DUSHKAL GO SEWA SAMITI,SUMERPUR vs. ITO (EXEMPTION), JODHPUR

5. Ld. CIT(A) also erred in law in by ignoring the fact that the assessee-trust could not upload Form-10 and Form-10B online due to technical issues and glitches which is an admitted fact even by CBDT and in many cases, delay was condoned.

6. Ld. CIT(A) also ignored the fact while rejecting the appeal that the assessee-trust also filed the physical copy audit report in Form-10B vide letter dated 07.10.2019.

7. Ld. CIT(A) erred in law in arbitrarily ignored the uploaded Audit Report (Form 10B), application for condonation of delay and the bonafide belief of the assessee-trust.

5. Aggrieved, from the said action of the revenue the assessee has filed an appeal before the ld. CIT(A). The ld. CIT(A) after hearing the contention of the assessee dismissed the appeal of the assessee by giving following findings on the issue:- “4. CIT’s decision: Since all the grounds of appeal pertains to the single issue of disallowance of exemption claimed u/s 11 of the Act, all the grounds of appeal are clubbed together for the sake of convenience and disposed as under:

4.1 The appellant had not filed the Form No.10B within the prescribed time and therefore the CPC did not grant the exemption u/s 11 as per the intimation u/s 143(1). Thereafter, the appellant filed a rectification application before the AO, which has been rejected by the AO. The present appeal is against the rectification order u/s 154 dated 04.02.2021. It is the contention of the appellant that due to certain technical glitches on the portal, Form No.10B could not be filed.

4.2 The appellant trust filed an application before the CIT (Exemptions), Jaipur dated 12.03.2020 for condonation of delay and the CIT(Exemptions), Jaipur vide order dated 25.03.2021 had rejected the application of the appellant. The appellant also filed an application dated

5 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) 26.04.2021 and had sought for condonation of delay u/s 119(2)(b) of the Act before the CBDT. The appellant had stated that the appellant trust is awaiting the response from the CBDT. Further, the appellant has also submitted that in certain similar cases, the CBDT has condoned the delay.

4.3 The appellant had filed an application u/s 154 of the Act. The ITO. Exemption Ward, Jodhpur vide order u/s 154 dated 04.02.2021 has stated as under:

"The asseessee has requested vide its application that demand has been raised u/s 143(1) of the Act by the CPC which is to be reduced to Nil as no taxable income shown in ITR However, on verification of record available with this office, it is noticed that the assessee- society did not file form 108 on line within the prescribed time limit and benefit of section 11 cannot be granted on account of non-filing of form 10B within due date. Therefore no mistake is apparent from record rectifiable u/s 154 of the Act at this level and accordingly the application is disposed."

4.4 The AO has categorically stated that the appellant did not file the Form No.108 within the prescribed time and hence the claim of exemption u/s.11 was not granted in the Intimation u/s 143(1) and therefore there is no mistake apparent from record rectifiable u/s 154 of the Act. Moreover, as on date, the competent authority has also not condoned the delay in filing the Form No.10B. Therefore, I am of the considered opinion that the AO has rightly held that there is no mistake apparent from record rectifiable u/s 154 at this stage. Accordingly, the grounds of appeal are dismissed.

2. Ground No. 2 : ADJUSTMENTS WERE MADE BEYOND THE A.O JURISDICTION / POWERS PROVIDED UNDER CLAUSES (i) TO (vi) OF SECTION U/S 143(1)(a) Ld. CIT(A) erred in law in arbitrarily confirming the adjustments made by the Ld. A.O. which were beyond the A.O.’s jurisdiction/ powers provided under clauses (i) to (vi) of section u/s 143(1)(a) by disallowing expenditures of Rs. 1,05,26,665/- (Including all the revenue and capital expenditures, amount accumulated or set apart upto 15% and treating them eligible adjustments under section 143(1)(a) whereas these adjustments were beyond the A.O’s jurisdiction or powers provided under clauses (i) to (vi) of section 143(1)(a). On perusal of the each clause starting from clauses (i) to (vi) of section 143(1)(a), your honor will observe that there is no clause (provision) which empowers Ld. A.O. to disallow the expenditures if no Audit Report in Form 10B is uploaded online and therefore, the Adjustment of Rs. 1,05,26,665/- is beyond the powers and jurisdiction of the Ld. A.O. u/s 143(1)(a).

7 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) 3. Ground No. 2 : FORM 10B COULD NOT UPLOADED DUE TO TECHNICALGLITCHES (A) Ld. CIT (A) erred in law in not rectifying the mistake by arbitrarily ignoring the fact that Appellant-trust is regularly getting its accounts audited and very regular in filing its Income Tax Return but in A.Y. 2017-18, assessee-trust could not upload Form-10B online within the prescribed time limit due to technical glitches and practical problems on the Income Tax Portal whereas, assessee-trust got its accounts audited by qualified chartered accountant on 02.08.2018 and also filed the Income Tax Return on 21.09.2018 i.e. well within the time limit (last date for audit report and ITR was 31.10.2018) with all required information / particulars including the details relevant to Audit Report (P.B. No. 30-36). It clearly shows that assessee-trust was very prompt and regular in filing its Income Tax Return (P.B. No. 37-38). (B) It was well known to every one including Hon’ble CBDT that there were technical glitches / issues / problems on the portal while uploading Online Form-10B. It is very important here to mention that many representations have been received by the CBDT / field authorities stating that Form no.10B could not be filed along with the return of income for AY. 2017-18 because of lots of technical issues were faced by the trusts and institutions and therefore, Hon’ble CBDT issued Circulars No. 02/2020 dated 03.01.2020 issued vide F.No.-197/55/2018-ITA-I (For Form-10B) (P.B. No. 1-2) and Circulars No. 10/2019 dated 25.05.2019 issued vide F.No.-197/55/2018-ITA-I (For Form-10B) and Circular No. 28/2019 dated 27.09.2019 issued vide F.No. 197/55/2018-ITA-I (For Form- 10B) . Both circulars No. 10/2019 and 28/2019 are being enclosed herewith for your kind consideration. It was genuine hardship faced by most of the Trusts and institutions and therefore, Hon’ble CBDT came up with these circulars. (C) Appellant trust also submitted the physical audit report vide letter dated 07.10.2019 and 18.01.2020 (P.B. No. 14-15) respectively to the ITO (E), Jodhpur. If there were no technical glitches and issues on portal then Appellant would have uploaded the audit report in Form-10B online only on 07.10.2019 instead of sending the physical copy of the audit report. It clearly shows that there were technical issues on the portal. (D) Accordingly, assessee-trust made an application to CIT (Exemption), Jaipur on 12.03.2020 for the condonation of the delay as per the CBDT Circular No. 02/2020 dated 03.01.2020 issued vide F.No.-197/55/2018-ITA-I (For Form-10B) but Ld CIT (Exemption), Jaipur rejected our application without providing any opportunity of hearing and without considering the technical glitches faced by assessee-trust vide order dated 25.03.2021 (P.B. No. 3-5). Appellant-trust also uploaded the Form 10B online on 31.03.2020 (P.B. No. 6) and uploaded revised Form 10B online on 30.08.2020. (D) Thereafter, appellant trust also filed application for condonation of delay before Hon’ble CBDT, New Delhi vide letter dated 26.04.2021 (P.B. No. 07-08) but appellant- trust did not get any communication or notice or order from the Hon’ble CBDT. Thereafter, Appellant trust also submitted reminders letter to the Hon’ble CBDT vide letters dated 09.06.2022 and 09.01.2023 (P.B. No. 09 - 13) but till now, appellant-trust did not received any communication or notice or order.

(E) It is also worthwhile to mention here that when Appellant-Trust noticed that huge demand has been created against it, Appellant-trust made an inquiry with ITO (Exemption) Jodhpur, he just opined that the trust’s demand may be due to non-filing of Form 10B online and he guided to upload Form 10B and to apply for condonation of delay as per CBDT Circulars No. 02/2020 dated 03.01.2020 issued vide F.No.- 197/55/2018-ITA-I (For Form-10B). (F) It is also worthwhile to mention here that Hon’ble CBDT vide its circular (1/1148- CBDT F. No. 267/482/77-IT (Part) dated February 9, 1978--CBDT Bulletin Tech. XXIII/582.) (P.B.- 23) clarified that the exemption as available to trust under section 11 and 12 may not be denied merely on account of delay in furnishing the auditor’s report. The provisions related with the requirement of audit submissions are directory and not mandatory and Hon’ble The Gujarat High Court has taken this view in CIT v. Gujarat Oil & Allied Industries [1993] 201 ITR 325 (Guj.)

(G) It is really very unfortunate, if a business man who is supposed to get its books of accounts audited and some how he couldn’t get it done on or before due date or even forgot to do so then in such case, that businessman would liable for just penalty of 0.5% of the turnover or Rs. 1,50,000/- which ever is higher and If there is a genuine reason for delay or non-filing of audit report, then as per Section 273B, no penalty will be levied but in case of trust / institutions who has got its accounts audited but just could not upload audit report in Form 10B online then in such case, all the expenditures will be disallowed and total income will be taxed @ MMR. This is really very unfortunate and unreasonable. (H) Please refer the attached Form-10B FAQ (P.B. No. 17) which are available on department’s official website and can be visited through the given link : https://www.incometax.gov.in/iec/foportal/help/form10bfaq#:~:text=Is%20it%20mandato ry%20to%20file,in%20the%20online%20mode%20only. Your honor will find that Question No. 4 - Is it mandatory to file Form 10B online? And the answer is Yes, with effect from AY 2020-21, it is required that Form 10B is mandatorily filed in the online mode only. So according to the FAQs available on the official portal of Income Tax Department, Form-10B in online mode is mandatory only from AY 2020-21 and onwards only. So accordingly. For A.Y. 2017-18, There is no compulsion to file the Form-10B online and accordingly, all the expenditures should be allowed as for A.Y. 2018-19 , Online filing was optional. (I) Further, The decision of the Hon’ble P&H High Court in the case of CIT vs. Shahzedanand Charity Trust – (1997) 228 ITR 292 (PH) (P.B. No. 25 - 29) clearly shows that the Hon’ble P&H High Court has categorically held that the audit report u/s.12A(1)(b) of the Act can be filed even at the appellate stage. Thus, clearly, the Hon’ble P&H High Court has held that the filing of the audit report alongwith the return as per provisions of section 12A(1)(b) of the Act is not mandatory.

9 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) (J). Please find enclosed herewith the latest judgments which completely supports the appellants plea :

1. 1. Jeevan Kalyana Sadhana Kendra Vs. Income Tax Officer (2023) 115 TLC 017 (ITAT, Cuttack) 2. Social Security Scheme Of Gicea Vs. Commissioner Of Income Tax (Exemptions) (2022) 112 TLC 383 (Hon’ble Gujarat High Court).

3. SHREE BHAIRAV SEVA SAMITI vs. INCOME TAX OFFICER (2022) 112 TLC 072 (ITAT, Mumbai) Appellant-trusts would like to draw your honor towards the following judgments on the relevant issues ‘Delayed filing of Audit Report and Genuine hardship’ – CASE LAW CONCLUSION CIT vs. Rai Bahadur Bissesswarlal The Hon’ble Calcutta High Court has affirmed Motilal Malwasie Trust (1992) 195 that the requirement of filing the audit report with ITR 825, the return is merely a procedural requirement, and that exemption cannot be denied so long as the report is available to the assessing officer before the completion of assessment. Calcutta Management Association The Hon’ble Calcutta bench of the Tribunal held vs. ITO (1992) 42 ITD 62, that the Audit Report can even be filed at the time of appeal before the Commissioner (Appeals). Swajan Pariwar Trust vs.ADIT(E) A similar view has been taken by the Hon’ble (1997) 57 TTJ (Mum) (SMC) 77, Mumbai Bench of Tribunal that where the trust filed the audit report along with a rectification application under section 154, it was entitled to the exemption, as the defect had been removed. CIT v. Gujarat Oil & Allied The Hon’ble Gujarat High Court held that the Industries [1993] 201 ITR 325 provision about furnishing of the auditor's report (Guj.) along with the return has to be treated as procedural provision and, therefore, directory in nature. CIT vs. Shahzedanand Charity Hon’ble High Court has clarified The CBDT, by Trust – (1997) 228 ITR 292 (PH), issuing the circular, has treated the provisions regarding furnishing of auditor's report along with the return to be procedural and, therefore, directory in nature. By showing sufficient cause, the auditor's report can be produced at any later stage either before the ITO or before the appellate authority. G.V. Infosolutions Pvt. Ltd. vs. The Hon’ble Delhi High Court has observed that DCIT, Circle 10(2) and others The limitation period in the provisions of law is (2019) 261 taxmann.com 482 meant to attach finality. However, wherever the 10 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) (Delhi) – Delhi HC legislature intends relief against hardship in cases where statues lead to hardships, the concerned authorities have to construe them in a reasonable manner.

The Hon’ble Karnataka High Court has mentioned jatha Ramesh Vs. CBDT, in the order that The wide powers given to CBDT New Delhi (2017) 87 in case of “genuine hardship” also confers an taxmann.com 228 (Kar. HC) obligation upon it to consider facts relevant to condonation of delay as well as merit of claim simultaneously on case-to-case basis. If the claim in a fit case, it should not normally be defeated on the bar of limitation particularly, when the delay for which condonation is sought is not abnormally large. CBDT and higher authorities of department need not always take only a pro revenue approach in such matters. Their approach should be equitious, balancing and judicious and should reflect the application of mind before denying the genuine claim of the assessee on the ground of mere delay in making such claim. In the case of Bombay It is well settled that in the matters of condonation Mercantile Co-op. Bank Ltd. of delay, highly pedantic approach should be eschewed and a justice-oriented approach should be adopted. It also observed that a party should not be made to suffer on account of technicalities. Sitaldas K.Motwani vs Director The expression “genuine hardship” in section General Of Income Tax (Bombay 119(2)(b) should be construed liberally, High Court) particularly in matters of entertaining application seeking condonation of delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay.

There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. The approach of the authorities should be justice oriented so as to advance the cause of justice.

Trust For Reaching The The Hon’ble Court held that the approach in the Unreached (Civil Application No. cases of present type should be equitious, balancing and judicious. Technically, strictly and 8977/9370/9760 of 2020) (Hon’ble Gujarat High Court) liberally speaking, the respondent might be justified in denying the exemption under section 12 of the Act by rejecting such condonation application but an assessee, a public charitable trust past 30 years who substantially satisfies the condition for availing such exemption should not be denied the same merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned.

4. Ground No. 3 : ITR WAS ACCEPTED AS COMPLETE AND CORRECT WITHOUT ANY NOTICE FOR DEFECT U/S 139(9). Ld. CIT(A) erred in law in not rectifying the mistake as the disallowances of expenditures (Disallowed by Ld. A.O.) which were made without providing the opportunity for removing the defect as per provisions of explanation (e) to sec.139(9). Ld. CIT(A) also erred in law by ignoring the fact that all the data and information including Auditors details were filled in the ITR and it’s ITR (without online uploading copy of Audit Report due to technical glitches) was not found defective and no notice u/s 139(9) was also received for removal of defect and hence, Assessee-trust was under bonafide belief that uploading of Form 10B are no more issue due to technical glitches. If the trust had received the notice u/s 139(9), the defect could have cured long back. Therefore, appellant-trust bonafidely believed that since no notice 139(9) has been issued by the department and parallel technical glitches are also there on portal while uploading Form 10B so trust assumed that it looks like that there is no need to fill Form 10B online.

5. Ground No. 4 : HON’BLE CBDT HAS ADMITTED THE FACTS THAT THERE WERE TECHNICAL ISSUES AND GLITCHES AND IN MANY CASES, DELAY WAS CONDONED A. It is also worthwhile to mention here that in the identical situation in the case of KESHAR BAG GOUSHALA SAMITTEE (PAN : AAAJK1068Q) in A.Y. 2018-19, Hon’ble CBDT has already condoned the delay vide its order dated 30.03.2021 (P.B. No. 18). Please also refer the application for condonation of delay (P.B. No. 19-20) in the case

12 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) of KESHAR BAG GOUSHALA SAMITTEE in filing Form 10B dated 22.05.2020 submitted before Hon’ble CBDT for A.Y. 2018-19. Your Honor will find that reason for delay in filing Form-10B is same in both applications i.e. in appellant’s case and in the case of KESHAR BAG GOUSHALA SAMITTEE. Further, both the application for the condonation of delay filed before the Hon’ble CBDT was typed on the same date i.e. 22.05.2020. Hon’ble CBDT has condoned the delay admitting the fact technical glitches faced by the KESHAR BAG GOUSHALA SAMITTEE for A.Y. 2018-19 with following words – “As it is a case of genuine hardships, the delay of 19 months in filing Form No. 10B for A.Y. 2018-19 from the date of filing the ROI on 21.09.2018 is hereby condoned and the jurisdictional Income-tax Authorities are authorized to admit Form No.10B for A.Y. 2018-19 as a Form filed within the stipulated time“ . B. Similarly, recently, Hon’ble Pr. CCIT (Exemption), Delhi has condoned the delay in the similar matter related to Sanskar Vikas Sansthan (PAN : AAETS9298N) relevant to A.Y. 2018-19 (P.B. No. 23-24). Please also refer the application for condonation of delay in filing Form 10B dated 24.05.2020 (related to Sanskar Vikas Sansthan) submitted before Hon’ble CBDT for A.Y. 2018-19 (P.B. No. 21-22). Your Honor will find that reason for delay in filing Form-10B are same in both applications i.e. application for A.Y. 2018-19 (KESHAR BAG GOUSHALA SAMITTEE) and A.Y. 2018-19 (DUSHKAL GO SEWA SAMITI ) are exactly same. C. It is also very important to submit here that in all the three applicants i.e. Dushkal Go Sewa Samiti, Keshar Bag Goushala Samittee and Sanskar Vikas Sansthan , a similar type of application for condonation of delay were drafted and filed before the Hon’ble CBDT as the same matter was there . D. There is no matter of tax evasion and loss of revenue but it is simply a matter of Technical Problems / Glitches of Income-tax Portal. Therefore, on the basis of above facts and circumstances and CBDT’s condonation order dated 30.03.2021 in the case of KESHAR BAG GOUSHALA SAMITTEE, and the Pr. Chief Commissioner of Income Tax(E) condonation order dated 20.02.2023 in the case of Sanskar Vikas Sansthan and the circulars issued by the CBDT, Appellant-trust requests your honor to kindly accept the above submission and quash the huge demand and condone the delay and oblige.”

“May it please your honors,

15 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) assessee should not be denied the benefit of deduction u/s.11 & 12 of the Act on account of the said venial breach in respect of the delay in filing of the audit report. Consequently, the delay in filing of the audit report in Form 10B is condoned. 7 LATE ARJAN KANJI In the interest of justice and following the Circular SMARAK CHARITABLE No. 2/2020, we hereby condone the delay of filing TRUST BHACHAU vs. Form No. 10B. To meet the ends of justice it is not DEPUTY simply sufficient in condoning the delay in filing COMMISSIONER OF Form 10B, the contents in the Form 10B is to be INCOME TAX (2023) 117 verified before granting exemption u/s. 11 of the TLC 069 (Hon’ble ITAT, Act to an assessee. We therefore of the considered Rajkot) opinion to set aside the matter to the file of the Assessing Officer to verify Form No. 10B, whether it is in accordance with the provisions of law and thereby grant the exemption u/s. 11 and 12 of the Act.

8 NAVBHARAT Bench find that the assessee has substantially CHARITABLE TRUST vs. satisfied all the conditions for availing the benefit INCOME TAX OFFICER of exemption under section 11/12 of the Act and (2023) 114 TLC 533 :(2023) except for filing audit report in Form 10B, which 150 taxmann.com 311 was filed belatedly, thus respectfully following the ITAT SURAT BENCH decision of Hon'ble Jurisdictional High Court, the (SMC) grounds of appeal raised by assessee are restored back to the file of Assessing officer to verify the contents of Form 10 for all the assessment years and grant necessary exemptions by passing the order in accordance with law.

9. HARI GYAN In view of the ratio laid down by the Hon’ble PRACHARAK TRUST vs. Jurisdictional High Court holding that non filing DEPUTY of Audit Report along with return of income is a COMMISSIONER OF procedural part and cannot be an impediment in INCOME TAX (2023) 118 law in claiming the exemption, we allow this TLC 142 (Hon’ble ITAT appeal condoning the delay in filing the Audit “D” BENCH, Report in Form No. 10B. AHMEDABAD)

10. SHREE BHAIRAV SEVA We find that the Hon'ble jurisdictional High Court SAMITI vs. INCOME TAX in case of CIT vs. Xavier Kalavani Mandal (P.) OFFICER (2022) 112 TLC Ltd. (supra) held that in order to claim exemption 072 (ITAT, Mumbai) under section 11, the assessee can filed audit report in Form 10B even at later stage either before the Assessing Officer or before appellate authority by showing a sufficient cause. Further, Hon'ble jurisdictional High Court decision in case of Sarvodaya charitable Trust vs. ITO

16 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) (Exemption) (supra) also held that where the assessee is a public charitable trust registered under section 12A of the Act and substantially satisfied condition for availing benefit of exemption as a charitable could not be denied exemption, the assessee merely on bar of limitation in furnishing audit report in Form 10B. We find that the assessee has complied the procedural requirement, therefore, the Assessing Officer/CPC is directed to verify the claim of the assessee and grant necessary deduction under section 11 of IT Act. 11 Social Security Scheme Of An assessee, which is a public charitable trust for Gicea Vs. Commissioner Of past 30 years which substantially satisfies the Income Tax (Exemptions) conditions for availing such exemption, should not (2022) 112 TLC 383 be denied the same merely on the bar of limitation (Hon’ble Gujarat High especially when the legislature has conferred wide Court) discretionary powers to condone such delay 12 CIT v. Bhawani Plywood the filing or furnishing the audit report along with (P) Ltd. (2010) 1 the return of income is directory and not taxmann.com 250 (Hon’ble mandatory. P&H High Court) 13 Sarvodaya Charitable Trust Exemption u/s 11 cannot be denied merely only on Vs. ITO, Exemption (2021) the basis of delayed filing of Form 10B. 125 taxmann.com 75 ( Hon’ble Gujarat High Court) 14 Xavier Kelavani Mandal the Hon’ble Gujarat High Court has held that even (P.) Ltd. (2014) if the Form No. 10B is filed at a later stage, either taxmann.com 184 (Gujarat) before the A.O. or before the appellate authority; it would be a sufficient compliance with requirements of section 12A(1)(b) as these requirements are only directory in nature. We are of the view that the approach in the cases of the present type should be equitious, balancing and judicious. Technically, strictly and liberally speaking, the respondent might be justified in denying the exemption under section 12 of the Act 15 TRUST FOR REACHING by rejecting such condonation application, but an THE UNREACHED assessee, a public charitable trust past 30 years THROUGH TRUSTEE, who substantially satisfies the condition for NIMITTABEN N BHATT availing such exemption, should not be denied the vs. COMMISSIONER OF same merely on the bar of limitation especially INCOME TAX when the legislature has conferred wide (EXEMPTIONS) (2021) discretionary powers to condone such delay on the 279 TAXMAN 229 :(2021) authorities concerned.

17 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) 202 DTR 39 (Hon’ble Gujarat High Court) The Hon’ble Gujarat High Court held that the 16 CIT v. Gujarat Oil & Allied provision about furnishing of the auditor's report Industries [1993] 201 ITR along with the return has to be treated as procedural 325 (Guj.) provision and, therefore, directory in nature. 17 ITO v. Smt. Mandira D. the filing of furnishing the audit report along with Vakharia (2001) 250 ITR the return of income is directory and not 432 (Hon’ble Karnataka mandatory. high Court) Hon’ble High Court has clarified The CBDT, by issuing 18 CIT vs. Shahzedanand the circular, has treated the provisions regarding Charity Trust – (1997) 228 ITR 292 (PH) (P.B. No. 25 - furnishing of auditor's report along with the return to be procedural and, therefore, directory in nature. By 29) showing sufficient cause, the auditor's report can be produced at any later stage either before the ITO or before the appellate authority. The Hon’ble Calcutta High Court has affirmed that the 19 CIT vs. Rai Bahadur requirement of filing the audit report with the return Bissesswarlal Motilal is merely a procedural requirement, and that Malwasie Trust (1992) 195 exemption cannot be denied so long as the report is ITR 825, available to the assessing officer before the completion of assessment. 20 Savitri Foundation Vs. ITO, wherein the AO made processing of return u/s ITA No. 1925/Mum/2021 143(1) denying exemption u/s 11 to assessee for (Hon’ble ITAT, Mumbai) 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. 21 Puravanchal Lokhit Mandal Exemption u/s 11 cannot be denied merely only on Vs. ITO, Exemption Ward, the basis of delayed filing of Form 10B. Vadodara, ITA No. 966/Ahd/2019 (Hon’ble ITAT, Ahmedabad) 22 ITO Vs Laxmanarayan Dev ITAT Ahmedabad held that benefit of exemption Shrishan Seva Khendra under section 11 of the Income Tax Act cannot be (Hon’ble ITAT, denied merely on account of delay in furnishing of Ahmedabad) audit report in Form No. 10B. 23 Calcutta Management The Hon’ble Calcutta bench of the Tribunal held that the Audit Report can even be filed at the time of Association vs. ITO (1992) 42 ITD 62, appeal before the Commissioner (Appeals). 24 Swajan Pariwar Trust vs. A similar view has been taken by the Hon’ble Mumbai Bench of Tribunal that where the trust filed the audit ADIT(E) (1997) 57 TTJ report along with a rectification application under (Mum) (SMC) 77, section 154, it was entitled to the exemption, as the Appellant’s trust relies on the above case laws which completely supports the appellant’s plea. Now in supports of grounds of appeal

, appellant-trust submits as under :-

3. Ground No. 1 : NO OPPORTUNITY OF HEARING WAS PROVIDED Ld. CIT(A) erred in law by ignoring the fact that Ld. A.O. has not provided the opportunity of hearing before passing the order u/s 154 of the Income Tax Act. Ld. CIT(A) also ignored the technical glitches faced by the appellant-trust while filing the Form 10B online before the due date.

4. Ground No. 2 : ADJUSTMENTS WERE MADE BEYOND THE A.O JURISDICTION / POWERS PROVIDED UNDER CLAUSES (i) TO (vi) OF SECTION U/S 143(1)(a) Ld. CIT(A) erred in law in not rectifying the mistake made by Ld. A.O. as adjustments were made beyond the A.O.’s jurisdiction/ powers provided under clauses (i) to (vi) of section u/s 143(1)(a) by disallowing expenditures of Rs. 1,05,26,665/- (Including all the revenue and capital expenditures and amount accumulated or set apart upto 15% and treating them eligible adjustments under section 143(1)(a) whereas these adjustments were beyond the A.O’s jurisdiction or powers provided under clauses (i) to (vi) of section 143(1)(a). On perusal of the each clause starting from clauses (i) to (vi) of section 143(1)(a), your honor will observe that there is no clause (provision) which empowers Ld. A.O. to disallow the expenditures if no Audit Report in Form 10B is uploaded online and therefore, the Adjustment of Rs. 1,05,26,665/- is beyond the powers and jurisdiction of the Ld. A.O. u/s 143(1)(a).

3. Ground No. 2 :FORM 10B COULD NOT UPLOADED DUE TO TECHNICAL GLITCHES (A) Ld. CIT (A) erred in law in not rectifying the mistake made by the Ld. A.O. that Appellant-trust is regularly getting its accounts audited and very regular in filing its Income Tax Return but in A.Y. 2017-18, assessee-trust could not upload Form-10B online (as per the new provisions) within the prescribed time limit due to technical glitches and practical problems on the Income Tax Portal whereas, assessee-trust got its accounts audited by qualified chartered accountant on 01.09.2017 and also filed the Income Tax Return on 15.10.2017 i.e. well within the time limit (last date for audit report and ITR was 07.11.2017) with all required information / particulars including the details relevant to Audit Report (P.B. No. 30-36). It clearly shows that assessee-trust was very prompt and regular in filing its Income Tax Return (P.B. No. 37-38).

(B) It was well known to every one including Hon’ble CBDT that there were technical glitches / issues / problems on the portal while uploading Online Form-10B (as per the new provisions). It is very important here to mention that many representations have been received by the CBDT / field authorities stating that Form no.10B could not be filed along with the return of income for AY. 2017-18 because of lots of technical issues were faced by the trusts and institutions and therefore, Hon’ble CBDT itself issued Circular No. 02/2020 dated 03.01.2020 issued vide F.No.-197/55/2018-ITA-I (For Form-10B) (P.B. No. 1-2) and Circular No. 10/2019 dated 22.05.2019 issued vide F.No.-197/55/2018-ITA-I (For Form-10B) and Circular No. 28/2019 dated 27.09.2019 issued vide F.No.- 197/55/2018-ITA-I (For Form-10B) for removal of difficulties. Both circulars No. 10/2019 and 28/2019 are being enclosed herewith for your kind consideration. It was genuine hardship faced by most of the Trusts and institutions and therefore, Hon’ble CBDT came up with these circulars. (C) Appellant trust also submitted the physical audit report vide letter dated 07.10.2019 and 18.01.2020 (P.B. No. 14-15) to the ITO (E), Jodhpur. If there were no technical glitches and issues on portal then Appellant would have uploaded the audit report in Form-10B online only on 07.10.2019 instead of sending the physical copy of the audit report. It clearly shows that there were technical issues on the portal. (D) Accordingly, assessee-trust made an application to CIT (Exemption), Jaipur on 12.03.2020 for the condonation of the delay as per the CBDT Circular No. 02/2020 dated 03.01.2020 issued vide F.No.-197/55/2018-ITA-I (For Form-10B) but Ld CIT (Exemption), Jaipur rejected our application without providing any opportunity of hearing and without considering the technical glitches faced by assessee-trust vide order dated 25.03.2021 (P.B. No. 3-5). Appellant-trust also uploaded the Form 10B online on 31.03.2020 (P.B. No. 6) and uploaded revised Form 10B online on 30.08.2020. (E) Thereafter, appellant trust also filed application for condonation of delay before Hon’ble CBDT, New Delhi vide letter dated 26.04.2021 (P.B. No. 07-08) but appellant- trust did not get any communication or notice or order from the Hon’ble CBDT. Thereafter, Appellant trust also submitted reminders letter to the Hon’ble CBDT vide letters dated 09.06.2022 and 09.01.2023 (P.B. No. 09 - 13) but till now, appellant-trust did not received any communication or notice or order. (F) It is also worthwhile to mention here that when Appellant-Trust noticed that huge demand has been created against it, Appellant-trust made an inquiry with ITO (Exemption) Jodhpur, he just opined that the trust’s demand may be due to non-filing of Form 10B online and he guided to upload Form 10B and to apply for condonation of delay as per CBDT Circulars No. 02/2020 dated 03.01.2020 issued vide F.No.- 197/55/2018-ITA-I (For Form-10B) . (G) It is also worthwhile to mention here that Hon’ble CBDT vide its circular (1/1148- CBDT F. No. 267/482/77-IT (Part) dated February 9, 1978--CBDT Bulletin Tech. XXIII/582.) (P.B.- 16) clarified that the exemption as available to trust under section 11 and 12 may not be denied merely on account of delay in furnishing the auditor’s report.

20 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) The provisions related with the requirement of audit submissions are directory and not mandatory . (H) It is really very unfortunate, if a business man who is supposed to get its books of accounts audited and some how he couldn’t get it done on or before due date or even forgot to do so then in such case, that businessman would liable for just penalty of 0.5% of the turnover or Rs. 1,50,000/- which ever is higher and If there is a genuine reason for delay or non-filing of audit report, then as per Section 273B, no penalty will be levied but in case of trust / institutions who has got its accounts audited and upload the details in Income Tax Return but just could not upload audit report in Form 10B online then in such case, all the expenditures will be disallowed and total income will be taxed @ MMR. This is really very unfortunate and unreasonable.

(I) Please refer the attached Form-10B FAQ (P.B. No. 17) which are available on department’s official website and can be visited through the given link : https://www.incometax.gov.in/iec/foportal/help/form10b-faq Your honor will find that Question No. 4 - Is it mandatory to file Form 10B online? And the answer is “Yes, with effect from AY 2020-21, it is required that Form 10B is mandatorily filed in the online mode only”. So according to the FAQs available on the official portal of Income Tax Department, Form-10B in online mode is mandatory only from AY 2020-21 and onwards only. So accordingly. For A.Y. 2017-18, There is no compulsion to file the Form-10B online and accordingly, all the expenditures should be allowed as for A.Y. 2017-18 , Online filing was optional.

(I) Further, The decision of the Hon’ble P&H High Court in the case of CIT vs. Shahzedanand Charity Trust – (1997) 228 ITR 292 (PH) (P.B. No. 25 - 29) clearly shows that the Hon’ble P&H High Court has categorically held that the audit report u/s.12A(1)(b) of the Act can be filed even at the appellate stage. Thus, clearly, the Hon’ble P&H High Court has held that the filing of the audit report alongwith the return as per provisions of section 12A(1)(b) of the Act is not mandatory.

Appellant-trusts would like to draw your honor towards the following judgments on the ‘Genuine hardship’ – CASE LAW CONCLUSION G.V. Infosolutions Pvt. Ltd. The Hon’ble Delhi High Court has observed that The vs. DCIT, Circle 10(2) and limitation period in the provisions of law is meant to others (2019) 261 attach finality. However, wherever the legislature taxmann.com 482 (Delhi) – intends relief against hardship in cases where statues

21 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) Delhi HC lead to hardships, the concerned authorities have to construe them in a reasonable manner. Jatha Ramesh Vs. The Hon’ble Karnataka High Court has mentioned in CBDT, New Delhi (2017) 87 the order that The wide powers given to CBDT in case taxmann.com 228 (Kar. HC) of “genuine hardship” also confers an obligation upon it to consider facts relevant to condonation of delay as well as merit of claim simultaneously on case-to-case basis. If the claim in a fit case, it should not normally be defeated on the bar of limitation particularly, when the delay for which condonation is sought is not abnormally large. CBDT and higher authorities of department need not always take only a pro revenue approach in such matters. Their approach should be equitious, balancing and judicious and should reflect the application of mind before denying the genuine claim of the assessee on the ground of mere delay in making such claim. M/S. Bombay Mercantile It is well settled that in the matters of condonation of Co-Op Bank Vs The Central delay, highly pedantic approach should be eschewed Board Of Direct Taxes and a justice-oriented approach should be adopted. It (Hon’ble Bombay High also observed that a party should not be made to suffer Court) on account of technicalities.

Contd…………8 Sitaldas K.Motwani Vs Director The expression “genuine hardship” in section 119(2)(b) General Of Income Tax should be construed liberally, particularly in matters of (Bombay High Court) entertaining application seeking condonation of delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. There is no presumption that delay is occasioned

22 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) deliberately, or on account of culpable negligence, or on account of mala fides. The approach of the authorities should be justice oriented so as to advance the cause of justice.

4. Ground No. 3 : ITR WAS ACCEPTED AS COMPLETE AND CORRECT WITHOUT ANY NOTICE FOR DEFECT U/S 139(9).

Ld. CIT(A) erred in law in not rectifying the mistake made by the Ld. A.O. as the disallowances of expenditures (Disallowed by Ld. A.O.) were made without providing the opportunity for removing the defect as per provisions of explanation (e) to sec.139(9). Ld. CIT(A) also erred in law by ignoring the fact that all the data and information including Auditors details were filled in the ITR and it’s ITR (without online uploading copy of Audit Report due to technical glitches) was not found defective and no notice u/s 139(9) was also received for removal of defect and hence, Assessee-trust was under bonafide belief that uploading of Form 10B are no more issue due to technical glitches. If the trust had received the notice u/s 139(9), the defect could have cured long back. Therefore, appellant-trust bonafidely believed that since no notice 139(9) has been issued by the department and parallel technical glitches are also there on portal while uploading Form 10B so trust assumed that it looks like that there is no need to fill Form 10B online.

5. Ground No. 4 : HON’BLE CBDT HAS ADMITTED THE FACTS THAT THERE WERE TECHNICAL ISSUES AND GLITCHES AND IN MANY CASES, DELAY WAS CONDONED B. It is also worthwhile to mention here that in the identical situation in the case of KESHAR BAG GOUSHALA SAMITTEE (PAN : AAAJK1068Q) in A.Y. 2018-19, Hon’ble CBDT has already condoned the delay vide its order dated 30.03.2021 (P.B. No. 18). Please also refer the application for condonation of delay (P.B. No. 19-20) in the case of KESHAR BAG GOUSHALA SAMITTEE in filing Form 10B dated 22.05.2020 along with the application filed in the appellant-trust case (P.B. No07-08) submitted before Hon’ble CBDT for A.Y. 2018-19.

Hon’ble CBDT has condoned the delay admitting the fact technical glitches faced by the KESHAR BAG GOUSHALA SAMITTEE for A.Y. 2018-19 with following words – “As it is a case of genuine hardships, the delay of 19 months in filing Form No. 10B for A.Y. 2018-19 from the date of filing the ROI on 21.09.2018 is hereby condoned and the jurisdictional Income-tax Authorities are authorized to admit Form No.10B for A.Y. 2018-19 as a Form filed within the stipulated time“ .

23 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) C. Similarly, recently, Hon’ble Pr. CCIT (Exemption), Delhi has condoned the delay in the similar matter related to Sanskar Vikas Sansthan (PAN : AAETS9298N) relevant to A.Y. 2018-19 (P.B. No. 23-24). Please also refer the application for condonation of delay in filing Form 10B dated 24.05.2020 (related to Sanskar Vikas Sansthan) submitted before Hon’ble CBDT for A.Y. 2018-19 (P.B. No. 21-22).

Your Honor will find that reason for delay in filing Form-10B are same in all the three applications i.e. application for A.Y. 2018-19 (KESHAR BAG GOUSHALA SAMITTEE) and A.Y. 2018-19 (Sanskar Vikas Sansthan) and A.Y. 2017-18 (DUSHKAL GO SEWA SAMITI ) are exactly same.

C. It is clear from both the orders that appellant’s case pertains to A.Y. 2017-18 and other assessee’s were suffering from technical glitches even in A.Y. 2018-19.

D. There is no matter of tax evasion and loss of revenue but it is simply a matter of Technical Problems / Glitches of Income-tax Portal.

Therefore, on the basis of above facts and circumstances and CBDT’s condonation order dated 30.03.2021 in the case of KESHAR BAG GOUSHALA SAMITTEE, and the Pr. Chief Commissioner of Income Tax(E) condonation order dated 20.02.2023 in the case of Sanskar Vikas Sansthan and the circulars issued by the CBDT and the various case laws, Appellant-trust requests your honor to kindly accept the above submission and quash the huge demand and condone the delay and oblige.”

8. Per contra, the ld. DR relied upon the orders of the ld. CIT(A).

24 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) However, no Intimations u/s 143(1)(a) was ever received by email nor by post and intimation is also not available on Income Tax Portal to that effect. But trust observes that CPC has disallowed the whole expenditure and created the huge demand of Rs. 43,47,570/- due to failure in uploading of online Form-10B online. Thereafter, assessee- trust submitted a physical copy of audit report vide letter dated 07.10.2019 to the Ld. A.O. After that, assessee-trust also submitted a reminder application dated 18.01.2020 and requested to quash the demand. The assessee-trust filed application for Condonation of Delay in online filing Form-10B on 12.03.2020 before the Hon’ble Commissioner of Income Tax (Exemption)but the same was also got rejected without providing any opportunity of hearing and without considering the facts and circumstances. Thus the reason for not filing in Form No. 10 was beyond the control of the assessee. Considering that general difficulties being faced the Central Board of Direct Taxes (CBDT) vide Circular No. 6/2020 issued directions that with a view to prevent hardships to the assessee in exercise of the powers conferred u/s 119(2)(b) of the Income Tax Act, 1961. The Board decided that where the application for condonation of delay has been filed and the return of income has been filed on or before 31st March

25 & 05/Jodh/2022 Dushkal Go Sewa Samiti vs. ITO(E) of respective assessment years, the Board directed to condone the delay and admit such belated application for condonation of delay in filing such Form/ return of income for the assessment years 2016-17, 2017-18 and 2018-19. In light of this clear instruction accepting the fact that there were technical glitches the assessee was prevented with sufficient cause for not filing the requisite form and considering the above discussion the circular of the Board, we are of the considered view that the lower authorities erred in not accepting the application for condonation of delay in filing of Form No. 10 in the case of the assessee. Hence considering that aspect of the matter we direct the lower authorities to accept the Form No. 10 belatedly filed by the assessee and grant the consequential relief to the assessee.

In light of these observations the appeal filed by the assessee is allowed.

In the result, both the appeals of the assessee are allowed.