ITAT Ahmedabad Ruling: Section 11 Exemption Valid Despite Delayed Filing of Form 10B Audit Report
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has delivered a crucial judgment regarding the procedural compliances required by charitable trusts. In the case of ITO Vs Laxmanarayan Dev, the Tribunal addressed whether a delay in furnishing the Audit Report in Form 10B acts as a total bar against claiming tax exemptions, or if it constitutes a condonable procedural lapse.
Factual Matrix of the Case
The dispute arose from the assessment proceedings for the Assessment Year (A.Y.) 2017–18. The respondent, Laxmanarayan Dev, is a public charitable trust dedicated to educational initiatives, managing both schools and a Yogashram. The trust holds a valid registration under Section 12AA (effective from April 1, 2004) and possesses approval under Section 80G of the Income Tax Act 1961.
For the year under consideration, the factual timeline was as follows:
- The assessee filed its Return of Income on October 11, 2017, declaring NIL income.
- Crucially, the Audit Report in Form 10B was not uploaded simultaneously with the income tax return.
- Due to communication gaps, the assessee failed to respond to notices from the Central Processing Centre (CPC).
- Consequently, the CPC processed the return under
Section 143(1)on March 24, 2019, rejecting the exemption claimed underSection 11. - This rejection resulted in a significant tax demand of ₹1,52,42,281.