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Facts
The assessee, Gujarat Technological University, filed its return for A.Y. 2019-20 claiming exemption under Section 11 and Section 10(23C)(iiiab). The CPC, in its rectification order, denied the exemption under Section 11 solely due to the delayed filing of Forms 10 and 10B. The CIT(A) upheld this denial, stating a lack of jurisdiction to condone the delay based on CBDT Circular No. 11/2024 and Section 11(2).
Held
The Tribunal held that the delay in filing Forms 10 and 10B was a procedural lapse and not a substantive ground to deny exemption under Section 11, especially since the assessee had otherwise complied with all conditions. Citing its own past decision for the assessee and various High Court/ITAT precedents, the Tribunal ruled that such procedural defects are condonable. It directed the Assessing Officer to condone the delay and grant the exemption under Section 11, subject to verification of other satisfied statutory conditions.
Key Issues
Whether the exemption under Section 11 of the Income Tax Act can be denied solely due to a delay in furnishing Forms 10 and 10B, despite substantive compliance with other conditions. Whether appellate authorities can condone such procedural delays.
Sections Cited
154, 139(1), 11, 10(23C)(iiiab), 12AA, 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via), 139(5), 234B, 234C, 119(2)(b), 11(2), 263
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Income Tax Appellate Tribunal, “ C ” BENCH, AHMEDABAD
Before: Ms SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR
O R D E R PER MAKARAND V. MAHADEOKAR, AM: ] ] This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the CIT(A)”] dated 14.03.2025, for the Assessment Year (A.Y.) 2019–20, arising out of the rectification order passed by the Centralized Processing Centre (CPC), Bengaluru, under ITA No.1187/Ahd/2025. Gujarat Technological University vs.D CIT 2 section 154 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] dated 03.08.2023. Facts of the Case 2. Briefly stated, the facts of the case, as emerging from the record, are that the assessee is Gujarat Technological University, a State Technical University established in the year 2007 under Gujarat Act No. 20 of 2007. The assessee is registered under section 12AA of the Act with effect from 01.04.2010 vide order dated 17.06.2010.
For the relevant previous year, the assessee filed its return of income under section 139(1) on 23.10.2019, accompanied by a provisional audit report in Form No. 10B. The return disclosed total receipts of Rs. 1,24,04,16,180/- and claimed exemption of Rs. 69,67,26,332/- under section 11 of the Act and Rs. 54,36,89,848/- under section 10(23C)(iiiab) of the Act. The said return was processed by CPC under section 143(1) on 03.06.2020, wherein the exemption claimed under section 11 was denied on the ground that details of registration under section 12A/12AA or approval under section 10(23C)(iv)/(v)/(vi)/(via) were not furnished; and the exemption claimed under section 10(23C)(iiiab) was denied for the reason that the institution was not considered as “substantially financed” by the Government.
Thereafter, the assessee filed a revised return under section 139(5) on 30.11.2020 claiming exemption of Rs. 74,05,74,800/- under section 11 and Rs. 52,41,30,536/- under section 10(23C)(iiiab). The revised return was . Gujarat Technological University vs.D CIT 3 processed on 12.02.2021 allowing exemption under section 11 but continuing to deny exemption under section 10(23C)(iiiab).
Subsequently, the assessee moved a series of rectification applications before CPC. The first application dated 17.12.2022 claimed exemption under section 11 at Rs. 75,30,47,170/-, which was processed on 06.06.2023 without allowing the said exemption and without recording reasons. The second application dated 08.06.2023 with identical claim met the same fate on 08.06.2023. The third rectification application dated 27.07.2023 was processed by CPC on 03.08.2023 under section 154 of the Act, which forms the subject matter of the present appeal.
In the rectification order dated 03.08.2023, CPC recorded the processing outcome in tabular form, wherein the claim of exemption under section 11 aggregating to Rs. 1,26,47,05,336/- was disallowed in toto. Consequently, the income was computed without such exemption, and tax was determined at normal rates along with interest under sections 234B and 234C. After giving credit for advance tax of Rs. 26,869/-, a demand of Rs. 69,40,22,390/- was raised. The order also indicated that the reasons for variance/demand were available in the detailed intimation sent to the assessee’s registered e-mail ID. Though the order did not specifically narrate the cause for denial of exemption, the subsequent proceedings before the CIT(A) make it clear that the disallowance was solely for the reason of delay in furnishing Form No. 10 and Form No. 10B within the statutory time limits.
. Gujarat Technological University vs.D CIT 4 7. Aggrieved, the assessee carried the matter in appeal before the CIT(A). In the appellate proceedings, the CIT(A) issued multiple notices and afforded opportunities of hearing on 28.03.2024, 03.10.2024, 05.11.2024, 10.01.2025, and 10.03.2025, and received written submissions on 22.03.2024, 05.04.2024, 12.04.2024, 10.10.2024, 11.11.2024, 24.01.2025, and 13.03.2025. It was noticed by the CIT(A) that the assessee had filed applications for condonation of delay in furnishing Form No. 10, Form No. 10B, and the revised return, both before the CIT(E), Ahmedabad, on 05.02.2024 and before the CBDT on 12.02.2024. The CIT(E) rejected the condonation application vide order dated 16.02.2024 passed under section 119(2)(b).
8. The CIT(A) recorded that the sole issue in appeal was the rejection of the claim of exemption under section 11 in the rectification order due to the delayed filing of the prescribed forms. Relying upon CBDT Circular No. 11/2024 dated 01.11.2024, the CIT(A) observed that he had no jurisdiction to condone such delay, as the power to do so vests only with the specified authorities prescribed therein. The CIT(A) further referred to the statutory mandate under section 11(2) for furnishing Form No. 10 within prescribed time and concluded that in absence of condonation by the competent authority, the exemption could not be granted. Accordingly, the appeal was dismissed.
The assessee has come up in further appeal before us, raising the following grounds of appeal:
All the grounds of appeal in this appeal are mutually exclusive and without prejudice to each other.
. Gujarat Technological University vs.D CIT 5 1. The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [‘CIT(A)’] has erred in fact and in law in upholding the rectification order passed by the learned Deputy Director of Income Tax, CPC, Bengaluru (“the AO”) u/s 154 of the Income-tax Act, 1961 (“the Act”), which is erroneous, invalid, and unsustainable in law.
The learned CIT(A) erred in fact and in law in denying the exemption u/s 11 of the Act amounting to Rs 1,26,47,05,336/- despite the fact that the Appellant being registered education institution u/s 12AA is eligible for exemption u/s 11 of the Act.
3. The learned CIT(A) erred in fact and in law in denying the exemption u/s 11 of the Act solely on account of delay in filing Form 10B and Form 10 disregarding the well-established principle that exemption u/s 11 of the Act cannot be denied merely due to procedural or technical lapses.
4. The learned CIT(A) erred in fact and in law in disallowing the claim of exemption u/s 11 of the Act without appreciating the binding decisions of the Jurisdictional High Court and Jurisdictional ITAT, which categorically hold that exemption u/s 11 cannot be denied merely on account of delay in furnishing the audit report in Form 10B, where the substantive conditions for exemption are otherwise satisfied.
5. The learned CIT(A) erred in fact and in law in not admitting Form 10 and Form 10B during the appellate proceedings, despite the settled position that appellate authorities are empowered to admit such documents at appellate level in the interest of justice and for proper adjudication of the matter.
6. The learned CIT(A) erred in fact and in law in disallowing the exemption u/s 11 of the Act merely because the condonation applications were pending before the specified authorities, without appreciating that no adverse inference should be drawn while such applications are pending for disposal.
The learned CIT(A) also failed to take into account that the delay in filing the Income Tax Return for AY 2019-20 had already been condoned by the competent authority, a fact which directly impacts the eligibility of the Appellant for exemption u/s 11 of the Act.
Without prejudice to above, the learned CIT(A) has erred in dismissing the grounds of appeal
related to exemption under section 11 as 'not maintainable', without awaiting the outcome of the condonation applications filed before the specified authorities, thereby denying the Appellant an opportunity to be heard fairly and violating principles of natural justice.
9. The learned CIT(A) erred in fact and in law in confirming the levy of interest u/s 234B.
. Gujarat Technological University vs.D CIT 6 10. The learned CIT(A) erred in fact and in law in confirming the levy of interest u/s 234C. 11. Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal
10. During the course of hearing, the learned Authorised Representative (“AR”) reiterated the factual background of the case and submitted that the sole reason for denial of exemption under section 11 of the Act in the rectification order passed by CPC, Bengaluru, was the alleged delay in furnishing Form No. 10 and Form No. 10B. It was emphasised that the assessee has, though belatedly, furnished both the forms and has otherwise fully and substantively complied with all the statutory requirements prescribed for availing exemption under section 11 of the Act. The AR pointed out that there is no finding in the impugned order of the learned CIT(A) regarding non-fulfilment of any substantive condition for exemption under section 11. The CIT(A) has not disputed that the assessee is registered under section 12AA of the Act and that its activities are genuine and carried out strictly in accordance with its stated objects. The only reason for sustaining the CPC’s action was the delay in filing Form No. 10 and Form No. 10B, without considering the assessee’s specific prayer for admission of the same at the appellate stage.
It was submitted that the delay was neither deliberate nor attributable to any mala fide intention on the part of the assessee. The lapse occurred on account of professional negligence of the then statutory auditor, as evidenced by the legal notice dated 05.12.2023 issued by the University’s advocate to the said auditor and the detailed affidavit dated 20.05.2024 sworn by the auditor himself. In the said affidavit, the auditor has accepted responsibility for the delay in filing the relevant forms and in responding to . Gujarat Technological University vs.D CIT 7 various notices issued by the Income Tax Department and has also affirmed that the exemption under section 11 was claimed in good faith. The AR submitted that the assessee has been granted exemption under section 11 in the past as well as in subsequent years, and there is no dispute on its eligibility. Reliance was placed on the principle that procedural lapses should not defeat substantive rights, particularly when all conditions for exemption are otherwise fulfilled.
The AR placed heavy reliance on the decision of the Co-ordinate Bench in the assessee’s own case for A.Y. 2017–18 in order dated 22.04.2025, wherein, after considering various judicial precedents of the Hon’ble Gujarat High Court and the ITAT, the Tribunal categorically held that “delay in filing of Form 10B in the instant case has caused no prejudice to the interest of the Revenue, since such delay is only a procedural lapse” and accordingly set aside the revisionary order passed under section 263. It was contended that the ratio laid down therein squarely applies to the present year and is binding, and therefore, the delay in filing Form No. 10 and Form No. 10B deserves to be condoned and the exemption under section 11 allowed.
In reply, the learned Departmental Representative (“DR”) supported the impugned order of the learned CIT(A) in its entirety.
We have carefully considered the rival submissions, perused the material placed on record, and duly examined the orders of the lower authorities. The undisputed facts are that the assessee, a State Technical University registered under section 12AA of the Act, claimed exemption . Gujarat Technological University vs.D CIT 8 under section 11 of the Act in its return of income for the year under consideration. The only reason for denial of the exemption by the CPC, and for upholding such denial by the learned CIT(A), was the delay in furnishing Form No. 10 and Form No. 10B within the prescribed time limit. There is no finding by the CIT(A) that any of the substantive conditions for claiming exemption under section 11 have not been fulfilled.
It is also an admitted position that the assessee has subsequently filed the prescribed forms, and that its registration under section 12AA and the genuineness of its activities have not been doubted. The delay has been explained by the assessee with cogent evidence, including a legal notice issued to its statutory auditor and the affidavit of the said auditor accepting responsibility for the procedural lapse. The explanation is bona fide and supported by circumstances such as portal-related difficulties and professional negligence.
We find that the Co-ordinate Bench in the assessee’s own case for A.Y. 2017–18 in order dated 22.04.2025, after considering binding decisions of the Hon’ble Gujarat High Court, held that delay in filing Form No. 10B is only a procedural lapse which causes no prejudice to the Revenue and cannot be the sole ground for denying exemption under section 11. In the absence of any change in facts or law, we are bound by the said decision for the present assessment year.
The Hon’ble Gujarat High Court in Brahmchari Wadi Trust v. CIT(E) [2025] 173 taxmann.com 54 (Guj.), Shri Parshwanath Bhakti Vihar Jain Trust v. CIT(E) [2024] 166 taxmann.com 732 (Guj.) and Sarvodaya Charitable Trust v.
. Gujarat Technological University vs.D CIT 9 ITO (Exemption) [2021] 125 taxmann.com 75 (Guj.) has consistently held that when the substantive conditions for exemption are satisfied, the benefit cannot be denied merely for delay in filing the prescribed forms, which is only a procedural requirement. The Co-ordinate Benches in Vardhman Stanakvasi Jain Shravak Trust [2025] 172 taxmann.com 165 (Ahd.-Trib.) and Shiksha Foundation [2024] 164 taxmann.com 757 (Ahd.-Trib.) have also taken the same view, holding that such procedural defects are curable and delay is condonable.
In view of the above, we hold that the delay in furnishing Form No. 10 and Form No. 10B in the present case deserves to be condoned in the interest of substantial justice. The orders of the CPC and the learned CIT(A), denying the exemption solely on account of such delay, cannot be sustained. We accordingly set aside the impugned order of the learned CIT(A) and direct the jurisdictional Assessing Officer to condone the delay in filing Form No. 10 and Form No. 10B, and thereafter to grant the exemption under section 11 of the Act as claimed by the assessee, subject to verification of the other statutory conditions, which, on the facts, are already satisfied.
In the result, the appeal of the assessee is allowed.