Filing Form 10 Before Assessment Ends is Sufficient Compliance, Pre-Printed Certificates Don't Invalidate Corpus Donations: ITAT Kolkata

Kolkata, July 28, 2025 - In a significant ruling for charitable organizations, the Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has held that filing Form 10 at any point before the completion of assessment proceedings constitutes sufficient compliance for claiming exemption under Section 11(2) of the Income Tax Act, 1961. The Tribunal also clarified that the nature of a corpus donation is not invalidated merely because the donor confirmation certificates were printed by the recipient trust.

The order was delivered by Vice-President Shri Duvvuru RL Reddy in an appeal filed by Bastuhara Sahayata Samiti, a non-profit organization, against the Income Tax Officer for the Assessment Year 2016-17.

Case Background

The case originated when the Assessing Officer (AO) disallowed the Samiti’s claim of Rs. 32,33,240/- as corpus donations, which are exempt from tax under Section 11(1)(d). The AO added this amount back to the Samiti's income, citing two primary reasons: 1. The confirmation certificates from donors appeared to be pre-printed by the Samiti itself, raising doubts about their authenticity. 2. The Samiti had belatedly filed Form 10 to accumulate funds under Section 11(2), and the petition to condone this delay was rejected by the Commissioner of Income Tax (CIT-Exemption).

The Commissioner of Income Tax (Appeals) subsequently dismissed the Samiti's appeal ex parte (without hearing the appellant), upholding the AO's additions without examining the merits of the case.

Key Arguments before the ITAT

The Samiti, represented by Advocate Shri S.K. Tulsian, presented two main lines of argument:

On Procedural Grounds: The counsel argued that the CIT(Appeals) had violated the principles of natural justice by passing an ex parte order without ensuring proper service of hearing notices. It was stressed that under Section 250(6) of the Act, the CIT(A) is statutorily obliged to decide an appeal on its merits and cannot dismiss it for non-prosecution.

On Merits of the Disallowance:

Corpus Donations: The Samiti contended that the donations were received via account payee cheques and RTGS for a specific purpose—a relief fund. The use of pre-printed certificates was merely to assist donors unfamiliar with the required format and did not detract from the clear intention of the donors or the genuineness of the transactions, which were backed by bank records.

Filing of Form 10: The counsel argued that the delay in filing Form 10 was a bona fide error due to lack of awareness about the new e-filing requirement introduced for A.Y. 2016-17. Citing a CBDT circular (No. 7/2018) and a Supreme Court judgment, they asserted that filing Form 10 before the assessment was finalized constituted "substantial compliance."

The Revenue, represented by Shri Somnath Das Biswas, Sr. D.R., supported the orders of the lower authorities.

Tribunal's Ruling and Reasoning

The ITAT, after considering the submissions, sided with the assessee on all grounds.

On Corpus Donations

Vice-President Reddy observed that the donations' nature should be determined by substance over form. The judgment noted:

"I have gone through the receipts filed by the assessee. Admittedly all the receipts printed by the assessee-Samiti. All the payments were made through RTGS. There is no single payment by way of cash. Apart from this, all the documents were signed by the different persons and on perusal of the receipts, the purpose of donation has categorically mentioned as corpus donation..."

The Tribunal concluded that since the donations were received through banking channels and the receipts clearly specified the purpose, the AO and CIT(A) were incorrect in rejecting the claim. The addition of Rs. 32,33,240/- was directed to be set aside.

On Delayed Filing of Form 10

The ITAT reinforced a well-established legal principle regarding procedural requirements. Relying on the Supreme Court's decision in CIT vs. Nagpur Hotel Owners Association (2001) 247 ITR 201 , the Tribunal held:

"So far as the delay in submitting Form 10 is concerned, I am of the view that as per several judicial pronouncements, it has been decided that furnishing of Form 10 at any time before completion of assessment will be a sufficient compliance of requirements of the law... Admittedly in this case, the assessee has filed Form 10 much prior to passing of the assessment order."

The Tribunal ruled that since the form was filed before the assessment was completed, the procedural requirement was substantially met, and the benefit of accumulation under Section 11(2) could not be denied.

Final Decision

The ITAT allowed the appeal in its entirety, setting aside the additions made by the Assessing Officer and providing significant relief to the charitable organization. The ruling underscores the judiciary's approach of not letting minor procedural lapses defeat substantive and legitimate tax exemption claims, especially for non-profit entities.