Income Tax Appellate Tribunal - Indore
Bagli Pragati Samiti,Indore vs Dlc-Wx-(267)(4), Income Tax ... on 8 May, 2026
आयकर अपीलीय अिधकरण, इंदौर ायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER
AND
SHRI PARESH M. JOSHI, JUDICIAL MEMBER
ITA No.982/Ind/2025
Assessment Year:2018-19
Bagli Pragati Samiti, DLC-WX (267)(4)
Basantibai Sisodia Garden Ujjain
Punjapura Road, Bagli बनाम/
Dewas Vs.
(Assessee/Appellant) (Revenue/Respondent)
PAN: AACAB2603F
Assessee by Shri Hitesh Chimnani & Ms. Komal Wadhwani,
ARs
Revenue by Shri Ashish Porwal, Sr. DR
Date of Hearing 27.04.2026
Date of Pronouncement 08.05.2026
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 27.03.2025 passed by learned Commissioner of Income-Tax (Appeals)-Addl/JCIT(A)-1, Kolkata ["Ld. CIT(A)"], which in turn arises out of intimation of assessment dated 26.09.2019 passed by learned CPC, Bengaluru ["Ld. AO"] u/s 143(1) of Income-tax Act, 1961 ["the Act"] for Assessment-Year ["AY"] 2018-19, the assessee has filed this appeal on the grounds as mentioned in Form No. 36 (Appeal Memo).
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Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19
2. The registry has informed that the present appeal is delayed by 159 days and therefore time-barred. The assessee has filed an application/ affidavit for condonation of delay; the same is scanned and re-produced for an immediate reference:
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3. The averments made by assessee in above affidavit, which are self- explanatory and which do not require repetition, were discussed and the Ld. DR for revenue does not have any objection if the bench condones delay and accordingly left it to the wisdom of bench. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a "sufficient cause" for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a "sufficient cause" for not presenting appeal within prescribed time. It is also a settled position by Hon'ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the facts of case, the provision of section 253(5) and the decision of Hon'ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.
4. The background facts leading to present appeal are as under:
(i) The assessee is a charitable institution registered u/s 12A/12AA of Income-tax Act, 1961 w.e.f. 29.04.2015 by Income-tax Department and eligible to claim exemption u/s 11/12 of the Act.Page 5 of 15
Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19
(ii) On 31.08.2018, the assessee filed return of income of AY 2018-19 u/s 139(1) r.w.s. 139(4A). In the return so filed, the assessee furnished following details:
Thus, the assessee furnished true and proper details of its registration u/s 12A/12AA and based thereon claimed exemption u/s 11/12 also in the return but, however, inadvertently selected/filled "Section 10(23C)(v)" in the column titled "Section under which exemption claimed, if any".
(iii) On 27.12.2018, the assessee submitted Audit Report [Form No. 10B] although the Audit Report [Form No. 10B] was required to be filed by 31.07.2018 [i.e. one month prior to the due date for filing of return u/s 139(1)]. Thus, the Audit Report [Form No. 10B] was filed belatedly.
(iv) On 26.09.2019, the AO processed assessee's return u/s 143(1) and denied the benefit of exemption u/s 11/12 to assessee for the reason Page 6 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 that the Audit Report [Form No. 10B] was not filed within statutory period.
(v) Aggrieved, the assessee carried matter in first-appeal but the CIT(A) rejected assessee's appeal and did not grant any relief.
(vi) Now, the assessee has come before us by way of next appeal.
5. Ld. AR for assessee at first narrated the reason of delayed filing of Audit Report [Form No. 10B]. He submitted that the assessee obtained Audit Report [Form No. 10B] from Chartered Accountant "Shri Ashok Kumar Pahwa" but, however, the same could not be filed on Income-tax Portal due to some technical problem on e-filing portal. He submitted that after several bonafide attempts, the report could be filed only on 27.12.2018. He submitted that these facts were clearly mentioned in the Statement of Facts filed in Form No. 35 (Memo of Appeal) to Ld. CIT(A). He submitted that one possible reason of technical glitch could be that the assessee inadvertently selected section 10(23C)(v) in the return of income filed. However, this is an undisputable fact that the assessee, though belatedly, filed Audit Report [Form No. 10B] to Income-tax Portal on 27.12.2018 before passing of intimation by AO u/s 143(1) dated 26.09.2019. He submitted that the assessee is engaged in charitable activities and the registration granted to it by tax authorities u/s 12A was in force. That the delay in filing Audit Report [Form No. 10B] is a procedural lapse and there is no other reason except this procedural lapse to deny the benefit of section 11/12 to assessee. He Page 7 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 submitted that the assessee should not be denied the legitimate exemption of section 11/12 when the assessee is genuinely doing charitable activities for the welfare of public and satisfying all conditions prescribed in income- tax law for being entitled to exemption. Ld. AR submitted that if the Audit Report [Form No. 10B] filed by assessee belatedly on 27.12.2018 is accepted, the assessee would be entitled to the benefit of exemption. Ld. AR submitted that in following decisions, the Hon'ble High Courts and ITAT Benches (including ITAT, Indore bench also) have held that the requirement of filing Audit Report [Form No. 10B] in time is one of the conditions for claiming benefit of exemption u/s 11/12 but it is a procedural-cum-directory requirement and even if the report is subsequently filed to AO, the exemption u/s 11/12 can't be denied:
(a) ITAT, Indore - Indore Contract Bridge Association Vs. CPC, Bangalore in ITA No. 403/Ind/2022 order dated 18.04.2023
(b) ITAT, Indore - Navratna Sukrat Foundation Vs. CPC, Bangalore, ITA No. 390/Ind/2022 dated 21.04.2023
(c) ITAT, Indore - DCIT Vs. Shri Vaishnav Polytechnic College, Indore ITA No. 469/Ind/2018 order dated 06.11.2020
(d) ITAT, Jodhpur - ITO, Exemption Ward Vs. Society for Education Conscietisation Awareness & Training, ITA No. 461/Jodh/2018 dated
06.05.2019
(e) ITAT, Ahmedabad - Puravanchal Lokhit Mandal Vs. ITO, Exemption Ward, Vadodara, ITA No. 966/Ahd/2019, dated 30.11.2022 Page 8 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19
(f) ITAT, Ahmedabad - Hari Gyan Pracharak Trust Vs. DCIT, CPC, Bangalore in ITA No. 245/Ahd/2021 order dated 16.06.2023
(g) Hon'ble Gujrat High Court - Sarvodaya Charitable Trust Vs. ITO, Exemption (2021) 125 taxmann.com 75 (Gujrat)
(h) Hon'ble Gujrat High Court - Indian Panel Board Manufacturer Vs. DCIT Tax Appeal No. 655 of 2022 dated 21.03.2023.
6. The relevant paras of Indore Contract Bridge Association Vs. CPC, Bangalore in ITA No. 403/Ind/2022 order dated 18.04.2023, are re- produced below:
"8. The exact controversy involved in these grounds is whether or not the assessee was entitled for exemption u/s 11/12 as claimed in the return of income, when the audit-report (Form No. 10B) was filed belatedly after processing of return u/s 143(1)?
9. Apropos to this issue, the precise facts are: The assessee is a charitable society registered u/s 12A of the Income-tax Act, 1961 and entitled for exemption u/s 11/12; accordingly it claimed exemption u/s 11/12 in the return of income. But when the AO processed return u/s 143(1) vide intimation dated 09.03.2019, he did not allow exemption u/s 11/12 for the reason that the audit report (Form No. 10B) was not filed by assessee with return of income. Subsequently after processing of return, the Form No. 10B was e-filed/uploaded on 03.04.2019 / 04.05.2019 before filing of first- appeal.
10. Ld. AR submitted that the assessee was engaged in charitable activities; that the registration granted to it by tax authorities u/s 12A was in force; that the assessee had been granted benefit of section 11/12 in preceding assessment-years as well as subsequent assessment-years. He further submitted that the assessee filed return of income on 03.08.2017 and prior to such filing, the accounts of assessee were duly audited on 08.06.2017, a copy of the audited-accounts is placed in the Paper-Book. However, the auditors of assessee failed to upload the audit-report alongwith the return of income. But, post-processing of return u/s 143(1) and before filing of first- appeal, the assessee arranged to get the audit-report e-filed/uploaded on 03.04.2019 / 04.05.2019. Ld. AR submitted that the CIT(A) has, without appreciating these facts, dismissed the appeal of assessee merely on a technical defect that the audit-report was not filed alongwith the return of income. Ld. AR submitted that except such technical defect, there is no other reason to deny the benefit of section 11/12 to assessee. Ld. AR submitted that Page 9 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 the e-filing/uploading of audit-report is done by auditors and not by assessee; therefore the defect is not per se attributable to assessee. Ld. AR submitted that in any case, the defect is due to an inadvertent human error and the assessee should not be denied the legitimate exemption, when the assessee is genuinely doing charitable activities for the welfare of public and satisfying all conditions prescribed in income-tax law for being entitled to exemption. Ld. AR submitted that if the audit-report obtained by assessee on 08.06.2017 but filed on 03.04.2019 / 04.05.2019 is accepted, the assessee would be entitled to the benefit of exemption. Ld. AR placed a heavy reliance on the latest decision of ITAT in Savitri Foundation Vs. ITO, ITA No. 1925/Mum/2021 (AY 2018-19) order dated 01.08.2022 wherein the AO made processing of return u/s 143(1) denying exemption u/s 11 to assessee for the very same reason of non-uploading of audit report before filing of return but subsequently the assessee uploaded audit-report during the course of first-appeal; when the matter reached ITAT, the Mumbai Bench has allowed exemption to assessee. Ld. AR submitted that the decision taken by ITAT is directly applicable to assessee. Ld. AR also submitted that the decision of Hon'ble Supreme Court in Wipro Ltd. 446 ITR 1 relied upon by Ld. CIT(A) is quite distinguishable for the reasons that (i) the said decision involved deduction u/s section 10B whereas the present-appeal is concerned with exemption u/s 11/12; and (ii) the said decision involved interpretation of sub-section (8) of section 10B which is a negative provision i.e. it provides that if the assessee did not want to apply section 10B, then the assessee had to file a declaration but this is not a case in section 11/12.
11. Per contra, Ld. DR vehemently defended the orders of lower-authorities and submitted that furnishing of audit-report alongwith return of income is a pre-condition for allowability of exemption u/s 11. Since the assessee has not fulfilled such condition, the lower-authorities have rightly denied the assessee's claim of exemption u/s 11 and there is no infirmity in the action of lower-authorities.
12. We have heard rival contentions of both sides and examined the present controversy in the light of judicial decisions. At first, we are convinced that the controversy is directly settled in favour of assessee by decision in Savitri Foundation (supra) where the Hon'ble Mumbai ITAT, following the decision of Hon'ble Mumbai High Court in CIT vs. Mumbai Metropolitan Regional Iron & Steel Market Committee 378 ITR 103 has observed and held thus:
"4. Submissions made by rival sides heard, orders of authorities below examined and the case law on which the ld. Authorized Representative of the assessee placed reliance considered. The assessee is a charitable trust registered under section 12AA of the Act and has been purportedly enjoying the benefits of section 11 since 2011. In the impugned assessment year, the benefit of exemption under section 11 of the Act has been denied to the assessee for the reason that assessee has failed to furnish audit report along with return of income. The contention of the ld. Authorized Representative of the assessee is that the audit report was available with the assessee at the time of filing of Page 10 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 return of income however due to inadvertent error the assessee failed to upload Audit Report in Form 10B along with e-filing of return of income. Non-filing of Audit Report is a bonafide error. The assessee has placed on record Audit Report dated 19/10/2018 in the prescribed Form 10B at page 15 of the Paper Book. The assessee after receiving the intimation under section 143(1) of the Act uploaded the Audit Report on 18/04/2020 in First Appellate proceedings.
5. In my considered view non-filing of Audit Report in Form 10B along with Return of Income is merely a procedural defect which is rectifiable. If the Audit Report was available with the assessee at the time of filing of Return of Income and was not filed due to bonafide reasons the benefit of exemption under section 11 cannot be denied if otherwise assessee is eligible to claim the same.
6. The Hon'ble Bombay High Court in the case of CIT vs. Mumbai Metropolitan Regional Iron & Steel Market Committee (supra) has held that late filing of required documents would not disentitle the assessee from availing benefit of section 11 of the Act. Thus, in the facts of the case and in the light of decision of Hon'ble Bombay High Court, I deem it appropriate to restore the file back to Assessing Officer for de novo assessment after considering the audit report field by the assessee, in accordance with law.
7. In the result, impugned order is set aside and appeal by assessee is allowed for statistical purposes."
13. We also gainfully refer another recent decision of ITAT, Ahmedabad Bench in the case of M/s Shardaben Education Trust, Gandhinagar Vs. ITO, Ahmedabad, ITA No. 2312/Ahd/2018, order dated 16.11.2022 where a similar controversy has been decided in favour of assessee, after following the decisions of Hon'ble Gujrat High Court in CIT vs. Gujarat Oil & Allied Industries reported in 201 ITR 325 and CIT vs. Mayur Foundation reported in 274 ITR 562. The relevant paragraphs of the order of ITAT are as under:
"12. We have heard the rival contentions of both the parties and perused the materials available on record. As per the provisions of section 12A(1)(b) of the Act, it is necessary for the assessee in order to claim exemption under section 11 of the Act to get the accounts audited as well as obtain the audit report in the prescribed form from the qualified chartered accountant which is to be filed along with the return of income. Admittedly, in the case on hand the assessee has not filed form 10B being the audit report along with the return of income and the same was also not filed till the completion of the assessment order as well as appellate order by the learned CIT-A. As such the order of the learned CIT(A) was passed dated 30th November 2017 whereas the Form 10B of the audit report was filed/uploaded dated 25th December 2017 which evidences that the audit report in Form 10B was filed subsequent to the Page 11 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 appellate order by the learned CIT-A. At this juncture it is also pertinent to note that the audit report in the prescribed form was prepared and signed by the qualified chartered accountant dated 5th September 2014 much before the date of filing the return of income by the assessee. Thus, it appears that report for the audit in the prescribed form was prepared well in time but it was filed belatedly.
12.1 Now the controversy arises whether the assessee can claim the benefit of exemption under section 11 of the Act in a situation where the audit report in the prescribed form was not filed along with return of income. In this context we note that act of the assessee to file the audit report duly signed by the qualified chartered accountant is a procedural requirement and the courts have held that the assessee cannot be denied the benefit for which it is entitled in the event of any procedural contravention specified under the provisions of the Act. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High Court in case of CIT vs. Gujarat Oil & Allied Industries reported in 201 ITR 325, the relevant extract of the judgment is reproduced as under:
"In our view, the aforesaid reasoning of the Allahabad High Court and the Patna High Court would squarely apply to the facts of the present case. The provision about furnishing of the auditors' report along with the return has to be treated as a procedural provision, directory in nature, and its substantial compliance should suffice, meaning thereby that such report should be made available by the assessee to the Assessing Officer latest when the question of framing of assessment is taken up by the Income-tax Officer and when he applies his mind to the claim of the assessee and if by that time, the assessee has put his house in order and has furnished the report of the auditor for supporting the return, he can be said to have satisfied the requirement of section 80J(6A) of the Act."
12.2 In view of the above we hold that the assessee cannot be denied the benefit of exemption for which it is entitled merely on the lapse of procedural requirement i.e. delay in filing the audit report in the prescribed form. In the judgment cited above, it was provided that the audit report was filed by the assessee before the completion of the assessment. In other words, the compliance of the law was made by the assessee when the assessment proceedings was pending before the AO whereas in the case on hand the assessee complied the requirement at the stage of appellate proceeding before tribunal. Thus, a question arises before us whether the principles laid down in the judgment cited above can be applied in the given facts and circumstances. In this context we note that, in the judgment cited above it was observed that procedural requirement for filing the audit report was fulfilled by the assessee before the completion of the assessment. But the facts of the case on hand are different in so far the audit report was filed by the assessee after the completion of the assessment Page 12 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 framed under section 143(3) of the Act. In this regard we note that the assessment remains pending if any appeal is pending before the higher forum. In other words, if any appeal is pending either before the ld. CIT- A or before the ITAT which transpires the fact that the assessment is pending. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High Court in case of CIT vs. Mayur Foundation reported in 274 ITR 562, wherein it was held as under:
"Thus, the proceedings before the Tribunal are meant to correctly assess the tax liability of an assessee: If this be so, it follows that the assessment proceeding cannot be said to be complete and is pending till the appeal is heard and disposed of by the Tribunal and the order of the Tribunal is given effect to by the assessing authority by computing the correct tax liability of an assessee. In other words, whether an assessee is required to pay tax or becomes entitled to a refund, would be ascertained by the assessing authority after giving effect to the order of the Tribunal."
12.3 Admittedly, the appeal was pending before the ITAT at the time when the audit report in form 10B was filed which transpires that the assessment has not reached to the finality and therefore principle laid down by the Hon'ble High Court of Gujarat in the case of CIT vs. Gujarat Oil & Allied Industries (Supra), that the requirement for filing the audit report is a procedural requirement, can be applied in the given facts and circumstances. Therefore, the benefit for which the assessee is entitled cannot be denied."
14. Respectfully following these decisions, we are of the view that in the present case, the assessee can't be denied the benefit of exemption u/s 11 as claimed in the return of income for mere delay in filing of audit-report. We, therefore, deem it fit to remand this matter back to the file of AO for a fresh assessment after considering the audit-report filed by assessee, in accordance with law. These grounds are accordingly allowed."
7. Accordingly, Ld. AR prayed that the Ld. AO be directed to accept the Audit Report [Forn No. 10B] filed by assessee and grant exemption u/s 11/12 as claimed in return of income.
8. Per contra, Ld. DR vehemently defended the orders of lower- authorities and submitted that furnishing of Audit Report [Form No. 10B] alongwith return of income is a pre-condition for allowability of exemption u/s 11. Since the assessee has not fulfilled such condition, the lower- Page 13 of 15
Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 authorities have rightly denied assessee's claim of exemption u/s 11 and there is no infirmity in the action of lower-authorities. Ld. DR also relied upon the observation made by Ld. CIT(A) in impugned order that the delay in filing Audit Report [Form No. 10B] can only be condoned by the specified authority in terms of section 119 as per Circular issued by CBDT and the assessee has not availed that remedy available to it. With these submissions, he requested to reject assessee's prayer.
9. In rejoinder, Ld. AR submitted that the application u/s 119 is only an additional remedy which cannot take away appellate remedy. To fortify this submission, Ld. AR relied upon Para 5.6 of the judgement of Hon'ble Gujrat High Court in Indian Panel Board Manufacturer Vs. DCIT Tax Appeal No. 655 of 2022 dated 21.03.2023 where it has been held thus:
"5.6 The tribunal further committed an error in appreciating the import of Section 119 2(b) of the Act inasmuch as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to, by the assessee. The circular No. 7/18 dated 20.12.2018 issued u/s 119 of the Act could not be, therefore, said to have taken away the appellate remedy."
10. We have heard rival contentions of both sides and examined the present controversy in the light of judicial decisions. In view of settled judicial rulings noted in foregoing paragraphs, we find that the assessee can't be denied the benefit of exemption u/s 11/12 as claimed in return of income for mere delay in filing of Audit Report [Form No. 10B], when the assessee has in fact filed such report, though belatedly, before processing of assessee's return u/s 143(1). Therefore, respectfully following the same, we Page 14 of 15 Bagli Pragati Samiti ITA No. 982/Ind/2025 - AY 2018-19 too hold that the assessee cannot be denied exemption u/s 11/12 as claimed. However, the claim of exemption u/s 11/12 involves a different type of working based on application and accumulation of income. Therefore, we restore this issue to the file of the AO for the limited purpose of recomputing the income and allowing exemption in accordance with law, after accepting the Audit Report [Form No. 10B] filed by assessee on 27.12.2018. The assessee succeeds accordingly.
11. Resultantly, this appeal of assessee is allowed for statistical purpose in terms indicated above.
Order pronounced in open court on 08/05/2026
Sd/- Sd/-
(PARESH M. JOSHI) (B.M. BIYANI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore
िदनांक /Dated : 08/05/2026
Patel/Sr. PS
Copies to: (1) The appellant
(2) The respondent
(3) CIT
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By order
E COPYSr. Private Secretary
Income Tax Appellate Tribunal
Indore Bench, Indore
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