ITAT Chennai: Belated Form 10B Sufficient for Section 11 Exemption When Available at Time of Processing

1. Background of the Dispute

The Chennai Bench of the Income Tax Appellate Tribunal in Victoria Educational Trust Vs ITO (ITAT Chennai) decided ITA No.:946/Chny/2025 on 05/08/2025 for Assessment Year 2022-23, dealing with denial of exemption under Section 11 solely due to delayed filing of Form No.10B.

The assessee, Victoria Educational Trust, is a charitable educational trust created under a trust deed dated 17.12.2003 (Document No. 993/IV of 2003). It was granted registration under Section 12AA with effect from 01.04.2006 by order dated 24.09.2007, pursuant to filing Form No.10A on 30.03.2007 before the Director of Income Tax (Exemptions). Subsequently, it also obtained provisional registration under Section 12(1)(ac)(vi) through order dated 27.05.2021, bearing Provisional Registration Number AABTV0115AE20206.

For AY 2022-23, the assessee filed:

  • Return of income on 09.11.2022 (Acknowledgement No. 795847221091122)
  • Audit report in Form No.10B on 09.11.2022 (Acknowledgement No. 796015270091122)

In the return, the assessee:

  • Claimed exemption under Section 11 of Rs.63,53,306/-
  • Declared taxable total income of Rs.8,45,492/-

The statutory timelines were as follows:

  • Due date for filing Form No.10B: 07.10.2022
  • Due date for filing return under Section 139(1): 07.11.2022

Hence, Form No.10B was filed with a delay of 33 days. This delay became the sole basis for later denial of exemption by the Centralized Processing Centre (CPC), Bengaluru.

2. CPC Intimation Under Section 143(1) and Subsequent Proceedings

2.1 CPC’s Disallowance of Section 11 Exemption

The return for AY 2022-23 was processed by CPC, Bengaluru under Section 143(1). In the intimation dated 02.06.2023 (DIN: CPC/2223/A7/326953674), CPC:

  • Disallowed the entire exemption claimed under Section 11 of Rs.63,53,306/-
  • Effectively treated the gross receipts as fully taxable

The sole ground for this adjustment was that the assessee had not furnished Form No.10B within the prescribed time, invoking Section 12A(1)(b)(ii).

2.2 Parallel Condonation Application Under Section 119(2)(b)

Alongside challenging the CPC intimation in appeal, the assessee also moved a petition for condonation of delay in filing Form No.10B before CIT(Exemptions), Chennai under Section 119(2)(b).

This condonation petition was rejected by order dated 11.01.2025 (DIN & Order No. ITBA/COM/F/17/2024-25/1072095396(1)`. The authority declined to condone the 33‑day delay in uploading Form No.10B.

2.3 First Appeal Before NFAC and Its Decision

The assessee filed an appeal against the CPC intimation under the faceless regime before the National Faceless Appeal Centre (NFAC), Delhi, in Form No.35. Among other grounds, the assessee contended that:

  • Disallowance of Section 11 exemption through Section 143(1) adjustment was beyond the permissible scope of such processing
  • Merely because Form No.10B was filed late, the entire gross receipts could not be brought to tax without allowing corresponding expenditure
  • The requirement of furnishing Form No.10B within the due date is procedural and not a rigid precondition for exemption
  • Form No.10B was already on record when CPC processed the return

NFAC, however, upheld CPC’s action. In its order dated 25.03.2025 (DIN & Order No. ITBA/APL/S/250/2024-25/1074981446(1)), the appellate authority concluded that:

  • Filing Form No.10B within time is a statutory requirement for claiming deduction/exemption
  • Since the assessee admittedly did not furnish Form No.10B before the due date, CPC’s denial of exemption was justified
  • No interference with the intimation under Section 143(1) was called for

This led to the present appeal before the ITAT, Chennai.

3. Grounds Raised Before ITAT

The assessee’s grounds of appeal broadly targeted:

  • Validity of NFAC’s order dated 25.03.2025
  • Legality of the adjustment made under Section 143(1) by CPC
  • Treatment of the entire Rs.63,53,306/- gross receipts as taxable income
  • Failure to consider that Form No.10B was already filed and available at the time of processing
  • Non-adherence to principles of natural justice and faceless regime procedures
  • Improper taxation of gross receipts without corresponding expenditure
  • Erroneous presumption of loss of exemption solely due to belated Form No.10B

4. Core Factual Matrix Relied Upon by the Tribunal

The Tribunal recorded the following critical facts:

  • Due date for Form No.10B for AY 2022-23: 07.10.2022
  • Actual date of filing Form No.10B: 09.11.2022
  • Period of delay: 33 days
  • Date of CPC intimation under Section 143(1): 02.06.2023
  • Therefore, Form No.10B was already on CPC’s record well before 02.06.2023

The Bench emphasized that the fundamental purpose of Form No.10B is to aid the Assessing Officer (or CPC) in correctly computing taxable income in cases covered by Section 11.