Minor Delay in Filing Form 10B Shouldn’t Deny Section 11 Exemption: Tribunal

On October 14, 2022, the assessee, a public charitable trust, submitted its income return for the assessment year 2022–2023 and the audit report in Form 10B. On April 4, 2023, the CPC issued an intimation order rejecting the exemption under Section 11 and treating income of Rs. 23,478,541 as taxable after issuing a notice under Section 143(1)(a) suggesting adjustments. Form 10B had to be filed one month prior to the deadline, and the 14-day delay in filing was the reason for the rejection. The CIT(A) upheld the denial because the assessee failed to reply to the notice or show up for the hearing. After that, the assessee filed an appeal with the ITAT.

Issue Raised: Can the exemption under Section 11 of the Income Tax Act be denied if there is a clerical discrepancy in the Form 10AC details entered in the return and a procedural delay in filing Form 10B?

ITAT Decision: The Tribunal, relying on the cases cited by the assessee, maintained that submission of Form 10B after a minor procedural delay should not be used as an excuse to reject legitimate claims under Section 11, particularly if the form was filed prior to the notification under Section 143(1). The Tribunal further pointed out that the tax consultant entered 80G details rather than 12A, which resulted in the discrepancy in Form 10AC details. This clerical error should not lead to the exemption being denied because the department had access to the accurate Form 10AC records.

However, because the assessee did not appear, the lower authorities were unable to verify these facts and the claims. Therefore, the Tribunal remanded back the case to the CIT(A) to check whether Form 10B was filed prior to the issuance of the 143(1) intimation and whether the trust had a valid 12A registration before providing relief.

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