SHRI GANADHIPATI GANDHARACHARYA KUNTIUSAGAR VIDYA SODH SONSTHA,KOLHAPUR vs. ITO, EXEMPTION, PUNE, KOLHAPUR

2.1 The affidavit of the consultant of the assessee trust along with the supporting medical documents is also placed on record stating the reasons for the delay as under : 5. The delay was neither intentional nor deliberate. It occurred due to reasons beyond our control, as explained below: 4.1 That as mentioned above I was deputed to look after tax and accounts matters of the trust since many years. 4.2 That, during the relevant period I was suffering from prolonged back pain, kidney-related problems and Umbilical hernia which severely restricted my ability to attend office and perform accounting and compliance work on a regular basis. AYs 2018-19 to 2021-26 4.3 Due to my condition, I was under continuous medical treatment and frequently advised rest. Copies of my medical certificates and prescriptions are annexed herewith as Enclosure 1. 4.4Because of my health condition, I was unable to properly coordinate the appeal matters, thereby contributing to the delay in filing the present appeals.

6. That I respectfully submit that the delay was solely due to genuine medical reasons beyond my control. There has been no negligence or malafide intention on the part of the Trust.

2.2 The Ld. DR had no objection if the delay is condoned and the appeal are admitted for adjudication.

2.3 After hearing both the sides and considering the above stated reasons, we are of the view that the delay is not intentional or deliberate but attributable to the sufficient cause. We, therefore, condone the delay in filing of the appeals and proceed to decide the appeals in light of the decision(s) of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 Live Law (SC) 339. AY 2018-19 for AY 2018-19 is taken up as a lead case. The assessee has raised the following grounds of appeal :-

1. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the order passed u/s 143(1) of the Act and that upheld by Ld. Add/J.CIT(A), making addition of Rs.70,85,371/- is incorrect, unjustified and is not in accordance with the provisions of sec. 11 r.w.s 12A of the Act. Accordingly, the Addition so made by Ld. AO and that upheld by Ld. CIT(A) be deleted and Appellant be granted just and proper relief in this respect.

2. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the Ld. AO and Ld. Addl./J.CIT(A) erred in not appreciating the fact that the return of income and the audit report in Form 10B both were duly filed much before passing of the order u/s 143(1) of the Act and hence there was no reason for denying the claim u/s 11 of the Act. Thus, the addition so made and as upheld be kindly held as incorrect and unjustified and not in accordance with the provisions of the Act.

3. Without prejudice to above grounds and on the facts and circumstances prevailing in the case and as per provisions & scheme AYs 2018-19 to 2021-26 of the Income-tax Act, 1961 ('The Act') it be held that the Ld. AO and Ld. Addl./J.CIT(A) erred in charging to tax entire receipts instead of surplus amount. Accordingly, Ld. AO be directed to delete the amount of addition pertaining to expenditure.

4. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing.”

4. Briefly stated the facts are that the assessee is a public trust and is registered u/s 12A of the Income Tax Act, 1961 (the “Act”) vide registration certificate dated 24.11.2003. It is also registered u/s 80G of the Act since 22.08.2008. For AY 2018-19, the assessee filed its return of income on 12.11.2019 u/s 139(4) of the Act and claimed exemption u/s 11 of the Act. The audit report and Form 10B was uploaded on the portal on 07.01.2019. The return of the assessee was processed u/s 143(1) of the Act vide intimation order dated 04.03.2020. The Central Processing Center/the Ld. Assessing Officer (“CPC/AO”) disallowed the exemption claimed u/s 11 of the Act due to late filing of audit report in Form 10B under the provisions of section 12A(1)(B) of the Act.

5. Aggrieved, the assessee filed an appeal before the Ld. Addl./JCIT(A) challenging intimation order u/s 143(1) of the Act with a delay which was condoned by the Ld. Addl./JCIT(A). The Ld. Addl./JCIT(A) upheld the decision of the Ld. AO and dismissed the assessee’s appeal for the reason that the assessee filed the income tax return beyond the due date of filing of the return, by observing as under : “6.3 In this context, it's important to note that according to Section 12A(1)(b) and Rule 178, Trusts are obligated to file Form 10B, which is mandatory. Form 10B can only be accessed and submitted online and must be filed no later than the specified date mentioned in Section 44AB of the Act, which is one month before the due date for submitting the Income Tax Return under Section 139(1)of the Act. The due date for submitting the return in case of the appellant was September 30, 2018 and it was further extended to October 31, 2018, by CBDT's notification no. 225/358/2018/ITA-II dated 08-10-2018. The term 'due date' is explicitly defined within Section 139(1) itself, leaving no room for ambiguity or dispute regarding the filing deadline. 6.4 The date of income tax return submission is conspicuously evident on the return document itself. Upon a thorough review, it becomes abundantly clear whether the return conforms to the stipulated statutory time limit or falls into the category of belated submissions. In the present case, the assessment year in question is AY 2018-19, and the appellant filed the income tax return on January 12, 2019, which is beyond the due date of filing the return, i.e., September 30, 2018, as per Section 139(1), and also beyond the extended deadline of October 31, 2018, allowed for that relevant year. 6.5 In view of the above, I find no error in the AO's decision to disallow the appellant's claim for exemption under Section 11 of the Act when processing the return under Section 143(1) of the Act.” AYs 2018-19 to 2021-26

7. The Ld. AR submitted that both the Ld. AO as well as Ld. Addl./JCIT(A) has erred in disallowing the assessee’s claim of exemption u/s 11 of the Act on the ground that the audit report in Form 10B was filed by the assessee beyond the prescribed due date of filing of return of income for the relevant AY 2018-19 under consideration. The Ld. AR submitted that both the return of income and Form 10B were duly filed much before passing of the intimation order u/s 143(1) of the Act and hence, the Ld. AO/the Ld. Addl./JCIT(A) is not justified in denying the assessee’s claim of exemption u/s 11 of the Act. He further submitted that the condition of filing of Form 10B for availing exemption u/s 11 is only directory in nature and not a mandatory requirement. He submitted that the impugned issue is covered in favour of the assessee by catena of decisions of various High Courts and Tribunals including the decisions of the Co-ordinate Bench(es) of the Pune Tribunal. In support thereof, he submitted a legal paper book comprising of the following decisions : i. Indian Medical Association Pune Branch Vs. DCIT, Exemption Circle, Pune (ITA Nos. 761, 762, 763, 765 & 766/PUN/2025); ii. Indian Medical Association Pune Branch Vs. DCIT, Exemption Circle, Pune (ITA No.767/PUN/2025); iii. Dr. Prabha Atre Foundation vs. ITO Exemption, Ward 1(2), Mumbai (ITA No. 124/MUM/2025); iv. CIT-IV Vs Xavier Kelavani Mandal Pvt Ltd [Tax Appeal No. 1362 Of 2011 (Guj HC)]; v. DCIT(E) vs. Audyogik Shikshan Mandal [ITA no. 361/PUN/2019]; vi. CIT vs. Shahzadanand Charity Trust [1998] 96 Taxman 494 (P&H); vii. CIT-II, Thâne vs. Mumbai Metropolitan Regional Iron & Steel Market Committee [[2015] 58 taxmann.com 253 (Bombay)]; viii. M/S. Incredible India Projects Private vs ACIT [ITTA Nos.21 & 22 of 2025] (Telangana HC).

9. Section 124(1)(ha) of the Act provides that the provisions of section 11 and 12 shall apply in relation to income of any trust or institution if the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (44) of section 139 te within the time allowed under that section. Now, since reference has been made to section 139(44) of the Act and the same is reproduced below: "S.139(4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (ta) of clause (24) of section 2. shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed sunder this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far may be, apply as if it were a return required to be furnished under sub-section (1).]]" AYs 2018-19 to 2021-26

10. Now, going through the provisions to section 139(44) of the Act shows that the assessee is required to file the return as per the provisions of section 139(1) of the Act. Now, perusal of section 139(1) shows that in the case of the assessee which is required to get its account audited, the due date is 30.09.2018 and for AY 2018-19 this date was further extended to 31.10.2018 vide CBDT's order dated 24.09.2018. Now, since the assessee has filed the return on 15.11.2018, it is a belated return. Thus, there remains no dispute to the fact that the return of income filed by the assessee is a belated return which as per section 139(5) of the Act could have been filed latest by 31.03.2019. Now, at this stage, we would like to refer to Circular issued by CBDT on 23.04.2019 giving clarification with regard to time allowed for filing of return of income subsequent to insertion of clause (ba) in sub-section 1 of section 12A of the Act and the same is reproduced below F.No. 173/193/2019-ITA-1 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, Dated: 23 April, 2019 To The Pr. DGIT (Systems), New Delhi. Subject: Clarification with regard to the time allowed for filing of return of income subsequent to the insertion of Clause (ba) in subsection 1 of section 124 of the income-tax Act, 1961. Sir, Undersigned is directed to refer to the representation (s) received on above mentioned subject stating that while processing of ITR-7 for the A.Y. 2018- 19, in respect of the belated returns filed u/s 139(4) of the Income Tax Act, 1961 (Act). the following is being communicated w/s 143(1)(a) of the Act:- "As per section 124(1)(ba) of the Income tax Act, 1961 the person in receipt of the income has furnished the return of income for the previous year in accordance with the provisions of sub-section (44) of section 139, within the time allowed under that section. Otherwise the exemption u/s-11 ie. sr. no 4(1) and 4 vili in schedule Part BTI is not allowed." Based on this, exemption is 11 of the Act has been denied to otherwise eligible trust, thereby creating huge demand.

3. Additionally, an excerpt of circular 02/2018 dated 15.02.2018 "Explanatory Notes to the Provisions of the Finance Act, 2017" on insertion of clause (ba) in Sub section (1) of section 12A is quoted as under: "the entities registered under section 12AA are required to file return of income under sub-section (4A) of section 139 of the Income tax Act, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax. Amendment to section 124 of the Income-tax has been made so as to provide for additional condition that the person in receipt of the income chargeable to income-tax shall furnish the return of income within the time allowed under section 139 of the Income-tax Act."

13. Now, on perusal of the Form 10B, we notice that the same is required to be submitted electronically, one month prior to the due date of the filing of return of income. Admittedly, in the case in hand, the audit report on form 10B has been uploaded on 30.03.2019 which is even after the date of filing the return of income on 15.11.2018. Now, before us, it has been contended by the ld counsel for the assessee that filing of audit report is directory in nature and even if report is submitted in time before the conclusion of the assessment proceedings, the same needs to be considered. Though the assessee referred to the various decisions, we find it pertinent to refer to the judgment of the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust us. ITO(Exemption) (supra) wherein Para 32 of the said judgment reads as follows: "32. 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 as 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."

15. Though the Hon'ble Court holds that the report should be considered even filed in the course of assessment proceedings, or before in appellate authority, however, we notice that in the instant case, the case of the assessee was not selected for scrutiny AYs 2018-19 to 2021-26 assessment and it was mere processing of return by the computer with the set program. Had it been the case of scrutiny proceeding w/s 143(3) of the Act, the case could have been different. The Id. A.O may had an opportunity to go through the audit report. But still when the issue came before Id. CIT(A) who also possesses co-terminus power with that of A.O and as per section 251(1)(a) of the Act. the Id. CIT(A) in disposing the appeal against order of assessment has the power to confirm, reduce, enhance or annul the assessment, therefore. though, it was not possible to entertain the audit report while processing the return w's 143(1)(a) of the Act, but the ld. CIT(A) was well within its power to have entertained the said report and examined the same as could have been done by the A.O.

16. We, therefore, in the given facts and circumstances and respectfully following the judgment of Hon'ble Gujarat High Court in the case Sarvodaya Charitable Trust us. ITO(Exemption) (xupra), we are of the considered view that since the case of assessee is for A.Y 2018-19 and CBDT came up with a circular dated 23.04.2019 specially for A.Y 2018-19 providing that return of income to be filed within the time allowed u/s 139 of the Act, the assessee has complied with the conditions provided in sub-clause (b) and (ba) to section 12 and there is no dispute at the end of the reveme authorities that the assessee is carrying on charitable activities, for which it has been granted registration w/s 12A of the Act, the benefit of section 11 and 12 should be given to the assessee and deductions claimed by the assessee are, therefore, allowed. Thus, Ground Nos. 1 to 4 of the assessee are allowed.

17. So far as alternate plea praying that only the net income should have been subjected to tax rather than gross receipts, since we have already allowed the deduction u/s 11 and 12 of the Act to the assessee, this alternate plea becomes academic in nature. Other grounds are general in nature which needs no adjudication" 8 The above decision has subsequently been followed in the case of Debendra and Rohini Memorial Trust (supra) adjudicating similar issue. So far as delay in filing of the Audit Report if available before the Assessing Authority same needs to be considered. For this proposition, we would like to quote the decision of this Coordinate Bench in the case of Sahaj Seva Trust Vs. ITO in order dated 06.05.2025. Ld. Departmental Representative failed to controvert the ratio laid down in the above decision by placing any other binding precedent in favour of the Revenue. We therefore respectfully following the decision in the case of Bangarh Educational Welfare Trust (supra) and Sahaj Seva Trust (supra) are inclined to hold that exemption w/s.11 claimed by the assessee deserved to be allowed. Accordingly, effective grounds of appeal raised on merits of the case are allowed."

12. Similar grounds have been raised by the assessee for AY 2019-20, 2020-21 and 2021-22 which are reproduced below :

, AY 2019-20 “1. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the Ld. AO and Ld. Addl./J.CIT(A) erred in not appreciating the fact that the return of income and the audit report in Form 10B both were duly filed much before passing of the order u/s 143(1) of the Act and hence there was no reason for denying the claim u/s 11 of the Act. Thus, the addition so made and as upheld be kindly held as incorrect and unjustified and not in accordance with the provisions of the Act.

2. Without prejudice to above grounds and on the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the Ld. AO and Ld. Addl./J.CIT(A) erred in computing tax at maximum marginal rate instead of slab rates as applicable to a public charitable trust. Accordingly, Ld. AO be directed to compute the tax correctly considering slab rates as applicable to public charitable trust.

3. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal

at the time of hearing.” , AY 2020-21

1. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the order passed u/s 143(1) of the Act and that upheld by Ld. Add/J.CIT(A), making addition of Rs. 81,77,359/- is incorrect, unjustified and is not in accordance with the provisions of sec. 11 r.w.s 12A of the Act. Accordingly, the Addition so made by Ld. AO and that upheld by Ld. CIT(A) be deleted and Appellant be granted just and proper relief in this respect.

2. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that Ld. Addl./J.CIT(A) erred in not appreciating the fact that the audit report in Form 108 was duly filed much before passing of the order u/s 250 of the Act and since Addl/J.CIT(A) is an authority having power co-terminus with that of an AO, Ld. Addl/J.CIT(A) should have considered the Form 108 so filed before him as that have been filed before completion of Assessment and accordingly, the addition so made because of delay in filing Audit report should have been deleted.

3. Without prejudice to above grounds and on the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the Ld. AO and Ld. Addl./J.CIT(A) erred in charging to tax entire receipts instead of surplus amount. Accordingly, Ld. AO be directed to delete the amount of addition pertaining to expenditure. AYs 2018-19 to 2021-26

4. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing.”

“1. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the order passed u/s 143(1) of the Act and that upheld by Ld. Add/J.CIT(A), making addition of Rs. 56,54,537/- is incorrect, unjustified and is not in accordance with the provisions of sec. 11 r.w.s 12A of the Act. Accordingly, the Addition so made by Ld. AO and that upheld by Ld. CIT(A) be deleted and Appellant be granted just and proper relief in this respect.

2. On the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the Ld. AO and Ld. Addl./J.CIT(A) erred in not appreciating the fact that the return of income and the audit report in Form 10B both were duly filed much before passing of the order u/s 143(1) of the Act and hence there was no reason for denying the claim u/s 11 of the Act. Thus, the addition so made and as upheld be kindly held as incorrect and unjustified and not in accordance with the provisions of the Act.

3. Without prejudice to above grounds and on the facts and circumstances prevailing in the case and as per provisions & scheme of the Income-tax Act, 1961 ('The Act') it be held that the Ld. AO and Ld. Addl./J.CIT(A) erred in charging to tax entire receipts instead of surplus amount. Accordingly, Ld. AO be directed to delete the amount of addition pertaining to expenditure.

14. For AY 2020-21, the return was filed on 31.03.2021 as against the due date of filing of return on 15.02.2021 and Form 10B was filed on 31.03.2021. The Ld. CPC/AO passed the intimation order on 25.11.2021.