Late Filing of Form 10B for Exemption Claim u/s 11: ITAT Allows Claim Based on Submission Before Assessment Completion [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal(ITAT) allowed the claim for exemption under section 11 of Income Tax Act,1961, despite the late filing of Form 10B, as the form was submitted before the completion of the assessment.

Puran Chand Arora Charitable Trust, appellant-assessee, filed its return for the Assessment Year 2016-17 on 28.07.2016. Since Form 10B was not filed with the return, the claim for exemption under section 11 of the Income-tax Act was rejected, and Rs. 15,69,680 was taxed.

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The assessee appealed to the Commissioner of Income Tax(Appeals)[CIT(A)], requesting to condone the delay in filing Form 10B. It was explained that the form was issued by the auditor on 16.06.2016, and the return was filed on 28.07.2016, showing no income after claiming Rs. 13,38,326 for charitable purposes. The delay was due to technical issues on the Income Tax(IT) Portal.

The CIT (A) rejected the appeal and upheld the addition made by the Assessing Officer(AO).

The assessee appealed before the tribunal aggrieved by the decision of CIT(A).

The assessee’s counsel explained that Form 10B was not filed on time due to technical glitches. The audit report was obtained before filing the return, and the income was applied for charitable purposes. The trustees realized the oversight, as the main trustee passed away in 2019, and filed Form 10B on 20.03.2020, along with a condonation request.

The counsel referred to Central Board of Direct Taxes(CBDT) Circulars and judicial decisions, arguing that the delay should not affect the exemption under section 11. He highlighted that the trust had a history of timely filings and followed the correct procedure in previous and subsequent years. The counsel also pointed out that the delay was due to genuine reasons and requested that the exemption be granted based on the facts and legal precedents.

In response, the revenue counsel highlighted that the assessee filed Form 10B on 20.03.2020, after the due date. The CIT(A) had noted this and concluded that the exemption under section 11 could not be granted. The counsel also pointed out that only the Commissioner of Income Tax(Exemption)[CIT (E)] could condone the delay, not the CIT (A).

Read More: ITAT condones 24-Day delay in filing Form 10B due to Technical Issues, Grants Exemption u/s 11 of Income Tax Act

The two member bench comprising Sudhir Kumar(Judicial Member) and S.Rifaur Rahman(Accountant Member) considered the submissions and material presented. It noted that the assessee obtained the audit report in Form 10B before filing the return of income but filed it late on 20.03.2020. The delay in filing was seen as a procedural lapse, but the audit report was dated before the return. The claim for exemption under section 11(1)(a) was initially denied due to the late submission of Form 10B.

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The appellate tribunal referred to a similar case, ACIT vs. Green Dot Health Foods Pvt. Ltd., where the delay in filing Form 10CCS was overlooked because the form was filed before the final assessment. Based on similar rulings, including decisions from the Delhi High Court and the Supreme Court, the Tribunal concluded that the delay in filing Form 10B should not affect the exemption claim.

The ITAT allowed the claim, agreeing that the filing of Form 10B was directory, not mandatory, and the assessee’s charitable activities justified granting the exemption.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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