ITO Vs United Education Society (ITAT Mumbai)
Summary: The Revenue appealed against the NFAC/CIT(A) order dated 13.10.2025 for AY 2015-16, whereby exemption under sections 11 and 12 was allowed and addition of ₹2,82,80,080/- was deleted. The assessee, a public charitable trust running Abdullah Qureshi High School in Mumbai, had applied for registration under section 12A on 31.03.2016 and obtained registration under section 12AA on 08.09.2016, operative from AY 2016-17. It filed its return for AY 2015-16 on 23.09.2016, while the statutory period for filing the return remained open up to 31.03.2017. The AO denied exemption principally because registration was not available for AY 2015-16, no assessment proceedings were pending on the date of registration, and Form No. 10B was uploaded electronically only on 01.07.2017. The Tribunal noted that the first proviso to Section 12A(2) was intended to mitigate genuine hardship and that the statutory period for filing the return was subsisting when registration was granted. Following Shri Hingulambika Education Society, the Tribunal held that the benefit of sections 11 and 12 could not be denied in the circumstances. As regards Form No. 10B, the Tribunal noted that the accounts were audited and the report was uploaded nearly five months before completion of assessment on 30.11.2017. Since the report was available to the AO before completion of assessment, no defect or prejudice to the Revenue was demonstrated. Relying, inter alia, on the reasoning concerning procedural compliance in Form 10B cases, the Tribunal rejected the Revenue’s grounds. The Revenue’s appeal was dismissed.
Cases Discussed
- Shri Hingulambika Education Society v. ITO (Exemptions) — ITA No. 1126/Bang/2022, order dated 22.06.2023.
- Commissioner of Customs (Import) Vs. Dilip Kumar & Company, [2018] 9 SCC 1
- — principle of strict construction relied upon by the Revenue and considered by the Tribunal.
- Sadhubella Education Society v. ITO)-2(3) — ITA No. 411/Mum/2026, decided on 18.06.2026.
- Sarvodya Charitable Trust vs. Income Tax Officer (Exemption) — (2021) 125 taxmann.com 75 (Gujarat).
- CIT Vs. Gujarat Oil and Allied Industries Ltd. — (1993) 201 ITR 325 (Guj.).
- Church of Our Lady of Immaculate Conception vs. Commissioner of Income tax (Exemption) and Ors. — Writ Petition (L) No.14461 of 2025, decided on 02.09.2025.
- Mirae Asset Foundation — referred to in the reproduced observations concerning condonation of delay in Form No. 10B.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the Revenue against the order dated 13.10.2025, impugned herein, passed by the National Faceless Appeal Centre (NFAC)/the Ld. Commissioner of Income-tax (Appeals) [in short “Ld. Commissioner”] under section 250 of the Income-tax Act, 1961 [in short “the Act”] for the Assessment Year 2015-16, whereby the Ld. Commissioner allowed the exemption claimed by the Assessee under sections 11 and 12 of the Act and deleted the addition of ₹2,82,80,080/– made by the Assessing Officer.
2. In the instant case, the Assessee is a public charitable trust registered un der the Bombay Public Trust Act, 1950, vide registration No. F-14862 (Bombay) dated 12.09.1991. The Assessee runs Abdullah Qureshi High School in English, Hindi and Urdu mediums at Behram Baug, Jogeshwari (West), Mumbai, and imparts education to approximat ely 2,000 students. The school is recognised by the competent education authorities and the Hindi and Urdu medium sections receive grant-in- aid from the Education Department, Government of Maharashtra.
3. The Assessee applied for registration under sectio n 12A of the Act on 31.03.2016, which was granted under section 12AA on 08.09.2016, operative from Assessment Year 2016-17. Thereafter, the Assessee filed its return of income for the year under consideration on 23.09.2016 declaring nil income after claiming exemption under sections 11 and 12 of the Act. The case was selected for scrutiny and statutory notices were issued to the Assessee.
4. The Ld. AO, though considered the claim of the Assessee and the registration subse quently granted under section 12AA of the Act, however, denied the exemption principally on the reasoning that the Assessee was not registered for Assessment Year 2015- 16; no assessment proceedings for the said year were pending on the date of registration; and Form No. 10B had been uploaded electronically only on 01.07.2017. Consequently, the Ld. AO treated the entire gross receipts of ₹2,82,80,079/– as taxable income and determined the total income at ₹2,82,80,080/- vide assessment order dated 30.11.2017 passed under section 143(3) of the Act.
5. Thus, the Assessee being aggrieved preferred the first appeal before the Ld. Commissioner and contended that the first proviso to section 12A(2) was intended to mitigate genuine hardship; that the objects and act ivities of the Assessee had remained unchanged; that the accounts had duly been audited; and that Form No. 10B was available before completion of the assessment.
6. The Ld. Commissioner by considering the findings of the AO and claim of the Assessee, obs erved that the registration was granted on 08.09.2016 and the return was filed shortly thereafter on 23.09.2016, within the subsisting statutory period under section 139 of the Act. Accordingly, the Ld. Commissioner allowed the exemption under sections 11 and 12 and deleted the addition.
7. Thus, the Revenue being aggrieved has preferred the instant appeal. Before us, the Ld. DR strongly relied upon the assessment order and submitted that no assessment proceedings were pending on 08.09.2016 because the ret urn was filed subsequently on 23.09.2016. The Ld. DR further submitted that timely electronic filing of Form No. 10B was mandatory and that the Ld. Commissioner had no jurisdiction to condone the delay under section 119(2)(b) of the Act.
8. On the contrar y, the Ld. Counsel for the Assessee supported the impugned order and reiterated the written synopsis filed during the course of hearing. It was submitted that the Assessee had been carrying on the same educational activities since long; that registration s tood granted before filing of the return and much before completion of the assessment; and that the statutory period for filing the return had not expired on the date of registration and the return was filed only fifteen days thereafter. It was further sub mitted that Form No. 10B had been electronically furnished well before completion of the assessment.
9. We have heard the parties and considered the rival submissions and perused the material available on record.
10. The following material dates are not in dispute:
| Particulars | Date |
|---|---|
| Application for registration under section 12A | 31.03.2016 |
| Registration granted under section 12AA | 08.09.2016 |
| Return of income for A.Y. 2015-16 filed | 23.09.2016 |
| Form No. 10B uploaded electronically | 01.07.2017 |
| Assessment order under section 143(3) | 30.11.2017 |
11. The first proviso to section 12A(2), as applicable to the year under consideration, extended the benefit of sections 11 and 12 to an earlier assessment year, where the assessment proceedings for such year were pe nding before the Assessing Officer on the date of registration and the objects and activities remained the same. The proviso was inserted to mitigate genuine hardship and, therefore, though its conditions cannot be ignored, however, the same are required t o be applied in a manner which advances the object of the provision.
12. For Assessment Year 2015- 16, section 139(4), as it then stood, permitted the return to be furnished before the expiry of one year from the end of the relevant assessment year or before completion of assessment, whichever was earlier. Consequently, the statutory period for filing the return remained open up to 31.03.2017. Registration was granted on 08.09.2016 and the Assessee filed the return on 23.09.2016, merely fifteen days the reafter and well within the subsisting statutory period.
13. We find that the Bangalore Bench of the Tribunal in Shri Hingulambika Education Society v. ITO (Exemptions), ITA No. 1126/Bang/2022, order dated 22.06.2023, considered a directly comparable situ ation and held that where the time for filing the return was still available on the date of registration and the return was thereafter filed within such period, the benefit of sections 11 and 12 could not be denied for the preceding year.
14. In the insta nt case, the statutory period for filing the return was subsisting on the date of registration and the return was filed within such period. It is also not the Revenue’s case that the objects and activities of the Assessee had changed. On the contrary, the record shows continuity of the same educational activities. Thus, considering the peculiar facts and circumstances in totality, we are of the considered view that the Ld. Commissioner correctly extended the benefit of sections 11 and 12 to the year under consideration.
15. The reliance placed by the Revenue upon the principle of strict construction in Commissioner of Customs (Import) v. Dilip Kumar & Co. {supra} does not warrant a different conclusion because the Assessee has established registration, con tinuity of its objects and activities, and filing of the return within the subsisting statutory period. Grounds Nos. 1 to 3 and 7 raised by the Revenue are therefore dismissed.
16. Coming to Form No. 10B, it is an admitted fact that the accounts of the A ssessee had duly been audited and Form No. 10B was electronically uploaded on 01.07.2017, nearly five months before completion of the assessment on 30.11.2017. The report was therefore available with the Ld. AO for examination before passing of the assessm ent order. No defect in the audited accounts or the audit report has been pointed out and no prejudice to the Revenue has been demonstrated. Thus, Form- 10B cannot be discarded.
17. We observe that recently, the Hon’ble Co- ordinate Bench of the Tribunal at Mumbai, in the case of Sadhubella Education Society v. ITO)-2(3), {ITA No. 411/Mum/2026, decided on 18.06.2026}, also dealt with an identical issue concerning the delay in filing Form No. 10B and, while following the judgments of the Hon’ble High Courts, including that of the Hon’ble Jurisdictional High Court, ultimately held that Form No. 10B, though filed belatedly, however, was valid, by observing and holding as under:
“17. In the present case, the Assessee has consistently maintained that Form No. 10B was duly furnished and was available on record. The delay, if any, was purely technical and procedural in nature. The audit report had been obtained and furnished, and the substantive conditions prescribed under section 12A(1)(b) stood substantially complied with.
18. It is now well- settled that exemption available to a charitable institution cannot ordinarily be denied merely on account of procedural lapses, when the substantive requirements stand fulfil led. The provisions relating to filing of audit reports are directory in nature and deserve liberal interpretation, particularly when the delay occurred during the period severely affected by the COVID-19 pandemic and when the requisite audit report was ul timately made available before the authorities.
19. Further, various judicial pronouncements have consistently held that procedural requirements should not defeat substantive claims for exemption, where no prejudice is caused to the Revenue and the necessa ry audit report is available on record.
20. The Hon’ble Gujarat High Court, in the case of Sarvodya Charitable Trust vs. Income Tax Officer (Exemption) (2021) 125 taxmann.com 75 (Gujarat), has settled t he issue that filing of audited report in Form No. 10B is directory in nature and the approach of the authorities ought to be equitous /balancing and judicious and availing of exemption should not be denied merely on the bar of limitation. This is more so, when the legislature has conferred vide discretionary powers to condone the delay on the authorities concerned. For brevity and ready reference, the conclusion drawn by the Hon’ble Gujarat High Court, is reproduced herein below: –
“That in the cases of de lay in filing form 10B the approach of the authorities ought to be equitious, balancing and judicious. Further, availing of exemption should not be denied merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
This Court in CIT Vs. Gujarat Oil and Allied Industries Ltd. (1993) 201 ITR 325 (Guj) has also held that provision regarding furnishing of audit repor t with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice Benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the As sessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause”
21. We further observe that Hon’ble Jurisdictional High Court in the case of Church of Our Lady of Imm aculate Conception vs. Commissioner of Income tax (Exemption) and Ors., in (Writ Petition (L) No.14461 of 2025 decided on 02.09.2025) has also dealt with identical case, wherein there was a delay of 29 days in filing of Form-10B. The Hon’ble Jurisdictional High Court by considering the judgment of the Hon’ble Gujarat High Court i.e., Sarvodaya Charitable Trust case (supra), ultimately condoned the delay in 10B of the Act, by observing and holding as under:-
“9. Having heard the learned Counsel for the parties, we agree with the contentions of the Petitioner. We find that admittedly there was only a 29 day delay in filing Form No.10B. In the present case, when one considers that Respondent No. 1 never doub ted the factual situation put forth by the Petitioner to explain the delay, Respondent No.1 ought to have condoned the delay. We find that if this delay is not condoned, there will be genuine hardship to the Petitioner, inasmuch as, the Petitioner would be denied the exemption otherwise claimed under the provisions of Section 11 of the Act and which is a substantial amount.
10. We are of the view that Respondent No.1 ought to have taken a justice oriented approach rather than a pedantic one, and condoned the delay. We also find that in similar facts, this Court in the case of Mirae Asset Foundation (supra), Sau Dwarkabai tai Karwa Charitable Trust (supr a) and Kotak Family Foundation (supra) has taken a similar view and condoned the delay. Even the Hon’ble Gujarat High Court in the case of Sarvodaya Charitable Trust (supra) took the view that in cases like the present one (delay in filing Form No.10B), the approach of the authorities ought to be equitious, balancing and judicious and availing of exemption should not be denied merely on the bar of limitation. This is more so, when the legislature has con ferred wide discretionary powers to condone the delay on the authorities concerned. The relevant portion of this decision reads thus:-
“31. Having given our due consideration to all the relevant aspects of the matter, we are of the view that the approach i n the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the under section 12 of the Act by rejecting such condonation application, but an assessee, a public charitable trust past 30 years who substantially satisfies the condonation for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.
32. We may also refer to the decision of this Court in CIT. v. Gujarat Oil and Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated us a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the asse ssee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause.”
11. In view of the foregoing discussion, we hereby quash and set aside the impugned order dated 30th Ja nuary 2025 passed by Respondent No.1 under Section 119(2)(b) of the Act. 12. Now that the impugned order is quashed, we also hereby condone the delay in filing Form No. 10B by the Petitioner.”
22. Thus, c onsidering the entirety of the facts and circumstances of the case, particularly:(a) the unprecedented disruptions caused by the COVID- 19 pandemic; (b) the repeated extensions granted by the CBDT for filing statutory forms and returns; (c) the fact that Fo rm No. 10B had been furnished by the Assessee and was made available on record; and (d) the settled principle that substantive benefits should not be denied for mere technical or procedural lapses, we are of the considered view that the delay, if any, in furnishing Form No. 10B deserves to be condoned.
23. Accordingly, the impugned order is set aside and the jurisdictional Assessing Officer (JAO) is directed to consider Form No. 10B furnished by the Assessee as validly filed and thereafter examine and verify the merits of the case and grant the exemption claimed under sections 11 and 12 of the Act, in accordance with law.
18. Thus, from the aforesaid analyzations it has become clear that obtaining the audit is substantive, whereas furnishing the prescribed report along with the return is procedural and the requirement may be complied with before completion of the assessment. The present case satisfies t his requirement because the report was electronically furnished before the assessment was completed.
19. The contention that only the prescribed authority could condone the delay under section 119(2)(b) also does not advance the Revenue’s case. The Ld. Commissioner was adjudicating the legality of the assessment and was not exercising the administrative power of condonation under section 119(2)(b).
20. The decision in PCIT v. Wipro Ltd. is distinguishable because that case concerned the exercise of a sp ecific statutory option under section 10B(8) within the prescribed period. In the present case, Form No. 10B is an audit report supporting the exemption already claimed and the same had been furnished before completion of the assessment. 21. Accordingly, we find no infirmity in the conclusion of the Ld. Commissioner that the delayed electronic uploading of Form No. 10B did not justify denial of exemption under sections 11 and 12 of the Act.
22. Grounds Nos. 4 to 6 and 8 raised by the Revenue are thus, dismissed.
23. For completeness, we also observe that even if exemption under sections 11 and 12 was unavailable, the entire gross receipts could not have been assessed as taxable income without examining the expenditure independently admissible under the n ormal provisions of the Act. This issue, however, remains academic because the exemption granted by the Ld. Commissioner has been upheld.
24. Thus, in view of the aforesaid findings, Ground Nos. 1 to 8 raised by the Revenue are dismissed. Ground No. 9, being general in nature, requires no separate adjudication.
25. In the result, the Revenue’s appeal is dismissed.
Order pronounced in the open court on 15.07.2026.
