CIT (Exemption) Vs Anjana Foundation (Supreme Court of India)
The matter arose from a dispute regarding denial of tax exemption to a charitable trust due to delay in filing the audit report in Form 10B under the Income Tax Act, 1961.
The respondent-assessee is a public charitable trust registered under the Bombay Public Trust Act, 1950. For Assessment Year 2021–22, it filed its return declaring a small surplus/deficit position. However, while processing the return under Section 143(1), the Centralised Processing Centre (CPC) denied exemption under Sections 11 and 12 on the ground that the audit report in Form 10B had not been filed along with the return within the prescribed time. As a result, the entire income — including corpus and voluntary donations — was treated as taxable, leading to a substantial tax demand.
Read HC Judgment: Gujarat HC Allowed Section 11 Exemption Despite Late filing of Form 10B
The assessee’s appeal before the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, was dismissed. On further appeal, the Income Tax Appellate Tribunal allowed the assessee’s claim. The Tribunal noted that Form 10B had in fact been prepared before the due date and was later furnished before the appellate authority. Relying on earlier decisions of the jurisdictional High Court and other benches, it held that filing Form 10B along with the return is a procedural requirement. Since the only reason for denial of exemption was non-filing of the form with the return, and not the absence of audit itself, the assessee should not be denied the benefit of Section 11. The Assessing Officer/CPC was directed to grant exemption after accepting the Form 10B.
The Revenue challenged this order before the Gujarat High Court under Section 260A, raising questions on whether filing Form 10B is merely procedural and whether exemption can be allowed when the form was not filed within the due date. The Revenue relied on a Supreme Court decision in Wipro Ltd, where strict compliance with exemption provisions was emphasized.
The High Court examined the Tribunal’s reasoning and the precedents it relied upon. It noted that the Tribunal had followed binding jurisdictional High Court judgments holding that delayed filing of Form 10B does not automatically disentitle a charitable trust from exemption if the audit was conducted and the form was later furnished before the appellate authority. The High Court concluded that the issue was covered by existing decisions and that no substantial question of law arose from the Tribunal’s order. Accordingly, the Revenue’s tax appeal was dismissed.
The Revenue then approached the Supreme Court of India by filing a Special Leave Petition (SLP). There was a delay of 237 days in filing the SLP. The Supreme Court found the reasons given for the delay to be neither satisfactory nor sufficient in law and refused to condone it. Independently of the delay, the Court also observed that it found nothing in the merits of the case. Consequently, the SLP was dismissed both on the ground of delay and on merits. All pending applications were disposed of.
In effect, the High Court’s view — that delayed filing of Form 10B is a procedural lapse and does not by itself justify denial of exemption under Section 11 when the audit requirement is otherwise fulfilled — remained undisturbed.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
