29-Day Form 10B Delay Cannot Deny Section 11 Exemption: ITAT Chennai

Keystone Foundation Vs ACIT (ITAT Chennai)

Summary: ITAT Chennai allowed Keystone Foundation’s appeal for AY 2023-24 and directed the Assessing Officer to allow exemption under Section 11 of the Income Tax Act, 1961, holding in effect that the assessee’s 29-day delay in filing Form 10B did not justify denial of the exemption where the audit report was already available before CPC when the return was processed.

The assessee filed its return on 29.11.2023 and Form 10B on the same date. The Tribunal recorded that the due date for the audit report was 31.10.2023 and therefore there was a delay of 29 days. Its condonation petition before CIT(E) was declined by order dated 11.01.2025. CPC did not allow the deduction claimed under Section 11 while processing the return, and CIT(A) directed that the assessee be taxed as an AOP under Section 164(2) and (3).

Before the Tribunal, the assessee contended that Form 10B was available on record before CPC passed the intimation and that filing Form 10B within the prescribed due date was directory rather than mandatory. It relied principally upon the Chennai Tribunal’s decision in Victoria Educational Trust v. ITO, ITA No.946/Chny/2025 for AY 2022-23 dated 05.08.2025.

The Tribunal extensively reproduced that decision, which had applied Commissioner of Income-tax, Maharashtra v. G. M. Knitting Industries (P.) Ltd., CIT v. Xavier Kelavani Mandal (P.) Ltd., Associated Chambers of Commerce and Industry of India v. Deputy Commissioner of Income-tax, Sarvodaya Charitable Trust v. ITO (Exemption) and Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income-tax. The reproduced Victoria Educational Trust order held that where Form 10B was available to CPC before processing, the Section 11 exemption could not be denied merely because the report had been filed belatedly; it also held that the remedy under Section 119(2)(b) was an additional remedy and rejection of a condonation petition did not close the appellate remedy.