Loading judgment…
Facts
The assessee filed its return declaring nil income, but the CPC assessed total income at Rs. 95,16,957. This was due to disallowing capital expenditure and accumulation of funds. The CPC's action was based on the ground that Form 10BB was not filed before the due date of filing the return.
Held
The tribunal held that the assessee mistakenly filed Form 10B instead of Form 10BB due to a bona fide error by the Chartered Accountant. This error was subsequently rectified. The tribunal found that such technical errors should not lead to denial of exemption, especially when corrected.
Key Issues
Whether denial of exemption due to a technical error in filing the audit report (Form 10B instead of 10BB) which was subsequently rectified is sustainable.
Sections Cited
143(1)
AI-generated summary — verify with the full judgment below
Before: SHRI INTURI RAMA RAO & SHRI SONJOY SARMA
Assessment Year: 2023-24 Loka Rakshaka Society…………………………………….……….Appellant Padappanal, Thevalakara, Kollam, Kerala-690524. [PAN:AAATL4673L] vs. ITO, Ward-Exemption, Kollam……..........………........……...…..…..Respondent Appearances by: Shri Ivan Joseph, CA, appeared on behalf of the assessee. Smt. Leena Lal, Snr AR, appeared on behalf of the Revenue. Date of concluding the hearing: June11, 2025 Date of pronouncing the order: August 12, 2025 ORDER
Per Sonjoy Sarma, Judicial Member:
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-3, Bengaluru dated 24.01.25 for the assessment year 2023–24.
Brief Facts of the Case are that the assessee filed its return of income on 02.11.2023, declaring nil income. The audit report in Form No. 10B was filed on 30.10.2023. The CPC, however, passed an intimation under section 143(1) of the Income-tax Act, 1961, assessing the total income of the assessee at Rs. 95,16,957, disallowing:
Capital expenditure of Rs. 69,56,407, and Accumulation of funds amounting to Rs. 2,56,550,
Aggrieved by the above order the assessee filed an appeal before the Ld.CIT(A), which was dismissed, upholding the order of the CPC.
At the time of hearing, the Ld. AR submitted that the form 10B was mistakenly filed instead of Form 10BB due to a bona fide error by the Chartered Accountant. As per the amended rules applicable from A.Y. 2023–24, Form 10BB is required to be filed where gross receipts are less than Rs. 5 crores, and No foreign contribution is received. In the present case of the assessee’s gross receipts were only Rs. 33.2 lakhs, and no foreign contribution was received, though the society had FCRA registration and the audit report was initially filed in Form 10B on 31.10.2023 and later revised in Form 10BB on 11.01.2025. In this regard an affidavit from the Chartered Accountant has been submitted acknowledging the mistake. The Ld. AR further stated that the issue is squarely covered by the decision of the ITAT Pune Bench in the case of Savitribai Phule Shikshan Prasarak Mandal, dated 07.01.2025, where it was held that such technical error in filing Form 10B instead of Form 10BB should not result in denial of exemption.
The Ld. DR supported the orders of the lower authorities.
We have carefully considered the rival submissions and material available on record. It is undisputed that the assessee erroneously filed Form 10B instead of Form 10BB, and later rectified the mistake. In this regard an affidavit from the Chartered Accountant confirms that the error was inadvertent and due to a bona fide mistake. The same has been judicially recognized as a technical error by the Pune Bench of the Loka Rakshaka Society Tribunal in Savitribai Phule Shikshan Prasarak Mandal (supra) Following the ratio laid down therein, and in the interest of substantial justice, we are inclined to accept the assessee’s explanation. The denial of exemption due to a procedural/technical lapse, which was subsequently corrected, cannot be sustained. Accordingly, the addition made by CPC is hereby directed to be deleted.
In the result, the appeal of the assessee is allowed.
12th August, 2025