Inadvertently Claimed Tax Exemption u/s 11/12A Instead of 10(23C)(via): ITAT Upholds JCIT(A) Relief as Form 10BB Filed Within Time [Read Order]

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has upheld the order of the Joint Commissioner of Income Tax (Appeals) in favor of B.P. Poddar Foundation for Education. The Tribunal dismissed the Revenue’s appeal, confirming that the charitable trust was entitled to exemption under Section 10(23C)(via) despite an initial filing error, as the requisite Form 10BB was subsequently filed within the permissible period per CBDT Circular No. 16/2024.

The case revolves around B.P. Poddar Foundation for Education, a Kolkata-based charitable trust, which has been registered under Section 12A since 1998. In September 2021, the trust obtained provisional approval under Section 10(23C)(via), a provision allowing tax exemption to certain educational and medical institutions.

When filing its return of income for the assessment year 2022–23, the trust inadvertently claimed exemption under Sections 11 and 12A, its previous registration status, instead of the now applicable Section 10(23C)(via). This mistake also led to the filing of Form 10B (required under Section 12A) instead of Form 10BB (the correct compliance form for Section 10(23C)(via)). This clerical oversight was attributed to the trust's administrative office being unaware of the compliance shift during the transitional phase following its new registration.

Upon processing the return, the Centralized Processing Centre (CPC) issued a notice under Section 143(1)(a), raising a demand of ₹10.68 crore by denying the exemption on the ground of a mismatch between the section claimed in the return and the details in Form 10AC. The CPC observed that the exemption claimed under Section 11 did not align with the registration details under Section 10(23C)(via), thereby treating the exemption as inapplicable.

Aggrieved by this, the assessee approached the Joint Commissioner of Income Tax (Appeals), who allowed the claim. The appellate authority recognized the error as inadvertent and found that the trust had a valid provisional approval under Section 10(23C)(via). The JCIT(A) noted that there was no malafide intention and that the exemption could not be denied merely due to an honest mistake in section selection.

The JCIT(A) further emphasized that the core eligibility for exemption was never in doubt. The trust’s application of Form 10B instead of 10BB was treated as a technical lapse rather than a substantive violation.

The Revenue filed an appeal before the ITAT, contending that Form 10BB, the prescribed form for institutions registered under Section 10(23C)(via), was not filed within the deadline, and hence, the exemption should not have been granted.

The assessee’s legal counsel countered this argument by pointing out that the CBDT Circular No. 16/2024 dated 18.11.2024 provides for condonation of delay in filing Form 10BB, if filed within three years from the end of the assessment year and supported by a reasonable cause. In compliance with the circular, the trust filed Form 10BB along with an application for condonation of delay before the Commissioner of Income Tax (Exemptions), Kolkata, on 5 June 2025.

The ITAT, comprising George Mathan (Judicial Member) and Sanjay Awasthi (Accountant Member), ruled in favor of the assessee. The bench observed that The trust held a valid and subsisting registration under Section 10(23C)(via) for the relevant assessment year. The error in section selection and the form used was clearly inadvertent and non-malicious.

It was also observed that the required compliance through Form 10BB had been fulfilled within the extended period allowed under the CBDT circular. The Tribunal held that the Revenue failed to demonstrate any specific error in the appellate order or to rebut the trust's eligibility. As a result the Tribunal dismissed the Revenue’s appeal and upheld the upheld the JCIT(A)’s order, granting full relief to the trust.

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