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Judgment
O R D E R
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the assessee against the order dated 01.01.2025 of the Ld. Addl/JCIT(A)-2 Jaipur (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No : ITBA/APL/S/250/2024-25/1071767781(1) arising out of the intimation order dated 26.10.2022 u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by AO, CPC, Bengaluru, for AY: 2021-22.
Heard and perused the record. The assesse is a registered trust u/s 12A and had not filed Form 10B before due date prescribed u/s 12A(1)(b). The return of income was filed on 15.03.2022 and Form 10B was filed on 03.09.2024 and CPC has disallowed the exemption u/s 11 claimed by the assesse on account of not filing audit report in Form 10B within one month before due date of filing of ITR and when challenged before ld. CIT(A) has been sustained for which assesse is in appeal.
On considering the rival contentions we find that the reason of denial of exemption was sustained by ld. CIT(A) was that the application for condonation filed before ld. CIT(E) was rejected, leading to ld. CIT(A) holding that there was no irregularity in denying exemption, however, we are of the considered view that when settled proposition of law is that filing of Form 10B is a procedural requirement and directory in nature denying of exemption u/s 11, was not justified. Reliance in this regard is placed on the decision in the case of Gift Trust Vs. The ITO, vide ITA No.170/Chny/2025 order dated 14.08.2025 wherein Coordinate Bench has observed as follows:
“10.We don’t countenance this action of Ld. CIT(A) for the reason that in a plethora of decisions, the Hon’ble Constitutional Courts have held that filing of Audit Report in Form No.10B before the due date couldn’t disentitle the assessee-Trust from exemption claimed u/s.11 of the Act because the filing of Form 10B is directory to facilitate the assessment and not mandatory. In this regard, we note the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Xavier Kelavani Mandal (P.) Ltd., reported in [2014] 41 taxmann.com 184 (Guj. HC), wherein the Hon’ble Gujarat High Court followed the decision of the Hon’ble Punjab & Haryana High Court in the case of CIT v. Shahzedanand Charity Trust reported in [1997] 228 ITR 292, wherein, it has been held that benefit of exemption should not be denied merely on account of delay in furnishing the Audit Report and it is permissible for the assessee to produce the Audit Report at a later stage either before the ITO or before the Appellate Authority by showing sufficient cause. In this context, we also note the decision of the Hon’ble jurisdictional Madras High Court in the case of CIT v. SPIC Educational Foundation [TCA No.1593 of 2008 dated 12.12.2018], wherein, the Hon’ble High Court has held that Filing of Form 10 [for accumulation of income u/s.11(2) of the Act] which was filed beyond due date couldn’t disentitle the Trust from exemption claimed u/s.11 of the Act. The Hon’ble Court directed the AO to examine the benefit of admissibility rather than to foreclose the claim of assessee on technicalities. We also take note of the decision of the Delhi Tribunal in ITA No.302/Del/2024 for AY 2022-23 dated 21.11.2024 wherein the Tribunal has held that the Ld.CIT(A) erred in disallowing the exemption claimed u/s.11 of the Act on similar ground i.e. assessee belatedly filed Form No.10B. In the light of the aforesaid discussion, we set aside the impugned order of the Ld.CIT(A) and direct the AO/CPC to examine the Form 10B filed by the assessee and decide the claim of exemption u/s.11 of the Act and pass order in accordance to law.”
Thus, we sustain the grounds and appeal of the assesse is allowed. The impugned order is set aside and ld. AO/CPC is directed to take into consideration for Form 10B filed by the assesse and decide the claim of exemption u/s 11 of the Act in accordance with law and pass order afresh.