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Facts
The assessee, a charitable trust, filed its income tax returns for AY 2021-22 and 2015-16. The audit report in Form-10B was filed after the return of income, which led the CPC to disallow the application of income under sections 11/12 of the Act. The assessee's appeals to the CIT(A) were dismissed for being filed beyond the limitation period, and the delay was not condoned.
Held
The Tribunal held that the delay in filing the appeals before the CIT(A) was not intentional and that the assessee's substantial rights were involved. Considering the principles of substantial justice, the delay was condoned, and the CIT(A)'s order was set aside. The matter was restored to the AO to verify other conditions and allow the benefit of section 11(2) if fulfilled.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was intentional and whether the benefit of exemption under section 11 of the Act should be allowed despite Form-10B being filed after the return of income.
Sections Cited
250, 254(1), 11, 11/12, 11(2), 139(4), 80J
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by assessee are directed against the order of the Ld. CIT(A)/ National Faceless Appeal Centre (NFAC) [hereinafter referred to as the “CIT(A)”] under section 250 of the Income-Tax Act, 1961 [hereinafter referred to as "Act"] both dated 23.09.2025 for the Assessment year [A.Y.] 2021-22 & 2015-16. Both the appeal of assessee were dismissed by ld CIT(A) for the want of delay by not condoning the delay in filing appeal.Once, the delay in filing appeal was not condoned, resultantly, both the appeals were dismissed as unadmitted. In both the years, Central Processing Centre (CPC) processed the return of income and has the assessee was not allowed application of income under section 11/12 of the Act, on the ground that Form-10-B was filed after filing return of income.
-03/Mum/2025 (AY 2021-22 & 2015-16) Vishnu Janardhan Shirolkar Mahajan Wady Trust
Rival submissions of both the parties have been heard and record perused. The learned authorized representative (Ld. AR) of the assessee submit that assessee is a public charitable trust, having registration under section 12A/AB of income tax Act and is also registered under Maharashtra Public Trust Act. In both the years the audit report in Form-10B was filed after filing return of income, though it was filed within due date, such fact is otherwise not in dispute. The CPC not allowed application of income under section 11/12 of the Act, on the ground that Form-10-B was filed after filing return of income. Such report was available before CPC when return was processed. The order of CPC was not communicated to the assessee in physical form nor the assessee realised that it was ever communicated to them by way of e-mail. The assessee came to know about such disallowances in both the years, when scrutiny order for AY 2022-23 was passed on 20.02.2025. The assessee realised/ came to know of such order when demand was shown on ITBA Portal. The consultant of assessee also not informed if any order of CPC was sent to him by way of e-mail. The assessee immediately filed appeal before ld CIT(A) with affidavit for seeking condonation of delay in both the years. The ld AR of the assessee submits that substantial rights of assessee are involved, the CPC as well as ld CIT(A) rejected the claim of assessee without allowing opportunity of hearing. The assessee is small trust and actively involved in charitable activities for last so many years and substantially satisfied all the conditions for availing benefit of exemption under section 11 of Income Tax Act. The ld AR of the assessee submits that there was no delay in filing appeal from the date of knowledge of the order of CPC. Even if it is considered as delay, it was not intentional and deliberate and may be condoned and appeal of the assessee may be allowed on merit as the assessee fulfilled all the conditions for availing benefits of section 11/12 of the Act. To support her submissions, she relied on the decision of Hon’ble Bombay High Court in Stride Multitrade (P) Ltd Vs ACIT (2021) 133 taxmann.com 282 (Bom) and Jayashree Chandrasingh Kabali Vs DCIT in dated 21.11.2025 and assessees own case for AY 2022-23 in dated 16.10.2025.
On the other hand the Ld. DR for the revenue submits that assessee has not furnished Form-10 B before filing return of income, which is preconditioned for availing benefit under section 11 of the Act. Further, there was inordinate delay in filing appeal before ld CIT(A), which has not been condoned. Thus, the assessee failed to satisfy the condition for availing benefit under section 11 Income Tax Act. To support his submissions, the ldSr DR for the revenue relied on the decision of Hon’ble Apex Court in Majji Sannemma Vs Reddy Sridevi in Civil Appeal No. 7696 of 2021-SC. The ldSr DR for the revenue prayed that the delay in both the appeal may not be condoned.
I have considered the rival submission of both the parties and I have gone through the orders of lower authorities carefully. It is not in dispute that assessee is a charitable trust. The assessee is having registration under section 12A/12AB, which is the precondition for claiming application of income of the trust. Further, oobjectsand activity of the assessee is not disputed by ldCIT(A). I find that in AY 2021-22, CPC processed return vide intimation dated 22/12/2022 and appeal before ld CIT(A) was filed on 03.03.2025. Similarly, in AY 2015-16, CPC processed return on 08/03/2017 and appeal before ld CIT(A) was filed on (AY 2021-22 & 2015-16) Vishnu Janardhan Shirolkar Mahajan Wady Trust 03.03.3025. In both the years, adjustment was made for the reasons that audit report in Form-10B was filed after filing return of income. Both the appeals of assessee were dismissed as unadmitted for the reasons that delay was not condoned.
I find that in both the years, the plea of ld AR of the assessee is thatthe order of CPC in both the years were not communicated to the assessee in physical form nor the assessee realised that it was ever communicated to them by way of e- mail. The assessee came to know about such disallowances in both the years, when scrutiny order for AY 2022-23 was passed on 20.02.2025. The assessee immediately filed appeal before ld CIT(A) with affidavit for seeking condonation of delay in both the years. Considering the facts that the assessee is a charitable institution and its one of the trustee has filed affidavit before ld CIT(A) in explaining similar facts. The ld CIT(A) instead of seeking any specific submissions rejected the plea of condonation of delay. Hon’ble Apex Court in a celebrated decision in Collector Land Acquisition Vs MstKatiji (1987) 2 SCC 107 held that there is no presumption under law the delay in filing appeal is intentional. The parties do not get any benefit in filing appeal belatedly, rather there is chance that the delay may not be condoned. It was further held that when technical consideration and cause of substantial justice and pitted against each other, the cause of substantial justice may be preferred. Considering overall facts of both the years, I am satisfied that the delay in filing appeal before ld CIT(A) was not intentional, hence, delay in both the years is condoned and the order of ld CIT(A)
is set aside. The ratio of decision relied by ldSr DR for the revenue is not applicable on the facts of the present appeals. In Majji Sannemma Vs Reddy -03/Mum/2025 (AY 2021-22 & 2015-16) Vishnu Janardhan Shirolkar Mahajan Wady Trust Sridevi (supra), the High Court has not recorded the finding of facts there the delay was not intentional or deliberate. Now adverting to the merits of the case.
I find that Hon’ble Gujarat High Court in CIT vs. Gujarat Oil & Allied Industries (1993) 201 ITR 325 (Guj); Gujarat Paghuthan Energy Corporation (P) Ltd. vs.
DCIT 225 Taxman 79 (Guj) and Zenith Processing Mills vs. CIT 219 ITR 721 (Guj) held that assessee could not file audit report along with return of income but file before completion of assessment by Assessing Officer. The assessee is entitled for deduction under section 80J. Similarly, Jurisdictional Bombay High Court in the case of CIT vs. Sakal Relief Fund (2017) 81 taxmann.com 396 (Bom) also held that Form-10B was filed during the re-assessment by assessee-trust the benefit of accumulation under section 11(2) of the Act was available because such filing would be considered within the time allowed for furnishing return of income under section 139(4) of the Act. Considering the aforesaid factual and legal position and the facts that all the conditionsexcept mirror delay in filing Form-10B are fulfilled, the matter is restored to the file of Jurisdictional AO to verify the facts in both the years and allow benefit of section 11(2), if the assessee fulfilled all other requisite conditions. The assessee is also directed to provide necessary detail to the Jurisdictional AO. In the result, the grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in open court on 09.02.2026.
Sd/- (PAWAN SINGH) JUDICIAL MEMBER Mumbai; Dated 09/02/2026 Self 5 -03/Mum/2025 (AY 2021-22 & 2015-16) Vishnu Janardhan Shirolkar Mahajan Wady Trust Copy of the Order forwarded to: