Form 10B Delay Condoned – Section 11 Exemption Cannot Be Denied Merely for Procedural Lapse: ITAT Mumbai

Case Background

Roman Catholic Church of St. Joseph Vs Central Processing Centre Income Tax Department
Tribunal: ITAT Mumbai
Assessment Year: 2023-24
Order Date: 11.03.2026

Overview of the Dispute

This case before the Income Tax Appellate Tribunal, Mumbai, arose from a situation where a registered public charitable trust was denied exemption under Section 11 and Section 12 of the Income Tax Act, 1961, solely on the ground that Form 10B — the prescribed audit report — was submitted 29 days after the applicable deadline, even though the return of income itself was filed within the due date.

The central question before the Tribunal was straightforward yet significant: Can a charitable trust be denied its legitimate statutory exemption merely because of a procedural delay in filing an audit report, when the report was made available before the return was processed?

The Tribunal answered in favour of the assessee, condoning the delay and directing the Assessing Officer to treat Form 10B as valid and adjudicate the exemption claim on merits.

Facts of the Case

The assessee, a Public Charitable Trust registered under Section 12A(b) of the Income Tax Act, 1961, and also under the Maharashtra Public Trusts Act, 1950, filed its return of income in Form ITR-7 on 29.11.2023. This was within the extended due date of 30.11.2023, as applicable under Section 139(1) of the Act.

However, as per Circular No. 16/2023 dated 18.09.2023, the deadline for filing the audit report in Form 10B had been extended to 31.10.2023. The assessee filed Form 10B along with the return on 29.11.2023, resulting in a delay of 29 days in filing the audit report.

Action Taken by the CPC

The Central Processing Centre (CPC) issued an intimation dated 19.11.2024 under Section 143(1) of the Act, rejecting the exemption claimed by the assessee. As a consequence of this rejection, the CPC made the following additions:

  • Rs. 88,95,454/- on account of accumulation under Section 11(1)(a) of the Act
  • Rs. 2,64,619/- on account of capital expenditure treated as application

The sole basis for denial was the 29-day delay in filing Form 10B.

Proceedings Before the Commissioner of Income Tax (Appeals)

The assessee challenged the CPC's additions before the CIT(A) / ADDL/JCIT(A) – 1, Ahmedabad. However, the Commissioner upheld the CPC's decision by relying on the Hon'ble Supreme Court's ruling in Pr. CIT Vs. Wipro Limited (2022) 448 ITR (1) (SC), along with various other judicial precedents.

The Commissioner further held that the CPC cannot go into debatable or controversial issues while processing a return under Section 143(1) of the Act, and accordingly dismissed the assessee's appeal, affirming both additions.

Aggrieved by the above order dated 04.09.2025, the assessee preferred the present appeal before ITAT Mumbai.

  1. Whether a delay of 29 days in filing Form 10B — when the return itself was filed within the prescribed due date — can result in outright denial of exemption under Section 11 of the Act?
  2. Whether the filing of Form 10B before the completion of processing under Section 143(1) constitutes substantial compliance?
  3. Whether the Wipro Limited judgment of the Supreme Court applies to cases involving procedural delays in filing audit reports by charitable trusts?

ITAT's Analysis and Findings

Reliance on the Coordinate Bench Decision

The Tribunal noted that an identical issue had already been examined by a Coordinate Bench in the case of M/s. Nasik ST. Xavier's Society vs. Central Processing Centre, Income Tax Department, Bengaluru (ITA No. 1364/M/2025 decided on 29.08.2025). In that case, the Coordinate Bench had carefully considered multiple High Court rulings and arrived at the following conclusion (reproduced by the Tribunal):