HERD EDUCATIONAL & MEDICAL RESEARCH FOUNDATION,NAGPUR vs. INCOME TAX OFFICER 4(3), NAGPUR
Facts
The assessee, a trust registered under Section 12AA, claimed an exemption of Rs. 6,50,000/-, which was disallowed by the CPC under Section 143(1) and affirmed by the Ld. Commissioner under Section 154. The disallowance was primarily due to the non-furnishing of Form 10B within the due date and a clerical error in specifying the claim clause. Although filed late, Form 10B was made available before the Section 154 order.
Held
The Tribunal, drawing upon precedents from coordinate benches and jurisdictional High Courts, held that the exemption under Section 11 should not be denied on mere technicalities like late filing of Form 10B or incorrect claim clause, especially when the assessee has otherwise complied with procedural requirements and filed the form. The Assessing Officer was directed to decide the claim on merits, treating Form 10B as valid.
Key Issues
Whether an exemption under Section 11 of the Income Tax Act can be denied solely due to late filing of Form 10B or a clerical error in claiming the exemption, when the form is subsequently filed and procedural requirements are largely met.
Sections Cited
11, 11(1)(c), 12A, 12AA, 119(2)(b), 139(4), 143(1), 154, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH “SMC”, NAGPUR
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 19.03.2025, impugned herein, passed by the National Faceless Appeal Center (NFAC) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2023- 24.
In the instant case, the Assessee had claimed the amount of Rs.6,50,000/- as exempt, however, the same was disallowed by the CPC vide order dated 18.11.2024 u/s 143(1) of the Act, which was subsequently affirmed by the Ld. Commissioner vide order dated 20.01.2025 u/s 154 of the Act.
2 ITA No.323/NAG/2025 M/s. Herd Educational & Medical Research Foundation
The Assessee, being aggrieved, challenged the said disallowance/addition and/or aforesaid intimation/order by filing first appeal before the Ld. Commissioner, who by considering the fact that the Assessee has not furnished the form no.10B within the prescribed time limit i.e. before the due date for filing of return of income and requested the Ld. Commissioner for condoning the delay who does not have any power to condone the same u/s 119(2)(b) of the Act and therefore the Assessee should have filed such petition before the appropriate authority and not before the Ld. Commissioner. The Ld. Commissioner consequently dismissed the appeal of the Assessee.
The Assessee has claimed that it had filed original return of income well before the due date i.e. 30.11.2023. The Assessee somehow wrongly mentioned the claim of Rs.6,50,000/- in clause 4 of Par B-TI as exemption u/s 11(1)(c) instead of clause 6(vi) of the Act. The Assessee filed form no.10 on dated 30.11.2024 as against the due date i.e. 30.11.2023 for filing of return. Admittedly, the Assessee has committed mistake in mentioning the claim of Rs.6,50,000/- in wrong clause and it is a fact that the Assessee, before passing the order u/s 154 of the Act, made available Form 10B and therefore the Assessee is entitled to get deduction claimed, in view of the judgment passed by the Co-ordinate Bench of the Tribunal at Mumbai in the case of Shree Bhairav Seva Samiti Vs. ITO Exemption, Thane in ITA No.2225/M/2022 wherein due to technical issues delay was caused in uploading the Form no.10B and the co-ordinate Bench of the Tribunal by taking cognizance of the fact that the Assessee uploaded the form no.10B before filing application u/s 154 of the Act, allowed the appeal of the Assessee and/or the identical claim as made by this present appeal by observing and holding as under:
3 ITA No.323/NAG/2025 M/s. Herd Educational & Medical Research Foundation
“8. We have considered the rival submissions and perused the material available on record. The assessee trust is holding a valid certificate of registration under section 12AA of the Act since 24/09/1982. In its return of income filed under section 139(4) of the Act, the assessee claimed exemption in respect of revenue expenditure and capital expenses under section 11 of the Act. While processing the return filed by the assessee under section 143 (1) of the Act, CPC Bangalore denied the exemption claimed under section 11 of the Act and raised a demand of Rs. 75,27,180. It is the plea of the assessee that Form 10B was obtained from the auditor on 15/09/2016, and due to the first year of e-filing Form 10B assessee faced some technical issues causing a delay in uploading the said Form.
In the present case, it is undisputed that the assessee trust is registered under section 12AA of the Act for the past 40 years and the said registration is still in existence. It is also not the case of the Revenue that the assessee has ceased to be a religious or charitable institution. Further, it is also not the case of the Revenue that the accounts of the assessee have not been audited by an accountant, and an audit report in Form 10B has not been obtained. Only on the technical aspect that Form 10B was not filed aalong with the return of income for the relevant assessment year, the exemption claimed under section 11 of the Act has been denied to the assessee without going into the merits. Further, no relief was granted to the assessee even when the assessee filed the application under section 154 of the Act. We find that while dealing with similar facts the Co–ordinate Bench of the Tribunal in Trinity Education Trust vs ITO, ITA No. 669/Srt./2018, vide order dated 28/02/2022, decided the issue in favour of the taxpayer by observing as under:
“8. We have considered the rival submissions both the parties and perused the order of lower authorities carefully. We find that there is no dispute that at the time of filing of return of income, the audit report has required under Form 10B was not uploaded once uploaded on the system consequently the AO/CPC not allowed the exemption claimed under section 11. Assessing Officer/CPC brought the entire receipt as taxable income. On receipt intimation under section 143(1) of the Act the assessee uploaded in Form 10B and filed application for rectification under section 154 of the Act. The application of the assessee was rejected on the ground report in Form 10B was not furnished before due date of return of income. The Id. CIT(A) dismissed the appeal of the assessee by taking view the audit report in Form 10B was not uploaded before due date of return of income.
4 ITA No.323/NAG/2025 M/s. Herd Educational & Medical Research Foundation
We find that the Hon'ble jurisdictional High Court in case of CIT vs. Xavier Kalavani Mandal (P.) Ltd. (supra) held that in order to claim exemption under section 11, the assessee can filed audit report in Form 10B even at later stage either before the Assessing Officer or before appellate authority by showing a sufficient cause. Further, Hon'ble jurisdictional High Court decision in case of Sarvodaya charitable Trust vs. ITO (Exemption) (supra) also held that where the assessee is a public charitable trust registered under section 12A of the Act and substantially satisfied condition for availing benefit of exemption as a charitable could not be denied exemption, the assessee merely on bar of limitation in furnishing audit report in Form 10B. Considering the aforesaid and legal discussion, we find that though the assessee has not filed any return of income at the time, however, it was available before the Id. CIT(A) as it was uploaded much before filing application under section 154. Therefore, respectfully following the decisions of Hon'ble jurisdictional High Court in case of CIT vs. Xavier Kalavani Mandal (P.) Ltd. (supra) and in Sarvodaya charitable Trust vs. ITO (Exemption) (supra), we find that the assessee has complied the procedural requirement, therefore, the Assessing Officer/CPC is directed to verify the claim of the assessee and grant necessary deduction under section 11 of IT Act. In the result, the appeal of the assessee is allowed for statistical purposes.”
As in the present case also the assessee has complied with the procedural requirement of obtaining and filing Form 10B, therefore, respectfully following the aforesaid decision of the Co- ordinate Bench of the Tribunal, the Assessing Officer is directed to decide the claim of the assessee under section 11 on merits, after accepting the Form 10B filed by the assessee. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
Thus, on the aforesaid analyzations and respectfully following the aforesaid decision, this Court is inclined to allow the claim of the Assessee and consequently direct the AO to decide the claim of the Assessee on merit by considering Form no. 10-B as valid.
5 ITA No.323/NAG/2025 M/s. Herd Educational & Medical Research Foundation
In the result, the appeal of the Assessee is allowed in the aforesaid terms. Order is pronounced 24.09.2025 as per rule 34(5) of the Income Tax {Appellate Tribunal} Rule 1963.
Sd/- (NARENDER KUMAR CHOUDHRY) JUDICIAL MEMBER
* Kishore, Sr. P.S.
Copy to: The Appellant The Respondent The CIT, Concerned, Nagpur The DR Concerned Bench
//True Copy//
By Order
Dy/Asstt. Registrar, ITAT, Nagpur.
