reasoning, I hold that there is no wrong committed by the assessee in filing the audit report on 28.10.2018 since the due date had been extended by the CBDT itself upto 31.10.2018, therefore, since audit report had been filed by the assessee within the extended due date, the CPC had erred in not granting exemption u/ss.11 & 12 of the Act to the assessee. Accordingly, I set aside the findings of the Ld. CIT(Appeals)/NFAC and direct the CPC to provide relief to the assessee.
Before parting, I also state that the Ld. CIT(Appeals)/NFAC writes at Para 4 that “the power of condonation of delay in filing Form 10B vested only with CIT (Exemption) and not with CIT(Appeals) or Addl. CIT (Appeals)…”. This observation is absolutely misplaced with the facts of the present case since in the present case, when the due date has been extended upto 31.10.2018 and the audit report in Form 10B has been filed by the assessee on 28.10.2018, there is no delay at all in filing such audit report, question of condonation of delay does not arise therefore. The First Appellate Authority had dismissed the appeal reading facts in wrong manner which therefore is not in accordance with principles of adjudication by a quasi-judicial authority.
That as per above terms, appeal of the assessee is allowed. Order pronounced in open court on 07th day of April, 2026.