Global University Foundation Vs ITO (Exemption) (ITAT Hyderabad)
In Global University Foundation vs. ITO (Exemption), the Income Tax Appellate Tribunal (ITAT) Hyderabad Bench addressed two key issues: (i) condonation of delay in filing the appeal, and (ii) denial of exemption under Sections 11 and 12 of the Income-tax Act, 1961, due to the delayed filing of audit report in Form 10B.
The assessee, a charitable foundation, filed its appeal with a delay of 506 days against the order dated 14 July 2023 passed by the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year (AY) 2021–22. The delay, according to the assessee, was caused by non-receipt of the CIT(A)’s order through the Income Tax Department’s communication channels. The assessee produced a screenshot of its official email inbox to show that no such order had been received. The delay came to light only when the foundation received its AY 2023–24 assessment order in December 2024, prompting it to check the Income Tax portal, where it discovered the earlier appellate order. It then filed an appeal in January 2025. The assessee argued that the delay was unintentional and beyond its control.
The Departmental Representative (DR) opposed the condonation, contending that the delay of over 500 days was inordinate and inadequately explained. However, after reviewing the circumstances and evidence, the Tribunal held that the assessee had shown sufficient cause for the delay. Given that the order was never communicated electronically, and following the principle that justice should prevail over technicalities, the Tribunal condoned the delay subject to the assessee paying ₹10,000 as cost to the Prime Minister’s National Relief Fund within 30 days.
On the substantive issue, the dispute concerned the denial of exemption under Sections 11 and 12 (charitable or religious trusts) due to the delayed filing of Form 10B, which contains the mandatory audit report required for claiming such exemption. The Centralized Processing Centre (CPC), while processing the return under Section 143(1), denied the exemption on the ground that the audit report was filed late.
The assessee explained that it had filed Form 10B on 15 March 2022, in compliance with CBDT Circular No. 1/2022 dated 11 January 2022, which extended the due date for filing returns and audit reports owing to the Covid-19 pandemic. Under the circular, the due date for filing the return was extended to 15 March 2022 and for furnishing the audit report to 15 February 2022. Since the return and Form 10B were filed on the same day, the audit report was available to the CPC at the time of processing. The assessee thus argued that the minor delay caused by the pandemic could not justify denial of exemption under Sections 11 and 12.
The ITAT referred extensively to the judgment of the Telangana High Court in Global Organization for Development vs. CIT (Exemption) (W.P. No. 8950 of 2024, dated 8 April 2024), which addressed a similar issue. The High Court held that authorities must consider an assessee’s explanation for delay under Section 119(2)(b) of the Act and exercise discretion to condone such delay where justified. It relied on the Gujarat High Court’s decision in Sarvodaya Charitable Trust v. ITO (Exemption) [2021] 124 taxmann.com 75 (Guj.), which emphasized that filing the audit report is procedural and directory in nature, and substantial compliance—such as filing before assessment completion—should suffice.
Additionally, the Hyderabad Tribunal noted consistent precedents from various High Courts:
