M P BIRLA FOUNDATION EDUCATIONAL SOCIETY,KOLKATA V. DY. COMMISSIONER OF INCOME TAX (EXEMPTION), KOLKATA

ITA 989/KOL/2025

AI Insights

The case involves the M P Birla Foundation Educational Society appealing against the denial of exemption under section 10(23C)(vi) of the Income Tax Act, 1961, for the assessment year 2018-19. The exemption was initially denied by the Centralized Processing Center (CPC) due to the late filing of the audit report on Form No. 10BB, which was filed after the due date but was available at the time of processing the return. The CIT(A) upheld the CPC's decision, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal found that the late filing of the audit report should not affect the exemption claim, referencing a similar case and decision by the High Court of Calcutta, which treated the filing of the auditor's report as a procedural provision and directory in nature.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 774584 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 07-05-2025
• Other Referred Cases: Commissioner of Income Tax Exemptions Kolkata vs M/s Indian Sugar Mills Association
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Benefit of exemption
• Section: 143(3); 11; 119(2)(b); 10B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society Vs. Dy. Commissioner of Income Tax (Exemption), Kolkata (Appellant) (Respondent) PAN: AAATM6127G Appearances: Assessee represented by : V.K. Sharma, AR. Department represented by : Praveen Kishore, CIT (DR). Date of concluding the hearing : 10-July-2025 Date of pronouncing the order : 10-September-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Addl/JCIT(A)-Panaji [hereinafter referred to as Ld. ‘Addl/JCIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 19.03.2025, which has been passed against the intimation order u/s 143(1) of the Act, dated 18.03.2020. 2. The assessee has raised the following grounds of appeal before the Tribunal: “1. That on the facts and in the circumstances of the case, the learned Addl./JCIT (Appeals) erred in not setting aside Intimation dated March 18, 2020 issued by CPC as illegal, invalid and bad in law. 2. That on the facts and in the circumstances of the case, the learned Addl./JCIT erred in not holding that denial of exemption claimed u/s. Printed from counselvise.com Page | 2 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. 10(23C)(vi) is beyond the scope of section 143(1)(a) of the Income Tax Act, 1961 (the Act) and therefore the Intimation dated March 18, 2020 issued by CPC is bad in law. 3. That without prejudice to the above, the appellant states that the Order dated March 18, 2020 is wholly arbitrary, bad in law and in gross violation of the principles of natural justice as the same does not deal with the objection of the appellant dated December 23, 2019 and as such the learned Addl./JCIT (Appeals) should have set aside the order. 4. That on the facts and in the circumstances of the case, the learned Addl./JCIT erred in not holding that the CPC/Assessing Officer failed to appreciate that in Serial No. 8 and 9 of Form of Return (ITR) though Section 10(23C) was mentioned but Clause (vi) was not mentioned anywhere and because of absence of specific clause mentioned in Part B-TI for taking exemption, the appellant had no other option but to report exempt amount under Serial No. 10 (amount eligible for exemption under any other Clause of Section 10, other than those mentioned in Serial No.8 and 9) and therefore it was incumbent upon CPC/Assessing Officer to grant appellant the benefit of exemption u/s. I0(23C)(vi) of the Act. 5. Further and in any event, without prejudice to above Grounds, assuming though not admitting that the appellant has not reported the exemption in the correct item and that either at Item No. 8 or 9 or any other item would have been the correct entry, even then it was incumbent upon CPC/Assessing Officer to process the return by giving the appellant the benefit of Exemption of Section 10(23C)(vi), as the appellant had duly provided details of the said Exemption in Part A of the return. 6. That on the facts and in the circumstances of the case, the learned Addl./JCIT erred in not holding that the appellant existed solely for education purpose and thus entitled to exemption u/s. 10(23CXvi) of the Act. That the appellant craves leave to add, alter, amend and/or withdraw all or any of the grounds at or before the hearing of the appeal.” 3. Brief facts of the case as culled out from the order of the Ld. CIT(A) are as under: “The matter pertains to assessment year 2018-19, the Income Tax Return was filed on March 28, 2019 and Form No. 10BB on January 29, 2019 was obtained from the Auditor. In the said return, the appellant duly mentioned the name of the auditor and the date of audit report and that the return was prepared on the basis of Balance sheet and Income & Expenditure Account. The income was declared NIL in the return after taking exemption under Printed from counselvise.com Page | 3 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. section 10(23C)(vi) of the Act. While, at the time of filing the return, it was noticed by the appellant that in serial no. 8 and 9 though section 10(23C) was mentioned, however, clause (vi) was not mentioned anywhere. Because of absence of specific clause mentioned in Part B-TI for taking exemption the appellant thought it prudent to report exempt amount under serial no. 10 (amount eligible for exemption under any other clause of section 10 other than those at serial no. 8 and 9) as it is entitled for exemption under section 10(23C)(vi). On December 4, 2019 the appellant received a purported communication from the Centralized Processing Center, Bengaluru by which it was alleged that in Schedule Part-BTI of the return of income the appellant had not selected the relevant clause of section 10 from the drop-down list under details of projects/institutions run by the appellant in Schedule Part A-General (1) that the appellant was not eligible to claim deduction under section 10 other than section 10(23C). In the communication, it was proposed to disallow the entire income of Rs. 26,65,66,937/- as exemption under section 10(23C)(vi) as claimed in the return of income. By the said communication the appellant was directed to file its response within 30 days from the issuance of the said communication failing which the return would be processed after making necessary adjustment under section 143(1)(a) of the Act as proposed without providing any further opportunities. 4. The appellant, on December 23, 2019, duly replied the said Communication dated December 4, 2019 through e-filing portal of the Income Tax Department that the income of the appellant was exempt under section 10(23C)(vi), (b) details of section i.e. section 10(23C) (vi) was clearly selected from the drop down list under column details of projects/institution run by the appellant under Part A General Schedule along with details of notification, registration number and approving authority and thus, the claim was rightly made, the appellant was only claiming exemption under clause (vi) of section 10(23C) and not under any other clause of section 10 of the Act. (d) in serial number 8 and 9 of the said form of return, though section 10(23C) was mentioned but clause (vi) was not mentioned anywhere. Because of absence of specific clause mentioned in Part B-TI for taking exemption, the appellant had no other option but to report exempt amount under serial no. 10 (amount eligible for exemption under any other clause of section 10, other than those mentioned in serial no. 8 and 9) as the appellant was entitled to exemption under section 10(23C) (vi) of the Act. The appellant states that the return was processed and an intimation dated March 18, 2020 was received by the appellant through its official e-mail id. After going through the said intimation the appellant was utterly surprised to notice that the exemption under section 10(23C)(vi) was denied on the grounds as proposed in the said communication dated December 4, 2019 and wrongly determined a total income at Rs. 26,65,66,937/-, 6. The appellant states that subsequently the case of the appellant was selected Printed from counselvise.com Page | 4 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. for complete scrutiny assessment under the E-assessment Scheme, 2019 and the assessment was completed under section 143(3) by an order dated April 7, 2021 assessing the same total income Rs. 26,65,66,937/- as was determined in the said intimation dated March 18, 2020 by denying the exemption under section 10(23C) (vi) of the Act on the alleged ground that the appellant did not file the return of income along with the audit report before the due date. Against the said Assessment Order dated April 7, 2021 the appellant preferred appeal before the Commissioner of Income Tax (Appeals). The appellant states that the said appeal is still pending. The appellant craves leave to refer to and/or rely upon the said Assessment Order dated April 7, 2021 and the appeal filed before the Commissioner of Income Tax (Appeals) against the said Assessment Order at the time of hearing of this appeal, if necessary.” 4. Aggrieved with the intimation issued under section 143(1) of the Act, the assessee filed an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee holding as under: “7.1 Ground no. (A) to (K) raised by the appellant are related to the issue that the AO (CPC), has erred in making addition of Rs.26,65,66,937/- which is claimed by the appellant as exempt income u/s.10(23C)(vi) of IT Act, in the return of income filed for the year under consideration. These grounds are adjudicated on merit of the case, facts, submission filed by the appellant and material available on record, as under: - Upon careful perusal of the statement of facts and submission filed by the appellant it is seen that the appellant filed its return of income for the year under consideration i.e. AY 2018-19 on 28.03.2019 by declaring total income as Nil along with claiming the exemption income amounting to Rs.26,65,66,937/- u/s. 10(23C)(vi) of IT Act. During the course of processing of return of income the AO (CPC) did not consider the amount of exemption claimed by the appellant of Rs.26,65,66,937/- and passed the intimation order u/s.143(1) of IT Act by making an addition of Rs.26,65,66,937/- in the total income of the appellant during the year under consideration. Aggrieved with action of AO (CPC) the appellant is in appeal Intimation order u/s 143(1) of the AO (CPC) and submission of the appellant has been carefully perused and appeal is decided as under:- As per the statutory provisions of IT Act, any exemption can be claimed and allowed to the appellant only in the condition when the return of income for the year in which such exemption is claimed has been filed within the due date of filing of return of income u/s.139(1) of IT Act. Further requisite Audit reports are also required to be furnished within the prescribed due date. Printed from counselvise.com Page | 5 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. Upon careful perusal of the data available on record it is seen that in this case the return of income for the year under consideration was filed after due date of filing of return of income u/s.139(1) of IT Act i.e. on 28.03.2019. and also Audit Report in Form 10BB was also filed after the due date i.e. on 29.01.2019. Further, it is seen from the press release of Government of India that for the year under consideration i.e. AY 2018-19 the due date of filing of return of income has been extended for multiple time and in spite of that the appellant utterly failed to file the return of income within the due date i.e. 31.10.2018. Further Audit Report in Form 10BB was also filed after the extended due date i.e. 31.10.2018. The copy of the relevant portion of the press release of Government of India is reproduced as under: Press Information Bureau Government of India Ministry of Finance O8 OCT 2018 6:55PM by PIB Delhi CBDT further extends date for filing Income Tax Returns and Audit Reports The due date for filing of Income Tax Returns and Audit Reports for Assessment Year 2018-19 is 30th September, 2018 for certain categories of taxpayers. Central Board of Direct Taxes (CBDT) had earlier extended the dale for filing of Income Tax Returns and various reports of Audit to 15th October, 2018. Upon consideration of representations from various stakeholders, CBDT further extends the 'due date' for filing of Income Tax Returns as well as reports of Audit (which were required to be filed by the said specified date) from 15th October, 2018 to 31st October, 2018 in respect of the said categories of taxpayers. However, as specified m earlier order dated 24.09.2018, assessees filing their return of income within the extended due date shall be liable for levy of interest as per provisions of section 234A of the Income-tax Act. 1961. Considering the above factual discussion it is clear that the appellant utterly failed to file the return of income as well as the audit report for the year under consideration within the due date since the appellant failed to comply with the statutory requirement to claim the exemption. Hence it is held that the AO (CPC) has correctly passed the intimation order by disallowing the exemption claimed by the appellant during the year under consideration and the intimation order passed by the appellant has no infirmity as such need not be interfered with. Accordingly grounds no. (A) to (K) raised by the appellant being devoid of merit are dismissed herewith.” Printed from counselvise.com Page | 6 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. 5. The appeal was accordingly dismissed. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 6. Rival contentions were heard and the record and the submissions made have been examined. The Ld. AR submitted that though the report was filed late on form No. 10BB, however the same was available at the time of processing of the return of income and therefore, the same to have been considered and the exemption claimed should have been allowed. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. 7. We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). It is noted that Form No.10BB had not been uploaded within the due date, which is claimed to be unintentional on the part of the assessee. However, it is noted that the same was available before the Ld. Assessing Officer at the time of processing of the return of income and was uploaded by the Chartered Accountant in time. The filing of Form has been held to be a procedural requirement and directive in nature and not mandatory. It would be appropriate to refer to the decision in the case of Commissioner of Income Tax Exemptions Kolkata vs M/s Indian Sugar Mills Association in ITAT/270/2023 IA No: GS/1/2023, GA/2/2023 vie order dated 10/01/2024 of the Hon'ble High Court of Calcutta wherein it has been held that the filing of the auditor’s report along with the return of income has to be treated as a procedural provision and therefore, directory in nature. The relevant extract from the order is as under: “The short question falls for consideration in the instant case is whether the Principal Commissioner of Income Tax (Appeals), NFAC was justified in allowing the appeal filed by the assessee thereby condoning the delay in filing the Form Printed from counselvise.com Page | 7 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. 10B of the Act. The learned Tribunal after going through the facts of the case took note of the latter circular issued by the Board in Circular No. 16 of 2022 dated 19-07-2022 issued under Section 119(2)(b) by which the powers delegated to the Principal Chief Commissioner of Income Tax/Commissioner of Income Tax to condone the delay in filing Form 10B beyond 365 days up to 3 years from the assessment year 2018-19 or for subsequent year. Applying the said circular the learned Tribunal affirmed the order passed by the CIT (Appeals) in grounds before us in this appeal. The revenue has not dealt with the said circular nor anything has been brough on record to show that Circular No. 16 of 2022 dated 19-07-2022 cannot be applied to the case on hand. The Commissioner of Income Tax (Exemptions) while rejecting the application for condonation of delay by order dated 17-08- 2020 has referred to the Circular No. 2 of 2020 dated 3.1.2020 which admittedly gives power to condone the delay in filing Form 10B up to a period of 365 days. The CIT (Appeals), NFAC also took note of a decision of the High Court of Gujarat in Commissioner of Income Tax Vs Gujarat Oil And Allied Industries reported in 1993 ITR (201) 325 wherein it was held that the filing of the auditor's report along with return of income has to be treated as procedural provision and therefore, directory in nature. Thus we find that there is no error committed by the learned Tribunal in dismissing the appeal filed by the revenue. Accordingly, the appeal is dismissed. Substantial questions of law are answered against the revenue.” 8. Although the decision has been rendered in the context of filing of From No. 10B, however, the judicial principle propounded is equally applicable to the filing of the audit report on Form No. 10BB as well. It was also submitted before us by the Ld. AR that the due date for filing the return of income had been extended and the audit report was required to be filed a month earlier. The same was filed belatedly but was available at the time of processing of the return of income and therefore, the claim of exemption should not have been denied. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) as well as the intimation of the Ld. AO and remit the matter back to the Ld. AO for considering the claim of the assessee afresh as the audit report on Form No. 10BB the was available at the time of processing of the return of income and therefore, the claim of exemption under section 11 of the Act had to be allowed. Needless to Printed from counselvise.com Page | 8 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, all the grounds taken by the assessee in his appeal are allowed for statistical purposes. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 10th September, 2025. Sd/- Sd/- [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 10.09.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 9 I.T.A. No.: 989/KOL/2025 Assessment Year: 2018-19 M P Birla Foundation Educational Society. Copy of the order forwarded to: 1. M P Birla Foundation Educational Society, Birla Building, 9/1, R.N Mukherjee Road, 4th Floor, Kolkata, West Bengal, 700001. 2. Dy. Commissioner of Income Tax (Exemption), Kolkata. 3. Addl/JCIT(A)-Panaji. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "