Exemption under sections 11 and 12 denied for late Form 10B reversed as form was on record; appeal allowed.

Denial of charitable exemption under sections 11 and 12 based solely on alleged belated filing of Form No. 10B was found unjustified because the audit report and Form No. 10B were on record at the time the return was processed under assessment intimation; reliance on binding precedent led to the conclusion that the appellate authority erred in refusing to condone delay, making the procedural ground contrary to law. Consequently, the exemption refusal was reversed and the assessee's appeal allowed.

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Issues: Whether denial of exemption under Sections 11 and 12 of the Income-tax Act, 1961 at the processing stage under section 143(1) on the ground that Form No.10B was not filed within the due date is justified where Form No.10B had been e-filed and was available on the Departmental records before issuance of the intimation; and whether the CIT(A) erred in refusing to condone the delay and dismissing the appeal in limine.

Analysis: The Tribunal examined the chronology showing Form No.10B and the return were e-filed on 30-03-2021 while the CPC processed the return under section 143(1) only on 30-11-2021, meaning the audit report was on record at the time of processing. The Tribunal considered binding decisions of the Gujarat High Court and coordinate benches of the Tribunal holding that furnishing Form No.10B is procedural and directory in nature, that delay in filing is a curable defect, and that processing-stage adjustments under section 143(1) are limited to prima facie issues and should not deny substantive exemptions on mere technical grounds. The Tribunal found that the CIT(A) treated the inaction as negligence and laches and relied on limitation principles without addressing that the underlying adjustment was contrary to settled precedent and that Form No.10B was available when the return was processed.

Conclusion: The denial of exemption under Sections 11 and 12 solely because Form No.10B was belatedly filed was not justified where Form No.10B had been furnished and was available with the CPC at the time the return was processed; the CIT(A) erred in refusing to condone the delay and in dismissing the appeal without adjudicating the merits. The exemption under Sections 11 and 12 is to be allowed.

Ratio Decidendi: Filing of Form No.10B is a procedural, directory requirement and a curable defect; where the audit report is on departmental record prior to issuance of intimation under section 143(1), exemption under Sections 11 and 12 cannot be denied at the processing stage on grounds of belated filing.

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