The requirement to file Form 10B for claiming tax exemption under S. 11 is substantive, but the timeline for filing is procedural/directory. If the audit report is available to the Assessing Officer before processing the return, the exemption cannot be denied solely due to a delay in filing.

ORDER

PER MANISH AGARWAL, AM :

The present appeal is filed by the assessee against the order dated 16.10.2025 by Ld. Addl./Joint Commissioner of Income Tax (A)-1, Bangaluru [“Ld. CIT(A)”] in Appeal No. NFAC/2020-21/10254914 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the rectification order dated 28.04.2023 passed u/s 154 of the Act pertaining to Assessment Year 2021-22.

2. As per facts extracted from the orders, Assessee is a Trust registered u/s. 12A of the Income Tax Act, 1961 [the Act] and for the Assessment Year 2021- 22 filed its return of income on 31.01.2022 at Rs. Nil/- after claiming an exemption of Rs. 88,34,723/- u/s. 11 of the Act. The auditor has filed audit report in Form number 10B on 31.01.2022 however, due to the technical glitches, it was verified by the assessee only on 26.02.20222. The due date for filing of the audit report was 15.02.2022. Due to a bona fide oversight as stated, form 10B was verified only on 26.2.2022. It has caused a delay of only 11 days in filing form number 10B.

3. The above return was processed u/s. 143 [1] of the Act on 10.08.2022, and the total income of the Appellant was determined at Rs. 88,34,723/- denying exemption u/s 11 & 12 of the Act on account of delayed filing of form number 10B. Aggrieved with the intimation, Assessee filed request for rectification of the same that exemption claimed u/s. 11 of the Act should be allowed. However, such an application was rejected on 28.04.2023. Against this order it preferred an Appeal before the ld. CIT(A) which was disposed of on 16.10.2025 where in it was held that as Form number 10B is filed belatedly, the delay is procedural and caused by a bona fide mistake, the condonation of delay in filing form number 10B does not vests with the CIT Appeal. Such power is explicitly conferred on the jurisdictional Commissioner i.e. CIT (Exemption) u/s 119[2][b] of the Act and therefore the Assessee was directed to file a petition for condonation of delay before the jurisdictional Commissioner of Income Tax (Exemption). Accordingly, he dismissed the appeal of the Assessee.

4. Aggrieved with the said order of ld. CIT(A), assessee has preferred this appeal before the Tribunal where all the grounds of appeal are in respect to the denial of exemption u/s 12A of the Act for the reason of delay filing of Form Number 10B.

5. Before us, the Ld. AR submitted that the auditor has filed Form number 10B on 26.02.2022 which was available before the AO/CPC before processing of return and, therefore, the rectification application filed by the assessee should have been allowed by the Central Processing Centre and exemption u/s. 11 of the Act be allowed. Ld. AR submits that filing of form number 10B prior to completion of assessment proceedings satisfies the intent of the law that the audit report is available to the Ld. Assessing Officer at the time of processing the return and therefore the exemption claimed u/s. 11 of the Act could not have been denied. To support the contention, ld. AR placed reliance on the reasoning given in the decision of the Hon’ble Supreme Court in case of Commissioner of Income Tax versus Nagpur Hotel Owners Association [2001] 114 taxman 255 [SC] wherein it was held that the compliance of requirement to intimate the Ld. Assessing Officer with respect to Assesses claim u/s. 11 of the Act can be at any time before the Assessment Proceedings. Ld. AR submitted that assessee’s case is that Form number 10B was filed on 26.02.2022 which is well before the impugned intimation issued u/s. 143 [1] of the Act on 10.08.2022 and, therefore, the Ce