Loading judgment…
Facts
The assessee, a trust, filed its return of income for AY 2017-18 and claimed accumulation of Rs. 80,48,916/- under Section 11(2) of the Income Tax Act. However, Form 10B was filed beyond the due date, leading to disallowance by the AO and confirmation by the Ld. Addl./JCIT(A).
Held
The Tribunal held that the Ld. Addl./JCIT(A) and AO lack the authority to condone the delay in filing Form 10B. However, it noted that the assessee had applied to the prescribed authority for condonation and also observed that a Coordinate Bench had set aside an identical issue for the previous AY. The matter was restored to the file of the Ld. Addl./JCIT(A) for fresh adjudication on merits.
Key Issues
Whether the appellate authorities have the power to condone the delay in filing Form 10B when the same is filed beyond the stipulated time, and whether the matter should be remanded for fresh adjudication on merits.
Sections Cited
11(2), 143(3), 139(1), 143(1), 119(2)(b), 12A(1)(b), 288, 11, 12, 13(9)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 07.11.2024 of the Ld. Additional/Joint Commissioner of Income Tax (Appeals), Prayagraj [“Addl./JCIT(A)”] pertaining to Assessment Year (“AY”) 2017-18.
2. The assessee has filed this appeal with a delay of 31 days. The assessee has filed an application for condonation of delay along with a sworn affidavit stating therein the reasons for delay in filing of the appeal. On perusal of the same, we are satisfied that the delay in filing of appeal is not intentional or deliberate and attributable to the sufficient cause. We, therefore, condone the said delay and proceed to decide the appeal.
3. The assessee has raised the following grounds of appeal :
1. That, on the facts and in the circumstances of the case, the order of Ld. Appellate Authority in dismissing the appeal filed by the appellant is arbitrary, erroneous, contrary to law and is opposed to the principles of natural justice, equity and fair play.
2. That, on the facts and in the circumstances of the case, the Ld. Appellate Authority has passed the order u/s 250 without giving sufficient opportunity of being heard and thus violating the principles of "audi alteram partem".
3. That, on the facts and in the circumstances of the case, the Ld. Appellate Authority has erred in confirming the disallowance of Rs.80,48,916/-made by the Ld. AO on account of late online filing of Form No. 10 as per the requirements of deduction claimed u/s 11(2) of the IT Act, 1961.
4. That, on the facts and in the circumstances of the case, the Ld. Appellate Authority has failed to appreciate the res judicata in this domain that Form No. 10 filed after expiry of limitation period but before Intimation u/s 143(1) shall be eligible for the purpose of claiming exemption u/s 11(2).
That, on the facts and in the circumstances of the case, the Ld. Appellate Authority has failed to appreciate the fact that the delay in filing the Form No 10B was unintentional and due to lack of knowledge which was later on rectified before the passing of the order u/s 143(1) of the IT Act.
That, on the facts and in the circumstances of the case, the Ld. Appellate Authority has passed the impugned order u/s 250 without bringing any cogent material on record, which is purely bad in law and have no legs to stand.
7. That, on the facts and in the circumstances of the case, the Ld. Appellate Authority has passed the impugned order u/s 250 in a mechanical way, without application of mind and without appreciating the overall facts and circumstances of the case.
8. The appellant may kindly be allowed to add, alter or modify any other modify any other points to the grounds of appeal
at any time before or at the time of hearing. 9. That, the aforesaid grounds of appeal are without prejudice to each other. 10. Any other order in the interest of justice may kindly be passed.”
4. Briefly stated, the facts of the case are that the assessee is a trust engaged in the charitable/religious activities. The assessee trust is registered under Bombay Public Trust Act, 1950. The trust has been granted registration u/s 12AA of the Income Tax Act, 1961 (the “Act”) by the Ld. CIT (Exemption), Pune vide order dated 11.03.2016. For the AY 2017-18, the assessee e-filed its return of income on 30.03.2018 declaring total income at Rs. Nil. The case was selected for complete scrutiny under CASS for the reason “Form 10 filed after due date and large amount accumulation or set apart u/s 11(2) of the Income Tax Act.” Statutory notice(s) u/s 143(2) and 142(1) of the Act along with questionnaire were accordingly issued and duly served upon the assessee. In response thereto made online submissions which were examined and placed on record. The Ld. Assessing Officer (“AO”) noticed that the assessee has claimed accumulation of Rs.80,48,916/- u/s 11(2) of the Act. However, as verified from the e-filing portal, the assessee has filed Form 10 electronically on 05.04.2018 which is beyond the due date specified u/s 139(1) for furnishing the return of income. The due date of filing Form 10 was 07.11.2017 for AY 2017-18. The assessee has therefore not complied the provisions of section 11(2) read with Rule 17(2) of the Income Tax Rules, 1962 (the “Rules”) and also the provisos of section 13(9) of the Act which mandates filing of Form 10 on or before due date specified under section 139(1) for furnishing return of income. Thus, vide show cause notice dated 29.11.2019, the assessee was asked to explain why its accumulation of Rs.80,48,916/- u/s 11(2) should not be rejected. The reply of the assessee was not found to be acceptable by the Ld. AO and he made disallowance of Rs.80,48,916/ on account of late online filing of Form No. 10 as per the requirements of deduction claimed u/s 11(2) of the Act, vide order passed under section 143(3) of the Act dated 25.12.2019.
5. Aggrieved, the assessee preferred an appeal before the Ld. Addl./JCIT(A). During the appellate proceedings, the Ld. Addl./JCIT(A) issued two notices dated 27.09.2024 and 25.10.2014 seeking compliance by 07.10.2024 and 01.11.2014 respectively. However, both the notices remained uncomplied by the assessee. The Ld. Addl./JCIT(A) upheld the order of the Ld. AO and dismissed the appeal of the assessee observing that the assessee has already filed an application for condonation of delay in filing Form 10B to the prescribed authority and the AO, JCIT(A), CIT(A) do not have authority under section 119(2)(b) of the Act to grant condonation of the delay in filing form 10B. The relevant findings and observation of the Ld. Addl./JCIT(A)is reproduced below: “Decision: 7.1 The statement of facts, grounds of appeal, and the order appealed against have been thoroughly examined. The central issue for adjudication among all the grounds of appeal raised pertains to the sole issue of denying the benefit of Section 11 & Section 12 of the Act while processing the return of Income under section 143(3) of the Act as Form 10B was not filed within the prescribed time limit. Therefore, all grounds of appeal are being clubbed and adjudicated together.
7.2 During the assessment proceedings, the AO noted that the appellant trust has filed Form 10B on 05.04.2018 which is not filed by the appellant trust within stipulated time period as per provision u/s 139 of the Act. Due to failed the filling of Form 10B of the Act in within time period, the appellant Trust is not eligible to take benefit of section 11 & 12 of the Act. Hence, the AO disallowed the exemption claimed u/s 11(2) of the Act for an amount of Rs. 80,48,916/-. 7.3 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. 7.4 In the present case, the appellant submitted Form 10B on April 05, 2018, while the deadline for filing Form 108 was one month prior to the due date for submitting the Return. The due date for submitting the return in case of the appellant was September 30, 2017, which was further extended October 31, 2017. There was a delay of 156 days in filing Form 10B. Hence, Form 10B was not filed within the time frame outlined by the Act. 7.5 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 and 12 of the Act when processing the return under Section 143(1) of the Act. 8.1 Further, Section 119 empowers the Board to issue orders and guidelines regarding the condonation of delay in compliance with any provision of the Act. Section 119(2) reads as follows: Section119(2) 1. 1………. 2. the Board may, if it considers it desirable or expedient soto do for avoiding genuine hardship in any case or class of ases, by general or special order, authorise any income-tax authority, not being a Joint Commissioner(Appeals) or a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law." 8.2 In this context, the Central Board of Direct Taxes (CBDT) issued Circular 10/2019 dated 22.05.2019. The relevant screenshot of the said circular is as under: CIRCULAR No. 10/2019 F.No. 197/55/2018-ITA-1 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North Block, New Delhi the 22nd May, 2019
Subject: Condonation of delay in filing of Form no. 10B for years prior to AY 2018-19-reg.
Under the provisions of section 12A of Income-tax Act, 1961 (hereafter 'Act') where the total income of a trust or institution as computed under the Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have to be audited by an accountant as defined in the Explanation below sub section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.
As per Rule 17B of the Income-tax Rules, 1962 (hereafter 'Rules) the audit report of the accounts of such a trust or institution is to be furnished in Form no. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed form along with the return of income results in disentitlement of the trust from claiming exemption under sections 11 and 12 of the Act.
Representations have been received by the Board/field authorities stating that Form no. 108 could not be filed along with the return of income for AY 2016-17 and AY 2017-18. It has been requested that the delay in filing of Form no. 10B may be condoned. Previously, vide instruction in F. No. 267/182/77-IT(part) dated 09.02.1978, the CBDT had authorised the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee.
Accordingly, in supersession of earlier Circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trusts or institutions for condoning the delay in filing Form no. 10B and in exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes hereby directs that: (i) The delay in filing of Form no. 10B for AY 2016-17 and AY 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned. (ii) In all other cases of belated applications in filing Form no. 10B for years prior to AY 2018-19, the Commissioners of Income-tax are authorised to admit such applications for condonation of delay u/s 119(2)(b) of the Act. The Commissioners will while entertaining such belated applications in filing Form no.10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time. Further, all such applications shall be disposed off by 30.09.2019. Sd/- (Rajarajeshwari R.) Under Secretary to the Government of India
8.3 It is evident from the CBDT Circulars and Section 119(2)(b) of the Act that the Assessing Officer (AO), Joint Commissioner of Income Tax (Appeals) [JCIT(A)], and Commissioner of Income Tax (Appeals) [CIT(A)] do not have the authority under Section 119(2)(b) of the Income Tax Act to grant condonation for the delay in filing Form 10B.
8.4 Therefore, neither the AO during return processing nor I, the JCIT(Appeals) when finalizing the appeal, are empowered by the statute to condone delay in filing Form 10B. 8.5 The appellant has the option to approach the jurisdictional Commissioner of Income Tax, Chief Commissioner of Income Tax, or Principal Chief Commissioner of Income Tax for the condonation of the delay in filing Form 10B and to claim the benefits of Sections 11 and 12 of the Act. It is further noted that in the case of the appellant they had already filed an application for condonation of delay in filing Form 10B to the Prescribed Authority.
9. In view of the above, I find no merit in the current appeal and, as a result, dismiss the appeal.”
6. The Ld. AR submitted that the non-compliance to the notices issued by the Ld. Addl./JCIT(A) was not intentional. He submitted that the assessee trust had appointed a new Chartered Accountant during the FY 2023-24 i.e. during the course of the appellate proceedings before the Ld. Addl./JCIT(A) and it took time for transferring the data from old Chartered Accountant to the new Chartered Accountant, in regard to the compliances applicable to the trust and hence, the supporting documentary evidences could not be consolidated and compliances to the aforesaid notices could not be made. The Ld. AR further contended that the Ld. Addl./JCIT(A) has the power to condone the delay in filing of Form 10/10B. He submitted that the delay in filing Form 10 was due to unawareness and technical issues on the portal because the online system of filing was newly introduced which was later rectified before passing of the order under section 143(1) of the Act. He submitted that there are several judicial precedents favorable to the assessee wherein the claim of exemption under section 11(2) has been allowed even when Form 10 was filed after expiry of limitation period but before intimation u/s 143(1) and/ or before the completion of the assessment proceedings and in the present case, the assessee filed Form 10 before intimation order u/s 143(1) and assessment order u/s 143(3) of the Act was passed by the Ld. AO. He submitted that given an opportunity the assessee is in a position to explain and substantiate its case before the Ld. Addl./JCIT(A) by filing all the requisite details/ submissions in support of its claim and therefore prayed that the matter be set aside to the file of the Ld. Addl./JCIT(A) to decide the impugned issue on merits.
The ld. DR strongly supported the order of the Ld. AO and Ld. Addl./JCIT(A).
We have heard the Ld. Representatives of the parties and perused the material available on record and also the paper book filed by the Ld. AR on behalf of the assessee including the decisions on merits of the case cited by the Ld. AR. The facts of the case are not disputed. Admittedly, there was non-compliance before the Ld. Addl./JCIT(A) due to which he proceed to complete the appellate proceeding exparte qua assessee and dismissed the appeal of the assessee for the reasons recorded in preceding paragraph. Before us, the Ld. AR has submitted that there was no deliberate intention behind non compliance of notices issued by the Ld. Addl./JCIT(A) but the same has happened due the change of the Chartered Accountant of the assessee. Further, it is the contention of the Ld. AR that the Ld. Addl./JCIT(A) has power to condone delay in filing Form 10/10B and the assessee has a strong case on merits supported by catena of judicial precedents favorable to the assessee on the impugned issue. He has therefore pleaded that an opportunity may be granted to the assessee to explain and present its case before the Ld. Addl./JCIT(A) by making factual and legal submissions and/ or filing the relevant details/ documentary evidence in support of its claim. We also find that the Coordinate Bench of this Tribunal in the assessee’s own case for previous AY 2016-17 in vide order dated 28-02.2025 has set aside the identical issue to be decided afresh on merits by the Ld. CIT(A)/NFAC. In this view of the matter and considering the totality of facts and in the circumstances of the case, we deem it fit, in the interest of justice to set aside the order the Ld. Addl./JCIT(A) and restore the matter back to his file to adjudicate the issue afresh on merits as per fact and law after allowing reasonable opportunity of being heard to the assessee and considering the factual and legal submissions to be filed by the assessee. The assessee shall provide the requisite support in terms of submitting the relevant documents/evidence as may be required/called upon on the appointed date without seeking any adjournment under any pretext unless required for a sufficient cause, failing which the Ld. Addl./JCIT(A) shall be at liberty to pass appropriate order as per law. We direct and order accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 11th September, 2025.