ITAT Condones Delay in Filing Form 10B; Allows MIG Cricket Club’s Exemption Claim Under Sections 11 & 12

MIG Cricket Club had filed its return of income belatedly for AY 2014-15 on 31 March 2016 based on provisional accounts, claiming exemption under Section 11. At that stage, the audit was not yet completed, and therefore Form 10B was not furnished along with the return. The audit was later completed on 13 December 2016, and the audit report was issued the same day. However, CPC treated the return as “invalid” on 28 December 2016 and processed it under Section 143(1) on 29 March 2017, denying the exemption for want of Form 10B.

In appeal before the CIT(A), the club furnished the audit report, but the CIT(A) refused to consider it on the ground that the assessee had not filed an application for condonation of delay before the competent authority. Aggrieved, the club carried the matter to the Tribunal. There was also a delay of 168 days in filing the appeal before the ITAT.

Issue Raised Before Tribunal: Whether exemption under Sections 11 and 12 can be denied solely on account of delayed filing of audit report in Form 10B, even when the report is produced during appellate proceedings and the delay is supported by reasonable cause.

ITAT’s Order: The Tribunal noted that the assessee had furnished Form 10B during the appellate proceedings, and the delay arose only because the audit itself was completed after the return was filed. Relying on Xavier Kelavani Mandal, Laxmanarayan Dev Shrishan Seva Khendra, it held that filing of Form 10B is a procedural requirement and not a rigid condition that automatically defeats a charitable exemption claim. Once the audit report is available on record and there is no allegation of mala fide, the delay must be condoned in the interest of substantive justice.

The ITAT condoned the delay and held that the CIT(A) ought to have considered the report rather than rejecting the claim on technical grounds. The matter was remitted to the Assessing Officer to examine the audit report and adjudicate the exemption claim under Sections 11 and 12 afresh, after providing due opportunity to the assessee.

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