Form 10BB Requirement is Directory, Not Mandatory: ITAT Holds Late Filing Cannot Deny S. 11 Exemption [Read Order]

The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has held that delay in filing the audit report in Form 10BB cannot be used as a ground to deny exemption under Section 11 of the Income Tax Act, 1961, especially when the form was available on record before processing of the return.

The appeal was filed by a charitable trust against the intimation issued under Section 143(1)(a), denying exemption for the assessment year 2023-24. The Centralised Processing Centre determined total income at ₹18.49 lakh, and the alleged denial was on account of delayed filing of Form 10BB. This finding was later upheld by the Commissioner of Income Tax (Appeals).

The assessee, represented by Adv. Mahendra Gargieya, contended that Form 10BB was filed prior to the processing of return under Section 143(1)(a). It was argued that the requirement of filing Form 10BB was procedural in nature. The counsel also furnished various judicial precedents establishing that exemption under Section 11 could not be denied merely due to delay in filing, if the same was available during assessment proceedings.

The Tribunal, comprising Annapurna Gupta (Accountant Member), examined the issue and noted that the due date for filing the return for the relevant assessment year was November 30, 2023, while the audit report was filed on March 31, 2024. It was further noted that the intimation under Section 143(1)(a) was issued only on December 19, 2024, by which the audit report was already available on record.

The Tribunal turned to several decisions of coordinate benches and the Gujarat High Court, including CIT (Exemption) v. Laxmanarayan Dev Shrishan Seva Khendra and Parul Mahila Pragati Mandal v. ITO (Exemption). This led to an observation that filing of Form 10BB is a procedural requirement and denying exemption due to late filing would result in denial of a substantive right.

The Bench held that since the audit report in Form 10BB was duly filed and made available prior to issuance of intimation under Section 143(1)(a), the denial of exemption under Section 11 was not justified.

Accordingly, the Tribunal set aside the orders of the lower authorities and allowed the appeal filed by the assessee.

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