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Facts
The assessee, a registered charitable trust, filed its return of income claiming exemption under Section 11 of the Income Tax Act. The return was processed under Section 143(1), denying the exemption because the Audit Report in Form 10BB was filed belatedly along with the return of income, which was filed within the due date. The CIT(A) upheld the denial, holding the filing of Form 10BB within the prescribed time as a mandatory pre-condition.
Held
The Tribunal, following the jurisdictional High Court's decision in St. Thomas High School and a coordinate bench's decision in the assessee's own case for a different assessment year, condoned the delay in filing Form 10BB. It held that a procedural lapse in filing the audit report beyond the due date should not be fatal to claiming exemption, especially when substantial compliance is met and the report is available during processing.
Key Issues
Whether delay in filing the Audit Report in Form 10BB, when filed along with the return of income which was within due date, can be a ground for denial of exemption under Section 11 of the Income Tax Act.
Sections Cited
11, 11(1)(a), 11(6), 12A(b), 12AB, 143(1)
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SANDEEP SINGH KARHAILSHRI BIJAYANANDA PRUSETH
The assessee has filed the present appeal against the impugned order, dated 21.11.2025, passed u/s 250 of the Income Tax Act, 1961 (“the Act”) by the learned Additional/Joint Commissioner of Income Tax (Appeals), Panaji [“Addl/JCIT(A)”], which in turn arose from the intimation issued u/s 143(1) of the Act, for the assessment year 2023-24.
In this appeal, the assessee has raised the following grounds: -
“1. On the facts and in circumstances of the case and in law the learned Commissioner of Income-tax (Appeals) [CIT(A)] erred in confirming the denial of exemption/deductions under Section 11 of the Act resorted to by the Centralized Processing Centre, Income Tax Department, Bengaluru (herein after referred to as "CPC - ITD") while processing the Return of Income under Section 143(1) of the Act on the grounds that the Audit Report in Form 10BB was filed belatedly, though with the Return of Income which was filed in prescribed time.
2. The learned CIT(Appeals) and the learned Assessing Officer failed to appreciate that the time limits prescribed for filing the Audit Report is only declaratory and not mandatory. The lower authorities failed to appreciate that delay in filing the Audit Report is only a procedural lapse and the same cannot be fatal leading to denial of exemption/benefits under Section 11 of the Act particularly when the said Audit Report was available on record when the Return of Income was processed under Section 143(1) of the Act.
3. The learned CIT (Appeals) failed to appreciate the explanations/submissions furnished by Appellant and the legal position emerging from the decisions of various High Courts/Income- tax Appellate Tribunals dealing with amended provisions of Section 12A(b) of the Act.
4. The learned CIT(Appeals) decided the issues involved without considering the submissions furnished by the Appellant.
5. It is submitted that the denial of exemption under Section 11 of the Act, as discussed above, has led to denial of deductions of the following amounts resulting into huge demand of Rs.21,59,030/- after adjusting the TDS refund of Rs.2,66,813/- against the Appellant.
2.1. A sum of Rs.52,76,591/- under section 11(1)(a) of the Act being the amount accumulated or set apart for application to charitable or religious purposes or for the stated objects of the trust to the extent it does not exceed 15 per cent of the income;
2.2. A sum of Rs. 10,00,000/- being the amount deemed to have been applied as per clause 2 of Explanation to section 11(1) of the Act.
2.3. A sum of Rs.89,407/- under section 11 read with Section 11(6) of the Act being the amount of capital expenditure incurred to be allowed as application of income.
It is submitted that the disallowances referred to above are unjustified and bad in law as the denial of exemption under Section 11 of the Act itself is all-founded and unwarranted.
6. It is submitted that on the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in confirming the adjustments resorted to by the learned Assessing Officer while processing the Return of Income under Section 143(1) of the Act.
7. It is submitted that the basic issue leading to denial of exemption under Section 11 of the Act viz., delay in filing the Audit Report in Form 10BB, itself is a highly debatable question of law and the ground same cannot be the ground for adjustment/additions/disallowances under Section 143(1)(a) / 143(1) of the Act.
8. The learned Assessing Officer has resorted to the adjustments without complying with the provisions of Section 143(1) of the Act.”
The solitary grievance of the assessee is the denial of exemption u/s 11 of the Act, on account of the delay in filing of Form No.10BB.
We have considered the submissions on both sides and perused the material available on record. The brief facts of the case are that the assessee is a Public Trust registered under the Maharashtra Public Trust Act, 1950, and also u/s 12AB of the Act. For the year under consideration, the assessee filed its return of income on 30.11.2023, declaring a total income of Rs.16,912/-, and claimed exemption u/s 11 of the Act. The return filed by the assessee was processed vide an intimation dated 19.11.2024 issued u/s 143(1) of the Act, assessing the total income of the Assessee at Rs.64,26,910/-, after denying the exemption claimed u/s 11 of the Act, on the basis that the Audit Report in Form No.10BB was not filed within the specified due date.
The Ld. Addl/JCIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue and held that the provisions of section 12A(i)(b), read with Rule 17B, lay down a mandatory pre-condition for filing Form No.10BB as per the time prescribed. However, the assessee has itself admitted that the Audit Report in Form No.10BB was filed 30 days beyond the extended due date. The Ld. Addl/JCIT(A) further held that it is an Appellate Authority and has no power to condone such delay. Accordingly, the denial of exemption u/s 11 of the Act was upheld. Being aggrieved, the Assessee is in appeal before us.
During the hearing, the learned Authorised Representative (“learned AR”) submitted that this issue is no longer res integra and the delay in filing Form No.10B/10BB has been condoned by the Hon’ble Jurisdictional High Court in various cases. The learned AR further submitted that the Coordinate Bench of the Tribunal, in assessee’s own case for the assessment year 2024- 25, has also condoned the delay in filing Form No.10B.
We find that the Hon’ble Jurisdictional High Court, in the case of St. Thomas High School Vs. Commissioner of Income Tax (Exemption), in [Writ Petition (L) No.14483 of 2025], vide judgment dated 02.09.2025, condoned the delay in filing Form No.10B by the taxpayer by observing as follows: -
“9. Having heard the learned Counsel for the parties, we agree with the contentions of the Petitioner. We find that admittedly, there was only a 29 day delay in filing Form No. 10B. In the present case, when one considers that Respondent No.1 never doubted the factual situation put forth by the Petitioner to explain the delay, Respondent No.1 ought to have condoned the delay. We find that if this delay is not condoned, there will be genuine hardship to the Petitioner, inasmuch as, the Petitioner would be denied the exemption otherwise claimed under the provisions of Section 11 of the Act and which is a substantial amount.
10. We are of the view that Respondent No.1 ought to have taken a justice oriented approach rather than a pedantic one, and condoned the delay. We also find that in similar facts, this Court in the case of Mirae Asset Foundation (supra), Sau. Dwarkabai tai Karwa Charitable Trust (supra) and Kotak Family Foundation (supra) has taken a similar view and condoned the delay. Even the Hon'ble Gujarat High Court in the case of Sarvodaya Charitable Trust (supra) took the view that in cases like the present one (delay in filing Form No. 10B), the approach of the authorities ought to be equitious, balancing
and judicious and availing of exemption should not be denied merely on the bar of limitation. This is more so, when the legislature has conferred wide discretionary powers to condone the delay on the authorities concerned. The relevant portion of this decision reads thus:-
“31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent no. 2 might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condonation for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
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.”
We further find that in assessee’s own case in Sacred Heart Church Vs. Income Tax Officer, in [ITA No.3790/Mum/2025 for the assessment year 2024-25], the Coordinate Bench of the Tribunal vide order dated 31.10.2025, condoned the delay in filing Form No.10B by the assessee and directed the Jurisdictional Assessing Officer to verify the claim of the assessee u/s 11 of the Act, on merits. The relevant findings of the Coordinate Bench, in the aforesaid decision, are reproduced as follows: -
“5. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on laws relied by the Id. AR of the assessee. We find that there is very short dispute in the present appeal. Admittedly, there is delay of 39 days in filing Form 10B. Though, the same was filed along with the return of income. We find that in a series of decision, as relied by Id AR of assessee, various High Courts as well as Tribunals have taken view that when audit report / Form 10B was filed even at later stage and the same was available before assessing officer when return was processed, the assessee is entitled to exemption. Thus, considering the facts of the case and keeping in view, various decision of High Courts and co-ordinate bench of Tribunal including in Church of Our Lady of Immaculate Conception Vs ITO (supra), the delay in filing form 108 is also allowed and jurisdictional assessing officer (JAO) is directed to verify the fact and allow appropriate relief for application of income under section 11. The assessee is also directed to provide requisite details, if so desired by jurisdiction assessing officer. In the result, grounds of appeal raised by assessee are allowed for statistical purpose.”
As it is evident from the perusal of the record, the due date for filing Form No.10BB, in the present case, was 30.09.2023, which was extended by Circular No.16 of 2023, dated 18.09.2023, to 31.10.2023. However, the assessee filed Form No.10BB on 30.11.2023, i.e., on the date of filing its return of income, after a delay of 30 days. It is an undisputed fact that the Audit Report in Form No. 10BB was not filed by the assessee within the prescribed limitation period, and there has been a delay.
From the careful perusal of the judicial pronouncements as noted above, including in the case of the assessee, it is evident that similar delay has been condoned. Accordingly, respectfully following the decision cited supra, we condone the delay in filing Form No.10BB by the assessee and restore the issue to the file of the Jurisdictional Assessing Officer to verify the claim of the assessee u/s 11 of the Act, on merits.
With the above directions, the impugned order is set aside. Needless to mention, the assessee shall be provided a reasonable opportunity of hearing, and the assessee shall furnish all the requisite details as may be sought by the Jurisdictional Assessing Officer. Thus, the assessee is directed to fully cooperate in the assessment proceedings. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 10/04/2026