2025 (11) TMI 899 - AT - Income Tax

Delayed Form 10BB filing due to COVID-19 not fatal; trust registered under Section 12AA entitled to claimed income

ITAT held that the assessee's delayed filing of Form 10BB (filed 28/03/2022 against due date 15/02/2022) due to COVID-19 did not warrant denial of ... Intimation u/s 143(1) issued by the CPC - adjustment by denying the claim of application of income on the ground of delay in filing Audit Report and return of income with prescribed time limit - delay caused in filing the said Form due to Covid-19 situations - HELD THAT:- As per the Circular No. 1/2022, the due date to file Form 10BB was 15/02/2022, however, the Assessee filed Form No. 10BB on 28/03/2022. It is true that at that point of time, the Covid-situations were in exist. As per the Assessee due to Covid-19 situations, the Assessee could not file the Form 10BB on time. The Ld. CIT(A) while allowing the Appeal relied on plethora of Judgment and found that the Assessee trust being a registered u/s 12AA of the Act and field original his return on time and also From 10BB on the date of filing of return of income, therefore, observed that the Assessee has complied with the requirements of furnishing of Form 10BB. In view of the settled principals of law that the limitation for filing of Form 10BB is only an advisory not mandatory and in the absence of contrary material brought on record by the Department against the findings of the Ld. CIT(A), we find no reason to interfere with the conclusion of the CIT(A) in allowing the First Appeal filed by the Assessee. Accordingly, we dismiss the Grounds of Appeal of the Revenue. ISSUES PRESENTED AND CONSIDERED 1. Whether failure to furnish Form No. 10BB within the due date specified by CBDT Circular amounts to mandatory non-compliance attracting denial of exemption/benefit under the relevant provisions of the Income-tax Act. 2. Whether delay in filing Form No. 10BB caused by COVID-19 or other exigencies can be treated as excusing the late filing where the return of income and other statutory registrations are in order. 3. Whether the assessing officer's adjustment/disallowance made by way of an intimation under section 143(1) on account of belated Form No. 10BB is sustainable in view of appellate findings that the substantive conditions for exemption were otherwise complied with. ISSUE-WISE DETAILED ANALYSIS Issue 1: Mandatory versus directory nature of the time-limit for filing Form No. 10BB Legal framework: The relevant statutory scheme requires furnishing of prescribed declarations/returns and supporting documents (here, Form No. 10BB) within the time prescribed by law/circular to claim exemptions/benefits under the Income-tax Act; assessing officers may deny benefits for non-compliance with provisos to the relevant sections. Precedent Treatment: The Tribunal considered authoritative judicial pronouncements that have held time limits for furnishing statutory declarations to be mandatory (excerpted judgment indicates reliance on a Supreme Court decision holding twin conditions - furnishing the declaration to AO and doing so before due date of filing original return - are mandatory). The earlier decisions cited by the lower appellate authority were relied upon by the assessee before the Tribunal. Interpretation and reasoning: The Tribunal examined the Circular prescribing the due date (15/02/2022) and noted the assessee filed Form 10BB on 28/03/2022. Despite quoting the higher court's view that the time limit is mandatory, the Tribunal found on facts that the time limit for filing Form No. 10BB was advisory rather than mandatory. The Tribunal placed weight on (a) the assessee being a registered trust under section 12AA, (b) the filing of the original return of income on time, and (c) the special circumstances of the COVID-19 pandemic affecting compliance. The Tribunal observed no contrary material was produced by the Revenue to rebut the CIT(A)'s finding that the requirements of furnishing Form 10BB were effectively complied with. Ratio vs. Obiter: The Tribunal's conclusion that the due date was advisory and that late filing did not defeat the exemption is treated as the operative ratio of this decision on the facts presented. The citation of the higher court's contrary holding is treated as considered precedent but not followed on the facts and reasoning of this matter; the Tribunal did not expressly overrule that precedent but declined to apply it in the present circumstances. Conclusions: The Tribunal concluded that non-furnishing of Form No. 10BB by the circular date did not mandatorily disentitle the assessee to the claimed benefit where the trust was registered, the return was filed on time, Form 10BB was filed shortly thereafter, and COVID-19 circumstances existed. Accordingly, the Tribunal upheld the allowance of the appeal by the lower appellate authority on this issue. Issue 2: Effect of COVID-19 and factual compliance on excusing delay in statutory filing Legal framework: Statutory provisions and administrative circulars prescribe time limits; courts and tribunals may consider factual circumstances and doctrine of substantial compliance or excusable delay when deciding entitlement to benefits. Precedent Treatment: The Tribunal referred to appellate authority findings and a body of judgments relied upon by the assessee at the CIT(A) level that supported treating technical or slight delays as not automatically fatal where substantive compliance exists. The Tribunal also noted a directly contrary apex court pronouncement but proceeded on its assessment of facts. Interpretation and reasoning: On the facts, the Tribunal accepted that COVID-19 conditions existed at the relevant time and that this affected timely filing. It emphasized substantive compliance: the assessee was registered under section 12AA and filed the original return of income within time; Form No. 10BB was filed soon after the circular date. Given these considerations and absence of contrary material from the Revenue, the Tribunal considered the delay excusable and the filing to be effectively compliant with the statutory purpose of the form. Ratio vs. Obiter: The Tribunal's approach that pandemic-related disruption and substantial compliance justify treating late filing as acceptable is part of its ratio in this case (fact-specific). Observations about pandemic impact and advisory nature of the time limit operate as factual and purposive reasoning rather than general overruling of the mandatory-time precedent. Conclusions: The Tribunal concluded that COVID-19 circumstances and the assessee's substantive compliance sufficed to cure the delayed filing; therefore, the delay did not warrant denial of the claimed application of income. Issue 3: Validity of adjustments made under section 143(1) by CPC in respect of belated Form No. 10BB Legal framework: The intimation under section 143(1) may reflect adjustments based on returns and supporting documents; where a taxpayer later furnishes omitted documents or where on appeal it is found that substantive conditions are met, such adjustments may be set aside. Precedent Treatment: The Tribunal considered the CIT(A) order which allowed the assessee's appeal against the CPC intimation. The Tribunal reviewed the Revenue's contention that the assessing officer's disallowance under the 10th proviso/section 14A corresponding provision was justified for non-compliance, and contrasted it with the appellate finding of compliance. Interpretation and reasoning: The Tribunal found no material produced by the Revenue to overturn the appellate conclusion that the assessee had met the factual requirements for the exemption and that the late filing did not, in the circumstances, deprive the assessee of the benefit. Given that the Form was filed (albeit late), the trust was registered, and the return was timely, the Tribunal treated the CPC's adjustment as unsustainable on these facts. Ratio vs. Obiter: The finding that the CPC adjustment under section 143(1) is to be dismissed on the present facts is the operative ratio as applied to the assessment year and particulars before the Tribunal. Broader statements about the scope of 143(1) adjustments were limited to reasoning on the record and not advanced as general propositions beyond the case facts. Conclusions: The Tribunal dismissed the Revenue's grounds of appeal against the CIT(A) order and upheld the appellate relief setting aside the CPC intimation's disallowance; the adjustment under section 143(1) was found not sustainable in the absence of contrary material and given the assessee's substantive compliance and pandemic-related delay. Cross-references and final disposition The Tribunal expressly considered higher court authority to the contrary but, on the facts before it (registration under section 12AA, timely filing of the return, subsequent filing of Form 10BB, and COVID-19 circumstances), affirmed the CIT(A)'s conclusion that the time limit was advisory in the particular circumstances and dismissed the Revenue's appeal.