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2025 Supreme(Online)(ITAT) 3889
INCOME TAX APPELLATE TRIBUNAL (CHENNAI BENCH)
SHRI GEORGE GEORGE K, VP, SHRI S.R.RAGHUNATHA, AM
DEVASAKAYAM AANGILAPPALLI PARIPALANA SABAI MADURAI – Appellant
Versus
ITO EXEMPTION WARD MADURAI – Respondent
ITA Nos.:933/Chny/2025
For the Appellants/Petitioners:Shri. G. Akash, Advocate
For the Respondents: Shri. Kumar Chandan, J.C.I.T.
The requirement for filing Form 10B is directory, and substantial compliance suffices for claiming exemptions under Section 11.
Headnote:The appeal filed against the order of the CIT(A) denying exemption under Section 11 of the Income Tax Act was admitted despite a delay of 32 days in filing due to reasonable cause. The court highlighted that the requirement to file Form 10B is directory rather than mandatory. It found that substantive compliance had already been fulfilled and that the denial based on procedural irregularity does not bar the granting of exemption. The Tribunal allowed the appeal, granting exemption under Section 11 of the Act.
| Table of Content |
|---|
| 1. case background and denial of exemption based on procedural failure. (Para 4 , 5) |
| 2. argument for exemption based on reforms and previous case precedents. (Para 7 , 8 , 9) |
| 3. legal reasoning regarding form 10b's nature and implications on exemption. (Para 10 , 11 , 12) |
| 4. observations reinforcing the directory nature of form 10b and supportive rulings. (Para 13 , 15 , 16) |
| 5. final decision to allow appeal and grant exemption. (Para 18) |
आदेश/ORDER
PER S. R. RAGHUNATHA, AM :
The present appeal filed by the assessee are directed against order passed by the learned Commissioner of Income Tax, Appeal, ADDL/JCIT (A), Jodhpur, dated 23.12.2024 for assessment years 2018-19.
2. At the outset, we find that there is a delay of 32 day in appeals filed by the assessee. The assessee filed an affidavit explaining the reasons for delay in filing the appeal. After hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeals on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeals and admit appeals filed by the assessee for adjudication.
3. The assessee has raised the following common grounds of appeal:-
1. The order of the CIT(A) upholding the denial of exemption u/s.11 of the Act by the AO, CPC is bad in law, opposed to law and facts and is liable to be quashed.
2. The Appellant being possessing valid registration u/s.12AA of the Act, the CIT(A) erred in upholding the action of AO in denying the exemption, without adverting to the facts and circumstances of the case and the grounds and submissions of the appellant
3. The Appellant running two educational institutions, the CIT(A) grossly erred in even failing to adjudicate the appellant's plea for allowing exemption u/s. 10(23C)(iiad) of the Act.
4. The appellant having fulfilled the substantial conditions to claim exemption u/s.11 of the Act, the CIT(A) erred in upholding the denial of the same on technical grounds
5. The exemption claimed by the appellant u/s.11 of the Act having been disallowed for the sole reason that the audit report in Form 10B was filed belatedly, the CIT(A) erred in failing to allow the same as the audit report was available before him.
6 The CIT(A) failed to appreciate that the appellant's petition to condone the delay in filing the audit report was rejected by the CIT(Exemptions) on a mere technical ground that he was not the competent auditory to condone delay beyond 365 days. In such circumstances, the CIT(A) erred in failing to adjudicate the appeal on merits.
7. Even in case the exemption u/ss. 10(23C) (iiiad) and 11 of the Act are not allowed, it is only the net income of the appellant, if any, that can be brought to tax and the CIT(A) erred in failing to adjudicate and allow this ground of the appellant.
8. Any other grounds that may be raised at the time of hearing.
4. The brief facts of the case are that the assessee is a Trust registered u/s.12A of the Income Tax Act, 1961 (in Short ‘the Act’). The assessee filed its return of income on 31.10.2018 for the assessment year 2018-19 declaring NIL income and got their books of accounts audited along with audit report in Form 10B. However, the form 10B was omitted to be electronically filed inadvertently. The Return of income was processed u/s.143(1) on 31.01.2020 determining the total income of the assessee at Rs.93,21,637/-, whereby exemption u/s.11 was denied for the reason that audit report in Form No.10B was not filed within the due date prescribed under the Act read with rule 12A(1)(b), thereby assessing the entire gross receipts of Rs.93,21,637/- at maximum marginal rate without considering expenditure incurred during the previous year relevant to assessment year 2018-19. The assessee filed the audit report in Form 10B on 11.02.2020.
5. Aggrieved, the assessee filed an appeal before the Ld. CIT(A). The Ld.CIT(A) vide order u/s.250 dated 23.12.2024 while holding that he had no power to condon
