Delayed Form 10/10B Filing Does Not Extinguish Section 11(2) Exemption Claim Where Original Return Was Filed Within Due Date: ITAT Ahmedabad

Case Background and Core Issue

Case: ITO Vs Ramji Mandir Religious And Charitable Trust (ITAT Ahmedabad)
**ITA No.😗* 374/Ahd/2023
Assessment Year: 2019-20
Order Date: 20/12/2023

The Income Tax Appellate Tribunal, "B" Bench, Ahmedabad, was called upon to adjudicate whether the delayed filing of Form 10/10B could be treated as an absolute bar to an assessee's exemption claim under Section 11(2) of the Income Tax Act, 1961, particularly where the original return of income had been submitted within the prescribed due date and the Form had also accompanied it.

The appeal had been filed by the Revenue challenging the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 01.03.2023, which had granted partial relief to the assessee — Ramji Mandir Religious And Charitable Trust — for Assessment Year 2019-20.

Factual Matrix

The trust, functioning as a religious and charitable entity, filed its original return of income on 25.09.2019, prior to the extended due date of 31.10.2019 applicable for Assessment Year 2019-20. In this original return, an exemption of Rs. 2.40 lakhs was claimed under Section 11(2) of the Income Tax Act, 1961. Crucially, Form 10 was also filed along with this original return, i.e., within the prescribed due date.

Subsequently, the assessee identified an error in the quantum of the Section 11(2) claim and filed a revised return of income on 13.03.2020 under Section 139(5), revising the exemption claim upward to Rs. 1,73,00,000/-. A revised Form 10/10B was also filed on 13.03.2020 to correspond with the revised quantum.

The Centralised Processing Centre (CPC), while processing the return and passing an intimation under Section 143(1) on 26.08.2020, restricted the exemption to Rs. 2.40 lakhs (as per the original return) on the broad ground that the return and Form 10 had not been filed within the due date prescribed under Section 139(1) of the Act.

Note: The CPC's position was factually erroneous — the original return had indeed been filed before the extended due date, and the return filed on 13.03.2020 was a revised return under Section 139(5), not a belated return.

Proceedings Before CIT(A)

Key Findings of the CIT(A)

The CIT(A) examined the factual position carefully and recorded the following findings:

Regarding the return filing timeline:

  • Section 139(4A) requires trusts and institutions to file their return of income within the same time limit applicable under Section 139(1)
  • For Assessment Year 2019-20, the extended due date was 31.10.2019
  • The assessee's original return had been filed on 25.09.2019 — clearly within the prescribed time
  • Verification from the CPC 2.0 portal confirmed that the return dated 13.03.2020 was a revised return under Section 139(5), not a belated return
  • The CPC's characterisation of the return as a belated filing was therefore factually incorrect

Regarding the Form 10B filing deadline:

  • As per Explanation (ii) to Section 44AB, the "specified date" for filing Form 10B is one month prior to the due date for furnishing the return under Section 139(1)
  • For Assessment Year 2019-20, this translated to 01.10.2019
  • The assessee had filed Form 10B on 13.03.2020, which was admittedly after the specified date
  • However, the original Form 10B had been filed before the due date along with the original return

On the legal position regarding delayed audit report filing:

The CIT(A) relied upon several judicial authorities to hold that delayed filing of the audit report/Form 10B cannot be an absolute ground for denying Section 11 exemption:

  1. CIT vs. Rai Bahadur Bissesswarlal Motilal Malwasie Trust, (1992) 195 ITR 825 — The Calcutta High Court held that filing the audit report with the return is a procedural requirement, and exemption should not be denied so long as the report is available to the Assessing Officer before completion of assessment.

  2. Calcutta Management Association vs. VTO, (1992) 42 ITD 62 — The Calcutta Bench of the Tribunal held that the audit report can even be filed at the appellate stage before the CIT(A).

  3. CIT vs. Nagpur Hotel Owners Association, [2001] 114 Taxman 255 (SC) — The Supreme Court held: