Form 10 Filed Late Due to Auditor's Oversight? ITAT Bangalore Directs AO to Defer Decision Pending Section 119(2)(b) Condonation Application

Case Reference

Friends of Sick Association Vs ITO (Exemption)
Forum: Income Tax Appellate Tribunal, Bangalore
Assessment Year: 2024-25
Order Date: 29th May, 2026

Background of the Dispute

Friends of Sick Association, a charitable trust, had filed its return of income for Assessment Year 2024-25 on 15.11.2024, declaring total taxable income at Nil. The return was subsequently processed by the Centralised Processing Centre (CPC), which issued an intimation under Section 143(1) of the Income Tax Act, 1961 on 29.1.2025.

Through this intimation, the CPC computed the total income of the trust at Rs. 93,36,280/- and raised a consequential tax demand of Rs. 34,27,636/-. The basis for this addition was the denial of the accumulation benefit claimed by the trust under Section 11(2) of the Act, solely on account of the trust's failure to file Form 10 within the prescribed time limit. The disallowance was made under Section 143(1)(a)(ii) of the Act.

Journey Through the Appellate Hierarchy

Before the First Appellate Authority

Aggrieved by the intimation dated 29.1.2025, the assessee preferred an appeal before the Addl./JCIT(A)-6, Mumbai. However, the first appellate authority dismissed the appeal, upholding the CPC's action on the following reasoning:

• Under Section 11(2) of the Act read with Rule 17(2), filing of Form 10 before the due date is a mandatory statutory requirement.
• In the present case, Form 10 was filed only on 14.02.2025, which was after the intimation under Section 143(1) had already been issued on 29.1.2025.
• The appellate authority held that where a statutory act is required to be performed in a particular manner, it must be done precisely in that manner, and any deviation renders the act ineffective.
• Reliance was placed on Dilip Kumar & Company (SC) to support the principle of strict interpretation of fiscal incentive provisions.
• Accordingly, the Addl./JCIT(A) declined to interfere with the adjustment made by the CPC.

Grounds Raised Before ITAT

Dissatisfied with the first appellate order dated 10.11.2025 passed under Section 250 of the Income Tax Act, 1961 [DIN & Order No. ITBA/APL/S/250/20225-26/1082446371(1)], the assessee filed a second appeal before the ITAT Bangalore. The following substantive grounds were raised: