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Facts
The assessee, a charitable trust, filed its return of income and claimed exemption under Section 11 for application and accumulation of funds. The audit report in Form 10B was uploaded belatedly by 303 days, although obtained within the due date. The AO and CIT(A) denied the exemption solely based on the delay in filing Form 10B.
Held
The Tribunal held that the delay in filing Form 10B is a regulatory mechanism and not fatal to the claim of exemption under Section 11, especially when the audit report was obtained within the due date and available before the processing of the return. The Tribunal followed a coordinate bench decision and directed the AO to allow the exemption.
Key Issues
Whether the delay in uploading the audit report in Form 10B is fatal to the claim of exemption under Section 11 of the Income Tax Act, despite the report being obtained within the due date and available before processing.
Sections Cited
250, 143(1), 12A(1)(b), 11, 251, 11(2)
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Income Tax Appellate Tribunal, “SMC” BENCH,KOLKATA
Appearances by: Assessee represented by : Raj Kumar Agarwal, CA Department represented by : Mrinmay Basak, Sr. DR Date of concluding the hearing : 15.12.2025 Date of pronouncing the order : 19.12.2025 O R D E R The present appeal filed by the assessee arise from order dated 27.11.2024passed u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) by the Ld. Additional/Joint Commissioner of Income Tax (Appeals), [hereafter “the Ld. Addl./JCIT(A)].
The only issue is raised by the assessee is against the order of Ld. CIT(A) wrongly holding that delay of 303 days in uploading audit report in Form 10B u/s 12A(1)(b) of the Act is fatal to the assessee’s claim of exemption u/s 11 of the Act despite the fact the same was uploaded before the processing of return of income u/s 143(1) of the Act.
The facts in brief are that the assessee is a charitable trust and has its filed return of income, which was processed u/s 143(1) of the Act by Khemka Charity Trust CPC-Bengaluru on 25.11.2019, wherein the application of funds of Rs. 8,17,000/- and accumulation of funds of Rs. 27,010/- u/s 11 were denied by AO, CPC. The assessee came in appeal before the Ld. CIT(A) and CIT(A) after recording the facts of the case allowed the appeal of the assessee, however, directed the AO to verify the information/details. While passing appeal effect order u/s 251/143(1) of the Act dated 06.12.2023 the AO noted that the Ld. CIT(A) had directed him to verify the claim of assessee and delete the disallowance. The AO observed that the ITR was filed on 25.07.2018. However, Form 10B was filed with the delay of 303 days delay by the assessee though the audit report was obtained within the due time and thus disallowed the claim of the assessee u/s 11 of the Act of Rs. 8,17,000/- in respect of application of income and Rs. 27,010/- accumulation of funds.
In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by holding that exemption u/s 11 of the Act is not allowable as Form 10B is not filed within the due date and there is no condonation of delay from Ld. CIT(Exemption). Therefore, ld CIT(A) justified the disallowance of application of funds at Rs. 8,17,000/- and accumulation of funds of Rs. 27,010/-.
After hearing the rival contention and perusing the material on record, we find that in this case though the audit report in Form 10B was filed belatedly after the due date by 303 days. However, undisputedly, the fact is that the same was obtained within the due date by the assessee and was also filed on 02.09.2018 whereas the processing of return of income of the assessee was done on 25.11.2019 meaning thereby that audit report was available with the AO CPC on the date of processing. In our opinion, the delay in filing the audit report before the AO is not fatal and would not go to the route of the matter. In our opinion, the said delay in filing the audit report is just regulatory mechanism and would not dis-entitle the assessee from claim u/s 11 of the Act. The case of the Khemka Charity Trust assessee is squarely covered by the decision of the coordinate Bench in the case of New Bombay Merchant Educational Foundation Vs. ACIT(E)- 2(2), Mumbai, AY 2018-19, wherein the coordinate Bench has held as under:
“5. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that assessee has filed return of income on 26.09.2018. The assessee obtained report in Form 10B on 25.09.2018, however form 10B was uploaded on ITBA system only on 27.06.2019. The assessee filed application for condonation of delay before CIT(E) on 12.12.2019. At the time of hearing, it was disclosed by ld. AR of the assessee that application for condonation of delay in filing Form 10B still has not been decided by CIT(E). We find that CBDT in its Circular No. 3 of 2020 directed that where there is delay upto 365 days in filing Form No. 9A and Form 10 for A.Y. 2018-19 or for any subsequent assessment year, the Commissioner of Income Tax were authorised to admit such belated applications of condonation of delay. We find that co-ordinate benches of Tribunal and High Courts in a series of decision has held that uploading of Form 10B belatedly is a merely regulatory and in case the audit report was available at the time of filing return of income and was not filed due to bona fide reasons, the benefit of section 11 cannot be denied, if otherwise assessee is eligible for such claim. We find that Hon’ble Gujarat High Court in in CIT Vs Mayur Foundation (2005) 274 ITR 562 (Gujarat) held that Form No.10 for exercising option under section 11(2) of the Act can be submitted at the time of assessment proceedings and accepted the contention of the assessee that proceedings before the Income Tax Appellate Tribunal is a continuation of an assessment proceedings and submission of Form No.10 before the Tribunal can be treated as sufficient compliance under the provision of section 11(2) of the Act. Further in Sarvodaya Charitable Trust Vs ITO (E) (2021) 125 taxmann.com 75 (Gujarat) held that where the assessee-trust for past many years had substantially satisfied conditions for claiming exemption under section 11, same could not be denied for non-filing of Form No. 10 in time. Therefore, considering the aforesaid factual and legal position, delay in filing Form 10B is allowed. The assessing officer is directed to allow exemption under section 11 of Income Tax Act. Considering the facts that we have directed the assessing officer to allow exemption/ application of income under section 11 of the Act, therefore, other grounds of appeal raised by the assessee have become academic.
6. We therefore, respectfully, following the decision of the coordinate Bench set aside the order of Ld. CIT(A) and direct the AO to allow the deduction of Rs. 8,17,000/- and Rs. 27,010/- as claimed by the assessee u/s 11 of the Act.
Order pronounced on 19.12.2025