Form 10B Deadline Missed? ITAT Permits Exemption with Valid Cause

Introduction

Good news for charitable trusts! The Income Tax Appellate Tribunal (ITAT) has recently ruled that a delay in filing Form 10B will not automatically disqualify a trust from claiming tax exemptions under Section 11 of the Income Tax Act, 1961. For charitable trusts and institutions in India, maintaining tax-exempt status is crucial, and timely filing of audit reports in Form 10B is a key compliance requirement. In this article, we explore this important ruling and what it means for charitable organisations.

Legal Dispute Over Tax Exemption for a Charitable Trust

A charitable trust filed its tax return for the 2016-17 assessment year on July 28, 2016, but failed to submit Form 10B—an essential document for claiming tax exemption. Consequently, the tax department rejected the exemption claim and imposed tax of Rs. 15,69,680.

Reasons for the Delay in Filing Form 10B

The trust’s auditor had issued Form 10B on June 16, 2016.
Due to technical glitches on the Income Tax portal, the trust couldn’t upload the form on time.
The main trustee passed away in 2019, causing administrative confusion.
Upon realizing the mistake, the trust filed Form 10B on March 20, 2020, along with a request to condone the delay.

CIT(A) Rejects Exemption Due to Late Submission

The trust appealed to the Commissioner of Income Tax (Appeals) [CIT(A)] to overlook the delay, but the request was denied. CIT(A) ruled that exemption could not be granted due to the late filing and stated that only the Commissioner of Income Tax (Exemption) [CIT(E)] has authority to condone such delays.

ITAT Appeal: Delay vs. Compliance

Undeterred, the trust appealed to the Income Tax Appellate Tribunal (ITAT), arguing:

The audit report (Form 10B) was prepared before filing the return, demonstrating compliance.
The delay was unintentional and caused by technical issues.
Several judicial precedents and CBDT circulars support that minor delays should not result in loss of exemption.
The tax department insisted that missing the deadline disqualifies the trust from exemption.

ITAT Ruling: Late Form 10B Does Not Cancel Exemption

After thorough review, the ITAT ruled:

The trust had the audit report before filing the return, fulfilling exemption conditions.
The delay was procedural, not an attempt to evade tax.
Courts, including the Delhi High Court and Supreme Court, have held that minor delays in Form 10B submission should not lead to denial of exemptions.
Citing the precedent of ACIT vs. Green Dot Health Foods Pvt. Ltd., where delay in filing Form 10CCS was excused since it was submitted before final assessment.
The tribunal concluded that filing Form 10B is a procedural requirement, not a mandatory condition for exemption.
Given the trust’s history of timely compliance and genuine charitable activities, the exemption was granted.

Key Takeaways for Taxpayers

File Form 10B on Time: Always aim to submit Form 10B along with your tax return to avoid any issues.
Missed the Deadline? Don’t Panic: If you miss the deadline for valid reasons, you can still seek relief by filing a request to condone the delay.
Technical Glitches Are Recognized: If portal or system issues caused the delay, keep records and clearly explain the situation to the tax authorities.
Legal Precedents Support Fairness: Courts and tribunals have consistently ruled in favor of trusts when delays are genuine and unintentional.
Consider Legal Assistance: If your exemption claim is rejected, you may have solid grounds to file an appeal.

The Bottom Line

This ruling emphasizes that genuine taxpayers should not be penalized for minor procedural delays. It highlights that small technical lapses should never overshadow sincere charitable efforts.

The key lesson? Consistent and timely tax compliance is crucial. Regularly filing returns and meeting deadlines builds trust, credibility, and safeguards your tax exemptions—even in challenging situations like this one

About the Author

Manisha
Manisha is a skilled writer who excels at simplifying complex legal topics into clear, practical guidance. Her work equips entrepreneurs with the essential knowledge to confidently navigate business laws, helping them successfully launch and manage their ventures

June 25, 2025