Trust must file Form 10 within due date for section 11(2) exemption despite technical portal glitches causing delay

ITAT Mumbai held that filing Form No. 10 within the due date under section 139(1) is mandatory for claiming exemption under section 11(2), following SC precedent in PCIT v. Wipro Ltd. However, the trust's delay was caused by technical glitches on the IT portal, constituting sufficient cause. ITAT set aside CIT(A)'s order and remanded the matter to AO with directions for the assessee to seek condonation of delay from CIT(E) before deciding the exemption claim.

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Issues Involved:

1. Validity of the order passed by the Joint Commissioner of Income Tax (Appeals).
2. Disallowance of exemption claim under Section 11(2) due to late filing of Form No. 10.
3. Nature of the requirement to file Form No. 10: mandatory or directory.
4. Jurisdiction of the Assessing Officer to disallow exemptions under Section 11 & 12.
5. Application of CBDT circulars for condonation of delay.

Detailed Analysis:

1. Validity of the Order Passed by the Joint Commissioner of Income Tax (Appeals):

The appellant contested the order dated 12.04.2024 by the Joint Commissioner of Income Tax (Appeals), arguing that it was "bad in law" and not in accordance with the provisions of the Income-tax Act. The appellant's primary contention was that the decision to disallow the exemption claim under Section 11(2) was erroneous, given the circumstances of the case.

2. Disallowance of Exemption Claim Under Section 11(2) Due to Late Filing of Form No. 10:

The appellant, a registered trust, claimed an exemption under Section 11(2) for an accumulation of income amounting to Rs. 51,21,991. The claim was disallowed because Form No. 10, required for claiming this exemption, was filed after the due date specified under Section 139(1). The appellant argued that the delay was due to technical issues with the Income-tax Portal, which was substantiated by a grievance filed on 31.03.2022.

3. Nature of the Requirement to File Form No. 10: Mandatory or Directory:

A critical issue was whether filing Form No. 10 by the due date is mandatory or directory. The appellant cited the Supreme Court decision in CIT v. Nagpur Hotel Owners' Association, which suggested that subsequent filing of Form No. 10 before the completion of assessment proceedings should not negate the exemption. However, the Tribunal referred to the Supreme Court's decision in PCIT Vs Wipro Ltd., which clarified that certain conditions, including timely filing, are mandatory for claiming exemptions. The Tribunal concluded that timely filing of Form No. 10 is mandatory.

4. Jurisdiction of the Assessing Officer to Disallow Exemptions Under Section 11 & 12:

The appellant challenged the jurisdiction of the Assessing Officer to disallow exemptions under Sections 11 and 12, arguing that the issue is debatable. The Tribunal did not find merit in this argument, as the procedural requirements under the Act were clear and unambiguous.

5. Application of CBDT Circulars for Condonation of Delay:

The Tribunal noted that the CBDT had issued circulars authorizing Commissioners of Income-tax to condone delays up to 365 days in filing Form No. 10. Given that the appellant had filed a grievance due to technical issues and the delay was within this period, the Tribunal set aside the order of the CIT(A) and remanded the matter back to the Assessing Officer. The appellant was directed to apply for condonation of delay, and upon such condonation, the Assessing Officer was instructed to reassess the exemption claim under Section 11(2) in accordance with the law.

Conclusion:

The appeal was allowed for statistical purposes, with the Tribunal directing the Assessing Officer to re-evaluate the exemption claim following the condonation of delay. The judgment underscores the importance of adhering to procedural timelines while also recognizing the potential for technical issues to cause delays.

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