Loading judgment…
Facts
The Assessee, a Public Charitable Trust, claimed exemption under Sections 11 and 12 of the Income Tax Act. The Central Processing Centre (CPC) rejected this claim under Section 143(1) and made additions, citing a 29-day delay in filing the Audit Report in Form 10B. The Ld. Commissioner upheld the CPC's decision, relying on the Apex Court judgment in Pr. CIT Vs. Wipro Limited.
Held
The Tribunal, relying on various High Court judgments, held that the filing of Form 10B is a procedural requirement and that a minor delay should be condoned to prevent genuine hardship and denial of substantial exemption. Distinguishing the Wipro Ltd. case, the Tribunal condoned the 29-day delay in filing Form 10B, set aside the lower authorities' orders, and directed the Assessing Officer to consider the Form 10B as valid and decide the exemption claim on its merits.
Key Issues
Whether exemption claimed by a charitable trust under Sections 11 and 12 of the Income Tax Act can be denied solely due to a 29-day delay in filing the Audit Report in Form 10B, and if the CPC can reject such claims under Section 143(1).
Sections Cited
250, 12A(b), 11, 12, 139(1), 143(1), 11(1)(a), 44AB, 119(2b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRYSHRI GIRISH AGRAWAL
O R D E R
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 04.09.2025, impugned herein, passed by Ld. Commissioner of Income Tax (Appeals) ADDL/JCIT (A) – 1, Ahmedabad [in short Ld. Commissioner] u/s 250 of the Income Tax Act, 1961, [in short ‘the Act’] for the A.Y. 2023-24.
In the instant case, the Assessee being a Public Charitable Trust registered under section 12A(b) of the Act, as well as under the Maharashtra Public Trusts Act, 1950 has claimed exemption u/s 11 and 12 of the Act, by filing its return of income in Form ITR – 7 on dated 29.11.2023 within the due date, as extended upto 30.11.2023, as involved u/s 139(1) of the Act.
The claim of the Assessee was rejected by the CPC vide intimation dated 19.11.2024 u/s 143(1) of the Act, mainly on the reason the Assessee failed to file the Audit Report in Form – 10B within the prescribed due date u/s 139(1) of the Act, and/or filed belatedly with a delay of 29 days. Thus, the CPC vide intimation dated 19.11.2024 ultimately made the additions of Rs.88,95,454/- and Rs.2,64,619/- respectively on account of accumulation u/s 11(1)(a) of the Act, and capital expenditure, which was claimed as application.
The Assessee being aggrieved challenged the said additions made by the CPC. However, could not get any relief from the Ld. Commissioner, as the Ld. Commissioner while relying on judgment by the Hon’ble Apex Court in the case of Pr. CIT Vs. Wipro limited (2022) 448 ITR (1) (SC) and various other judgments and by holding that CPC cannot enter into debatable or controversial issue u/s 143(1) of the Act, denied the exemption claimed by affirming the additions and dismissing the Appeal of the Assessee. Thus, the Assessee being aggrieved has preferred the instant Appeal.
Roman Catholic Church of St. Joseph 5. We have heard the parties and perused the relevant material available on record. The Assessee controverted the findings of the authorities below, whereas the Ld. DR supported the orders passed by authorities below. Though, the Assessee filed Form No.10B along with return of income on dated 29.11.2023 which was filed within the due date, as prescribed and extended.
However, the Assessee was supposed to file the Audit Report in Form-10B on or before 31.10.2023, as per Circular No.16/2023 dated 18.09.2023 by which the date for filing Form -10B was extended. Thus, there was a delay of 29 days in filing Form – 10B which ultimately resulted into not allowing the exemption claimed u/s 11 and 10 of the Act, by the authorities below.
7. We observe that the Hon’ble Coordinate Bench of the Tribunal in the case of M/s. Nasik ST. Xavier’s Society vs. Central Processing Centre, Income Tax Department, Bengaluru, (ITA No.1364/M/2025 decided on 29.08.2025) has also dealt with an identical issue, wherein there was a delay in filing to Form-10B and the Hon’ble Coordinate Bench of the Tribunal by considering various judgments of the Hon’ble High Courts and the fact that the Hon’ble Gujarat High Court in the case of CIT(Exemptions) vs. Laxminarayandev Shikshan Seva Kendra (2024) 167 taxmann.com 548 (Gujarat) [10.09.2024] also distinguished the judgment of the Hon’ble Apex Court in the case of Pr.CIT vs. Wipro Limited (supra) as relied on by the Ld. Commissioner, in approving the decision of the CPC, rejecting the deduction claimed by the Assessee u/s. 11 of the Act.
Roman Catholic Church of St. Joseph 8. For brevity and ready reference, the conclusion drawn by the Hon’ble Coordinate Bench of the Tribunal, is reproduced herein below:- “6. We have heard the parties and perused the material available on record. Admittedly, the Assessee has not filed Form 10B before one month of due date of submitting the income tax return u/s 139(1) of the Act, as specified in section 44AB of the Act. However, it is a fact that the Assessee had duly furnished Form No.10B online on dated 30.11.2023 before filing of its return of income for which the last date was extended up to 30.11.2023 and/or the Form 10B has been made available before the processing of the return of income u/s 143(1) of the Act on dated 19.11.2024.
We observe that in the case of Sarvodaya Charitable Trust vs. ITO (Exemption) (2021) 125 taxmann.com 75 (Guj.) the Hon’ble Gujarat High Court has also dealt with the identical issue qua filing of Form 10B belatedly, however, in that case the Assessee approached the Appropriate Authority u/s 119(2b) of the Act for condonation of delay in filing of Form 10B. The Hon’ble Gujarat High Court by considering the issue, held as under: “That in the cases of delay in filing form 10B the approach of the authorities ought to be equitious, balancing and judicious. Further, availing of exemption should not be denied merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. This Court in CIT Vs. Gujarat Oil and Allied Industries Ltd. (1993) 201 ITR 325 (Guj) has also held that provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice Benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the Assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause"
We further observe that the Hon'ble Gujarat High Court in the case of Commissioner of Income Tax (Exemption) Vs. Laxminarayandev Shikshan Seva Kendra (2024) 167 taxmann.com 548 (Guj.) (10.09.2024) has also dealt with the issue "wherein the Form 10B was filed during the course of appellate proceedings before the Commissioner (Appeals) who allowed the benefit of section 11 of the Act to the Assessee" and the Tribunal upheld the said decision of the Ld. Commissioner. The Hon'ble Gujarat High Court by taking cognizance of the fact and the decision of the Sarvodaya Charitable Trust case (supra) approved the decision of the Tribunal in following the judgment of the Social Securities Scheme of GICEA Vs. Commissioner of Income Tax Roman Catholic Church of St. Joseph (Exemption), Ahmedabad dated 21.12.2022 in Special Civil Application No. 17612 of 2022, wherein it has been held as under: “That though filing of audit report is mandatory in nature and substantial compliance is required to be made, however, furnishing of audit report along with return filed is to be treated as a procedural requirement"
9. The Hon'ble Gujarat High Court also distinguished the judgment of the Hon'ble Apex Court in the case of Pr. CIT Vs. Wipro Ltd. (2022) 446 ITR (1)(SC), which has been relied on by the Ld. Commissioner in approving the decision of the CPC, while rejecting the deduction claimed by the Assessee u/s 11 of the Act.
We further observe that the Hon'ble Jurisdictional High Court in the case of Mirae Audit Foundation Vs. Pr. Commissioner of Income Tax-6, Mumbai & Ors. has also taken into consideration the Judgment of the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust case (supra) and ultimately condoned the delay of 246 days in filing of Form 108 by holding as under: "That if delay is not condoned, there will be genuine hardship to the petitioner, in as much as the petitioner would be denied the exemption otherwise claimed under the provisions of section 11 of the Act and which is substantial amount".
11. Thus, on the aforesaid analyzations, we direct the AO to consider Form no.10B filed by the Assessee, as valid and verify the facts and determine on merit, the deduction/exemption claimed by the Assessee.
We further observe that Hon’ble Jurisdictional High Court in the case of Church of Our Lady of Immaculate Conception vs. Commissioner of Income tax (Exemption) and Ors., in (Writ Petition (L) No.14461 of 2025 decided on 02.09.2025) has also dealt with identical case, wherein there was a delay of 29 days in filing of Form- 10B. The Hon’ble Jurisdictional High Court by considering the judgment of the Hon’ble Gujarat High Court i.e., Sarvodaya Charitable Trust case (supra), ultimately condoned the delay in filing the Form – 10B of the Act, by observing and holding as under:-
Roman Catholic Church of St. Joseph “9. Having heard the learned Counsel for the parties, we agree with the contentions of the Petitioner. We find that admittedly there was only a 29 day delay in filing Form No.10B. In the present case, when one considers that Respondent No.1 never doubted the factual situation put forth by the Petitioner to explain the delay, Respondent No.1 ought to have condoned the delay. We find that if this delay is not condoned, there will be genuine hardship to the Petitioner, inasmuch as, the Petitioner would be denied the exemption otherwise claimed under the provisions of Section 11 of the Act and which is a substantial amount.
10. We are of the view that Respondent No.1 ought to have taken a justice oriented approach rather than a pedantic one, and condoned the delay. We also find that in similar facts, this Court in the case of Mirae Asset Foundation (supra), Sau Dwarkabai tai Karwa Charitable Trust (supra) and Kotak Family Foundation (supra) has taken a similar view and condoned the delay. Even the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust (supra) took the view that in cases like the present one (delay in filing Form No.10B), the approach of the authorities ought to be equitious, balancing and judicious and availing of exemption should not be denied merely on the bar of limitation. This is more so, when the legislature has conferred wide discretionary powers to condone the delay on the authorities concerned. The relevant portion of this decision reads thus:- "31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no. 2 might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condonation for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
We may also refer to the decision of this Court in CIT. v. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated us a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause."
Roman Catholic Church of St. Joseph 11. In view of the foregoing discussion, we hereby quash and set aside the impugned order dated 30th January 2025 passed by Respondent No.1 under Section 119(2)(b) of the Act.
12. Now that the impugned order is quashed, we also hereby condone the delay in filing Form No.10B by the Petitioner.”
Thus on the aforesaid, analyzations and respectfully following the aforesaid decisions, we deem it appropriate to condone the delay of 29 days in filing of Form – 10B, hence, the orders passed by the authorities below are set aside and the Assessing Officer is directed to consider Form – 10B filed by the Assessee, as valid and verify the facts and determine on merit, the deduction/exemption claimed by the Assessee.
In the result, the Assessee’s Appeal is allowed, in the above terms.