SHRI GURU NANAK NAM LEWA SEWAK JATHA,,FATEHGARH SAHIB vs. ITO, EXEMPTION WARD, CHANDIGARH

आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ “एस.एम.सी” , च᭛डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH

HEARING THROUGH: PHYSICAL MODE

᮰ी िवᮓम ᳲसह यादव, लेखा सद᭭य
BEFORE: SHRI. VIKRAM SINGH YADAV, AM

आयकर अपील सं./ ITA No. 521 /Chd/2025
िनधाᭅरण वषᭅ / Assessment Year : 2017-18

Shri Guru Nanak Nam Lewa
Sewak Jatha
Patwar, Khana Road Attewali,
Fatehgarh Sahib, Punjab-
147301
बनाम

The ITO (Exemptions)
Ward, Chandigarh
˕ायी लेखा सं./PAN NO: AAFAS7679P
अपीलाथᱮ/Appellant

ᮧ᭜यथᱮ/Respondent

िनधाᭅᳯरती कᳱ ओर से/Assessee by :
Shri Bharat Poplani, C.A राज᭭व कᳱ ओर से/ Revenue by :
Dr. Ranjit Kaur, Addl. CIT, Sr. DR

सुनवाई कᳱ तारीख/Date of Hearing : 11/08/2025
उदघोषणा कᳱ तारीख/Date of Pronouncement : 12/08/2025

आदेश/Order

PER VIKRAM SINGH YADAV, AM

This is an appeal filed by the assessee against the order of the Ld. Addl/JCIT(A)
Mysore dt. 25/02/2025 pertaining to Assessment Year 2017-18 wherein the assessee has challenged the action of Ld. Addl/JCIT(A) in sustaining the disallowance of exemption claimed by the assessee under section 11 of the Act.
2. Briefly, the facts of the case are that the assessee e-filed its return of income on 26/03/2018 which was selected for scrutiny, thereafter notices were issued. As per the AO, as the assessee has not e-filed the Audit Report in Form 10B alongwith or before filing the return of income, the exemption claimed under section 11 was required to be disallowed and the assessee was issued a show cause in this regard. In response, the assessee submitted that it has filed Form 10B on 22/03/2019, however there has been a delay in filing the said form and reasons for the delay were explained and it was requested to condone the delay and to allow the exemption under section 11 of the 2

Act. The submissions so filed by the assessee were considered but not found acceptable to the AO. The AO held that as per Section 12A of the Act, the assessee was required to file the Audit Report for the year under consideration in Form 10B alongwith return of income by the due date as per Section 139 (1) of the Act and since assessee has failed to do so within the prescribed due date, the amount of Rs.
26,64,530/- claimed by way of exemption under section 11 was disallowed and the assessed income was determined at Rs. 26,64,530/-.
3. The assessee thereafter carried the matter in appeal before the Ld. Addl/JCIT(A) and it was submitted that the Audit Report was obtained prior to the filing of the return of income and a copy thereof was submitted. It was also fairly submitted that the same could not be uploaded on the IT system and reasons of such delay was again reiterated. Further, reference was drawn to the CBDT Circular No. 10/19 dt. 22/05/2019
whereby the CBDT has condoned such delays in filing Form No. 10B for the impugned assessment year and it was submitted that the exemption so claimed u/s 11 be allowed.
4. The submission so filed by the assessee were considered but not found acceptable to the Ld. Addl/JCIT(A). As per the Ld. Addl/JCIT(A), filing of Form 10B is a statutory requirement for claiming exemption under section 11 of the Act which the assessee has failed to do so. Further, the Ld. Addl/JCIT(A) held that the assessee was not granted condonation of delay in filing the Form 10B and there is no extension in due date of filing of Form 10B. In view of the same, the order so passed by the AO was sustained and the appeal of the assessee was dismissed. Against the order of the Ld.
Addl/JCIT(A), the assessee is now in appeal before us.
5. During the course of hearing, the Ld. AR submitted that the assessee is a charitable trust registered under the Indian Trust Act and Section 12A of the Act. The assessee’s case was selected for scrutiny and notice under section 143(2) was issued on 27/08/2018 and the assessment order was passed under section 143(3) on 27/11/2019
wherein the AO disallowed the exemption claimed under section 11 solely on the ground that the Audit Report in Form 10B was not e-filed within the due date prescribed under section 139(1) of the Act. It was submitted that the CBDT vide Circular No.

10/2019 dt. 22/05/2019 has provided that in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income but has been furnished subsequently to the filing of the return of income but before the date specified under section 139, the delay was condoned. It was submitted that in the instant case, the assessee has obtained the Audit Report on 31/08/2017 prior to the filing of the return of income on 26/03/2018 and e-filed the same on 22/03/2019 after filing the return of income but within the extended time limit prescribed under section 139 of the Act. Accordingly, assessee’s case is squarely covered by the Para 4(i) of CBDT Circular No. 10/2019 dt. 22/05/2019. It was submitted that despite CBDT Circular condoning the delay for the relevant Assessment Year 2017-18, the AO disallowed the exemption claimed under section 11 which has been mechanically sustained by the Ld. Addl/JCIT(A).
6. Further, reliance was placed on the various Coordinate Benches and Hon’ble
High Court decisions such as CIT V. Shahzedanand Charity Trust (1997) (P&H), Dera
10/2019 dt. 22/05/2019. It would therefore be relevant to the contents of the said circular which read as under:

considered and the delay is to be condoned. The criteria thus laid down is two- fold – obtaining the audit report before filing the return of income, secondly, furnishing of such audit report after filing the return of income but such filing of audit report is to be within time allowed u/s 139 of the Act.
11. In the instant case, it is not in dispute that the Audit Report in Form 10B has been obtained on 31/08/2017 before filing of the return of income on 26/03/2018 and such Audit Report has been furnished subsequent to the filing of the return of income on 22/03/2019 which is within one year from the end of relevant assessment year 2017-18. In other words, such audit report has been furnished within time limit prescribed u/s 139(5) of the Act. The assessee thus satisfies both the criteria so laid down in the CBDT Circular. The CBDT Circular has talked out furnishing such audit report before the date specified under section 139 of the Act and has not specified furnishing such audit report within time prescribed u/s 139(1) of the Act as so read and understood by the AO. There is no scope for reading or adding anything further while reading the CBDT
Circular, the language of which is clear and unambiguous. It is a settled legal proposition that CBDT circulars are binding on the AO and the AO has clearly erred in not following the said Circular dated 22/05/2019 which was available well before passing of the assessment order on 27/11/2019. Even the Ld.
Addl/JCIT(A) has failed to take cognizance of the same and has summarily upheld the findings of the AO.
12. Having said that, we find that in terms of clause 4(ii), the Commissioners have been directed to consider condonation applications not fulfilling the aforesaid criteria as laid down in clause 4(i) and examine the reasonableness of the explanation so furnished by the respective assessees and dispose off such applications by 30/09/2019. 13. In the instant case, we find that the assessee has reached out to the AO seeking condonation for delayed filing of Form 10B and in such a situation, where the AO didn’t condone the delay presuminingly (though nothing is stated in this regard specifically dismissing the application) for the reason that it doesn’t satisfy the criteria as laid down in clause 4(i) and reading sub-section (1) to section 139, the assessee could have been advised to approach the Commissioner or the assessee’s application could have referred to the Commissioner, however, nothing to this effect is available on record and even time limit for the Commissioner to dispose off such application has since expired.
In such a peculiar situation, the assessee couldn’t be left remedy less and reasonability of its explanation seeking condonation of delay which the aforesaid CBDT circular also provides need to be tested.
14. In the instant case, we find that it is an admitted fact that audit report has been obtained from the auditors well before filing of the return of income and as such, there is no delay in so far as obtaining the audit report is concerned and basis such audit report, the return has been filed thereafter. The audit report has thereafter been furnished and e-filed on 22/03/2019 during the course of assessment proceedings and available with the AO well before passing of the assessment order u/s 143(3) of the Act 27/11/2019. Therefore, for all intent and purposes, the audit report was available to assist the AO to examine the claim of exemption so claimed by the assessee society u/s 11 of the Act. The assessee has explained the reasons for the delay in e-furnishing of audit report due to inadvertent error on the part of the Chartered Accountant to electronically upload the audit report and such reasons have remained unrebutted before us.
I therefore find that even on this account, where the assessee has come forward with a reasonable explanation for the delayed up-loading of the audit report, the delay deserve to be condoned and claim of exemption u/s 11 is to be allowed to the assessee.
15. Further, I find that the various Coordinate Benches decision also supports the case of the assessee wherein it has been consistently held across Benches held that filing of audit report is a substantive requirement and not the mode and stage of filing which is procedural, once the audit report is available with the AO during the assessment proceedings, the requirement of law is satisfied and non-filing of the audit report along with the return of income is thus a procedural omission and the same cannot be an impediment in law in claiming exemption u/s 11 of the Act.
16. In light of the aforesaid discussion and in the entirety of facts and circumstances of the case, the findings of the AO and that of the Ld.
Addl/JCIT(A) are set aside and the AO is directed to allow the necessary exemption u/s 11 to the assessee.
17. In the result, appeal of the assessee is allowed.
(Order pronounced in the open Court on 12/08/2025 ) िवᮓम ᳲसह यादव

(VIKRAM SINGH YADAV)

लेखा सद᭭य / ACCOUNTANT MEMBER
AG
Date: 12/08/2025

आदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to :