In a significant ruling favouring charitable institutions, the Ahmedabad SMC Bench of the Income Tax Appellate Tribunal (ITAT), in the case of Parantap Charitable Trust vs Income Tax Officer, has held that belated filing of Form 10B does not bar exemption under Section 11 of the Income-tax Act, 1961, if the audit report is available before the tax authorities during assessment or rectification proceedings.
The Tribunal passed the order on 8 January 2026 for Assessment Year (AY) 2017-18, allowing the appeal in full.
Case Details at a Glance
- Case Name: Parantap Charitable Trust vs ITO
- Forum: Income Tax Appellate Tribunal, Ahmedabad
- Bench: SMC Bench
- Assessment Year: 2017-18
- Order Date: 8 January 2026
- Result: Appeal allowed in full
- Key Issue: Whether belated filing of Form 10B defeats Section 11 exemption
Facts of the Case
The assessee, Parantap Charitable Trust, is a charitable trust registered under the Income-tax Act and had claimed exemption under Section 11 in its return of income for AY 2017-18.
Although the trust had:
- Conducted the statutory audit, and
- Obtained the audit report in Form 10B,
the audit report was not uploaded electronically within the prescribed due date.
On this sole ground, the Assessing Officer (AO) denied the Section 11 exemption, treating the delayed filing of Form 10B as a fatal non-compliance.
Delay in Filing Appeal and Its Condonation
The appeal before the ITAT was filed with a delay of 368 days. The assessee explained that:
- It was under a bona fide belief that exemption under Section 11 had already been granted, and
- The lapse came to light only after the AO passed an appeal-effect order, whereby the exemption earlier allowed was withdrawn.
Accepting the explanation as genuine and reasonable, the ITAT condoned the delay, holding that the delay was neither deliberate nor mala fide.
Core Legal Issue Before the Tribunal
The principal question before the ITAT was: “Can exemption under Section 11 be denied solely due to belated filing of Form 10B, even when the audit report is otherwise available before the tax authorities”
Tribunal’s Analysis and Findings
The ITAT held that:
- Form 10B is a procedural requirement, intended to ensure that accounts of charitable trusts are duly audited
- The requirement is directory and not mandatory in nature
- Once the audit report is available before the tax authorities before completion of assessment or during rectification proceedings, the purpose of the law stands satisfied
The Tribunal observed that substantive exemption under Section 11 cannot be denied for a mere technical or procedural lapse.
Reliance on Settled Judicial Precedents
The Ahmedabad ITAT noted that its conclusion was in line with:
- Gujarat High Court decisions, which have consistently held that:
- Delay in filing Form 10B is a curable defect, and
- Exemption under Section 11 cannot be denied solely on procedural grounds
- Earlier coordinate bench rulings of the ITAT, holding that:
- Procedural requirements should not defeat substantive charitable exemptions
- Audit reports filed during appellate or rectification stages must be considered
The Tribunal reiterated that procedural law is meant to advance justice, not frustrate it.
Stand of the CIT(A)
The Commissioner of Income Tax (Appeals) had also accepted that:
- Filing of Form 10B is directory in nature, and
- Belated filing should not automatically disentitle the assessee from Section 11 exemption
However, effective relief was not granted, which led the assessee to approach the ITAT.
Final Direction of the ITAT
The ITAT categorically held that:
- The Assessing Officer could not ignore the Form 10B audit report, once it was available during rectification proceedings
- Denial of exemption solely on account of delayed filing was unsustainable in law
Accordingly, the Tribunal directed the AO to allow exemption under Section 11.
Key Takeaways from Parantap Charitable Trust vs ITO
- Belated filing of Form 10B does not automatically bar Section 11 exemption
- What is crucial is availability of the audit report before tax authorities
- Procedural lapses cannot override substantive charitable benefits
- Bona fide delays are liable to be condoned
📋 Form 10B Compliance Checklist (For Exemption u/s 11)
1. Trust Registration & Basic Eligibility ✅
☐ Trust / institution registered under Section 12AB / 12A
☐ Income applied for charitable or religious purposes as per Section 11
☐ Books of account properly maintained
2. Audit Requirement Under Section 12A(1)(b) 📑
☐ Accounts audited by a Chartered Accountant
☐ Audit completed before filing or completion of assessment
☐ Form 10B audit report obtained (date of audit important)
3. Filing of Form 10B 🖥️
☐ Form 10B uploaded electronically on the Income-tax portal
☐ Filed before the due date, wherever possible
☐ If filed late:
- Audit report was already available, and
- Form 10B furnished before completion of assessment or during rectification
4. Return of Income (ITR-7) Compliance 📊
☐ Return filed in ITR-7
☐ Section 11 exemption correctly claimed in return
☐ Form 10B details properly linked to the return (if available at filing stage)
5. Rectification / Appellate Stage Safeguards ⚖️
☐ If exemption denied due to Form 10B delay:
- Rectification application filed under Section 154, or
- Ground raised before CIT(A) / ITAT
☐ Copy of Form 10B and audit report placed on record
☐ Explanation of bona fide reason for delay, if any
6. Judicial Support Awareness 📚
☐ Reliance placed on:
- Gujarat High Court rulings
- ITAT decisions holding Form 10B as procedural and directory
☐ Emphasis that substantive compliance overrides technical lapse
7. Risk Mitigation Best Practices 🚨
☐ Maintain proof of date of audit completion
☐ Maintain acknowledgement of Form 10B filing
☐ Avoid repeated delays to prevent adverse inference
☐ Track changes in e-filing deadlines and utilities
✔️ Key Compliance Insight
Delay in filing Form 10B is not fatal, provided:
- Audit was conducted, and
- Audit report is available before tax authorities at assessment or rectification stage.
Why This Ruling Is Important
This ruling reinforces a consistent judicial approach that charitable trusts should not lose statutory exemptions due to technical or procedural lapses, especially where audits are duly conducted.
For charitable institutions and professionals, the decision highlights the importance of:
- Ensuring Form 10B is eventually placed on record
- Seeking rectification or appellate relief where exemption is denied mechanically
Relying on settled case law that upholds substance over form
Source: TaxGuru