PALAM RURAL CENTRE,TIRUPPUR V. ACIT, EXEMPTIONS, COIMBATORE

SA 51/CHNY/2025

AI Insights

The case involves Palam Rural Centre, a charitable trust, which appealed against the order of the Assistant Commissioner of Income Tax (Exemptions), Coimbatore, for the Assessment Year 2018-19. The primary contention was the non-filing of Form 10B, which the trust argued was not mandatory and that they had filed other necessary forms (3CB and 3CD). The trust faced a significant delay in filing the appeal due to the medical emergency of their Chartered Accountant and the COVID-19 pandemic. The Tribunal considered various precedents and the specific circumstances of the case, including the impact of the pandemic on legal deadlines, and decided in favor of the trust, allowing the appeal and directing a reassessment based on net income rather than gross receipts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706009 (ITAT-CHENNAI)
• Appeal Type: Stay Application
• Pronouncement Date: 01-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2018-2019
• Other Referred Cases: M/s.Annadaneshwara Charitable Trust vs. ITO Ward-3, Raichur, Sree Venkateswara Education Trust Vs Income Tax Officer(Exemptions Ward, Salem), H.M.V. Educational Cultural & Social Trust Vs ITO (E), Ward -1 Bangalore, Shree Jain Swetamber Murtipujak Tapagachha Sangh v. Commissioner of Income Tax (Exemptions) and Anr
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SITA KRISHNAMOORTHY; J. C.I.T
• Assessee Lawyers: EDSER RAJ
• Keywords: Condonation of delay; Set aside; Revenue expenditure; Reasonable cause; Period of limitation; Principle of natural justice; TDS; Charitable institution; Time period of passing order; Application of stay
• Section: 11; 12AA; 12A; 139; 12; 119(2)(b); 10B; 139(5)

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी जॉजŊ जॉजŊ क े, उपाȯƗ एवं ŵी एस.आर.रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R.RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 [Arising in ITA No.: 1560/Chny/2025] िनधाŊरण वषŊ / Assessment Year:2018-19 Palam Rural Centre, Pethampalayam, Veerapandi S.O., Tiruppur – 641 605. vs. The Asst. Commissioner of Income Tax (Exemptions), Coimbatore. [PAN: AAATP-2929-F] (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से/Appellant by : Shri. Edser Raj, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. Sita Krishnamoorthy, J.C.I.T. सुनवाई की तारीख/Date of Hearing : 11.06.2025 घोषणा की तारीख/Date of Pronouncement : 01.07.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM: The aforesaid appeal and stay application filed by the assessee for Assessment Year (AY) 2018-19 arises out of the order of Ld. CIT, Appeal, Addl./JCIT (A)-2, Visakhapatnam dated 07.03.2025. 2. The grounds of appeal raised by the assessee are as follows: Ground 1 The Learned Addl/Joint Commissioner of Income (Appeals) failed to consider the entire grounds and has not passed orders on the merits of the case. :-2-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 Ground 2 It is submitted that, even though for non filing of Form 10B, but filed the audit report in Form 3CB and 3CD, so the appellants praying that the entire Gross Receipts cannot be taken for tax calculation. It is submitted that, admissible expenses against the transactions can be taken for tax calculation purposes. It is submitted that the issue involved is with reference to the filing of the Form 10B was not filed in this case for the assessment year 2018-19. It is submitted that the filing of Form 10B is not mandatory and only a directory in nature. In the case of M/s.Annadaneshwara Charitable Trust vs. ITO Ward-3, Raichur, ITA No.514/Bang/2023 for the AY 2018-19 observed as follows. \"In light of the Order of the Bangalore Bench of the Tribunal, I restore the matter to the AO. The AO is directed to examine the financials of the assesse and allow the expenditure which have been incurred for earning the income of the assessee. I make it clear that since in the absence of registration under section 12AA of the Act, there is no question of any application of income. It is ordered accordingly.\" It is submitted that, the above case is clearly mentioned that eventhough there is an absence of registration under section 12AA at the time of filing of return, the Tribunal held that, the entire Gross receipts cannot be taken for calculation of tax only after allowing the expenditure for earning the income of the assesse. Ground 3 It is submitted that the delay in filing the appeal was due to the extraneous circumstances of the case. It is submitted that the Chartered Accountant who was handling the case of the Appellant underwent an open-heart surgery in May 2022 and was advised continuous bed rest for several months. At the same time, the Appellant Trust was also awaiting response from the Jurisdictional Assessing Officer with respect of Income dated 23/09/2020. It is submitted that the delay was occurred on extraneous reasons and the delay is not wanton or willful. Ground 4 It is submitted that filing of Form 10B under the Income Tax Act is different and filing of annual Balance Sheet is different. It is submitted that the filing of the Income Tax Return has been complied with, which is main statutory responsibility. In the case of Sree Venkateswara Education Trust Vs Income Tax Officer(Exemptions Ward, Salem (TCA Nos 168 and 169 of 2020 and C.M.P.No.5380 and 5387 of 2022 dated 02.09.2024 the Madras High Court observed as follows. :-3-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 \"25. In our view also, if assessments are to be completed, deductions and applicable exemptions that are otherwise available to an assessee ought to have been extended by the Assessing Officer to an assessee before finalizing the assessment. Since the appellant/assessee was not entitled to exemption as a Trust under Sections 11, 12 and 12A of the Act in absence of registration under the Act as it stood Section 12AA of the Act, the benefit of other deductions under the Act ought to have been given. The Assessing Officer is not expected to act mechanically to confirm the liability to fasten an unjust tax liability on an assessee.\" It is submitted that in view of the above decision of the High Court of Madras, the assessing officer ought to have assessed the appellants on the basis of the report submitted as per Sec. 139 of the Income Tax Act. Ground 5 It is submitted that the conditions for claiming exemption under Section 11 have been complied with by way producing the accounts and returns under the income Tax Act. It is submitted that in the case of Appellants case (Palam Rural Centre Vs The Assistant Commissioner of Income Tax (Exemptions)the Honourable Income Tax Appellate Tribunal \"B\" Bench Chennai (ITA.872/Chny/2025 directed the Assessing Officer to compute the total income afresh after allowing the admissible expenditure. Ground 6 It is respectfully submitted that simply because the Form 10B was not filed would not render the Assessing Authority to resort to best judgment assessment to the Trust which has been legally formed as per the provisions of Income Tax Act. The exemption has to be given in all the amount of Rs.1,90,74,483-00 on the basis of the Returns filed by the Trust Appellants. In the case of H.M.V. Educational Cultural & Social Trust Vs ITO (E), Ward -1 Bangalore in ITA No.9/Bang/2023 Asst. Year 2018-19 held as follows: \"The section 139(4A) of the Act prescribes that all other provisions of the Act shall apply as if it were a return required to be furnished under sub-section (1) of section 139 of the Act. The income is arrived after deducting the allowable expenditures as per the I.T. Act. 1961. In the impugned case on hand, the total receipts declared by the assessee, which is placed at Paper Book page No.6, we observe that there is excess expenditure over income of Rs.6,62,324/-, which is loss suffered by the assessee during the year. Therefore, in this case, the claim of deduction from income under section 11 and 12(1) (ba) of the Act does not arise. No doubt that the assessee has filed his return of income belatedly but he was required to compute his income and the income is below the threshold limit and in this case no tax shall be charged on the entire receipts. We also make it :-4-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 clear that the assessee will not get the benefit of carry forward & setting off of loss for the subsequent year as prescribed under section 139(3)of the Act. Considering the facts of the case, we set aside the order of the CIT(A). Accordingly, appeal of the assessee is partly allowed. \"10. In the result, appeal of the assessee is partly allowed\" Ground 7 It is submitted that the Learned Joint Commissioner (Appeals) in his order observed as follows. \"\"2.5 The appellant society's request for condonation lacks merit as the due date for filing had expired long before the COVID-19 period of limitation. Accordingly, the appeal is disposed of as time-barred and not admitted for adjudication.\" \"2.6 In the result, the appeal filed by the appellant society is treated as DISMISSED in-limine.\" It is submitted a Full bench of the Hon'ble Supreme Court of India (SC), comprising of Mr. Chief Justice N.V. Ramana, Mr. Justice L. Nageswara Rao and Mr. Justice Surya Kant, in their order dated 10.01.2022 in Re: Cognizance for Extension of Limitation (MA No. 21 of 2022 in MA No. 665 of 2021 in SMW(C) No. 3 of 2020), restored the SC order dated 23.03.2020 and directed for the exclusion of period from 15.03.2020 till 28.02.2022 in computing the period of limitation for any suit, appeal, application or proceeding; the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. Further, in cases where the limitation would have expired between 15.03.2020 and 28.02.2022, irrespective of the actual balance period of limitation remaining, all parties shall have a limitation period of 90 days available to them from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022, is greater than 90 days, that longer period shall apply. The period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe limitation period for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. During the COVID-19 period (specifically between March 15, 2020, and February 28, 2022), the limitation period for legal actions was extended. Regardless of the :-5-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 original limitation period, all persons were given a new 90-day period from March 1, 2022, to file their cases. The Indian government extended the limitation period for various legal actions to address the challenges caused by the COVID-19 pandemic. The extension applied to the period between March 15, 2020, and February 28, 2022, according to the Supreme Court of India ruling. It is submitted that in his The ADDL/JCIT(A)-2 VISAKHAPAATNAM observed as follows. \"The appeal if any, was required to be filed against such order, on or before 30.10.2019 whereas the impugned appeal was filed on 29.1.2024 resulting in delay of 1551 days.\" The delay is as follows only. From November 2019 to March 2020 April 2021 to February 2022 March 2022 April 22 to 31.3.2023 April 2023 to 29.01.2024 497 344 31 365 306 Total 1543 1543 Less period during Pandamic 746 746 Covid 19 as per Supreme Court Decision, Upto February 2022 From March 15, 2020 to 31.03.2020 16 April 2020 to 31.03.2021 365 April 2021 to 28.02.2022 306 Correct number of delay is 797 It is submitted the ADDL/JCIT(A)-2, Visakhapaatnam, is not correct in arriving at the number of days as 1551.It is prayed that this point may be considered in favor of the appellants and the matter may be decided on merit as this is a Trust for social cause. Ground 8 It is submitted that the appellants is a charitable trust is a registered as Trust with effect from 11-01-1982 Registration No. 1419(66)/81-82 dated 11.01.1982 filed report Audit Report along With Income Tax Returns. It is submitted that once the audit report is filed to be available with the Assessing Officer, the requirement of law is satisfied. In that view it is submitted that the Learned Additional/Joint Commissioner of Income (Appeals) was not justified in dismissing the appeal on the ground of limitation. The appellants pray that they are eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of :-6-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 non-filing of audit report could never to an impediment in law in claiming the exemption. Ground 9 It is submitted that as the entire income of Rs.1,92,15,510/- of the appellant(Trust) is exempted as per the Income Tax Act, the question of levy of interest under Sec. 234 C of the Income Tax Act does not arise. Ground 10 In a similar matter in Shree Jain Swetamber Murtipujak Tapagachha Sangh v. Commissioner of Income Tax (Exemptions) and Anr (Writ Petition (L) No.1321 of 2024 decided on 27.3.2024) was also a case where auditor had due to oversight not filed Form 10B. The Court held that the error on the part of auditor cannot be rejected but should be accepted as a reasonable cause shown by the trust management. In that case also, Petitioner did not suo moto realize its mistake and filed a condonation request only after Centralised Processing Centre (\"CPC\") sent an intimation about non-filing of Form 10B.\" \"9. Having considered the matter in its entirety, we are satisfied that the delay was not intentional or 2024:KER:59378 WP(C) 17059/2024 and Conn.Cases deliberate. Petitioner cannot be prejudiced on account of an ignorance or error committed by professional engaged by Petitioner. In our view, Respondent No.1 ought to have exercised the powers conferred\". In the circumstances, it is prayed that the order of the Assessing authority may kindly be set aside and the books of accounts of the Trust may be accepted and render justice. The appellant craves the permission before this Honorable Tribunal raise additional grounds if any to be raised in support of the above submission at the time of hearing. In the circumstances it is prayed that the order of the Assessing authority and learned Addl/Joint Commissioner of Income (Appeals) may kindly be set aside and the books of accounts of the Trust may be accepted and render justice. 3. The brief facts of the case are that the assessee is a charitable trust registered as Trust with effect from 11/01/1982 Registration No.1419(66)/81-82 dated 11/01/1982. It is submitted that Palam Rural Centre (People's Association for Leather and Allied Manufacturing) offers employment opportunities to people of the :-7-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 marginalized cobbler family community and their children education and other facilities in a village in Tamil Nadu region, southeastern India. In the Tamil language, Palam also means \"bridge.\" Palam Rural Centre seeks to build a \"bridge\" to the markets of the rest of the world. Other artisan benefits include health care and retirement pensions. Palam artisans see education of their children as the key to hope and change. Through this work, Palam Rural Centre is providing dignity and security to artisans and helping to break down caste walls in society. 4. The assessee Trust filed its return of income for the Assessment year 2018- 19 on 15/08/2018 admitting an Income of Rs.1,41,027/- and claiming a refund of Rs.22,970/-. Further the assessee filed its audit report u/s.44AB of the Act in Form 3CA & 3CD for the AY 2018-19 but could not file the Form 10B for the assessment 2018-19 due to unforeseen circumstances due to the CA's medical emergency, a factor beyond the Trust's control as explained above under the heading 'reasons for delay'. 5. During the impugned assessment year the assessee was in receipts from operations of Rs.1,92,15,510/- as voluntary contributions during the year and claimed an expenditure of Rs.1,90,74,483/- and claimed the balance amount as application as per Sec.11 and 12 of the Act. The assessee due to the mistake of finance team and ignorance, did not file Form 10B for the A.Y. 2018-19. The Return of Income was processed u/s.143(1) of the Act by the AO, CPC by disallowing the entire expenditure and arriving at a Total Income of Rs.1,92,15,510/- and a demand of Rs.84,41,913/-. It may be noted that Interest under Section 234C was levied at Rs.3,43,663/-. :-8-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 6. Being aggrieved, the assessee filed a Return of Income u/s.119(2)(b) of the Act on 16/09/2020 vide Ack. No.554486931160920. The Return of Income was transferred to the jurisdictional Assessing Officer, that is, ACIT, (Exemptions), Coimbatore, on 18/09/2020. However, there was no response from the side of the JAO over the said return. Under these Circumstances, the Appellant also filed another Return of Income under section 139(5) on 23/09/2020 vide Ack. No.576055421230920. The said return of income also remains unanswered from the side of the Income Tax Department. 7. Later, aggrieved by the Intimation u/s.143(1) of the Act, the assessee filed an appeal before the ADDL/JCIT(A)-2, Vishakhapatnam belatedly stating that the delay in filing the appeal was not intentional or deliberate and is due to the fact the assessee believed in good faith that fling of Audit Report in Form10B is merely directory in nature, more particularly when Form No.3CA and 3CD were filed and that it amounted to sufficient compliance. 8. Furthermore, it is submitted that the Chartered Accountant, who was handling the case of the assessee underwent an open heart surgery in May 2022 and was advised continuous bed rest for several months. At the same time, the assessee was also awaiting response from the Jurisdictional Assessing Officer with respect the Return of Income dated 16/09/2020 and from the CPC for the Return of Income dated 23/9/2020. It is submitted that the appeal was required to be filed against such order on or before 30/10/2020 whereas the impugned appeal was filed on 29/01/2024 resulting in delay of 1,551 days. Further, the period from 15/03/2020 to 29/05/2022 is covered by the extension of limitation granted by the Supreme Court in the light of the covid-19 Pandemic. :-9-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 9. However, the Addl. / Joint Commissioner (A)-2, Visakhapatnam passed order on 07/03/2025 by dismissing the appeal in limine without condoning the delay in filing the appeal by holding as under: “2.2 The reasons given by the appellant society is not acceptable. The prescribed due date for filing the appeal was 30/10/2019, well before the onset of the covid- 19 pandemic and the related relaxation period. The Hon'ble Supreme Court in Miscellaneous Application No. 665 of 2021 In SMW (c) No.3 of 2020 took Suo Motu cognizance and extended the limitation period due to COVID-19 from 15/03/2020 onwards. However, since the statutory deadline in the present case had already lapsed before this period, the benefit of the extension does not apply to the appellant society.\" \"2.3 The appellant society has failed to provide any reasonable and justifiable cause for the substantial delay before 15/03/2020, and no evidence has been furnished to demonstrate any exceptional circumstances preventing the timely filing of the appeal.\" \"2.4 The Supreme Court's ruling was intended to provide relief to litigants whose limitation period expired on or after 15/03/2020, and not to revive appeals that were already time-barred prior to that date. Secondly appellant society also stated that the Chartered Accountant underwent surgery in 2022 May as one of the reason for delay. The appellant's reason lacks merit as there is a significant gap of around 3 years which remains unexplained. Appellant society is responsible for their legal compliance and could have engaged another chartered account, further courts have ruled that personal difficulties of a representative do not excuse prolonged inaction.\" \"2.5 The appellant society's request for condonation lacks merit as the due date for filing had expired long before the COVID-19 period of limitation. Accordingly, the appeal is disposed of as time-barred and not admitted for adjudication.\" \"2.6 In the result, the appeal filed by the appellant society is treated as DISMISSED in-limine.\" Aggrieved by the order of the ld.addl/JCIT, the assessee is before us. 10. The ld.AR for the assessee submitted that the exemption u/s.11 and 12 to the trust cannot be denied merely on the ground that Form No.10B was not filed. On this issue, the appellant submitted that filing of audit report in Form No.10B is directory in nature and the same cannot be the sole ground for denying the exemption claimed under the Act. Further, the ld.AR stated that the entire receipts cannot be considered :-10-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 as income and the expenses incurred during the year for the purpose of earning such income must be allowed and net income alone can be taxed. The appellant also relied on certain case laws in support of his claim. 11. It is submitted that filing of Form 10B under the Income Tax Act is different and filing of annual Balance Sheet is different. It is submitted that the filing of the Income Tax Return has been complied with, which is main statutory responsibility. In the case of Sree Venkateswara Education Trust Vs Income Tax Officer (Exemptions) Ward, Salem (TCA Nos 168 and 169 of 2020) and C.M.P.No.5380 and 53 87 of 2022 dated 02.09.2024 the Madras High Court observed as follows: \"25. In our view also, if assessments are to be completed, deductions and applicable exemptions that are otherwise available to an assessee ought to have been extended by the Assessing Officer to an assessee before finalizing the assessment. Since the appellant/assessee was not entitled to exemption as a Trust under Sections 11, 12 and 12A of the Act in absence of registration under the Act as it stood Section 12AA of the Act, the benefit of other deductions under the Act ought to have been given. The Assessing Officer is not expected to act mechanically to confirm the liability to fasten an unjust tax liability on an assessee.” It is submitted that in view of the above decision of the High Court of Madras, the assessing officer ought to have assessed the appellants on the basis of the report submitted as per Sec. 139 of the Income Tax Act and assesse Trust is eligible for deductions and applicable exemptions and allowed the applicable expenditures. So, the Assessee Trust has to be taxed on the Net Income only and not for the Gross Receipts. 12. In the case of M/s.H.M.V. Educational Cultural & Social Trust, Bangalore Vs. ITO (E), Ward-1 Bangalore, ITA No.9/Bang/2023, Bangalore Tribunal has held as follows: \"8. After hearing the rival contentions and facts of the case, we noted that the assessee filed return of income on 19.03.2019, whereas the due date for filing return of income was on 30.09.2018. The assessee is also registered u/s 12A of the Act, therefore, as per the amendment made in section 12A(1)(ba) of the Act, the assessee was required to file return of income within the due date for getting exemption w/s. 11 and 12 of the I.T.Act. In the impugned assessment year, the gross receipt of the society is Rs.10,22,94,076/-, which consist as under:- :-11-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 Bank Interest Receipts Activity Service/Incomes Application & Admission Fees Tuition & Annual Fees Other Fees Transport Fees Events & Projects Fees Miscellaneous Income OCEP fee 24,94,862.00 23,042.00 1,42,51,999.00 4,90,600.00 7,17,92,051.00 5,95,206.00 1,04,27,081.00 64,000.00 4,31,000.00 17,24,235.00 8. From the above, it is clear that the above receipts includes bank interest of Rs.24,94,862/- and we noted that in over all, the Trust is in loss for the year of Rs.6,62,323.82/- The income tax is levied on the income of the assesee during the impugned assessment year. However, in this case, the CPC has charged the income tax on the entire gross receipts without giving effect of the expenditures incurred by the assessee towards earning of the income. The income has been defined in section 2(24) of the Act., the income should be construed in its general meaning but not to the entire receipts, if the assessee has incurred any expenditure towards earning the income, in such case, the assessee is entitled for deduction of expenditure incurred as prescribed in the Income Tax Act. There may be disallowances of the expenditures, which are not in conformity within the provisions of the Income Tax Act. In this case, the assessee filed return of income belatedly as per section139(4) of the Act. The section 139(4A) of the Act prescribes that all other provisions of the Act shall apply as if it were a return required to be furnished under sub-section (1) of section 139 of the Act. The income is arrived after deducting the allowable expenditures as per the I.T. Act. 1961. In the impugned case on hand, the total receipts declared by the assessee, which is placed at Paper Book page No.6, we observe that there is excess expenditure over income of Rs.6,62,324/-, which is loss suffered by the assessee during the year. Therefore, in this case, the claim of deduction from income under section 11 and 12(1) (ba) of the Act does not arise. No doubt that the assessee has filed his return of income belatedly but he was required to compute his income and the income is below the threshold limit and in this case no tax shall be charged on the entire receipts. We also make it clear that the assessee will not get the benefit of carry forward & setting off of loss for the subsequent year as prescribed under section 139(3) of the Act. Considering the facts of the case, we set aside the order of the CIT(A). Accordingly, appeal of the assessee is partly allowed. 10. In the result, appeal of the assessee is partly allowed\" 13. In view of the above ITAT order, if the assessee Trust is denied to claim section 11 & 12 exemption of the Act, then the assessee will be liable to tax only on the net income and not on the gross receipts of the Trust. :-12-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 14. In assessee’s case for the assessment Year 2022-23 in ITA No.872/Chny/2025, dated 21.04.2025, the Tribunal has observed as follows: 5. We have heard the rival submissions, and perused the materials available on record. The assessee is a charitable trust registered u/s.12A of the Act. The assessee has filed its return of income along with audit report in Form No.3CD on 07.11.2022, showing total income of Rs.90,190/- after claiming refund of Rs.32,000/- The assessee however has not filed Form. 10B by 07.10.2022 i.e., one month prior to due date of filing return of income in order to claim exemption u/s. 11 & 12 of the Act. Accordingly, the CPC in intimation u/s 143(1) of the Act denied the benefit of Section 11 & 12 of the Act and computed the total income at the gross receipts shown in the return of income not allowing even revenue expenditure claimed as application of fund. We find that the assessee in the return of income has shown gross receipts of Rs.1,90,83,483/- and also claimed expenditure such as rents, repair and maintenance of Rs.3,08,764/-, compensation to employees of Rs.49,74,193/-, insurance of Rs.4,79,769/-, workmen and staff welfare expenses of Rs.23,52,563/-, conveyance and travelling expenses of Rs.1,08,019/- rates and taxes of Rs.2,32,045/-. However, the same have not been considered while computing the total income while denying exemption u/s 11 & 12 of the Act on application of fund. The assessee had enclosed Form 3CD along with the return of income filled, therefore the figure of income over expenditure was available at the time of processing of return w/s 143(1) of the Act We also note that assessee has filled form 10B on 05.04.2023 and subsequently filed condonation petition u/s. 119(2)(b) of the Act before CIT(E), for condonation of delay in filing Form-10B. In view of the above facts and considering the principle of natural justice, we set aside the order of CPC and Ld Addl. CIT(A) and direct the A.O to compute the total income afresh, after allowing the admissible expenditures, on receipt of the order of Ld. CIT(E) on assessee's application for condonation of delay. In view of the above, the appeal filed by the assessee is allowed for statistical purposes.” 15. In view of the above Order the ld.AR prayed that the net Income only to be taxed as per the returns filed. As per the audited financials, the net income of Rs.1,41,027/-after allowing the audited eligible expenditure of Rs.1,90,74,483/- on the Gross receipts of Rs.1,92,15,510/-. Further the ld.AR prayed for allowing TDS amount of Rs.22,970/- as claimed in the return of income. 16. Per contra, the ld.DR submitted that the ld.Addl / JCIT has rightly dismissed the appeal of the assessee without condoning the delay of 1551 days and hence prayed for confirming the same. :-13-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 17. We have heard both the parties, perused materials available on record and gone through orders of the authorities below along with case laws relied on. Admittedly, the assessee had filed its return of income for the A.Y. 2018-19 on 15.10.2018 along with the audit report u/s.44AB of the Act in Form No.3CA and 3CD. However, the assessee had not filed the form No.10B to claim the exemption u/s.11 & 12 of the Act. We note that the assessee had been trying with the alternate solutions of filing the return u/s.119(2)(b) / 139(5) of the Act. In the meanwhile, the Covid 19 impact was also there. Apart from that the auditor of the assessee was under medical emergency and hence the assessee had a reasonable cause to file the appeal belatedly by 1,551 days. In view of the above reasons, we condone the delay in filing the appeal of the assessee before the ld.addl. CIT / JCIT and set aside the order of the ld.JCIT. 18. Further, we find that the assessee had filed its audited financials along with the audit report in form No.3CA & 3CD under the provisions of the 44AB of the Act on 15.10.2018. However, the CPC had erroneously computed the income of the assessee by considering the entire revenue from operations of Rs.1,92,15,510/- without allowing the expenditure as per the audited financials, which is not tenable under the law. We note that the Tribunal in assessee’s own case for the A.Y.2022- 23, in ITA No.872/Chny/2025 dated 21.04.2025 has already remitted the issue back to the files of the AO with a direction to compute the net income, instead of entire receipts. 19. Therefore, in the present facts and circumstances of the case, we are of the considered view that the CPC has erred in computing the entire receipts as income :-14-: ITA No.:1560/Chny/2025 & S.A.No.51Chny/2025 and hence we direct the JAO to compute the net income after allowing the expenditure as per the audited financials of the assessee and tax it in accordance with law. Thus, all the related grounds raised by the assessee are allowed. 20. Since, we have already set aside the order of the CPC as well as the ld.Addl / JCIT, the demand raised no longer exists. Accordingly, the stay application filed by the assessee becomes infructuous and hence dismissed. 21. In the result, the appeal filed by the assessee is allowed for statistical purposes and the Stay Application filed by the assessee is dismissed as infructuous. Order pronounced in the court on 01st July, 2025 at Chennai. Sd/- Sd/- (जॉजŊ जॉजŊ क े) (GEORGE GEORGE K) उपाȯƗ /VICE PRESIDENT (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद˟/ACCOUNTANT MEMBER चेɄई/Chennai, िदनांक/Dated, the 01st July, 2025 SP आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "