Delay of 22 Days in Filing Form 10B Does Not Bar Section 11 Exemption if Report is Available Before Processing

By | September 18, 2026
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Delay of 22 Days in Filing Form 10B Does Not Bar Section 11 Exemption if Report is Available Before Processing
Issue
Whether an assessee registered as a charitable trust/section 8 company can be denied exemption under Section 11 of the Income-tax Act, 1961 due to a 22-day delay in submitting Form 10B prior to the Section 139(1) due date, when the audit report was already available on record with the Central Processing Centre (CPC) before the return of income was processed under Section 143(1).
Facts
  • The assessee is a Section 8 company registered under the Companies Act, 2013, holding valid registrations under Sections 12A and 80G of the Income-tax Act, 1961.
  • For Assessment Year 2022-23, the extended due date for filing the return of income under Section 139(1) was November 7, 2022.
  • As per Section 12A(1)(b), the prescribed audit report in Form 10B was required to be furnished at least one month prior to the Section 139(1) due date, placing the deadline at October 7, 2022.
  • The assessee uploaded Form 10B on October 29, 2022, resulting in a delay of 22 days past the statutory timeline for filing the audit report.
  • The assessee subsequently filed its return of income on October 29, 2022, which fell within the extended Section 139(1) due date.
  • On March 28, 2023, the return was processed under Section 143(1), where the CPC denied Section 11 exemption solely because Form 10B was not furnished one month prior to the Section 139(1) due date.
Decision
  • The tribunal ruled in favor of the assessee, holding that the procedural requirement of filing Form 10B is directory in nature rather than mandatory regarding its exact timeline, provided it is submitted before assessment/processing.
  • It was held that since Form 10B was uploaded on October 29, 2022, and was fully available on record with the CPC prior to the Section 143(1) processing date (March 28, 2023), the exemption could not be disallowed.
  • The denial of Section 11 exemption under Section 143(1) summary adjustments was directed to be deleted, granting full exemption benefit to the assessee.
Key Takeaways
  • Substance Over Procedural Delays: Availability of Form 10B before the tax authority processes the return under Section 143(1) satisfies the core compliance mandate for claiming Section 11 exemption.
  • Scope of Section 143(1) Adjustments: CPC cannot mechanically disallow statutory exemptions for procedural delay when supporting documents and audit reports are already in its system prior to issuance of the intimation order.
  • Directory Nature of Filing Timelines: The requirement to submit audit reports one month prior to the return due date is procedural; non-adherence does not invalidate a substantive exemption claim if rectified before assessment.
IN THE ITAT PANAJI BENCH ‘SMC’
Sou Taradevi Asopa Foundation
v.
ITO*
Vinay Bhamore, Judicial Member
and Manish Borad, Accountant Member
IT Appeal No. 227 (PAN) OF 2026
[Assessment year 2022-23]
AUGUST  20, 2026
Janak Purohit for the Appellant. Mayur Kamble for the Respondent.
ORDER
Vinay Bhamore, Judicial Member. – This appeal filed by the assessee is directed against the order dated 17.02.2026 passed by Ld. Addl./JCIT(A)-1, Ahmedabad [‘Ld. CIT(A)’] for the assessment year 2022-23.
2. The appellant has raised the following grounds of appeal :-
“ 1. That the order dated 17.02.2026 passed by the Commissioner of Income Tax, Appeal, ADDL/JCIT (A)-1, Ahmedabad (“the learned CIT(A)” in short), the Rectification order passed by the Assessing Officer (“the learned AO” in short) under Section 154 of the Income-tax Act, 1961 (“the Act” for short), dated 14.08.2023 and the Intimation passed by the learned AO under Section 143(1) of the Act dated 28.03.2023, are all bad in law, arbitrary, unjustified, unsustainable, and opposed to the facts of the case.
2. That the learned AO has erred in not allowing the Appellant’s rightful exemption under Sections 11 and 12 of the Act, and in consequently raising a demand of Rs. 3,65,200/- vide the impugned intimation issued under Section 143(1) of the Act, solely on account of an alleged delay of 22 days in furnishing the audit report in Form 10B. The learned CIT(A) has erred in upholding the same without proper appreciation of facts and law.
3. That the denial of exemption under Sections 11 and 12 of the Act on account of delay in filing Form 10B is wholly unjustified. The Appellant had filed Form 10B on 29.10.2022, prior to the issuance of the intimation under Section 143(1) dated 28.03.2023. It is a settled position that where Form 10B is available on record of the revenue/respondents prior to the issuance of intimation under Section 143(1), the exemption under Section 11 cannot be denied merely on account of delay in filing the said form.
4. That, in any event, the delay was occasioned due to genuine and bona fide reasons, namely that the director of the trust underwent knee surgery on 29.07.2022 and remained immobile for approximately ten weeks thereafter. The Appellant had filed an application before the Hon’ble CIT (Exemptions), Bangalore under S.119(2)(b) seeking condonation of delay in filing Form 10B. The learned CIT(A) has erred in not considering the said application and the bona fide circumstances explained therein and thereby upholding the erroneous disallowance of rightful exemptions under the Act.
5. Moreover, the learned CIT(A) failed to appreciate that the entitlement to exemption under Sections 11 and 12 is not contingent upon the S.119(2)(b) application being allowed and thus, the impugned order is bad in law.
6. That it is further well established that procedural delays, particularly those arising from bona fide and unavoidable circumstances, ought not to defeat substantive rights, more so when the delay is merely 22 days only. The delay was due to genuine medical reasons without any mala fide intent, which ought to have been duly considered by the learned CIT(A).
7. That, without prejudice and in any event, the learned AO erred in not allowing deemed expenditure of 15% of gross receipts given that it is admitted that the Appellant is a charitable trust duly registered under Sections 12A and 80G of the Act. Moreover and in any event, the learned AO erred in not allowing deduction of administrative expenditure of Rs. 41,493/-. The learned CIT(A) erred in upholding the said disallowances.
8. That, without prejudice and in any event, the impugned intimation and rectification order was passed by the learned AO without any prior intimation or effective opportunity to show cause against the same. Hence, they are illegal and contrary to the principles of natural justice.
9. Without prejudice to the above, the interest and demand levied are not in accordance with law. The same are therefore liable to be set aside in the facts and circumstances of the present case.
10. That the impugned orders of the learned AO and of the learned CIT(A) are otherwise bad in law, contrary to the facts on record, violative of the principles of natural justice, and liable to be set aside.
The Appellant most humbly craves leave of this Hon’ble Tribunal to add to or alter, by deletion, substitution or otherwise, the other grounds of appeal, at any time before or during the hearing of the appeal. The Appellant further submits that the above grounds are independent of and without prejudice to one another.”
3. Facts of the case, in brief, are that the assessee is a section 8 company duly registered under the Companies Act, 2013 and also registered u/s 12A and 80G of the Income Tax Act, 1961. The assessee company filed its return of income claiming exemption u/s 11 of the IT Act which was processed u/s 143(1) of the IT Act on 28.03.2023 by denying the exemption u/s 11 of the IT Act, since the audit report in Form 10B was not furnished at least one month prior to the due date for furnishing return of income u/s 139(1) of the IT Act. The assessee also filed rectification u/s 154 of the IT Act on 14.08.2023, however, the CPC issued revised intimation order with no change.
4. Being aggrieved with the above intimation order, the assessee preferred an appeal before Ld. CIT(A). Not being satisfied with the reply and submissions of the assessee company, Ld. CIT(A) dismissed the appeal filed by the assessee.
5. It is the above order against which the assessee is in appeal before this Tribunal.
6. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that the assessee is a section 8 company duly registered under the Companies Act, 2013 and also registered u/s 12A and 80G of the Income Tax Act, 1961 and furnished the prescribed audit report in Form 10B on 29.10.2022. As per section 12A(b) of the IT Act, the assessee company was required to file prescribed audit report in Form 10B at least one month prior to the due date of filing of return of income u/s 139(1) of the IT Act and for the period under consideration, the due date for filing return of income was 07.11.2022, accordingly, the last date to file Form 10B audit report in the instant case in hand was 07.10.2022, however, the same was furnished on 29.10.2022 i.e. with a delay of 22 days. We further find that the return of income was furnished by the assessee on 29.10.2022 which is within the prescribed extended time limit u/s 139(1) of the IT Act. We further find that the return of income was processed on 28.03.2023 which is admittedly subsequent to the filing of Form 10B audit report. In other words, Form 10B audit report was very well available with the CPC on 28.03.2023 i.e. before processing of return of income u/s 143(1) of the IT Act. It was the contention of the counsel of the assessee that filing of Form 10B audit report is only directory and not mandatory and in this regard, reliance was placed on various decisions passed by coordinate bench of this Tribunal including the case of Shree Gajanan Maharaj Shegaon Mandir Vishwasth Mandal v. Exemption Ward [IT Appeal No. 625 (PUN) of 2026, dated 10-8-2026] wherein the Tribunal allowed the deduction u/s 11 of the IT Act by relying on other coordinate bench decision passed in the case of Indian Medical Association Pune Branch v. DCIT [IT Appeal Nos. 761 to 766 (PUN) of 2025, 31-7-2025], wherein the Tribunal relying on judgement of Hon’ble Gujarat High Court in the case of CIT (Exemptions) v. Laxmanarayan Dev Shrishan Seva Khendra  [2026] 488 ITR 794 (Gujarat) allowed the assessee’s claim of exemption u/s. 11 of the Act by observing as under :-
“5. The Ld.AR submitted that the assessee has been denied its claim of exemption u/s. 11 of the Act on the ground that the assessee filed audit report belatedly. The Ld.AR submitted that the audit report in Form-10B was filed electronically on 04-09-2018 (page 13 to 15 of the paper book refers). He submitted that since the assessee has filed the audit report in Form-10Bduring the appellate proceedings and the return of income was furnished on 24-11-2017 (which is filed within the due date for AY. 2016- 17 i.e. 31-03-2018) before the intimation order was passed by the CPC and Form-10 was also filed electronically on 21-06-2019 (page 30-31 of the paper book refers), therefore, the claim of exemption u/s. 11 should not be denied.
5.1. In support of his above contention, the Ld.AR relied on the decision of the Co-ordinate Bench of the Pune Tribunal in the case of Indian Medical Association, Pune Branch v. DCIT(E) in ITA No.761 to 766/pUN/2025,dt.31-07-2025 wherein the Tribunal in turn relied on the decision of the Hon “ble Gujarat High Court in the case of CIT v. Laxmanarayan Dev Shrishan Seva Khendra   548/[2026] 488 ITR 794 (Gujarat) (Guj) and allowed the appeal of the assessee, condoning the delay in filing ofForm-10B.
5.2. The Ld.AR further submitted that delay in filing of Form-10B is merely a procedural lapse and relying on the settled judicial principles, and CBDT Circular No. 14(XL-35), dt. 11-04-1955 submitted that the assessee”s claim of exemption u/s. 11 should be allowed.
6. The Ld.DR supported the order of the Ld.ADDL/JCIT(A) and the Ld.AO.
7. We have heard the Ld. Representatives of the Parties and perused the material available on record. It is an admitted fact that the assessee filed its return for AY. 2016-17 u/s. 139(4) of the Acton 24-11-2017, declaring total income of Rs. NIL, after claiming exemption u/s. 11 of the Act. The return of the assessee was processed by the Ld.AO/CPC and an intimation order u/s. 143(1) of the Act was passed on 30-05-2018, determining the income of the assessee at Rs.1,43,91,810/- as against the returned income of Rs. NIL due to non-filing of Form-10B/10 by the assessee. We find that the Ld.ADDL/JCIT(A) has dismissed the appeal of the assessee for the reasons which we have already reproduced in the preceding paragraphs. Before us, the Ld. Counsel for the assessee has taken a plea that since the assessee has filed the audit report during the appellate proceedings and the return of income was furnished before the intimation order was passed by the CPC, therefore, the claim of exemption u/s. 11 of the Act should not be denied. There is also no dispute to the fact that the assessee filed the audit report in Form-10B on 04-09-2018 and Ld.ADDL/JCIT(A) has passed the impugned order on 31-12-2025. Admittedly, Form-10B was filed after intimation order u/s.143(1) of the Act was passed, but before the appellate proceedings were completed.
7.1. We find that an identical issue had come up before the Coordinate Bench of the Pune Tribunal in the case of Indian Medical Association, Pune Branch v. DCIT(E) (supra), where the Tribunal relied on the decision of the Hon”ble Gujarat High Court in the case of CIT v. Laxmanarayan Dev Shrishan Seva Khendra (supra) and allowed the assessee “s claim of exemption u/s. 11 of the Act. In the case of CIT v. Laxmanarayan Dev Shrishan Seva Khendra (supra), the Hon “ble High Court has held that – “where assessee, a public charitable trust, did not upload audit report in Form 10B along with its return of income and CPC processed return under section 143(1) denying benefit of section 11, since assessee had already filed audit report in Form 10B electronically during pendency of appellate proceedings along with copy of audited financial statements, delay in filing saidform was to be condoned”.
7.2. The Hon”ble High Court while holding so, has also distinguished the decision of the Hon “ble Supreme Court in the case of PCIT v. Wipro Ltd. [2022] 446 ITR 1(SC), which has been relied by the Ld.ADDL/JCIT(A) in his impugned order to dismiss the appeal of the assessee. The relevant extract of the order of the Tribunal in the case ofIndian Medical Association, Pune Branch v. DCIT(E) (supra) is reproduced below:

“16. We find the Hon’ble Gujarat High Court in the case of CIT v. Laxmanarayan Dev Shrishan Seva Khendra (supra) has held that where the assessee, a public charitable trust, did not upload audit report in Form 10B along with its return of income and CPC processed return under section 143(1) denying benefit of section 11, since assessee had already filed audit report in Form 10B electronically during pendency of appellate proceedings along with copy of audited financial statements, delay in filing said form was to be condoned. The relevant observations of Hon’ble High Court read as under:

7. Reference to the aforesaid decision has no connection whatsoever remotely to the facts of the present case and therefore, in the facts of the present case, the Tribunal has rightly followed the decision of this Court in case of Sarvodaya Charitable Trust v. Income Tax Officer (Exemption) in Special Civil Application No.6097 of 2020 decided on 09th December, 2020 as well as the decision in case of Social Security Scheme of GICEA (supra) to uphold the decision of the CIT (Appeals), wherein this Court has held that the approach of the authority in such type of cases should be equitable, balancing and judicious. In the facts of the case. when the assessee has already filed the audit report in Form 10B electronically on 27.02.2021 during pendency of appellate proceedings along with copy of audited financial statements, delay in filing the said form is rightly condoned by CIT(A) and the Tribunal.

8. In such circumstances, we are of the opinion that the Tribunal has not committed any error by not following the decision in case of M/s. Wipro Limited (supra) as referred to and relied upon by learned advocate for the appellant-Revenue, and has rightly followed the decision of this Court in case of Social Security Scheme of GICEA (supra).

9. In view of the foregoing reasons, we are of the opinion that no question of law much less any substantial question of law arises from the impugned order of the Tribunal. The Appeal is accordingly dismissed.”

17. In view of the above decisions, we hold that the Ld. Addl./JCIT(A) was not justified in rejecting the claim of exemption u/s 11 of the Act on account of delay in filing of the return of income as well as delay in uploading the audit report in Form 10B. We, therefore, set aside the order of the Ld. CIT(A)/NFAC and direct the Assessing Officer/ CPC to allow the claim of exemption u/s 11 of the IT Act, 1961. The grounds raised by the assessee are accordingly allowed. Since the assessee succeeds on the issue of claim of exemption u/s 11, therefore, the alternate claim of the assessee, for taxing the net income rather than gross receipt does not require any adjudication being academic in nature. The appeal of the assessee is accordingly allowed.”

7.3. Based on the factual matrix and the legal position set out above, in our view, the Ld.ADDL/JCIT(A) erred in dismissing the assessee”s appeal denying its claim of exemption u/s. 11 of the Act on the ground of delay in filing of Form-10B. We, therefore, set aside the order of the Ld.ADDL/JCIT(A) and direct the Ld.AO/CPC to allow the assessee”s claim of exemption u/s. 11 of the Act. The effective grounds raised by the assessee are accordingly allowed. The other grounds raised by the assessee relating to taxing of the net income and not gross receipts are not adjudicated as these grounds are rendered academic in nature in view of our decision above on the issue of claim of exemption u/s. 11 of the Act.
8. In the result, the appeal filed by the assessee is partly allowed.
7. Respectfully following the above decision passed by coordinate bench of this Tribunal in the case of Shree Gajanan