2024 (8) TMI 1476 - AT - Income Tax

Denial of exemption u/s 11 - appellant had not filed Form-10B - appellant is a registered Trust u/s 12A of the Act and the claim of exemption of income was denied u/s 143(1) - HELD THAT - In Hari Gyan Pracharak Trust 2023 (6) TMI 923 - ITAT AHMEDABAD has held that since filing of Form-10B is merely a procedural requirement, any defect in that is curable. It is seen that the Hon'ble Orissa High Court in the case of Oneness Educational and Charitable Trust 2024 (4) TMI 500 - ORISSA HIGH COURT has held that the oversight in not filing Form-10B within the due date was to be condoned and the exemption was to be allowed and granted. Also, the Hon'ble Telangana High Court in the case of Global Organisation for Development 2024 (5) TMI 1171 - TELANGANA HIGH COURT has held that the delay on the part of the assessee in submitting Form-10B was to be condoned and the matter remanded back to the file of the AO for passing appropriate order on merits. Also in Al Jamia Mohammediyah Education Society 2024 (4) TMI 939 - BOMBAY HIGH COURT held that where the assessee Trust belatedly submitted Form-10B, along with return, on account of oversight by the Chartered Accountant, the delay in filing of Form-10B deserves to be condoned. Thus delay in filing of Form-10B is hereby condoned and it is directed that the appellant be allowed exemption as would be due to him as per law. The ld. AO is directed accordingly. Appeal filed by the assessee allowed for statistical purposes.

Summary

Issues:
1. Denial of exemption of income for a charitable Trust due to non-filing of Form-10B.
2. Appeal against the denial of exemption filed before ITAT.
3. Argument for condonation of delay in filing Form-10B.
4. Comparison with relevant case laws supporting condonation of delay.
5. Decision on condonation of delay and granting of exemption.

The judgment pertains to the denial of income exemption for a charitable Trust due to the non-filing of Form-10B, as processed under section 143(1) of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) upheld the disallowance of the exemption, citing the failure to submit Form-10B within the specified due date. The appellant approached the ITAT, arguing that the Trust, being registered under section 12A of the Act, was eligible for the claimed exemption. The appellant contended that the failure to file Form-10B was an oversight, which should be considered a curable defect and not a fatal illegality.

The ITAT considered submissions from both parties and reviewed relevant case laws. The ITAT noted the case of Hari Gyan Pracharak Trust vs. DCIT, where a similar procedural defect was deemed curable. Additionally, decisions from the Orissa High Court, Telangana High Court, and Bombay High Court supported the condonation of delays in filing Form-10B for charitable Trusts. The Bombay High Court emphasized that oversight by the Chartered Accountant should not prejudice the Trust, especially when the delay was unintentional.

Consequently, the ITAT ruled in favor of the appellant, condoning the delay in filing Form-10B and directing the granting of the exemption as per the law. The ITAT allowed the appeal for statistical purposes, emphasizing that the delay was not intentional or deliberate. The judgment highlights the importance of considering genuine hardships faced by charitable Trusts due to procedural errors and the need for a balanced and equitable approach in such cases.

The judgment underscores the significance of condoning delays in procedural requirements for charitable Trusts to prevent undue prejudice based on unintentional errors. It sets a precedent for considering the specific circumstances of each case and exercising discretionary powers to ensure fairness and uphold the objectives of income tax laws concerning charitable organizations.