Form 10B Accepted Within Extended Return Due Date Constitutes Valid Compliance Entitling Section 11 Exemption

By | October 17, 2026
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Form 10B Accepted Within Extended Return Due Date Constitutes Valid Compliance Entitling Section 11 Exemption

Issue

Whether uploading Form 10B on the due date of the return and formal trustee acceptance on the next day—prior to the extended return deadline—satisfies Section 12A(1)(b) compliance, making disallowance under Section 143(1) and rejection of condonation under Section 119(2)(b) unsustainable.

Facts

  • Assessee Status: The petitioner is a registered charitable trust claiming tax exemption under Section 11 for AY 2019-20.
  • Filing Timeline:
    • Return of income filed on 30-09-2019 claiming exemption under Section 11.
    • Audit report in Form 10B uploaded by the auditor on 30-09-2019.
    • Trustees formally accepted Form 10B on 01-10-2019 (portal recorded filing date as 01-10-2019).
    • Extended due date for filing return of income for the relevant year was 31-10-2019.
  • Disallowance & Application:
    • Return processed under Section 143(1) disallowing Section 11 exemption on the ground that Form 10B was not filed on or before the date of filing the return.
    • Petitioner submitted an application under Section 119(2)(b) for condonation of a one-day technical delay, which the Revenue rejected as time-barred.

Decision

  • Substantial Compliance: Acceptance of Form 10B on 01-10-2019, well before the extended due date of 31-10-2019, constitutes sufficient compliance with Section 12A(1)(b).
  • Invalid Summary Disallowance: Disallowance of Section 11 exemption under Section 143(1) based on a one-day technical lag in portal acceptance was unjustified.
  • Rejection Order Quashed: Rejection of the condonation application under Section 119(2)(b) by the Revenue was held unsustainable and set aside.
  • Relief Directed: The Revenue was directed to accept the audit report in Form 10B and grant the exemption under Section 11 to the trust. (In favour of assessee)

Key Takeaways

  • Form 10B Availability Prior to Due Date: So long as the audit report in Form 10B is submitted and accepted before the statutory due date for filing the return of income, exemption under Section 11 cannot be denied on hyper-technical procedural delays.
  • Substance Over Technicality: Procedural or portal-driven lag between auditor uploading and trustee confirmation should not override substantive entitlement to charitable trust exemptions.
  • Limits of Section 143(1) Adjustments: Summary processing under Section 143(1) ought not to disallow legitimate tax exemptions when the required compliance is complete prior to the extended return filing deadline.
HIGH COURT OF GUJARAT
Shri Ramji Mandir Seva Trust
v.
Commissioner of Income-tax (Exemption)
A.S. Supehia and Ms. VAIBHAVI D. NANAVATI, JJ.
R/SPECIAL CIVIL APPLICATION NO. 12674 of 2026
SEPTEMBER  17, 2026
Manish J. Shah for the Petitioner. Aman Mir for the Respondent.
JUDGMENT
A.S. Supehia, J.- The present writ petition has been filed seeking the following reliefs : –
“A) this Hon’ble Court be pleased to hold that, there is no delay in filing Form No.10B dated 30.09.2019 at Annexure-E as the same was filed within 24 hours of uploading the income tax return for the Asst. Year 2019-20.
B) this Hon’ble Court be pleased to hold that in absence of any variation while accepting audit report in Form No.10B uploaded by the auditor of the petitioner Trust, the date of furnishing Form No.10B relates back to the date of uploading by the auditor and thereby be pleased to hold that there was no delay in furnishing Form No.10B dated 30.09.2019 at Annexure-E for Asst. Year 2019-20,
C) this Hon’ble Court be further pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing adverse consequential intimation issued u/s. 143(1) dated 11.05.2020 at Annexure-F by Respondent No.3 and further be pleased to direct Respondent No.3 to process the return afresh and issuing intimation u/s.143(1) allowing the benefit u/s.11 of the Act.
D) In alternative, this Hon’ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing -565 the rejection, order dated 16.05.2025 passed by Respondent No.1 at Annexure-G1 rejecting the condonation application of the petitioner.
D1) this Hon’ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of mandamus or certiorari or any other appropriate writ, order or direction reading down the Circular No.16 of 2024 dated 18.11.2024 at Annexure-J to the extent it provides for limitation for preferring an application u/s.119(2)(b) seeking condonation of delay in filing Form No.10B for the assessment years prior to Asst. Year 2020-21.
E) Pending the hearing and final disposal of this application, this Hon’ble Court be pleased to stay the recovery of the demand arisen due to issuance of intimation u/s.143(1) dated 11.05.2020 at Annexure-F”
2. The petitioner is a Charitable Trust registered with the Charity Commissioner, Surat, having Registration No.Surat, E-6776. The Trust was established by a Trust Deed dated 06.04.2009. The petitioner Trust had applied for registration under the Act by preferring an application under Section 12A(a) of the Income Tax Act, 1961 (for short, “the Act”) and accordingly, the petitioner Trust was granted registration on 19.06.2014 by allotting Registration No.SRT/CIT-1/ITO(Tech)/ 12AA(1)(b)(i)/2014-15.
3. The petitioner-Trust filed its return of income for the Assessment Year 2019-20 on 30.09.2019 at 20:56 hours, declaring total income of Rs.2,31,330/- after claiming exemption under the provisions of Section 11 of the Act.
4. The petitioner, being liable to furnish an audit report under Section 12A(b) of the Act, had obtained the audit report from the Chartered Accountant on 30.09.2019, before the last date for filing the return of income i.e. 31.10.2019. Though, the auditor of the petitioner-Trust had uploaded the audit report in Form No. 10B on 30.09.2019, unfortunately, the said audit report uploaded by the auditor remained to be accepted by the trustees, as required on the income-tax portal, before filing the return of income on 30.09.2019, and the same could be accepted only on 01.10.2019, i.e. on the very next day. Accordingly, the date of filing of the audit report was considered as 01.10.2019.
5. The aforesaid return of income was processed on 11.05.2020 by issuing an intimation under Section 143(1) of the Act dated 11.05.2020. In the said intimation, the exemption claimed by the petitioner was not allowed on the ground that Form No. 10B was not filed on or before the date of filing of the return of income and, accordingly, a demand of Rs.1,68,598/- was raised against the petitioner. It is the case of the petitioner that since the intimation was issued during the Covid period, the same could not be attended to immediately and, thereafter, somehow, no further action was taken by the petitioner in respect of the demand raised through the aforesaid intimation.
6. Thereafter, the petitioner filed an application under Section 119(2)(b) of the Act dated 27.03.2025, on 01.04.2025, before the respondent No.1, praying for condonation of delay of one day in filing Form No. 10B. It was stated therein that the delay of one day in filing Form No. 10B was completely unintentional, as the form had already been uploaded on 30.09.2019, but the same could be accepted only on 01.10.2019. Accordingly, the Income-tax Department considered the date of filing of Form No. 10B as 01.10.2019, resulting in a delay of one day.
7. The said application was rejected by respondent No.1 by an order dated 16.05.2025, stating that, in view of Circular No. 16/2024 dated 18.11.2024, the respondent-authority is authorized to entertain an application only up to three years from the end of the assessment year seeking condonation of delay in filing Form Nos. 9A, 10, 10B and 10BB. Accordingly, the respondent No.1 rejected the application, stating that the application seeking condonation of delay of one day was filed on 01.04.2025 for A.Y. 2019-20, which was beyond the period of three years from the end of the assessment year, and, accordingly, he had no authority to entertain such an application under Section 119(2)(b) of the Act.
8. Learned advocate Mr.Shah has submitted that the petitioner Trust had obtained the audit report in Form No.10B on 30.09.2019 and that the auditor had duly uploaded the same on the portal on 30.09.2019, before filing of the return of income on 30.09.2019. Unfortunately, due to an oversight, the said Form No. 10B, as uploaded by the auditor, could be accepted by the trustee of the petitioner Trust only on 01.10.2019 and, accordingly, the Income-tax portal considered the date of filing of the audit report as 01.10.2019. In view of this fact, the Central Processing Unit of the Income-tax Department denied the entire exemption available to the petitioner Trust in the intimation order passed under Section 143(1) of the Act dated 11.05.2020, citing the reason that Form No.10B was not filed on or before the date of filing of the return of income. Accordingly, for a mere delay of one day in accepting Form No. 10B, which had already been uploaded on the portal on 30.09.2019, the entire benefit available under Section 11 of the Act to the Trust has been forfeited.
9. Learned advocate Mr.Shah has submitted that filing of the audit report in Form No.10B within 24 hours of filing of the return of income must be considered as sufficient compliance with Section 12A(1)(b) of the Act, more particularly, in the facts of the present case, where the return of income was filed on 30.09.2019 at 20:56 hours, the audit report in Form No. 10B was uploaded on the portal on 30.09.2019 at 16:21 hours, and the audit report in Form No. 10B was accepted on 01.10.2019 at 11:45 hours. In view of the aforesaid submissions, it is submitted that there is no violation of Section 12A(1)(b) of the Act, as alleged by respondent No.3, and, accordingly, the intimation order passed under Section 143(1) of the Act dated 11.05.2020, denying the benefit of exemption under Section 11 of the Act and thereby raising a demand of Rs.1,68,600/-, is patently bad in law.
10. At the outset, learned Senior Standing Counsel Mr. Aman Mir, upon taking instructions from the respondent-authorities, has submitted that in the order dated 11.05.2020 passed under Section 143(1) of the Act, the original date of filing of the return i.e. 30.09.2019 shows that it was extended till 31.10.2019. However, it is contended that since the petitioner filed the application beyond three years and hence as per the Circular No.16/2024 dated 18.11.2024, the application for condoning the delay in filing FORM 10B cannot be condoned. It is also urged that the petitioner may be relegated to file an appeal.
11. Keeping the aforesaid factual aspect in mind, it is not in dispute that the petitioner, which had obtained its audit report under Section 12A(b) of the Act on 30.09.2019, before the last date of filing the return i.e. 31.10.2019 in Form 10B, uploaded the same on 30.09.2019. However, the audit report in FORM 10B uploaded by the auditor remained to be accepted by the trustees, as required by the Department, and the same could be accepted only on 01.10.2019 i.e. on the very next day resulting into demand of Rs. 1,68,600/-.
12. The petitioner, being a trust, was under the impression that the audit report satisfied the provisions of Section 12A(1) (b) of the Act, as it was accepted only on 01.10.2019. Thus, there was a delay of one day in accepting the FORM 10B Report, thereby constraining the petitioner to file an application under Section 119(2)(b) of the Act on 01.04.2026. The application filed by the petitioner under Section 119(2)(b) of the Act was rejected by the respondent authorities, while refusing to condone the delay, by the impugned order dated 16.05.2025, by placing reliance on the Circular dated 18.11.2024 issued by the Central Board of Direct Tax (CBDT).
13. It is accepted by the Revenue that the date of filing of return was extended from 30.09.2019 to 31.10.2019 as mentioned in summary assessment order dated 11.05.2020 under Section 143(1) of the Act. At this stage , we may refer to the relevant provisions of Section 12A(1)(b) of the Act, which are extracted as below:
“Conditions for applicability of sections 11 and 12.
12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:—
(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form91 and in the prescribed manner to the 92[Principal Commissioner or] Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA. xxxxx
(b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below subsection (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form95 duly signed and verified by such accountant and setting forth such particulars as may be prescribe.”
14. The provisions of sub-clause(b) to Section 12A(1) requires charitable and religious trusts or institutions to get their accounts audited by a qualified chartered accountant if their total income crosses the basic non-taxable exemption limit, and furnish the same “along with the return of income”. The compliance of this Rule enables the trust to claim tax exemptions on its charitable income. The summary assessment order dated 11.05.2020 passed under Section 143(1) of the Act reflects that date of filing of return has been extended from 30.09.2019 to 31.10.2019. Hence, it can be held that there is sufficient compliance of the provisions of Section 12A(1)(b) of the Act. The expression “along with the return of income” cannot be rigidly applied in cases as the present one. In the circumstances, where the filing of return has been extended, and FORM 10B has been accepted by the Trust before the extended date, though the return has been filed earlier before the initial date, the revenue should take a rational approach by validating FORM 10B.
15. This Court, in the case of Association of Indian Panelboard Manufacturer v. Dy. CIT [2025] 482 ITR 54 (Gujarat), while considering the provisions of Section 10B of the Act read with Section 12A and Section 119(2)(b) of the Act, has held thus:
“3. The facts are that the appellant which is a charitable trust registered under Section 12AA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), filed return of income on 31.12.2018, in respect of the assessment year 2018-19 declaring total income to be nil, after claiming exemption of Rs.1,37,628/- under Section 11(1) of the Act, and also exemption to the extent of Rs.46,62,372/- under Section 11(2) of the Act.
3.1 It is the case of the petitioner that by inadvertence it did not file alongwith the return of the income, the audit report in Form 10B. The Form 10B was admittedly filed however electronically on 7.12.2019. On the same date intimation was given by the income tax authority denying exemptions claims under Section 11(1) and 11(2) of the Act on the ground that the appellant assessee had not filed audit report in Form 10B alongwith return of income.
3.2 The appellant preferred appeal against the said decision of denial of exemption reflected in communicated by intimation dated 7.12.2019. The Commissioner of Income Tax (Appeals)-the appellate authority dismissed the appeal on 24.12.2021.
xxx xxx xxx
5.6 The tribunal further committed an error in appreciating the import of Section 119 2(b) of the Act inasmuch as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to by the assessee. The circular No.7/18 dated 20.12.2018 issued under Section 119 of the Act could not be, therefore said to have taken away the appellate remedy.
5.7 The tribunal misdirected itself in yet another way when it observed that The Finance Act, 2015 with effect from 1.4.2016, that is from assessment year 2016-17 changed the legal position. There is no such change which could be said to have altered the legal position. The only change is with regard to compulsory filing of audit report in Form 10B in electronically form which is made mandatory under Rule 12 (2) of the Income Tax Rules, 1962 but there is no change with regard to the substantive law about filing of audit report as stated above.
6. The moot aspect thus centres around to the requirement of the availability of the audit report when the assessment was undertaken by the Assessing Officer even though the same may not have been filed along with the return of income. Filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 10B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee.
6.1 The appellant assessee has to be held to be eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of non-filing of audit report alongwith return of income which was at the best procedural omission, could never to an impediment in law in claiming the exemption.
6.2 Accordingly the substantial questions of law have to be decided in favor of the appellant.”
16. Thus, this Court has held that while filing the audit report is a substantive requirement, the time and manner of its submission are purely procedural, and if Form 10B is available to the Assessing Officer before assessment proceedings conclude, the statutory requirement is met. It is also held that delayed filing of the audit report is merely a procedural omission that cannot legally block the assessee from claiming substantive exemptions. It is also held that import of Section 119 (2)(b) of the Act inasmuch as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to by the assessee. Thus, in wake of the fact that the filing date of Return of Income (ROI) was extended, and since the petitioner filed and accepted FORM 10B before such date, the revenue in the first place was required to take cognizance of FORM10B-report and ought to have granted exemption.
17. The contention raised by the learned Senior Standing Counsel regarding the petitioner having a remedy of filing an appeal against the original order does not merit acceptance in view of the settled position of law laid down by this Court, more particularly, in the present case, there is an additional ground of the Assessing Officer/Revenue having committed a mistake in not validating the audit report despite the extension of the date for filing of Return of Income (ROI). The impugned order dated 16.05.2025 is hereby quashed and set aside. The respondents are directed to accept the audit report in Form 10B for A.Y.2019-20 of the petitioner, and accordingly, shall grant exemption. Necessary action shall be taken within a period of four (04) weeks from the date of receipt of copy of this judgment.
18. Accordingly, the present writ petition is allowed.