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Facts
The assessee, an Association of Persons, filed its return for AY 2021-22. Its registered status u/s 12AB(1)(b) was granted, but the Audit Report (Form 10B) was filed belatedly. The CPC denied exemption u/s 11 based on this delay and also due to a discrepancy in reporting corpus donations.
Held
The Tribunal condoned the delay in filing Form 10B, noting it was filed before the processing of the return and that similar delays have been condoned by higher courts. It also directed the AO to verify the correct amount of corpus donations reported.
Key Issues
Whether the delay in filing Form 10B should be condoned, and whether corpus donations were correctly reported and treated as capital receipts.
Sections Cited
11, 143(1)(a), 12AB(1)(b), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
The captioned appeal at the instance of assessee pertaining to A.Y. 2021-22 is directed against the order dated 28.02.2025 of National Faceless Appeal Centre(NFAC), Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Intimation Order dated 08.12.2022 passed u/s.143(1)(a) of the Act.
Assessee has raised following grounds of appeal :
“1. The learned addl./Jt. Commissioner of Income Tax (Appeals) erred in facts and in law, in confirming denial of exemption under section 11 of the Income Tax Act, 1961 (the Act) on account of a delay in filing Form 10B for the year under consideration, without appreciating that the delay was attributable to circumstances beyond the control of the Appellant.
2. Without prejudice to the above ground, the learned Addl./Jt. Commissioner of Income Tax (Appeals) erred in facts and in law, in treating the corpus donations as income of the Appellant, without appreciating that the corpus donations constitute a capital receipt and should not be treated as income.
3. Without prejudice to the above grounds, the learned Addl./Jt. Commissioner of Income Tax (Appeals) erred in not adjudicating or considering the ground preferred by the Appellant with respect to the amount of corpus donations being incorrectly reported.
4. Without prejudice to the above grounds, the learned Addl./Jt. Commissioner of Income Tax (Appeals) erred in facts and in law, in not considering the correct amount of corpus donations received during the year for arriving at the total income of the Appellant.
5. Without prejudice to the above grounds, the learned Addl./Jt. Commissioner of Income Tax (Appeals) erred in facts and in law, in not granting a deduction in respect of the expenditure incurred by the Appellant.
6. The appellant craves leave to add, alter or amend any of the grounds of the appeal, at any time before or at the time of hearing.”
Brief facts of the case are that the assessee is an Association of Persons (AOP) engaged in promotion of education, social justice, environment friendly sustainable development etc. It derives income from charitable activities. It has been granted registered u/s.12AB(1)(b) of the Act for the period A.Y. 2021-22 to 2025-26 vide order dated 23.03.2024. Return of income for A.Y. 2021-22 e-filed on 14.02.2022 on ITR-7. Audit Report on Form No.10B was filed belatedly on 18.11.2022. However, the CPC while processing the return u/s.143(1)(a) of the Act on 08.12.2022 did not consider Form No.10B e-filed on the portal and denied and benefit of exemption u/s.11 of the Act and assessed the income at Rs.48,02,104/-. Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed.
Now the assessee is in appeal before this Tribunal.
Ld. Counsel for the assessee has made two fold arguments, firstly that eventhough Audit Report on Form No.10B was filed prior to processing of return u/s.143(1)(a) of the Act but CPC erred in not considering the Audit Report in giving due benefit u/s.11 of the Act for which assessee is eligible. In support, reliance placed on various decisions including the decision of this Tribunal in the case of Sirur Shikshan Prasarak Mandal Vs. ACIT reported in (2024) 166 taxmann.com 525 (Pune-Trib.) where it has been held that if Form 10B was available before CPC while processing the return, the assessee is entitled to exemption u/s.11 of the Act.
Second fold of argument is regarding the mistake committed by the Auditor by way of mentioning the wrong figure of corpus donation received during the year at Rs.41,96,493/- as against the actual corpus received at Rs.7,97,493/-. For verification of this mistake, it is prayed that necessary directions may be given to the ld. Jurisdictional Assessing Officer for examining the fact.
On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities.
I have heard the rival contentions and perused the record placed before me. So far as non consideration of the Audit Report on Form No.10B is concerned, I note that eventhough the Audit Report on Form No.10B was filed belatedly but it was prior to the processing of the return u/s.143(1)(a) of the Act. This Tribunal in the case of Sirur Shikshan Prasarak Mandal (supra) dealing with the very same issue has observed as under (relevant extract) :
“12. Now, we find that the assessee trust was granted registration u/s 12A of the IT Act during the pendency of assessment proceedings and Form 10B audit report was also available with the CPC while processing the return. Therefore, considering the totality of the facts and in the light of the decisions of Co-ordinate Bench of the Tribunal (supra) discussed above, we allow the additional ground of appeal raised by the assessee in the present appeal. We therefore direct CPC to amend the intimation issued u/s 143(1) of the IT Act in the light of Form 10B Audit Report and provisional registration certificate u/s 12A of the IT Act furnished before us.”
I further observe that Honble High Court of Bombay in the case of Karnataka Sangha Vs. CIT (E) reported in (2025) 171 taxmann.com 137 (Bombay) condoned the delay in filing of Form 10B and similar delay in filing Form 10B was also condoned by the Hon’ble Bombay High Court in the case of Warkhari Shikshan Sanstha Vs. CIT(E) reported in (2025) 171 taxmann.com 269 (Bombay).
In the instant case also, the delay in filing of Audit Report on Form No.10B was on account of Chartered Accountant looking after the Audit work. He was facing technical difficulty in uploading the Audit Report and since the assessee is dependent upon the Auditor for uploading of the Tax Audit Report, said delay has occurred. Even otherwise, the Audit Report was duly uploaded on 18.11.2022 and CPC was having requisite information about filing of Audit Report on Form No.10B and therefore CPC ought to have considered the same while processing the return u/s.143(1)(a) of the Act. I therefore in light of the judgments referred hereinabove, condone the delay in filing of the Audit Report on Form No.10B and direct the Jurisdictional Assessing Officer to examine the contents of the Audit Report and allow exemption u/s.11 of the Act in accordance with law. Ground No. 1 raised on this issue is hereby allowed for statistical purposes.
Ground Nos. 2, 3 and 4 have been raised regarding the correctness of the amount of corpus donation raised during the year. As per the details filed before me, it is stated that the corpus donation contribution received during the year is at Rs.7,97,493/-, however, the Chartered Accountant entrusted with the responsibility of reporting the figures in the return has mistakenly mentioned the closing balance of corpus donation as on 31.03.2024 at Rs.41,96,493/- as the corpus donation received during the year. The account of corpus fund placed before me is as under :
Opening balance of Corpus Fund as on 1 April Rs.33,99,000/- 2020 as per the Balance sheet Corpus donations received during the year Rs.7,97,493/- Closing balance of Corpus Fund as on 31 Rs.41,96,493/- March 2021 as per the Balance sheet
In place of corpus donation received at Rs.7,97,493/-, the figure mentioned in the income-tax return is Rs.41,96,493/-. Further, since the assessee has made application of income during the year as per the corpus donation received during the year, the same fell short against the incorrect figure of Rs.41,96,493/- due to which addition has been made in the hands of assessee. This being a typographical error, needs necessary verification. However, since the matter has already been restored back to the Jurisdictional Assessing Officer to examine the Audit Report on Form No.10B this issue also is restored to the file of ld. JAO to examine the corpus donation received during the year in light of my observations made herein above and if it is found to be correct, necessary relief should be granted to the assessee after affording reasonable opportunity of hearing.
As regards the remaining grounds are concerned, they are merely alternate in nature. Since I have already allowed Ground No.1 by condoning the delay in filing of Audit Report on Form No.10B and restored the issue to ld. JAO for necessary verification and also dealt with Ground No.2 regarding the correct amount of corpus donation received during the year at Rs.7,97,493/- and directed ld. JAO to verify the same, dealing with remaining grounds will be merely academic in nature. Effective Grounds of appeal No. 1 & 2 raised by the assessee are allowed for statistical purposes and remaining grounds are rendered infructuous as alternate in nature.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 14th day of July, 2025.