Managingbody of Shri Haryana Gaushala Vs ITO (ITAT Delhi)
Delhi ITAT: Belated Filing of Form 10B is a Procedural Lapse; Section 11 Exemption Cannot Be Denied on Technical Grounds
The Delhi ITAT held that the delayed filing of Form 10B is only a procedural requirement and cannot, by itself, be a ground to deny exemption under section 11 to a charitable trust. Accordingly, it set aside the orders of the CPC and the CIT(A) and directed the Assessing Officer to consider the belatedly filed audit report and decide the exemption claim on merits.
The assessee, a trust registered under section 12A, had filed its return of income on 15.03.2022, but filed Form 10B only on 03.09.2024. CPC denied the exemption under section 11 as the audit report had not been furnished within the prescribed time, and the CIT(A) upheld the denial, noting that the Commissioner (Exemptions) had rejected the assessee’s application for condonation of delay.
The Tribunal observed that the legal position is now well settled that filing of Form 10B is directory and procedural, intended to facilitate assessment, and is not a mandatory condition for claiming exemption. Therefore, exemption u/s 11 cannot be denied merely because the audit report was filed belatedly.
In reaching this conclusion, the ITAT relied upon the Chennai Bench decision in Gift Trust v. ITO, which in turn followed the judgments of the Gujarat High Court in CIT v. Xavier Kelavani Mandal, the Punjab & Haryana High Court in CIT v. Shahzedanand Charity Trust, the Madras High Court in CIT v. SPIC Educational Foundation, and an earlier Delhi Tribunal decision. These authorities consistently hold that the audit report can be furnished even at a later stage before the Assessing Officer or appellate authority, and the exemption claim should be examined on merits rather than rejected on technical grounds.
Accordingly, the Tribunal allowed the appeal, set aside the impugned order, and directed the AO/CPC to take the belatedly filed Form 10B into consideration and adjudicate the assessee’s claim for exemption under section 11 in accordance with law.
Cases Discussed
- Gift Trust Vs. The ITO (ITAT Chennai), ITA No.170/Chny/2025, order dated 14.08.2025
- ITA No.302/Del/2024 (ITAT Delhi), AY 2022-23 dated 21.11.2024
- CIT vs. Xavier Kelavani Mandal (P.) Ltd. (Gujarat High Court), [2014] 41 taxmann.com 184
- CIT v. SPIC Educational Foundation (Madras High Court), TCA No.1593 of 2008 dated 12.12.2018
- CIT v. Shahzedanand Charity Trust (Punjab & Haryana High Court), [1997] 228 ITR 292
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 01.01.2025 of the Ld. Addl/JCIT(A)-2 Jaipur (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No : ITBA/APL/S/250/2024-25/1071767781(1) arising out of the intimation order dated 26.10.2022 u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by AO, CPC, Bengaluru, for AY: 2021-22.
2. Heard and perused the record. The assesse is a registered trust u/s 12A and had not filed Form 10B before due date prescribed u/s 12A(1)(b). The return of income was filed on 15.03.2022 and Form 10B was filed on 03.09.2024 and CPC has disallowed the exemption u/s 11 claimed by the assesse on account of not filing audit report in Form 10B within one month before due date of filing of ITR and when challenged before ld. CIT(A) has been sustained for which assesse is in appeal.
3. On considering the rival contentions we find that the reason of denial of exemption was sustained by ld. CIT(A) was that the application for condonation filed before ld. CIT(E) was rejected, leading to ld. CIT(A) holding that there was no irregularity in denying exemption, however, we are of the considered view that when settled proposition of law is that filing of Form 10B is a procedural requirement and directory in nature denying of exemption u/s 11, was not justified. Reliance in this regard is placed on the decision in the case of Gift Trust Vs. The ITO, vide ITA No.170/Chny/2025 order dated 14.08.2025 wherein Coordinate Bench has observed as follows:
“10. We don’t countenance this action of Ld. CIT(A) for the reason that in a plethora of decisions, the Hon’ble Constitutional Courts have held that filing of Audit Report in Form No.10B before the due date couldn’t disentitle the assessee-Trust from exemption claimed u/s.11 of the Act because the filing of Form 10B is directory to facilitate the assessment and not mandatory. In this regard, we note the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Xavier Kelavani Mandal (P.) Ltd., reported in [2014] 41 taxmann.com 184 (Guj. HC), wherein the Hon’ble Gujarat High Court followed the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT v. Shahzedanand Charity Trust reported in [1997] 228 ITR 292, wherein, it has been held that benefit of exemption should not be denied merely on account of delay in furnishing the Audit Report and it is permissible for the assessee to produce the Audit Report at a later stage either before the ITO or before the Appellate Authority by showing sufficient cause. In this context, we also note the decision of the Hon’ble jurisdictional Madras High Court in the case of CIT v. SPIC Educational Foundation [TCA No.1593 of 2008 dated 12.12.2018], wherein, the Hon’ble High Court has held that Filing of Form 10 [for accumulation of income u/s.11(2) of the Act] which was filed beyond due date couldn’t disentitle the Trust from exemption claimed u/s.11 of the Act. The Hon’ble Court directed the AO to examine the benefit of admissibility rather than to foreclose the claim of assessee on technicalities. We also take note of the decision of the Delhi Tribunal in ITA No.302/Del/2024 for AY 2022-23 dated 21.11.2024 wherein the Tribunal has held that the Ld.CIT(A) erred in disallowing the exemption claimed u/s.11 of the Act on similar ground i.e. assessee belatedly filed Form No.10B. In the light of the aforesaid discussion, we set aside the impugned order of the Ld.CIT(A) and direct the AO/CPC to examine the Form 10B filed by the assessee and decide the claim of exemption u/s.11 of the Act and pass order in accordance to law.”
4. Thus, we sustain the grounds and appeal of the assesse is allowed. The impugned order is set aside and ld. AO/CPC is directed to take into consideration for Form 10B filed by the assesse and decide the claim of exemption u/s 11 of the Act in accordance with law and pass order afresh.
Order pronounced in the open court on 05.08.2026
