Minimal delay in Form 10B filing condoned during pandemic period, section 11 exemption allowed

The ITAT Mumbai held that minimal delay in filing Form 10B should be condoned where the assessee filed the return within the extended due date during the pandemic period. The assessee filed Form 10B on 14/3/2022 along with the return, though the form was due by 31/1/2022 (one month before the extended return filing date of 28/2/2022). The Tribunal noted technical glitches faced by taxpayers, uncertainty regarding due dates due to CBDT extensions, and the pandemic context. Following the precedent in Kedar Nath Saraf Charity Trust, the ITAT upheld the CIT(A)'s decision allowing section 11 exemption despite the delayed Form 10B filing.

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Issues Involved:
1. Justification of exemption u/s 11 of the Act despite late filing of Form 10B.
2. Appropriateness of CIT (A)'s relief for delayed filing of the audit report.

Summary:

Issue 1: Justification of exemption u/s 11 of the Act despite late filing of Form 10B
The appeal filed by the Income Tax Officer challenges the appellate order which allowed the assessee's exemption u/s 11 of the Income-tax Act, 1961. The assessee, an educational trust registered u/s 12A, filed its return of income for A.Y. 2021-22 on 14th March 2022 and revised it on 29th March 2022. The return was processed u/s 143(1) and later rectified u/s 154, denying exemption u/s 11 due to the late filing of Form 10B. The CIT (A) found that the assessee had filed Form 10B along with both the original and revised returns. The CIT (A) held that the time limit for filing Form 10B is directory, not mandatory, citing the Gujarat High Court's decision in Sarvodya Charitable Trust, which stated that exemption u/s 11 cannot be denied for delay in filing Form 10B. The CIT (A) concluded that the assessee complied with the procedural requirements and allowed the exemption.

Issue 2: Appropriateness of CIT (A)'s relief for delayed filing of the audit report
The Departmental Representative argued that Form 10B should be filed one month before the due date of filing the return of income, as per Section 44AB, which was not adhered to by the assessee. The Authorized Representative countered that the form was filed along with the returns and that the CIT (A) correctly relied on judicial precedents. The Tribunal noted that the extended due date for filing the return was 28th February 2022, while the assessee filed the return and Form 10B on 14th March 2022. Given the minimal delay and the pandemic-related disruptions, the Tribunal cited the case of Kedar Nath Saraf Charity Trust, which allowed for leniency in such delays. The Tribunal upheld the CIT (A)'s decision, condoning the delay and allowing the exemption u/s 11.

Conclusion:
The Tribunal dismissed the appeal filed by the Income Tax Officer, affirming the CIT (A)'s decision to allow the exemption u/s 11 despite the delayed filing of Form 10B, considering the procedural compliance and pandemic-related disruptions. The order was pronounced in open court on 07.05.2024.

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