IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “C”, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A No.4573/Mum/2025 (Assessment Year: 2017-18)

Income-tax Officer vs Seth Damji Laxmichand Jain (Exemption)-2(3), Mumbai Dharma Sthanak, Room No.617, 6^th Floor, MTNL 64, Dr. Ambedkar Road, Opp. Building, Cumballa Hill, Dr. D.G. Kalachowki Post Office, Deshmuka Marg, Peddar Road, Chinchpokali, Mumbai-400 012 Mumbai-400 026 PAN: AACTS2218L APPELLANT RESPONDENT Assessee by : Shri Ravi Ganatra Respondent by : Shri Virabhadra Mahajan (SR. DR)

Date of hearing : 14/10/2025 Date of pronouncement : 17/10/2025 O R D E R Per Anikesh Banerjee (JM):

The instant appeal of the assessee filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, “the Act”) for the Assessment Year 2017- 18, date of order 28/05/2025. The impugned order emanated from the order of the Ld. Income-tax Officer (Exemption), Ward 2(3), Mumbai (in short, the “Ld. AO”), the order passed U/s 143(3) of the Act, date of order 25/12/2019.

2. The brief facts of the case are that the assessee is a trust registered as a charitable organization under Sections 12A and 80G of the Act. For the impugned assessment year, the assessee filed its return of income on 31.03.2018, which was subsequently revised on 03.04.2018. On the same date, the assessee also filed its audit report in Form No. 10B, declaring a total income of Rs.5,050 and claiming exemption under Section 11 of the Act. The return of income filed by the assessee was selected for complete scrutiny under CASS. The Ld. AO completed the assessment under Section 143(3) of the Act by disallowing the deduction of Rs.3,56,00,000/- claimed under Section 11(2) and further made an addition of Rs.1,97,60,600 under Section 11(3) on the ground that the amount accumulated during AY 2012–13 for utilization within the subsequent five years was not utilized for the purpose for which it was accumulated. Instead, said amount was donated to other trusts, which, according to the Ld. AO, constituted a violation of the provisions of Section 11(3) of the Act. During the course of assessment proceedings, the Ld. AO issued a show cause notice stating that the assessee had claimed deduction of Rs.3,56,00,000 under Section 11(2) for accumulation of income to be utilized within the next five years. However, Forms No. 10 and 10B were filed on 03.04.2018, i.e., after the due date for filing, which was 07.11.2017. The Ld. AO, therefore, called upon the assessee to show cause as to why the deduction claimed under Section 11(2) should not be disallowed, as the filing of Forms No. 10 and 10B before the due date was mandatory for claiming exemption under Section 11. In response, the assessee explained that the delay in filing the said forms was due to an inadvertent oversight. It was submitted that the trust and its activities were genuine and aimed at benefiting society at large. The assessee further stated that the Board of Trustees, in its meeting held on 31.10.2017, had resolved to accumulate Rs.3,56,00,000 for the purpose of establishing a diagnostic centre for the benefit of economically weaker sections, where services such as ECG, pathology, X-rays, CT scans, and sonography could be made available at nominal rates. The assessee also contended that, although Rule 17 requires the filing of Form No. 10 before the due date under Section 139(1), various judicial pronouncements have held that the requirement is satisfied as long as the form is filed before the completion of assessment. However, the Ld. AO rejected the assessee’s explanation and disallowed the claim of deduction amounting to Rs.4,66,74,510 under Section 11 due to the delay in filing Form 10B. Additionally, the Ld. AO disallowed Rs.1,97,60,600 accumulated during A.Y. 2012–13, alleging non-utilization for the specified purpose.

Being aggri