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Facts
The assessee, a welfare fund board eligible for exemption under Section 11, filed Form 10B belatedly (delay condoned) and subsequently filed a revised Form 10B. The Assessing Officer disregarded the revised Form 10B and adopted a lower application of income, leading to an appeal by the assessee against the assessment and related penalty. The Ld. CIT(A) upheld the AO's decision.
Held
The Tribunal held that the filing of Form 10B is a procedural direction and substantial compliance is sufficient. Citing High Court and ITAT precedents, it directed the Ld. AO to accept and act upon the revised Form 10B, remanding the quantum assessment for fresh adjudication. Consequently, the penalty proceedings under Section 270A were also set aside for fresh consideration based on the final quantum assessment.
Key Issues
Whether the Assessing Officer was justified in not considering a revised Form 10B when the original belated Form 10B had been condoned, and the implications for the claim of exemption and penalty under Section 270A.
Sections Cited
250, 143(3), 143(3A), 143(3B), 270A, 12A, 11, 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHINBENCH “DB”, COCHIN
Per Shri Anikesh Banerjee (JM): The instant appeals of the assessee were preferred against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (for brevity, ‘the Act’) for assessment year 2018-19, date of order 20/08/2025& 21/08/2025 related to the order of the National e-Assessment Centre, Delhi (for brevity the “Ld. AO”) passed and 668/Coch/2025 Kerala Beedi and Cigar Workers Welfare Fund Board u/s143(3) r.w.s. 143(3A)&143(3B) of the Act, date of order 06/04/2021 and order passed U/s 270A of the Act, order dated 10/02/2022 respectively.
The Brief facts of the case are that the assessee is a Board constituted under the Kerala Beedi and Cigar Workers Welfare Fund Act 1995 enacted by the Government of Kerala with the object of providing for the constitution of a fund to grant relief to, to promote the welfare of and to pay pension to beedi and cigar workers and self-employed persons in beedi and cigar industries in the State of Kerala. The main source of its receipt is from grants or loans or advances made by the State Government and the application of the funds is for payment of pension to beedi and cigar workers and self-employed person in beedi and cigar industries in Kerala besides providing medical assistance for them and also providing educational assistance for their children. The assessee is registered u/s 12A of the Act and eligible for exemption u/s 11 of the Act. As per the return filed, your assessee had shown gross receipt of Rs.2,56,25,897/-application of Rs.4,60,29,424/- and miscellaneous income was shown as NIL. The assessee filed the return of income with statutory form 10B in following dates. The chronological event is described as below: - Date of filing of return of income based on unaudited figures 31.3.2019 Date of audited financial statements 06.12.2019 Date of audit report in Form 10B - Original 09.12.2019 Original Form 10B filed on 09.12.2019 Date of audit report in Form 10B - Revised 30.12.2019 Revised Form 10B filed on 23.03.2021 Date of notice u/s 142(1) 19.03.2021 Date of reply to notice u/s 142(1) 06.04.2021 and 668/Coch/2025 Kerala Beedi and Cigar Workers Welfare Fund Board 3. The assessee filed the form-10B on dated 09/12/2019 with delay. The Ld. CIT(Exemption) has condoned the delay in fling 10B dated 09/12/2019, copy of the order annexed in APB pages 64-65. However, the Ld. AR argued that the assessee further revised the form-10B on dated 23/03/2021 which was not condoned by the Ld. CIT(E) Kochi. So, the Ld. AO treated the 1st form 10B as valid one without considering the revised form 10B. The grievances of the assessee that the Ld. AO wrongly adopted the application of income in impugned assessment year amount to Rs. 1,58,03,104/- instead of Rs.4,61,27,469/-. Aggrieved assessee filed an appeal before the Ld. CIT(A) but the assessee fails to succeed. Being aggrieved the assessee filed an appeal before us.
We heard the rival submission and considered the documents available in the record. The assessee filed Form 10B with delay which was condoned by the Ld. CIT(E), Kochi. Further, the assessee filed revised form 10B which was not considered by any of the authority. The filling of Form No. 10B is a procedural direction in in the proviso. The assessee is registered u/s 12A and followed the direction as per the Act during filing of return. For filing of Form No. 10B is just a failure of procedural system. Here we respectfully refer the order of Hon’ble High Court of Gujarat in the case of Sarvodaya Charitable Trust v. Income Tax Officer. (Exemption), [2021] 125 taxmann.com 75 (Gujarat). The relevant paragraph is extracted as below:- “32. 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 and 668/Coch/2025 Kerala Beedi and Cigar Workers Welfare Fund Board 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 beore the Income-tax Officer or before the appellate authority by assigning sufficient cause”. The Ld. AR respectfully relied on the order of the coordinate bench of the ITAT Chennai Bench 'B' in Rani Adaikalaraj Educational and Charitable Trust v. Income-tax Officer reported in [2025] 171 taxmann.com 466 (Chennai - Trib.)held where assessee-trust, initially mentioned Rs. 71.77 lakhs instead of Nil under section 11(1)(2) and later filed a revised audit report and claimed repayment of loan as application of income, since assessee’s claim was supported by audited financials, revised audit report, revised computation and bank statements reflecting repayment of loan, Assessing Officer was to be directed to accept revised computation and allow exemption under section 11.
The Ld. DR argued and stood in favour of the orders of revenue authorities.
We note that the assessee had rectified the defect and filed a revised Form No. 10B on 23.03.2021. The original Form No. 10B was admittedly filed belatedly; however, the delay in filing the same was duly condoned by the competent authority. Accordingly, the initial Form No. 10B stands validated in the eyes of law. The assessee, thereafter, merely amended the said Form by filing a revised Form No. 10B, which cannot be treated as a fresh or invalid filing.Respectfully following the judgment of the Hon’ble Gujarat High Court and the decision of the Co-ordinate Bench of the ITAT, Chennai, we direct the Ld. AO to accept and act upon the revised Form No. 10B filed on 23.03.2021.In the interest of justice, the matter is remanded to the file of the Ld. AO for the limited purpose of verifying the evidences and particulars furnished in the revised Form No. 10B. The assessee is directed to furnish all relevant documents and supporting evidences, if any, and 668/Coch/2025 Kerala Beedi and Cigar Workers Welfare Fund Board before the Ld. AO, who shall examine the same in accordance with law and decide the issue afresh after granting a reasonable opportunity of being heard to the assessee. We make it clear that we have not expressed any opinion on the merits of the case, so as not to cause any prejudice to the proceedings before the revenue authority. The assessee is also directed to extend full cooperation and ensure expeditious completion of the set-aside proceedings.
7. The present appeal pertains to the penalty imposed under section 270A of the Act. Since the quantum appeal has been adjudicated and remanded to the file of the Ld. Assessing Officer for fresh consideration, the penalty proceedings initiated under section 270A of the Act are also set aside to the file of the Ld. AO to be adjudicated afresh in accordance with law, consequent upon the final determination of the quantum assessment.
In the result, both the appeal of the assessee bearing & 668/COCH/2025 are allowed for statistical purposes.
Order pronounced on 13th day of November 2025 in accordance with Rule 34(4) of the Income tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (INTURI RAMA RAO) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,�दनांक/Dated: 13/11/2025 Disha Raut, Stenographer