The trust's Form 10B did not go with the return and the exemption has been refused. Does filing it in answer to the s.139(9) notice save the claim?
Yes. The Tribunal held that the authorities were not justified in refusing the exemption under s.11 where the assessee had filed the audit report in answer to the defect notice under s.139(9) and before the assessment proceedings were completed. A highly technical view of the timing defeats the purpose of the requirement where substantive compliance has been made.
Decided by the ITAT (Dr. M.L. Meena, Accountant Member and Anikesh Banerjee, Judicial Member) on 2022-03-02, reported as I.T.A. No. 619/Asr/2019, assessment year 2016-17. It bears on section 139(9), section 139(9) Explanation, section 11, section 12, section 12A, section 154 of the Income Tax Act 1961, in Charitable Trusts & Exemption, Capital Gains Exemptions and Assessment & Scrutiny matters.
The audit report clause of the Explanation is one of the two or three that produce most defect notices. This is a recent order confirming that the cure works, and it is the Tribunal route where the CPC has already denied the exemption in processing.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee was a registered charitable trust. It filed its return for assessment year 2016-17 on 29 August 2017 without the audit report in Form 10B required for the exemption under ss.11 and 12. On receiving a notice of defect under s.139(9) it filed the audit report, the report itself being dated 2 June 2016. The authorities refused the exemption under ss.11 and 12 on the footing that the report had not been filed along with the return.
The appeal of the assessee was allowed (para 13). The income-tax authorities were not justified in denying the claim of exemption under s.11, and the Assessing Officer was directed to rectify the defect in the original order and pass a rectification order under s.154 as per law.
The Tribunal treated the omission of the audit report as the kind of defect the s.139(9) machinery exists to cure, and recorded that the assessee had answered the defect notice by filing the report before the assessment proceedings were complete. The requirement that the report accompany the return is directed at ensuring the report exists and is before the officer when he assesses; taking a highly technical view of the moment of filing defeats the legislative intent where substantive compliance has been achieved.
In the backdrop of the above discussion, the appeal of the assessee is allowed in the terms
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Handle my notice → Ask a CA on WhatsAppYes. The Tribunal held that the authorities were not justified in refusing the exemption under s.11 where the assessee had filed the audit report in answer to the defect notice under s.139(9) and before the assessment proceedings were completed. A highly technical view of the timing defeats the purpose of the requirement where substantive compliance has been made. This was decided by the ITAT (Dr. M.L. Meena, Accountant Member and Anikesh Banerjee, Judicial Member) and bears on section 139(9), section 139(9) Explanation, section 11, section 12, section 12A, section 154 of the Income Tax Act 1961. It is reported as I.T.A. No. 619/Asr/2019, assessment year 2016-17. The audit report clause of the Explanation is one of the two or three that produce most defect notices. This is a recent order confirming that the cure works, and it is the Tribunal route where the CPC has already denied the exemption in processing. If it applies to you, the first step is this: Produce the audit report with its own date, to show it was in existence when the return was filed.
The assessee was a registered charitable trust. It filed its return for assessment year 2016-17 on 29 August 2017 without the audit report in Form 10B required for the exemption under ss.11 and 12. On receiving a notice of defect under s.139(9) it filed the audit report, the report itself being dated 2 June 2016. The authorities refused the exemption under ss.11 and 12 on the footing that the report had not been filed along with the return. The matter was decided on 2022-03-02 by the ITAT (Dr. M.L. Meena, Accountant Member and Anikesh Banerjee, Judicial Member). On those facts the ITAT held as follows. The appeal of the assessee was allowed (para 13). The income-tax authorities were not justified in denying the claim of exemption under s.11, and the Assessing Officer was directed to rectify the defect in the original order and pass a rectification order under s.154 as per law.
The Tribunal treated the omission of the audit report as the kind of defect the s.139(9) machinery exists to cure, and recorded that the assessee had answered the defect notice by filing the report before the assessment proceedings were complete. The requirement that the report accompany the return is directed at ensuring the report exists and is before the officer when he assesses; taking a highly technical view of the moment of filing defeats the legislative intent where substantive compliance has been achieved. In the words reproduced by the source cited on this page: "In the backdrop of the above discussion, the appeal of the assessee is allowed in the terms"
It was decided by the ITAT on 2022-03-02 and is reported as I.T.A. No. 619/Asr/2019, assessment year 2016-17. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 139(9), section 139(9) Explanation, section 11, section 12, section 12A, section 154, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal of the assessee was allowed (para 13). The income-tax authorities were not justified in denying the claim of exemption under s.11, and the Assessing Officer was directed to rectify the defect in the original order and pass a rectification order under s.154 as per law. It arises in Charitable Trusts & Exemption, Capital Gains Exemptions and Assessment & Scrutiny matters, on section 139(9), section 139(9) Explanation, section 11, section 12, section 12A, section 154 of the Income Tax Act 1961, and was decided by Dr. M.L. Meena, Accountant Member and Anikesh Banerjee, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show the date on which it was filed in answer to the s.139(9) notice and that it preceded the completion of the assessment. Frame the claim as substantive compliance and ask that the denial be set right, here by a rectification order under s.154. Where the denial came from the CPC in processing, take the appeal rather than only a rectification petition.
Searched for later treatment; none was found. That is not the same as a source affirming it. No later order applying, doubting or dissenting from this one was located on indiankanoon. It runs with the Calcutta High Court's decision in CIT v. Rai Bahadur Bissesswarlal [1992] 195 ITR 825 (Cal) on the audit report of a trust being curable, though that decision is not cited in it. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The copy read gives the date of filing of the audit report as 20 March 2017 while the return is recorded as filed on 29 August 2017, which cannot both be right as stated; the report itself is dated 2 June 2016. The point decided does not turn on which of the two filing dates is correct, but the sequence in the order should not be relied on without the case papers. The operative sentence is quoted in fragment because the fetch layer truncates near 125 characters. indiankanoon's page title renders the party name as Measage Gram Sewa; the order itself does not carry that word. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal of the assessee was allowed (para 13). The income-tax authorities were not justified in denying the claim of exemption under s.11, and the Assessing Officer was directed to rectify the defect in the original order and pass a rectification order under s.154 as per law.
TaxSphere, “Gram Sewa and Viklang Shayta Sanstha v DCIT”, https://taxnotice.vittsphere.com/caselaw/case/gram-sewa-viklang-sahayta-v-dcit-139-9-form-10b-cured/ (validity last checked 2026-09-17)
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Is the list of defects in the Explanation to s.139(9) a closed list, so that the officer cannot call anything else a defect?
The officer refused you firm status because a document was missing that the Explanation to s.139(9) does not mention. Was he entitled to do that without giving you a chance to put it right?
You missed the fifteen days on a s.139(9) notice and the officer has written back that your return is invalid. Is there anything left to do?
The accountant's certificate for the s.80HHC claim was prepared but never attached to the return. Is the deduction gone?
