2025 (9) TMI 1740 - AT - Income Tax

Exemption under Section 11 for charitable trust affirmed despite belated return; AO directed to grant relief

Issue concerns eligibility of a charitable trust for income tax exemption where registration certificate under the trust registration provision was not ... Exemption u/s. 11 - assessee trust has not submitted copy of registration certificate u/s 12AA - Return of Income was filed belatedly - HELD THAT:- Since the issue involved in the present appeal is identical to the issue involved in [2025 (7) TMI 1965 - ITAT PUNE] we hold that the Assessee is eligible for exemption u/s.11 of the Act. We find support from the Order of Debendra and Rohini Memorial Trust [2023 (7) TMI 278 - ITAT KOLKATA] wherein, held that Assessee was eligible for exemption u/s.11 though the Return of Income was filed belatedly. As decided in HEALTH FOUNDATION & RESEARCH CENTRE [2025 (6) TMI 818 - ITAT AHMEDABAD] condone the delay in filing Form No. 10B and direct the Assessing Officer to grant the benefit of exemption under sections 11 and 12 in accordance with law. Thus, we direct the Assessing Officer to allow the Exemption u/s.11 of the Act and delete the addition. Assessee appeal allowed. Issues: (i) Whether the delay of 567 days in filing the appeal before the CIT(A) should be condoned; (ii) Whether the assessee, a trust registered under section 12A/12AA, is entitled to exemption under section 11 for A.Y. 2018-19 despite belated filing of return and belated uploading of Form No.10B.Issue (i): Whether the delay of 567 days in filing the appeal before the CIT(A) should be condoned.Analysis: The Tribunal examined the affidavit and facts demonstrating that the assessee is a trust of medical practitioners and that the assessment order was passed during the second wave of the COVID-19 pandemic when trustees (being doctors) were engaged in emergency medical services. The Tribunal also considered that the assessee had advanced a bona fide belief that parallel proceedings (appeal against assessment under section 143(1)) made filing before CIT(A) unnecessary. In light of these facts and the documentary material, the Tribunal found sufficient cause for the delay and treated the claim for condonation as supportable.Conclusion: The delay of 567 days in filing the appeal is condoned in favour of the assessee.Issue (ii): Whether the assessee is entitled to exemption under section 11 for A.Y.2018-19 despite belated return filing and belated uploading of Form No.10B.Analysis: The Tribunal noted that the assessee holds registration under section 12A/12AA and that identical issues were recently decided in favour of the assessee by the Tribunal in connected matters (ITA Nos.761, 762, 763, 765 & 766//PUN/2025), where exemption under section 11 was allowed despite belated filing and late upload of Form No.10B. The Tribunal applied the principles that the requirement to file the audit report with the return is procedural/directory and that substantial compliance or sufficient cause for delay permits admission of the audit report at the appellate stage. The Revenue conceded that the issue was covered in favour of the assessee by the Tribunal's prior order and the Tribunal relied on coordinate decisions supporting allowance of exemption under section 11 in similar circumstances.Conclusion: The assessee is entitled to exemption under section 11 for A.Y.2018-19; the addition/disallowance made by the Assessing Officer is deleted in favour of the assessee.Final Conclusion: The Tribunal condoned the delay and, following its reasoning and existing coordinate decisions, allowed the assessee's appeal by directing the Assessing Officer to grant the benefit of exemption under section 11 for the assessment year 2018-19, thereby allowing the grounds of appeal raised by the assessee.Ratio Decidendi: Where a trust is duly registered under section 12A/12AA, belated filing of the return and delayed uploading of the audit report (Form No.10B) are procedural matters where substantial compliance or sufficient cause (including extraordinary circumstances such as COVID-19 and trustees' duties) justifies condonation of delay and admission of the audit report, permitting allowance of exemption under section 11.