Whether exemption U/s 11 or 10(23C) can be denied during intimation U/s 143(1) solely for the reason that 10B or 10BB was filed belatedly, even though the forms were eventually furnished and were available with the AOr?

 

Here is an interesting issue before Kolkata ITAT as to Whether exemption under section 11 or 10(23C) can be denied during intimation under section 143(1) solely because Form 10B or 10BB was filed belatedly, even though the forms were eventually furnished and were available with the Assessing Officer?

Let us have a Short Overview of the case:

The case details is as under:

Saraswati Devi Educational and Social Trust vs. CPC, Bangalore/ITO Ward-1(3), Exemption, Kolkata (ITAT Kolkata, ITA Nos. 873 & 874/KOL/2025, dated 4 November 2025).

Tribunal’s Analysis
• The assessee trust filed its returns on 27.03.2021 (AY 2020–21) and 31.10.2023 (AY 2023–24), and uploaded its Form 10B/10BB along with the returns.
• CPC rejected the exemption claim under section 11 by invoking section 143(1) citing late filing of audit reports, without providing prior opportunity to the assessee as required by the proviso to section 143(1)(a).
• The Tribunal observed that the audit report was available with the tax authorities before finalization of intimation, and that the default was technical or procedural in nature.

Judicial Precedent Relied Upon
Sarvodaya Charitable Trust v. ITO [(2021) 125 taxmann.com 75 (Guj.)] Held that exemption under section 11 cannot be denied merely on delayed filing of Form 10B when the audit report was ultimately furnished and delay was condonable. The Court emphasized substantive compliance over procedural lapses, noting the CBDT’s discretion under section 119(2)(b) to condone delay.
The ITAT in this case followed the same reasoning-holding that technical delay does not defeat a substantive exemption claim, particularly in the context of processing under section 143(1) where no detailed adjudication is intended.

Observations and Ruling
• CPC was not justified in denying exemption under section 11 or 10(23C) merely for delayed filing of audit reports.
• The opportunity required under proviso to section 143(1)(a) was not granted before making the adjustment.
• Therefore, the intimations under section 143(1) for both AYs were quashed.
• The Tribunal directed that exemption under section 11/12/10(23C) be allowed since the trust’s audit report was filed and compliance was substantially met.

The copy of the order is as under:

1762233442-PARAcE-1-TO