AMBICA EDUCATION TRUST,HIMATNAGAR V. THE ADIT, CPC PRESENT JURIS. THE ITO, EXEMPTION, PALANPUR

ITA 799/AHD/2025

AI Insights

The case involves Ambica Education Trust, a registered charitable trust, which appealed against the orders of the Additional Commissioner of Income Tax (Appeals)-2, Kolkata. The appeals were related to the denial of benefits under sections 11 and 12 of the Income Tax Act, 1961, for the Assessment Years 2019-20 and 2020-21, due to the belated filing of Audit Report in Form 10B. The Centralised Processing Centre (CPC) had treated the total income as taxable and demanded tax based on the late filing of Form 10B. The Tribunal considered various judicial precedents and the procedural nature of filing Form 10B, ultimately deciding in favor of the assessee by directing a re-evaluation of the exemption claim on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717377 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2020-2021
• Appeal Filed On: 16-04-2025
• Other Referred Cases: Association of Indian Panel Board Manufacturer, Shree Bhairav Seva Samiti, Trinity Education Trust vs ITO, CIT vs. Xavier Kalavani Mandal (P.) Ltd., Sarvodaya Charitable Trust vs. ITO (Exemption), ITO Vs. Shri Laxmanarayan Dev Shrishan Seva Khendra
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TAKING VIEW
• Keywords: Condonation of delay; Set aside; Competent authority; Charitable institution; Benefit of exemption
• Section: 154; 11; 12AA; 12A; 12; 119(2)(b); 10B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: DR. BRR KUMAR, VICE PRESIDENT And Shri T.R. SENTHIL KUMAR, JUDICIAL MEMBER Ambica Education Trust Puriba Sadan, Near Gayatri Mandir, Mahavirnagar, Himatnagar-383001 Gujarat PAN: AACTA3545N (Appellant) Vs Asst. Director of Income Tax, CPC Through Income Tax Officer (Exemption), Palanpur (Respondent) Assessee Represented: Shri Rushin Patel, A.R. Revenue Represented: Shri Sher Singh, CIT-DR & Shri Hargovind Singh, Sr. D.R. Date of hearing : 29-07-2025 Date of pronouncement : 13-08-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- These two appeals are filed by the assessee as against the separate appellate orders both dated 30-03-2025 passed by the Additional Commissioner of Income Tax (Appeals)-2, Kolkata arising out of the intimations passed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2019-20 and 2020-21 respectively. ITA Nos: 798 & 799/Ahd/2025 Asst Years: 2019-20 & 2020-21 Printed from counselvise.com I.T.A No. 798 & 799/Ahd/2025 A.Y.2019-20 & 2020-21 Page No Ambica Education Trust Vs. ADIT, CPC Through ITO (Exemsption) 2 2. Brief facts of the case are that the assessee is a registered charitable Trust running Educational Institution. For the Asst. Year 2019-20, assessee trust filed its Return of Income on 11-06- 2020 [which is well within the extended period upto 30-11-2020 due to Covid-19 pendamic] declaring Nil income after claiming benefits under sections 11 of the Act. The assessee Trust filed its Audit Report in Form 10B on 23-03-2020 [with typo error in wrongly mentioning the accounting period ending on 23-03-2020 instead of 31-03-2019] much before the filing of the Return of Income. However, the Centralised Processing Centre, Bangalore vide intimation dated 14-08-2020 held that assessee filed Form 10B belatedly, therefore denied the benefits of Section 11 and 12 of the Act and therefore treated the total income as taxable and demanded Tax of Rs.1,36,19,089/-. 3. Aggrieved against the same, assessee filed appeal before Addl. CIT(A) as well as Rectification Petition before Assessing Officer. Ld. Addl. CIT(A) held that being an appellate authority does not have the power to condone the delay in filing Form 10B, whereas the Administrative Commissioner is the Competent Authority u/s 119(2)(b) of the Act to condone the delay in filing Form 10B, thereby dismissed the appeal. In the meanwhile the Assessing Officer has rectified the intimation denying deduction u/s.11 of the Act on account of late filing of Form 10B and accepted the Nil income filed by the assessee vide its Rectification dated 30-06- 2020. It is thereafter the assessee trust filed revised Form 10B on 17-04-2025 much after the disposal of the appeal by Addl. CIT[A] on 30-03-2025. Printed from counselvise.com I.T.A No. 798 & 799/Ahd/2025 A.Y.2019-20 & 2020-21 Page No Ambica Education Trust Vs. ADIT, CPC Through ITO (Exemsption) 3 4. For the Asst. Year 2020-21, assessee trust filed its Return of Income on 09-01-2021 [which is well within the extended period upto 15-02-2021 due to Covid-19 pendamic] declaring Nil income after claiming benefits under sections 11 of the Act. Therefore, the Centralised Processing Centre, Bangalore vide intimation dated 11- 10-2021 denied the benefits of Section 11 of the Act and therefore treated the total income as taxable and demanded Tax of Rs.1,32,58,790/-. The assessee Trust filed its Audit Report in Form 10B on 08-02-2024 much after the filing of the Return of Income but during pendency of appeal before Addl CIT[A]. 5. Aggrieved against the same, assessee trust filed appeal before Addl. CIT(A), who held that Form 10B filed after almost two and half years from the date of processing u/s.143[1] of the Act, thereby dismissed the appeal. 6. Aggrieved against separate appellate orders, assessee is in appeal in before us raising the following Grounds of Appeal: ITA No. 798/Ahd/2025 for Asst. Year 2019-20 1 The ld. CIT(A) has erred in law and on facts of the case, in sustaining denial of benefits of section 11 by the CPC u/s. 143(1) of the Act, merely because of belated filing of audit report in Form 10B. 2. The appellant craves leave to add, amend, alter or delete the grounds of appeal at the time of hearing, if need arise. ITA No. 799/Ahd/2025 for Asst. Year 2020-21 1 The ld. CIT(A) has erred in law and on facts of the case, in sustaining denial of benefits of section 11 by the CPC u/s. 143(1) of the Act, merely because of belated filing of audit report in Form 10B. Printed from counselvise.com I.T.A No. 798 & 799/Ahd/2025 A.Y.2019-20 & 2020-21 Page No Ambica Education Trust Vs. ADIT, CPC Through ITO (Exemsption) 4 2. The appellant craves leave to add, amend, alter or delete the grounds of appeal at the time of hearing, if need arise. 7. We have heard rival submissions, given our thoughtful consideration and perused the materials available on record. It is an admitted fact the assessee filed its Audit Report in Form No. 10B belatedly thereby while passing intimations u/s. 143(1) of the Act, the assessee was denied the benefit of exemption u/s. 11 as per section 12A(1)(b) of the Act read with 1st proviso to Rule 12(2) of the I.T. Rules. 7.1. Late filing of Form 10B is no more res integra by jurisdictional High Court judgement in the case of Association of Indian Panel Board Manufacturer wherein it is held that filing of Form 10B as required u/s. 12A are directory in nature, as such the Assessing Officer are not powerless to allow an assessee to file Audit Report, if not filed along with return, any time before completion of assessment. The Hon’ble High Court of Gujarat held as follows: “….6. The moot aspect thus centres around to the requirement of the availability of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed along with the return of income. Filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 12B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee. 6.1 The appellant assessee has to be held to be eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of non-filing of audit report along with return of income which was at the best procedural omission, could never to an impediment in law in claiming the exemption.” Printed from counselvise.com I.T.A No. 798 & 799/Ahd/2025 A.Y.2019-20 & 2020-21 Page No Ambica Education Trust Vs. ADIT, CPC Through ITO (Exemsption) 5 7.2. On similar set of facts the Mumbai Bench of the Tribunal in the case of Shree Bhairav Seva Samiti (cited supra) held as follows: “…9. In the present case, it is undisputed that the assessee trust is registered under section 12AA of the Act for the past 40 years and the said registration is still in existence. It is also not the case of the Revenue that the assessee has ceased to be a religious or charitable institution. Further, it is also not the case of the Revenue that the accounts of the assessee have not been audited by an accountant, and an audit report in Form 10B has not been obtained. Only on the technical aspect that Form 10B was not filed along with the return of income for the relevant assessment year, the exemption claimed under section 11 of the Act has been denied to the assessee without going into the merits. Further, no relief was granted to the assessee even when the 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 vs ITO, ITA No. 669/Srt./2018, vide order dated 28/02/2022, 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 that the Hon'ble jurisdictional High Court in case of CIT vs. Xavier Kalavani Mandal (P.) Ltd. (supra) held that in order to claim exemption under section 11, the assessee can filed audit report in Form 10B even at later stage either before the Assessing Officer or before appellate authority by showing a sufficient cause. Further, Hon'ble jurisdictional High Court decision in case of Sarvodaya charitable Trust vs. ITO (Exemption) (supra) also held that where the assessee is a public charitable trust registered under section 12A of the Act and substantially satisfied condition for availing benefit of exemption as a charitable could not be denied exemption, the assessee merely on bar of limitation in furnishing audit report in Form 10B. Considering the aforesaid and legal discussion, we find that though the assessee has not filed any return of income at the time, however, it was available before the ld. Printed from counselvise.com I.T.A No. 798 & 799/Ahd/2025 A.Y.2019-20 & 2020-21 Page No Ambica Education Trust Vs. ADIT, CPC Through ITO (Exemsption) 6 CIT(A) as it was uploaded much before filing application under section 154. Therefore, respectfully following the decisions of Hon'ble jurisdictional High Court in case of CIT vs. Xavier Kalavani Mandal (P.) Ltd. (supra) and in Sarvodaya charitable Trust vs. ITO (Exemption) (supra), we find that the assessee has complied the procedural requirement, therefore, the Assessing Officer/CPC is directed to verify the claim of the assessee and grant necessary deduction under section 11 of IT Act. In the result, the appeal of the assessee is allowed for statistical purposes.” 10. As in the present case also the assessee has complied with the procedural requirement of obtaining and filing Form 10B, therefore, respectfully following the aforesaid decision of the Co-ordinate Bench of the Tribunal, the Assessing Officer is directed to decide the claim of the assessee under section 11 on merits, after accepting the Form 10B filed by the assessee. 7.3. Further very same Bench of this Tribunal in the case of ITO Vs. Shri Laxmanarayan Dev Shrishan Seva Khendra in ITA No. 410/Ahd/2022 dated 19-05-2022 held as follows: “….6. We have given our thoughtful consideration and perused the materials available on record. The moot question whether it is permissible to the assessee to produce the audit report at the appellate stage is correct in law is been decided by the Jurisdictional High Court in the case of CIT Vs. Gujarat Oil & Allied Industries Ltd. [1993] 201 ITR 325 (Guj.) wherein it is held that the provisions regarding furnishing of audit report along with the return has to be treated as a procedural provision. It is directory in nature and its substantial compliance would suffice. Thus the Hon’ble Court Held that the benefit of exemption should not be denied merely on account of delay in furnishing the same. 6.1. Similarly in the case of Social Security Scheme of GICEA (cited supra) the Hon’ble Jurisdictional High Court held as follows: 5. “…..the only question which falls for consideration is whether respondent committed an error in passing the order by not condoning the delay in filing Form No. 10B along with the return filed. In the decision of this Court in Sarvodaya Charitable Trust (supra) this Court has observed that furnishing of audit report along with return filed is to be treated as a procedural requirement. It is though mandatory in nature the substantial compliance is required to be made. In the case of Sarvodaya Charitable Trust (supra) the assessee had produced the audit report after processing the return under section 143(1). This Court in the said order has observed that the approach of the authority in these type of cases should be equitable, balancing and judicious. Technically speaking, Printed from counselvise.com I.T.A No. 798 & 799/Ahd/2025 A.Y.2019-20 & 2020-21 Page No Ambica Education Trust Vs. ADIT, CPC Through ITO (Exemsption) 7 respondent No. 2 might be justified in denying the exemption under section 11 of the Act by rejecting such condonation application, but an assessee, which is a public charitable trust for past 30 years which substantially satisfies the conditions for availing such exemption, should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay. Applying the said principle, the petition is allowed. The impugned order passed by respondent dated 12-3-2021 is quashed and aside. The impugned order of rectification under section 154 of the Act dated 25-1-2019 is also quashed and set aside. The application for condonation of delay filed by the petitioner before the respondent is allowed. 6. The respondent is now directed to process the return in accordance with law. It is noticed that no assessment is framed and only an intimation under section 143(1) of the Act was issued. No scrutiny could be carried out by the respondent since the audit report under section 10B was not on record. Learned advocate for the petitioner Mr. B.S. Soparkar fairly submitted that the issue of benefit of exemption may be examined by issuance of notice u/s 143(1)/143(2) and the petitioner shall not object to the said proceedings by taking the ground of limitations.” 6.2. Respectfully following the above judicial pronouncements by Jurisdictional High Court, we have no hesitation in confirming the order passed by Ld. CIT(A) who has directed the Jurisdictional Assessing Officer (JAO) to verify the Form No. 10B and allow the claim of exemption u/s. 11 and compute the total income. Thus the grounds raised by the Revenue is devoid of merits and the same is liable to be dismissed.” 8. In the present cases before us Audit Report in Form 10B though filed belatedly by the assessee trust, the same were not considered and verified by the CPC processing u/s. 143(1) of the Act, so the said orders are hereby set aside. Further there is no regular assessment orders passed u/s.143(3) of the Act in the assessee case, therefore we hereby direct the Jurisdictional Assessing Officer to verify the Form No.10B and then allow the claim of exemption u/s. 11 of the Act and in accordance with the provisions of law by giving opportunity of hearing to the assessee. Thus the grounds raised by the assessee are hereby allowed. Printed from counselvise.com I.T.A No. 798 & 799/Ahd/2025 A.Y.2019-20 & 2020-21 Page No Ambica Education Trust Vs. ADIT, CPC Through ITO (Exemsption) 8 9. In the result, the appeals filed by the Assessee are allowed for statistical purposes. Order pronounced in the open court on 13 -08-2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad: Dated 13/08/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "