Facts of the Case

The assessee, Kinkini, Bhilwara, an AOP-Trust engaged in charitable activities, filed its return of income for Assessment Year 2023-24 claiming exemption under Sections 11 and 12 of the Income-tax Act. The due date for filing the return was 30.11.2023, and Form 10BB was required to be filed one month prior thereto. The assessee filed Form 10BB on 31.03.2024. While processing the return under Section 143(1)(a) on 19.12.2024, the CPC denied exemption under Sections 11 and 12 solely on the ground of delayed filing of Form 10BB and assessed total income at ₹18,49,950. The CIT(A) confirmed the denial holding that neither the AO nor the appellate authority had power to condone the delay. Aggrieved, the assessee preferred an appeal before the Tribunal.

Issues Involved

Whether exemption under Sections 11 and 12 can be denied solely on account of delayed filing of Form 10BB, whether filing of Form 10BB is a mandatory or procedural requirement, and whether exemption can be denied when Form 10BB was filed before processing of return under Section 143(1).

Petitioner’s Arguments

The assessee contended that Form 10BB was filed before the return was processed under Section 143(1)(a) and therefore was available on record. It was argued that filing of Form 10BB is a procedural requirement and not a substantive condition for claiming exemption under Sections 11 and 12. Reliance was placed on several High Court and ITAT decisions holding that delayed filing of audit report cannot result in denial of exemption when the report is available during assessment proceedings.

Respondent’s Arguments

The Revenue relied on the orders of the CPC and the CIT(A) and contended that timely filing of Form 10BB was mandatory and, in the absence of statutory power to condone delay, exemption was rightly denied.

Court Order / Findings

The ITAT Jaipur held that the requirement of filing Form 10BB is procedural in nature and delay in filing the same cannot be a ground for denial of exemption under Sections 11 and 12. The Tribunal observed that Form 10BB had been filed on 31.03.2024 and was available on record before issuance of intimation under Section 143(1)(a) dated 19.12.2024. Relying on binding judicial precedents including decisions of the Gujarat High Court and consistent ITAT rulings, the Tribunal held that once the audit report is filed and available with the Department prior to completion of proceedings, exemption cannot be denied merely on the ground of delay. The denial of exemption by CPC and confirmation by the CIT(A) were therefore held to be unsustainable in law.

Important Clarification

The Tribunal clarified that procedural lapses such as delayed filing of Form 10BB cannot defeat substantive statutory rights conferred on charitable trusts under Sections 11 and 12. Where the audit report is filed and available before processing or assessment, exemption cannot be denied solely on technical grounds.

Final Outcome

The appeal filed by the assessee was allowed. The denial of exemption under Sections 11 and 12 of the Income-tax Act was set aside and the assessee was held entitled to exemption as claimed for Assessment Year 2023-24.

Link to Download order-https://www.mytaxexpert.co.in/uploads/1768993257_KINKINIBHILWARABHILWARAVS.ITOEXEMPTIONWARD1JAIPUR.pdf

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