ITAT Chennai: Belated Filing of Form 10B by 31 Days Cannot Automatically Deny Section 11 Exemption to Charitable Trust

Background and Context

The Income Tax Appellate Tribunal, Chennai Bench, in the matter of G.C.T. Alumni Association Vs ACIT (ITAT Chennai) for Assessment Year 2020-21, rendered an important decision holding that a delay of 31 days in filing the audit report in Form No. 10B would not, by itself, result in the denial of exemption under Section 11 of the Income Tax Act, 1961. The Tribunal allowed the appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-1, Bengaluru, dated 29.09.2025, passed under Section 250 of the Act.

This ruling carries significant implications for charitable trusts and other institutions claiming exemption under Section 11, particularly those who encountered administrative difficulties during the Covid-19 pandemic period and were consequently unable to meet prescribed filing deadlines.

Facts of the Case

The assessee, a charitable trust, filed its return of income for Assessment Year 2020-21 on 09.02.2021, declaring Nil total income after claiming exemption under Section 11 of the Income Tax Act, 1961.

When the return was processed under Section 143(1) of the Act, the income was assessed at Rs. 73,00,273/- — the Section 11 exemption having been disallowed solely on the ground that the audit report in Form No. 10B had not been submitted within the prescribed time limit.

The assessee's explanation before the first appellate authority was straightforward: the audit report could not be uploaded within the stipulated time on account of disruptions caused by the Covid pandemic. It was filed on 10.02.2021, the very day after the return of income, resulting in a delay of merely 31 days. Despite this explanation, the Commissioner of Income Tax (Appeals) declined to provide relief, noting that the assessee's application for condonation of delay under Section 119(2)(b) had already been rejected by the competent authority.

Aggrieved by this outcome, the assessee approached the ITAT Chennai.

Arguments Advanced Before the Tribunal

Assessee's Contentions

The authorised representative for the assessee raised the following key arguments:

  • The lower authorities were incorrect in denying the Section 11 exemption on account of a mere 31-day delay in filing Form No. 10B.
  • A plain reading of Section 13(9) of the Income Tax Act, 1961 demonstrates that exemption under Section 11 can be denied only in two specific situations:
    1. Where the assessee fails to file the return of income within the due date prescribed under Section 139(1), or
    2. Where the assessee fails to submit the prescribed form for accumulation of income.
  • Neither of these conditions was attracted in the present case. A delayed filing of the audit report does not fall within the scope of denial contemplated under Section 13(9).
  • Reliance was placed on the coordinate bench decision in Victoria Educational Trust Vs ITO, ITA No.946/Chny/2025 dated 05.08.2025, which dealt with an identical factual matrix.

Revenue's Submission

The Departmental Representative contended that since the assessee's petition for condonation of delay under Section 119(2)(b) had been rejected by the delegated authority vide order dated 11.01.2025, the assessee's claim before the appellate Tribunal ought not to be entertained. According to the Revenue, the rejection of the condonation application foreclosed further appellate consideration of the issue.

The Coordinate Bench Decision: Victoria Educational Trust Vs ITO

The Tribunal extensively examined the decision in Victoria Educational Trust Vs ITO — ITA No.946/Chny/2025 dated 05.08.2025, which the assessee had placed primary reliance upon.

In that case, the audit report in Form No. 10B had been filed 33 days late — on 09.11.2022, against the due date of 07.10.2022. However, the report was available in the records of the Centralized Processing Centre (CPC) before the intimation order under Section 143(1) was passed on 02.06.2023.

The coordinate bench in Victoria Educational Trust reasoned as follows: