Case Law Details
Manav Seva Trust Vs A.O. (ITAT Kolkata)
ITAT Kolkata ruled in favor of Manav Seva Trust, a registered charitable trust under Section 12A of the Income Tax Act, after its exemption claim was denied due to the late filing of Form-10B. The trust had filed its income tax return for AY 2018-19 on September 30, 2018, which was processed under Section 143(1). However, the CPC disallowed the exemption claim in an order dated March 18, 2020, as Form-10B was not submitted. The CIT(A) upheld this decision, citing that the trust did not seek condonation of delay under CBDT Circular No. 16/2022. The trust appealed to ITAT, arguing that the omission was an oversight and should be considered a curable defect.
The tribunal reviewed legal precedents, including rulings by the Orissa, Telangana, and Bombay High Courts, which consistently held that procedural delays in filing Form-10B should be condoned if there is no malafide intent. It noted that similar cases emphasized balancing procedural compliance with equitable considerations. ITAT concluded that the delay was neither intentional nor deliberate and should not deprive the trust of its exemption benefits. Consequently, ITAT condoned the delay, allowing the trust’s exemption claim, and directed the Assessing Officer to process the return accordingly. The appeal was allowed for statistical purposes, reinforcing that procedural lapses should not obstruct genuine claims under tax law.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
In this case, the Appellant filed its return of income on 30.09.2018, which was processed u/s 143(1) of the Income Tax Act, 1961 (in short the ‘Act’) by CPC, whereby the claim of exemption of income of the charitable Trust was denied on the ground that the appellant had not filed Form-10B. It may be mentioned that the appellant is a registered Trust u/s 12A of the Act and the claim of exemption of income was denied vide order dated 18.03.2020 u/s 143(1) of the Act.
1.1. Aggrieved with this action, the appellant approached the Commissioner of Income Tax (Appeals)-11, Mumbai [hereinafter referred to as ld. ‘CIT(A)’] who has mentioned in his order dated 27.03.2024 that Form-10B was not submitted within the due date, i.e. the date specified u/s 139(1) of the Act. It has been further recorded that the assessee did not avail of the liberty allowed vide CBDT Circular No. 16/2022 bearing F.No.197/89/2022-ITA-I dated 19.07.2022. This Circular authorizes the concerned Commissioners of Income Tax to admit applications for condonation of delay in filing Form-10B for AY 2018-19 or any subsequent assessment year. Considering these factors, the ld. CIT(A) confirmed the disallowance of claim of exemption, even though he has mentioned in para 5.3 of the impugned order that the appellant can still choose to filed a condonation of delay application before the competent authority.
2. The appellant was apparently not satisfied with the findings in the impugned order and has chosen to file an appeal before the ITAT. It is seen that the grounds of appeal are lengthy and argumentative, but their content can be summarized by simply mentioning that since the appellant is a registered Trust u/s 12A of the Act, he is eligible for exemption claimed of 3,71,471/-.
2.1 Before us, the ld. Counsel for the assessee mentioned that due to an oversight they were not able to file the details as required under Form-10B and relied on some authorities to canvass the point that such an action constitutes a curable defect and is certainly not a fatal illegality.
2.2 D/R relied on the order of the ld. CIT(A) and stated that the appellant had an opportunity to move the competent authority for condonation of delay as envisaged in Circular No. 16/2022 (supra).
3. We have considered the submissions by both the ld. A/R and ld. D/R and also perused the orders of ld. AO and the ld. CIT(A). Ld. A/R has relied on the case of Hari Gyan Pracharak Trust vs. DCIT in ITA No. 245/AHD/2021, order dated 16.06.2023. In this case, the Coordinate Bench has held that since filing of Form-10B is merely a procedural requirement, any defect in that is curable. It is seen that the Hon’ble Orissa High Court in the case of Oneness Educational and Charitable Trust vs. Commissioner of Income-tax (Exemption) reported in [2024] 161 taxmann.com 544 (Orissa) has held that the oversight in not filing Form-10B within the due date was to be condoned and the exemption was to be allowed and granted. Also, the Hon’ble Telangana High Court in the case of Global Organisation for Development vs. Commissioner of Income-tax (Exemption) reported in [2024] 162 taxmann.com 633 (Telangana) has held that the delay on the part of the assessee in submitting Form-10B was to be condoned and the matter remanded back to the file of the AO for passing appropriate order on merits. Similarly, the Hon’ble Bombay High Court in the case of Al Jamia Mohammediyah Education Society vs. Commissioner of Income-tax (Exemptions) reported in [2024] 162 taxmann.com 114 (Bombay) has held that where the assessee Trust belatedly submitted Form-10B, along with return, on account of oversight by the Chartered Accountant, the delay in filing of Form-10B deserves to be condoned. In fact, some relevant portions from the said order deserves to be extracted as under:
“■ Admittedly, Petitioner is a charitable trust and had been filing its returns and Form 10B for AY 2015-16, for AY 2017-18 to AY 2021-22 within the due dates. On this ground alone, delay condonation application should have been allowed because the failure to file returns for AY 2016-17 could be only due to human error. Even in the impugned order, there is no allegation of mala fide. As held by the Gujarat High Court in Sarvodaya Charitable Trust
■ ITO (Exemption) [2021] 125 taxmann.com 75/278 Taxman 148, the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, Respondent No.1 might be justified in denying the exemption by rejecting such condonation application, but an assessee, a public charitable trust with almost over thirty years, which otherwise satisfies the condition 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. [Para 6]
■ Moreover, the Petitioner does not appear to have been lethargic or lacking in bona fides in making the claim beyond the period of limitation which should have a relevance to the desirability and expedience for exercising such power. Such routine exercise of powers would neither be expedient nor desirable, since the entire machinery of tax calculation, processing of assessment and further recoveries or refunds, would get thrown out of gear, if such powers are routinely exercised without considering its desirability and expedience to do so to avoid genuine hardship. [Para 7]
■ In a similar matter in Shree Jain Swetamber Murtipujak Tapagachha Sangh v. CIT (Exemptions) [2024] 161 taxmann.com114 (Bombay) was also a case where auditor had due to oversight not filed Form 10B. The Court held that the error on the part of auditor cannot be rejected but should be accepted as a reasonable cause shown by the trust In that case also, Petitioner did not suo moto realize its mistake and filed a condonation request only after Centralised Processing Centre (“CPC”) sent an intimation about non-filing of Form 10B. [Para 8]
■ Having considered the matter in its entirety, one is satisfied that the delay was not intentional or deliberate. Petitioner cannot be prejudiced on account of an ignorance or error committed by professional engaged by Respondent No.1 ought to have exercised the powers conferred. [Para 9]
■ In the circumstances, this Writ Petition has to be allowed and is hereby allowed in terms of prayer clause.
■ Since the delay has been condoned, Respondent shall process Petitioner’s returns in accordance with law by giving effect to this order on the basis that Form No.10B has been filed within time. [Para 11]”
4. Considering the discussions made above, the delay in filing of Form- 10B is hereby condoned and it is directed that the appellant be allowed exemption as would be due to him as per law. The ld. AO is directed accordingly.
5. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 9th August, 2024.
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