ITO, WARD-1(1), EXEMPTION, NEW DELHI vs. FORUM OF INDIAN REGULATORS, DELHI

The Revenue has raised the following substantive ground of appeal :-

Brief facts of the case are that, the order u/s 143(1) of the Act came to be passed on 25/03/2019 pertaining to Assessment Year 2017-18 wherein the DCIT CPC, Bangalore had disallowed Rs. 1,50,06,077/- on the reason that the assessee has not e-filed the audit report in Form No. 10B along with or before filing the return of income, accordingly the exemption u/s 11 of the Act was not allowed to the assessee.

Aggrieved by the order dated 25/03/2019, the assessee preferred an appeal before the CIT(A) i.e. national Faceless Appeal Centre (‘NFAC’ for short) vide order dated 28/04/2022 allowed the appeal filed by the assessee.

The Ld. DR vehemently submitted that the CIT(A) has erred in allowing the appeal of the assessee in contravention of provisions of Section 12A (1)(b) of the Act read with Rule 12(2) of the Income Tax Rules as the assessee had fail to e-filed or its audit report u/s 10B on or before the due date of filing the return.

On the other hand, the Ld. Counsel for the assessee submitted that the assessee filed income tax return for Assessment Year 2017-18 electronically on 04/08/2017 and also filed requisite audit report in Form No. 10B was up loaded by tax auditor on 28th August 2017 much before the due date, further submitted that the assessee filed Form No. 10 and 9A as per Rule 17 on 03/08/2017 and Form 10B was e-verified by the assessee on 23rd March, 2018 before the completion of assessment u/s 143(1) of the Act. The ITR was verified on 11th September, 2017 well before the due date i.e. 7th November, 2017. The intimation notice was served on the assessee on 19/11/2018 u/s 143(1) (a) (ii) of the Act and same was replied by the assessee within the stipulated time. The Ld. Counsel further submitted that the order u/s 143(1) was passed on 25th march, 2019 without giving effect to the reply field and exemption u/s 11(2) of the Act was denied consequently demand of Rs. 63,12,051/- was created. The assessee assailed order passed by the CIT(A).

During the appellate proceedings, the assessee vide written submission dated 24/04/2019 brought to the notice of the Ld. CIT(A) regarding order passed u/s 154A of the Act by the A.O., CPC, Bangalore and nullifying the demand created u/s 143(1) of the Act and pleaded for withdraw of the appeal filed by the Assessee. However, the CIT(A) instead of dismissing the appeal as sought by the Assessee himself proceeded to pass the order on merit and allowed the Appeal filed by the Assessee vide order impugned dated 28/04/2022 which is under challenged by the Department.

Considering the fact that the A.O./ CPC, Bangalore has already rectified the mistake dated 06/08/2019 wherein the demand raised against the assessee was reversed and the income return for the Assessment Year 2017-18 was accepted by the Department, the Appeal filed by the Revenue challenging order of the CIT(A) deleting the addition made by the A.O. on merit does not survive. Accordingly, the Grounds of Appeal of the Revenue fails. Appeal filed by the Revenue is dismissed.

In the result, Appeal filed by the Revenue is dismissed.