Alternative for India Development Vs ITO (ITAT Chennai)
Income Tax Appellate Tribunal (ITAT), Chennai Bench, delivered its order on 9 October 2025 in an appeal filed by a charitable trust, Alternative for India Development, against the order of the Joint Commissioner of Income Tax (Appeals)-2, Gurugram. The appeal arose from an intimation issued by the Centralized Processing Centre (CPC), Bengaluru under Section 143(1) of the Income Tax Act, 1961 for Assessment Year 2019–20.
Condonation of Delay
The appeal was filed 198 days beyond the limitation period. The assessee submitted a petition for condonation supported by an affidavit explaining that the delay occurred as it was pursuing an alternate remedy. The Department opposed the plea, arguing that no sufficient cause had been shown. The Tribunal found the explanation reasonable and bona fide, observing that substantial justice must prevail over technicalities. Accordingly, the delay was condoned, and the appeal was admitted for hearing on merits.
Facts of the Case
The assessee, a trust registered under Section 12A of the Income Tax Act, filed its return of income for AY 2019–20 on 31 August 2019 declaring ‘Nil’ income after claiming exemption under Section 11. While filing the return, the assessee inadvertently selected the option for approval under Section 10(23C)(iv) instead of Section 12A/12AA, under which it was actually registered. Due to this clerical error, the CPC treated it as an institution approved under Section 10(23C)(iv) and required submission of an audit report in Form 10BB.
The assessee had, however, already obtained and uploaded the audit report in Form 10B, applicable to entities registered under Section 12A, on 4 September 2019—four days after filing the return. While processing the return, the CPC denied exemption under Section 11 on the ground that the audit report in Form 10BB had not been furnished, treating the entire receipts of ₹2,83,02,078 as taxable income.
Order of the JCIT(A)
In appeal, the assessee explained that it was registered under Section 12A and had correctly filed the audit report in Form 10B within the due date. The JCIT(A) agreed that the assessee was a registered trust under Section 12A but noted that, under Rule 12(2) of the Income Tax Rules, 1962, the audit report in Form 10B had to be furnished on or before the due date of the return. As the report was uploaded after filing the return, the JCIT(A) held that he had no power to condone the delay in filing Form 10B. He, therefore, upheld the CPC’s denial of exemption under Section 11 and dismissed the appeal.
Arguments Before the Tribunal
The assessee’s authorised representative submitted that the extended due date for filing the return was 31 October 2019 and for furnishing the audit report was 30 September 2019. The audit report was filed on 4 September 2019, well within the prescribed statutory date. It was argued that a short gap between filing the return and uploading the audit report could not justify denial of exemption. The assessee relied on the Tribunal’s order in its own case for AY 2016–17 (ITA No. 2114/Chny/2024), where it was held that filing Form 10B is directory and not mandatory.
The Departmental Representative opposed the claim, contending that Section 12A(1)(b) mandates filing of the audit report within the due date prescribed under Section 139(1). It was argued that Form 10B should accompany the return of income and that uploading it later does not satisfy the legal requirement. The Department maintained that this procedural lapse disentitled the assessee from exemption under Section 11.
Tribunal’s Findings
After considering rival submissions and the record, the Tribunal noted that the assessee was registered under Section 12A, filed its return on 31 August 2019, and uploaded Form 10B on 4 September 2019, within the statutory due date of 30 September 2019. The Tribunal observed that the Revenue did not dispute the assessee’s eligibility for exemption under Section 11, and the only issue was procedural—relating to the timing of Form 10B submission.
The Tribunal held that judicial precedents have consistently established that the requirement to file the audit report along with the return is directory and not mandatory. Exemption under Section 11 cannot be denied on purely procedural or technical grounds if the substantive conditions are met. Since the assessee furnished the audit report within the prescribed statutory time, the Tribunal found no justification for denial of exemption merely because the report was uploaded after the return or due to selection of the wrong section in the return form.
Reference to Earlier Tribunal Decision
The Tribunal referred to its own decision in the assessee’s case for AY 2016–17, where a similar issue had arisen. In that decision, various judicial authorities, including High Courts and coordinate benches, had held that the filing of Form 10B is procedural. The Tribunal in that case directed the Assessing Officer to allow exemption under Section 11 despite delay in uploading Form 10B. The Chennai Bench reiterated that a minor procedural lapse should not defeat a substantive claim when all conditions of eligibility are met.
Decision
Following its earlier ruling, the Tribunal held that filing of Form 10B is a procedural formality and that its delayed uploading cannot be a ground for denying exemption under Section 11. It concluded that both the CPC and the JCIT(A) were not justified in rejecting the assessee’s claim. The Tribunal set aside the order of the JCIT(A) and directed the Assessing Officer to treat the audit report filed on 4 September 2019 as valid, delete the addition of ₹2,83,02,078, and allow the exemption under Section 11.
Conclusion
The Tribunal allowed the appeal, holding that the assessee had complied with the statutory requirement of filing the audit report within the due date, and that minor procedural delays or clerical errors cannot invalidate a legitimate claim for exemption. The order was pronounced in open court on 9 October 2025 at Chennai.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
