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Facts
The assessee, a society registered under the Societies Registration Act, filed its return of income declaring NIL. The Assessing Officer (AO) made an addition of Rs. 86,28,404/- disallowing a deduction claimed under Section 11(2) because Form 10 was filed late. The National Faceless Appeal Centre (NFAC) dismissed the assessee's appeal.
Held
The Tribunal held that the delay in filing Form 10 is a curable defect, especially when the form was uploaded before the assessment order was framed and was available on the Income Tax Portal. The Tribunal condoned the delay and directed the AO to allow the benefit of Section 11 of the Act.
Key Issues
Whether the delay in filing Form 10 for claiming exemption under Section 11 is a curable defect and whether the benefit of Section 11 should be denied on this ground.
Sections Cited
143(3), 11(2), 12A, 139(1), 11, 143(1), 143(2), 142(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “C”, DELHI
Before: SH. M. BALAGANESH & SH. SUDHIR KUMAR
Date of hearing: 11/09/2025 Date of Pronouncement: 28/10/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC),Delhi [hereinafter referred to as “Ld. NFAC”] vide order dated 28.03.2025 pertaining to A.Y. 2017-18 arising out the assessment order dated 10-12-2019 under section 143(3) of the Income-Tax Act, 1961(in short “the Act”. 2. The assessee has raised the following ground in appeal:
Confirming the following actions of ACIT( E ) circle-2(1) , Delhi a. determining taxable income at Rs.86,28,404/- against the Nil as returned b. not allowing deduction claimed u/s 11(2) of the I.T. Act 1961 on the ground that Form 10 had been filed late; c. ignoring the statutory Form 10 available on record at the time of assessment; 3. The brief facts of the case are that the assessee society is registered under the Societies Registration Act XXI of 1860. Assessee is also registered u/s 12A of the Act and also notified u/s 80G(5)(vi) of the Act. The object of the trust is to set up Gaushala and also to setup research-center for village development, land reform, sheltering of cows etc. The assessee filed its return of income declaring income NIL on 31-10-2017. The return of income was processed u/s 143(1) of the Act and case was selected for scrutiny under CASS. Notices under section 143(2) of the Act was issued. Again notice under section 142(1) of the Act with questionnaire were issued. The Assessing Officer completed the after making the addition of Rs.86,28,404/- holding that the assessee has not uploaded the Form 10 under rule 17 of the Income Tax rules so the assessee was not allowed to be accumulated u/s 11(2) brought to tax the net income.
Aggrieved the order of the assessing officer the assessee filed the appeal before Ld. NFAC who vide order dated 28-03-2025 dismissed the appeal. The relevant finding of the Ld. NFAC is reproduced hereunder: 5.2. During the appellate proceedings, the appellant has submitted that the appellant has uploaded the Form 10 on 11-09-2019 after issuing of show cause notice by the AO during the assessment proceedings. The appellant has also submitted that the application for condonation was filed before the CIT(Exemption) on the ground that CBDT Circular No.7 of 2018 empowered the CIT(Exemption) for condonation of delay for the A.Y.2016-17and this application in question is for A.Y. 2017-18 hence application was rejected. The appellant also referred to the CBDT circular No. 30/2019 dated 17-12-2019 through which it was advised to CIT(Exemption) that the earlier circular No. 7 of 2018 stated above may be considered as extended for the A.Y. 2017-18. However, the appellant has not made any mention as to whether any fresh request or application was made to the CIT(Exemption) for condonation referring to the new notification.
5.3 It is to be clarified that there was no specific circular for condonation of delay of filing the Form 10. The case of the appellant clearly within the ambit of circulars mentioned above and circular has not been declared as null and void by the jurisdictional High Court. Accordingly one has to follow the circular of the CBDT. 5.4. In this scenario, there is technical breach of submitting Form 10 which cannot be corrected through CIT(Appeal), as the powers to condone the delay in filing the Form 10 has specifically been conferred to CIT(Exemption), by way of circulars No. 7 of 2018 and 30 of 2019. AS on today the Form 10 has been uploaded by the appellant beyond the time limit prescribed and no condonation thereof from the CIT(Exemption ) is there. Therefore, at this juncture action of the AO in making addition of Rs. 86,28,404/- u/s 11(2) of the I.T.Act for want of Form 10 is upheld and grounds of appeal are dismissed.
5. Being aggrieved the order of the Ld. NFAC the assessee is in appeal before the tribunal.
6. Ld. AR submitted that the Form 10 was uploaded before framing the assessment order. The Ld. AR drawing our attention to the CBDT Circular No. 10/2019, dated 22-05-2019, submitted that the filing of the audit report in Form no. 10B was directory in nature and not mandatory: hence the same was condonable in view of the provision of section 12A of the Act and that was why the CBDT condoned the delay in filing the audit report. He further submitted that filing the audit report in Form 10 online on or before filing the ITR under section 139(1) of the Act was one of the requirements to avail the benefit under section 11 and 12 of the Act. The requirement of filing of Form 10 online on or before filing ITR under section 139(1) of the Act was directory in nature and thus was curable defect. The Assessing Officer should have considered the uploaded audit report in Form 10 at the time of processing the ITR under section 143(1) of the Act as the said report was available on the Income tax Portal. Ld. AR has relied the decision of The Vedic Culture Centre vs. Income tax Officer Ward (Exemption) -2(3) .
Ld. Sr. Departmental Representative has relied upon the orders of the lower authorities. He further submitted that the report on Form 10 was not filed with in time.
We have heard both parties and gone through the material available on record. If the report on Form No 10 was not filled on line on or before filing the return of income, then it is a curable defect as ratio laid down in the cited decision and the as per the Circular No. 10/2019 dated 22-05-2019. The assessee has uploaded the report on Form 10 and same was available at the time of processing the ITR u/s 143(1) of the Act, then the denial of claim of exemption under section 11 of the Act is not justified. We condone the delay in filing the audit report in Form 10 on line and direct the Assessing Officer to allow the benefit of section 11 of the Act to the assessee. The appeal of the assessee is allowed for statistical purpose.
In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 28.10.2025.