Exemption u/s 11 can not be denied for belated filing of revised Form 10B when original Form 10B was filed within due date – ITAT
In a recent judgment, ITAT Lucknow has held that benefit of exemption u/s 11 can not be denied on the ground of belated filing of revised Form 10B when the original Form 10B had been filed within due date prior to the date of filing of return of income and the revised Form 10B although filed belatedly had only substituted the original Form 10B which was filed very much in time.
ABCAUS Case Law Citation:
4640 (2025) (07) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) confirming the denial of exemption u/s 11 and 12 of the Income Tax Act, 1961 (the Act) on the ground that Audit Report in Form 10B had been filed after the due date for filing Return of Income.
The appellant assessee was a Society registered under section 12AA of the Act. The assessee-society filed its return of income for the year under consideration under section 139(1), declaring total income at NIL. The assessee-society in the return filed had claimed exemption relating to the amount applied for charitable and religious purposes during the previous year. However, by mistake as per the Form 10B filed the amount applied for religious or charitable purposes in India was stated to be Nil.
The Central Processing Centre (CPC) processed the return under section 143(1) of the Act and made adjustment disallowing the exemption claimed by the assessee.
Before the Tribunal, the assessee submitted that original Audit Report in Form 10B had been filed by the assessee before the due date, but Form 10B was subsequently revised and submitted after the due date.
It was submitted that the return of income was filed declaring the income at Nil after claiming the benefit of exemption under sections 11 and 12 of the Act. The original Audit Report in Form 10B was filed within due date before filing of return whereas only the revised Audit Report in Form 10B was filed belatedly revising the income of the previous year applied to charitable or religious purposes in India.
It was prayed that the revised Form 10B be directed to be accepted or in the alternative expenditure incurred by the assessee be allowed as deducible after due verification by the AO.
N the contrary, the Revenue submitted that the revised Form 10B had not been filed within the specified date and, therefore, the CPC, Bangalore could not have validly accepted the revised Form 10B as per the provisions of the Act.
It was submitted that the CIT(A) had extensively dealt with the issue before him and had after due consideration of the facts before him held that the assessee was not entitled to get the benefit of sections 11 and 12 of the Act if the revised Form 10B was not filed within time.
Thus. the issue to be decided by the ITAT was as to whether revised Form 10B filed belatedly can be considered as fulfillment of the statutory requirement for filing Form 10B prior to filing of the return of income.
The Tribunal observed that the CPC, Bangalore did not allow the benefit of sections 11 and 12 of the Act to the assessee while processing the return of income under section 143(1) of the Act, because at the time of processing, the relevant details were not before the CPC because as per the original Form 10B, the amount applied for religious or charitable purposes in India was Nil.
The Tribunal further observed that CIT(A) held that since the revised Form 10B was filed belatedly, only CBDT had the power to condone the delay on application being made by the assessee in terms of the provisions of section 119(2)(b) of the Act and, therefore, he, as the he was not entrusted with the power for condoning the delay.
The CIT(A) had relied upon the judgment of the Co-ordinate Bench wherein, it was held that the Commissioner (Appeals) did not have any power under section 119(2)(b) of the Act to condone the delay in filing Form 10B and, therefore, dismissal of assessee’s appeal, for failure to have filed Audit Report in Form 10B, by the First Appellate Authority was in order.
However, the Tribunal observed that recently Delhi ITAT held that filing of Form 10B is directory to facilitate the assessment and is not mandatory. It further went on to hold that mere non-filing of Form 10B, which is directory in nature, cannot be the ground for denying the benefit extended by the statute.
Therefore, the Tribunal held that the assessee will be entitled to the benefits accruing to it even after filing of Form 10B belatedly, especially because it is not in dispute that the original Form 10B had been filed prior to the date of filing of return of income and the revised Form 10B (although filed belatedly) has only substituted the original Form 10B which was filed very much in time.
As Tribunal restored the appeal to the file of the AO and directed to allow the benefit of expenditure incurred as revenue expenditure incurred towards charitable and religious purposes in India and compute the income of the assessee accordingly.
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