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Facts
The assessee, a society registered under Section 12A, filed its return declaring 'Nil' income along with Form 10B. There was a delay in filing Form 10B, due to which the exemption under Section 11 was not allowed in the intimation u/s 143(1), and income was assessed at Rs. 85,01,732. The CIT(A) upheld this order.
Held
The Tribunal held that the filing of Form 10B is a procedural requirement and directory, not mandatory. Since Form 10B was available at the time of processing, the exemption could not be denied at the 143(1) stage. The matter was remanded to the AO.
Key Issues
Whether the exemption under Section 11 can be denied solely for the delay in filing Form 10B at the 143(1) stage, when the form was available before processing.
Sections Cited
250, 1961, 12A, 11, 143(1), 139(1), 119(2)(b), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Addl/JCIT(A)-Jodhpur [hereinafter referred to as the Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2021-22 dated 30.08.2024. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1. The order passed by the learned Additional/Joint Commissioner of Income Tax (Appeals), Jodhpur (“CIT(A)"), under section 250 of the Income Tax Act, 1961 (“the Act”), insofar as it is against the Appellant, is opposed to law, weight of evidence, natural justice and probabilities on the facts and circumstances of the Appellant's case.
The Appellant denies itself liable to be assessed on a total income of Rs. 85,01,732/- as against the returned income of Rs. Nil/- on the facts and circumstances of the case. ITA No.: 2175/KOL/2024 Assessment Year: 2021-22 Lalit Sen Lane Pratibandhi Unnayan Samity.
The authorities below erred in law in not appreciating that the Appellant is a Trust registered under 12A of the Act and accordingly, entitled for exemption under section 11 of the Act, resulting in no taxable income under the facts and circumstances of the case.
The authorities below erred in law in not considering the Form 10B filed on 15.03.2022 on the facts and circumstances of the case.
The learned CIT(A) erred in law in upholding the adjustment made by the Assessing Officer aggregating to Rs. 85,01,732/- on account of delay in filing Form 10B on the facts and circumstances of the case.”
The assessee sought adjournment which was rejected as there was no justification for the same. Brief facts of the case are that the assessee is a society and was granted registration under section 12A of the Act. The return of incomedeclaring total income of ₹ Nil was filed along with Form No. 10B dated 24/08/2021 on 03/03/2022. There was a delay in filing Form No. 10B and in the intimation issued u/s 143(1) of the Act, the exemption claimed u/s 11 of the Act was not allowed and the total income was assessed at ₹ 85,01,732/-.
Before the Ld. Addl/JCIT(A) the assessee contended that Form No. 10B was filed on 15.03.2022 while the processing took place on 23.08.2022 and, therefore, on the date of processing the return, Form No. 10B was available before the Assessing Officer, CPC, Bengaluru and the exemption claimed should have been allowed but the appeal was dismissed. Aggrieved with the order of the Ld. Addl/JCIT(A), the assessee has filed the appeal before the Tribunal.
Rival contentions were heard and the record and the submissions made have been examined. The Ld. AR submitted that though the audit report was filed late on Form No. 10B, however the same was available at the time of processing of the return of income and therefore, the same ought to have been considered and the exemption claimed should have ITA No.: 2175/KOL/2024 Assessment Year: 2021-22 Lalit Sen Lane Pratibandhi Unnayan Samity. been allowed as filing of Form No. 10B is procedural in nature. The Ld. DR relied upon the order of the Ld. Addl/JCIT(A) and requested that the same may be upheld.
We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. Addl/JCIT(A). The Ld. CIT(Appeals) dismissed the appeal by holding that the failure to furnish such Form No. 10B in the prescribed manner before filing of the return of income u/s 139(1) of the Act within the prescribed due date results in disentitlement of the appellant from claiming exemption under section 11/12 of the Income-tax Act, 1961 and, therefore, the CPC was justified in denying the exemption claimed u/s. 11/12 of the Act while processing the return of income in the appellant’s case vide intimation passed u/s 143(1). The action of the CPC in the intimation u/s 143(1) of the I.T. Act was upheld.
A perusal of the record shows that Form No.10B was not uploaded within the due date, which is claimed to be unintentional on the part of the assessee. However, it is noted that the same was available before the Ld. Assessing Officer at the time of processing of the return of income and was uploaded by the Chartered Accountant. The filing of Form No. 10B has been held to be a procedural requirement and directive in nature and not mandatory as has been held by the Ld. CIT(Appeals). It would be appropriate to refer to the decision in the case of Commissioner of Income Tax Exemptions Kolkata vs. M/s. Indian Sugar Mills Association in ITAT/270/2023 IA No: GS/1/2023, GA/2/2023 vide order dated 10.01.2024 of the Hon'ble High Court of Calcutta wherein it has been held that the filing of the auditor’s report along with the return of income has to be treated as a ITA No.: 2175/KOL/2024 Assessment Year: 2021-22 Lalit Sen Lane Pratibandhi Unnayan Samity. procedural provision and therefore, directory in nature. The relevant extract from the order is as under: “The short question falls for consideration in the instant case is whether the Principal Commissioner of Income Tax (Appeals), NFAC was justified in allowing the appeal filed by the assessee thereby condoning the delay in filing the Form 10B of the Act. The learned Tribunal after going through the facts of the case took note of the latter circular issued by the Board in Circular No. 16 of 2022 dated 19-07-2022 issued under Section 119(2)(b) by which the powers delegated to the Principal Chief Commissioner of Income Tax/Commissioner of Income Tax to condone the delay in filing Form 10B beyond 365 days up to 3 years from the assessment year 2018-19 or for subsequent year. Applying the said circular the learned Tribunal affirmed the order passed by the CIT (Appeals) in grounds before us in this appeal. The revenue has not dealt with the said circular nor anything has been brough on record to show that Circular No. 16 of 2022 dated 19-07-2022 cannot be applied to the case on hand. The Commissioner of Income Tax (Exemptions) while rejecting the application for condonation of delay by order dated 17-08-2020 has referred to the Circular No. 2 of 2020 dated 3.1.2020 which admittedly gives power to condone the delay in filing Form 10B up to a period of 365 days. The CIT (Appeals), NFAC also took note of a decision of the High Court of Gujarat in Commissioner of Income Tax Vs Gujarat Oil and Allied Industries reported in 1993 ITR (201) 325 wherein it was held that the filing of the auditor's report along with return of income has to be treated as procedural provision and therefore, directory in nature. Thus we find that there is no error committed by the learned Tribunal in dismissing the appeal filed by the revenue. Accordingly, the appeal is dismissed. Substantial questions of law are answered against the revenue.”
It was also submitted before us by the Ld. AR that Form No. 10B was filed belatedly but was available at the time of processing of the return of income and, therefore, the claim of exemption should not have been denied. It was also submitted that the denial of exemption cannot be permitted while processing the return under section 143(1) as the same is not part of the prima facie adjustment but the same can only be denied in the course of the assessment under section 143(3) of the Act. Hence, after examining the facts of the case, we deem it appropriate ITA No.: 2175/KOL/2024 Assessment Year: 2021-22 Lalit Sen Lane Pratibandhi Unnayan Samity. to set aside the order of the Ld. Addl/JCIT(A) as well as the intimation of the Ld. AO and the remand the matter to the Ld. AO for considering the claim of the assessee and allow the exemption claimed in accordance with law as the audit report on Form No. 10B was available at the time of processing of the return of income and, therefore, the claim of exemption u/s 11 of the Act had to be allowed and the same cannot be disallowed while processing the return under section 143(1) of the Act. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, all the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 8th December, 2025. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 08.12.2025 Bidhan (Sr. P.S.) ITA No.: 2175/KOL/2024 Assessment Year: 2021-22 Lalit Sen Lane Pratibandhi Unnayan Samity. Copy of the order forwarded to:
Lalit Sen Lane Pratibandhi Unnayan Samity, Ransagar, Lalbagh, Murshidabad, West Bengal, 742149. 2. ITO, Ward-1(4), Exempt, Kolkata.
Addl/JCIT(A)-Jodhpur.
CIT-
CIT(DR), Kolkata Benches, Kolkata.
Guard File. //// By order