TaxTMI 
TaxTMI 
2026 (9) TMI 1956
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....n the prescribed time is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. "CIT(A)" has grievously erred in law and or on facts in disallowing the exemption u/s 11 on account of failure to file Form-10B for AY 2022-23 on or before 07.10.2022. 1.3 The Ld. "CIT(A)" has grievously erred in law and or on facts in holding that there were twin conditions of furnishing Form 10B before AO and that too one month prior to the due date of filing of ITR, though it has been consistently held by various judicial forums that obtaining Form-10B before the prescribed time was a mandatory requirement for obtaining exemption whereas filing of said Form 10B was a procedural requirement. 2.1 The Ld. "CIT(A)" has grievously erred in law and or on facts in upholding the adjustment made by CPC u/s 143(1) by way of disallowance of exemption u/s 11 of Rs. 1,02,90,390/- on account of failure to file Form 10B within the prescribed time. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. "CIT(A)" has grievously erred upholding the adjustment made by CPC u/s 143(1) by way of disallowance of exemption u/s 11 of Rs. ....
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....the assessee 's submission that the delay was occasioned by pursuit of grievance-redressal remedies (relying on ITO v. K.S.P. Shanmugavel Nadar & Others, (1985) 153 ITR 596 (Mad.)), condoned the delay under section 249(3) of the Act and admitted the appeal for adjudication on merits. 5. Before the Ld. CIT(A), the assessee contended, inter-alia, that the impugned rectification order was a non-speaking order passed in violation of the principles of natural justice, the CPC having disallowed the exemption without recording any reason and without affording an opportunity to explain, relying on ACIT v. Balmiki Prasad Singh, [2018] 99 taxmann.com 204 (SC), and TLG India (P.) Ltd. v. DCIT, [2019] 111 taxmann.com 376 (Bom.). On merits, it was contended that the assessee, being a registered charitable institution which had duly applied the entirety of its receipts towards its stated objects and had filed its return and audit report within the statutory time limits under sections 139(4A) and 44AB of the Act, could not be denied the benefit of exemption merely on a mechanical and statistical basis. 6. The Ld. CIT(A) rejected the natural-justice contention, holding that a proposed ad....
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..... (supra) was misplaced, that decision being concerned with the exercise of a substantive statutory option, the declaration under section 10B(8) to opt out of a tax holiday, which the Hon'ble Supreme Court held must be exercised within the time prescribed as a condition of the option itself; whereas the furnishing of an audit report under section 12A(1)(b) is a matter of evidentiary compliance verifying an exemption otherwise available on fulfillment of the substantive conditions of registration and application of income, and is therefore curable in nature. 10. We have heard rival submission of parties and perused the relevant material on record including the paper book (pages 1-22) comprising of impugned order u/s 142(1) and decisions relied upon. 11. Regarding the ground of violation of natural justice, we find no substance in submission of assessee. The Schedule of variance annexed to the very intimation dated 31.03.2023 under section 143(1) records, in terms, that the disallowance was on account of the audit report in Form 10B not having been e-filed at least one month prior to the due date for furnishing the return, in accordance with section 12A(1)(b) of the Act. Th....
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....urt observed that the benefit of exemption should not be denied merely on account of delay in furnishing the audit report, particularly when the same is made available before completion of assessment proceedings. Similarly, the Coordinate Bench of the Tribunal in MIG Cricket Club (supra) has condoned comparable delays where the audit report was filed prior to completion of assessment and no prejudice was caused to the revenue. In the present case, the delay is marginal, the audit report was filed before the return of income and was available during processing, and the assessee has otherwise complied with the substantive conditions for claiming exemption under sections 11 and 12 of the Act. Denial of exemption merely on account of such procedural lapse would defeat the object of the statute and result in undue hardship. The Ld. DR relied on the order of Hon'ble Apex Court & Hon'ble Bombay High Court is misplaced. In case of Little Angels Education Society (supra) the delay was more than 365 days where as the delay for assessee's case was 29 days. Delay in compliance should not automatically result in denial of substantive benefits, particularly where the requirement is p....
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....assessee filed the application under section 154 of the Act. We find that while dealing with similar facts the Co-ordinate Bench of the Tribunal in Trinity Education Trust v. ITO [IT Appeal No. 669 (Srt.) of 2018, dated 28-2-2022], decided the issue in favour of the taxpayer by observing as under: "8. We have considered the rival submissions both the parties and perused the order of lower authorities carefully. We find that there is no dispute that at the time of filing of return of income, the audit report has required under Form 10B was not uploaded once uploaded on the system consequently the AO/CPC not allowed the exemption claimed under section 11. Assessing Officer/CPC brought the entire receipt as taxable income. On receipt intimation under section 143(1) of the Act the assessee uploaded in Form 10B and filed application for rectification under section 154 of the Act. The application of the assessee was rejected on the ground report in Form 10B was not furnished before due date of return of income. The Id. CIT(A) dismissed the appeal of the assessee by taking view the audit report in Form 10B was not uploaded before due date of return of income. 9. We find ....
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....1 and 12, provided the form is furnished before the claim is finally disposed of, held as under: 7.1 In Association of Indian Panel Board Manufacturers v. Dy.CIT [2023] 157 taxmann.com 550/482 ITR 54 (Gujarat), this Court has categorically held that filing of Form 10B is only a procedural requirement and the failure to file Form 10B along with the return of income cannot be treated as mandatory requirement for the purpose of claiming exemption under Section 11 and 12 of the Act and even if such Form is filed at a later stage, the Assessee will still be entitled to claim exemption. The aforesaid decision in the case of Association of Indian Panel Board (supra) has been followed by this Court in case of CIT (Exemption) v. Anjana Foundation [2024] 168 taxmann.com 462 (Gujarat). Thus, it will be seen that the Petitioner-Assessee could not be denied the exemption merely because Form 10B was not filed within time. In such circumstances, the denial on the part of the Department to condone the delay in complying with the procedural requirement on the part of the Assessee would result in denial of a substantive right of the Assessee to claim an exemption, which would in turn, resul....
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....tion 12AA and application of income to the stated charitable objects. The distinction between a substantive, time-bound election and a procedural, evidentiary requirement is precisely the ground on which the authorities cited on behalf of the appellant have consistently distinguished Wipro Ltd. in this very context, and we respectfully adopt the same reasoning. 17. In the present case, it is not in dispute that the assessee is registered under section 12AA of the Act and it filed its return of income within the extended due date. The assessee also obtained the audit report in Form 10B within the prescribed time and efiled on 31.10.2022, which is, before the due date for filing the return itself, albeit after the "one month prior" cut-off. It is also not in dispute that the entirety of receipts stood applied towards its stated charitable objects. This fact was itself accepted by the CPC in processing Schedule ER of the return. In these circumstances, following the ratio of the decisions cited above, we hold that the mere delay in e-filing of Form 10B cannot, by itself, operate to disentitle the appellant of the exemption otherwise available under section 11 of the Act. 17.1 Re....