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Facts
The assessee's return for AY 2022-23, declaring nil income, was processed under Section 143(1) resulting in an addition of Rs. 50,68,558/- due to discrepancies in Form 10AC details and the non-filing of Form 10B within the prescribed time. The CIT(A) dismissed the assessee's appeal, confirming the addition, despite a pending petition for condonation of delay in filing Form 10B under Section 119(2)(b).
Held
Before the ITAT, the assessee submitted an application to withdraw the appeal, stating that the ld. CIT (Exemption) had already condoned the delay in filing Form 10B under Section 119(2)(b) of the Income Tax Act, 1961. The Revenue had no objection to the withdrawal. Consequently, the ITAT dismissed the appeal as withdrawn.
Key Issues
Whether the delay in filing Form No. 10B for claiming exemptions under the Income Tax Act should be condoned, and whether the disallowance of exemptions for non-filing/delayed filing of Form 10B was justified.
Sections Cited
250, 143(1), 119(2)(b), 12A, 139(1), 12A(1)(b), 11, 12
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW ‘B’ BENCH, LUCKNOW
A.Y. 2022-23 Central Methodist Church, vs. The Commissioner of Income 109, Cantonment Road, Lucknow- Tax (Exemption), Lucknow- 226001 226001 PAN: AAATC2909E (Appellant) (Respondent) Assessee by: Sh. Rakesh Garg, Adv Revenue by: Sh. R.R.N. Shukla, CIT DR Date of hearing: 02.09.2025 Date of pronouncement: 30.09.2025 O R D E R PER NIKHIL CHOUDHARY, A.M.: [ This is an appeal filed by the assessee against the order of the ld. Addl/JCIT(A), Patna under section 250 of the Income Tax Act, dismissing the appeal of the assessee against the order passed by the ld. Assessing Officer under section 143(1) on 31.03.2023. The grounds of appeal are as under:-
01. Because the CIT (A) has erred on facts and in law in dismissing the appeal of the assessee overlooking the issue of condonation of delay caused in filing Form No. 10B, such delay being condonable as per section 119(2)(b), petition for which is pending adjudication before the CIT(Exemptions), the order passed by the CIT(A) be set aside.
02. Because the CIT(A) has failed to appreciate that the delay in filing Form No. 10B was purely on account of the delay caused on account of the person preparing and filing of the Audit report / returns, the assessee being under a bonafide belief that the same would be done in time, was not justified in not appreciating the facts and circumstances of the case and dismissing the appeal inlimine.
03. Because the CIT(A) has failed to appreciate that in the case of sister organization, namely, Lalbagh Methodist Church where the facts and circumstances being the same, the CIT(A) having allowed the appeal, copy of which order was filed in the submissions, should have considered the same and not have dismissed the appeal, in any case the order passed by the CIT(A) is bad in law be set aside.
04. Because without prejudice to the above grounds of appeal even if the Form No. 10B, is deemed to have not been filed, yet the computation of income ought to be done as per Central Methodist Church A.Y. 2022-23 the penal provisions wherein, the expenditure incurred in earing the income be deducted, as against levying tax on the entire gross receipts, the order is erroneous be set aside.”
It is seen that the appeal is delayed by 15 days. The ld. AR has submitted that this was mainly due to the processing delay at the level of the concerned filing counsel. However, it was submitted that the assessee was in any case withdrawing the appeal and therefore, the delay may kindly be condoned. After considering the above, the delay of 15 days is condoned to permit the assessee to withdraw the appeal.
The facts of the case are that the assessee filed a return of income for the assessment year 2022-23 on 7.11.2022 declaring its total income at Rs. Nil. The same was processed under section 143(1) of the Act and the total income was determined at Rs. 50,68,558/-. Aggrieved with the said order, the assessee filed an appeal before the first appellate authority which was transferred to the ld. Addl/JCIT(A), Patna for consideration. Before the ld. CIT(A), it was submitted that the assessee was a registered society which was also registered under section 12A of the Income Tax Act, 1961, vide Order No. 13529/2007-08 dated 20.11.2007. It had filed Form No. 10A for renewal of registration and after that the society had received Form No. 10AC granting registration under section 12A. It had filed its return of income on 7.11.2022 and thereafter received a response under section 143(1)(a)(2) dated 14.02.2023 in which the Department had pointed out that the details provided at Sr. No. (A 19) of Schedule Part A General, were not matching with the information as per Form No. 10AC and hence the amount mentioned at Sr. No.4 and 6 were not matching with the information as per Form No. 10AC. Hence, the amounts mentioned at Sr. No. 4 and 6 (8) of Part B, 1 Part-B TI was not allowable. Thus, Rs. 50,68,558/- was stated to be not allowable. It was also submitted that the Department pointed out that the assessee had not e-filed its Audit Report in Form No. 10B at least one month prior to the due date of furnishing the ITR under section 139(1), hence the exemptions claimed in Sr. No. 6i to 6vii of Part B1-Part-B-TI is not allowable in accordance with the provisions of section Central Methodist Church A.Y. 2022-23 12A(1)(b) of the Income Tax Act, whereas the assessee had duly filed the Form No. 10B on 7.11.2022. It was pointed out that a petition for condonation of delay had been submitted before the ld. CIT (Exemption) on 16.07.2024, a copy of which was attached, the same was pending for adjudication. It was further pointed out that a similar issue had arisen in the case of Lal Bagh Methodist Church for the same assessment year, but in that case the delay in filing the Form 10B had been condoned by the ld. CIT (Exemption). The facts and circumstances of both the societies were exactly the same and therefore, the assessee was hopeful that the petition for condonation would be considered favorably and would be decided soon. It was further pointed out that the CBDT had taken a liberal view with reference to the delay caused in filing Form No. 10B and vide Circular No. 02/2020 held that where there was delay of upto 365 days in filing of Form No. 10B for the assessment year 2018-19 or for any subsequent assessment years, the Commissioners of Income Tax, were authorized to admit such belated applications for condonation of delay under section 119(2)(b) of the Income Tax Act and decide the same on merits. The ld. CIT (Exemption) considered the issues raised by the assessee and pointed out that it was clear from the provisions of section 11 and 12, that the assessee had to submit the prescribed report i.e. Form No. 10B within the prescribed time period which the assessee had not done. Quoting from the judgments of the Hon’ble Supreme Court in the case of State of Jharkhand vs. Ambay Cements (2005) 1 SCC 368 and PCIT-III, Bengaluru vs. Wipro Limited in Civil Appeal No. 1449 of 2022, the ld. Addl/JCIT(A) held that a person who claims exemption must establish that he is entitled to that exemption or condition. Exemption provisions had to be construed strictly and any person who failed to comply with the necessary conditions had to be denied the exemption. Therefore, he denied the exemption and dismissed the appeal of the assessee thereby confirming the addition of Rs. 50,68,558/- in its hands.
Aggrieved, the assessee has come in appeal before us. On the appointed date of hearing, Sh. Rakesh Garg, Advocate (hereinafter referred to as the ld. AR),