Deendayal Seva Pratishthan Vs ITO (ITAT Nagpur)
Summary: The Income Tax Appellate Tribunal (ITAT), Nagpur, has allowed the appeal of Deendayal Seva Pratishthan, ruling that a charitable trust should not be denied tax exemption solely because of a technical delay in verifying the electronically filed audit report (Form 10B). The tribunal held that since the auditor had digitally signed and filed the form within the stipulated time, the subsequent delay in the trust’s own verification, attributed to technical difficulties, amounted to a curable technical default and did not negate the substantial compliance with the filing requirement for claiming exemption under Section 11 of the Income Tax Act, 1961, overturning the tax authorities’ decision that relied on a strict interpretation of filing deadlines.
Facts of the Case:
- The assessee, Deendayal Seva Pratishthan, a charitable trust, filed its return of income for AY 2022–23 declaring NIL income, claiming exemption under Section 11 of the Income-tax Act, 1961.
- Although the audit report (Form 10B) was uploaded by the statutory auditor on 28/09/2022, the verification by the trust was completed later, on 28/10/2022, due to technical issues.
- The Income Tax Department assessed the total income at Rs. 3,19,98,103, denying the exemption.
Assessee’s Arguments:
- The trust submitted that Form 10B was filed before filing the return and before the due date under Section 139(1).
- The delay in completing verification was a technical issue and should not disqualify the trust from exemption under Sections 11 and 12.
- They contended that non-filing or delayed filing is a curable technical defect, not a substantive lapse.
- They argued that substantial compliance with the law was achieved since the audit report was digitally signed within the prescribed time.
Arguments by Department:
